The U.S. economy continues to drag, but why’s the recovery going so slowly? The 13.9 million unemployed Americans aren’t the only ones who want to know.
Yesterday, following a speech by Federal Reserve chairman Ben Bernanke (who described the economic recovery as “frustratingly slow”), JP Morgan Chase CEO Jamie Dimon grabbed the microphone and asked Bernanke whether excessive government regulations are hampering the growth. Dimon said:
I have this great fear that someone’s going to write a book in 10 or 20 years, and the book is going to talk about all the things that we did in the middle of the crisis to actually slow down recovery. I don’t personally buy the argument that because it was a financial crisis it has to take a long time coming out . . .
Has anyone bothered to study the cumulative effect of all these [regulations], and do you have a fear like I do that when we look back and look at them all, that they will be a reason it took so long that our banks, our credit, our businesses and most importantly job creation start going again? Is this holding us back at this point?
Bernanke’s reply: “Has anybody done a comprehensive analysis on the impact on credit? Umm, I can’t pretend that anybody has. It’s just too complicated. We don’t really have the quantitative tools to do that.”
Dimon is on to something.
Last year, when Congress was considering the Dodd–Frank Bill and the enormous amount of regulations that went with it, Heritage’s David John and James Gattuso wrote that the legislation amounted to the largest expansion of Washington’s role in the financial industry since the Great Depression. Overall, they warned, it would do more harm than good, impacting consumers, businesses and the economy at large.
Today we’re seeing the effects of the Obama regulatory state manifested in May’s miserable job numbers—only 54,000 new jobs, unemployment increasing to 9.1 percent, and the longest average length of unemployment the country has seen. Heritage’s James Sherk and Rea Hederman, Jr., write that excessive regulations are a big part of the problem:
Unfortunately, policies from Washington have done more harm than good over the past two years. While the credit crunch had an impact on businesses, increased regulations and uncertainty about taxes and rules have delayed business expansion and hiring. Businesses, especially small businesses, have a hard time understanding how a certain regulation could affect their future business. This uncertainty means that businesses are less inclined to expand and add to their labor force.
Even if the Fed doesn’t have the “quantitative tools” to analyze the effect of regulations on the economy, the results are pretty apparent.
Watch video of the full exchange between Bernanke and Dimon above, and be sure to join the conversation with a comment below.