CEO of Alcoa Embraces Regulations as Good for Business, the Economy
by Katie Greenhaw, 1/18/2013
”You have the CAFE standards, Corporate Average Fuel Economy standards, which require that cars meet certain efficiency levels and that's driven all sorts of innovation... We need smart legislation as a new foundation.”
No, this isn’t a quote from someone here at the Center for Effective Government. While we agree and have made the same point ourselves, these words were spoken Jan. 15 by Klaus Kleinfeld, the CEO of Alcoa (a large aluminum company), at a Brookings panel on fostering growth through innovation.
The fact that public protections can increase productivity, spur innovation, and encourage creation of new markets is not news to us – or, apparently, to business leaders. New standards can create incentives to improve technologies and manufacturing processes. Studies have shown that benefits of recent regulations were valued at more than two times their cost. Also, a Harvard Business School economist noted that the productivity gains generated by new regulations may entirely offset the cost of complying with the new standards.
After so many instances of industry interference and assaults on regulations in recent years (take this, this, or this, for a few examples), Kleinfeld's message is particularly welcome. We encourage other executives to join in and advocate for stronger regulatory standards and safeguards that benefit average Americans and business.