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MSCI's Position on Regulatory Reform

Regulations are necessary to ensure consumer and worker well-being, but overregulation imposes significant costs on Americans without improving their daily lives or enhancing their safety or prosperity. Today, regulatory bodies have as much, or even more, influence over our lives than Congress. In 2014, Congress passed just 224 laws while executive branch agencies issued 3,554 regulations. As a result, American consumers and businesses spend about $2 trillion each year, a sum equal to 12 percent of the total U.S. economy, to comply with federal regulations. In 2012, these rules cost businesses approximately $10,000 per employee. What’s more, regulations disproportionately affect smaller firms, costing businesses with less than 50 employees $11,724 per employee and larger firms $9,083 per employee. Finally, overregulation harms consumers by adding to the cost of goods. The average household’s regulatory bill is approximately $15,000 each year, about one quarter of its income.

The direct and indirect costs of overregulation and the lack of transparency in the regulatory process reduce our industry’s ability to compete and prosper in the global marketplace. Regulatory uncertainty creates a risky and costly business climate, leading to high compliance costs, delayed research and development and the costs resulting from inefficient planning. Unnecessary regulations impose higher costs on the manufacturing industry and its customers. These costs stifle business investment and erode consumer demand, both of which inhibit economic growth. Reforming our regulatory system would encourage businesses to take additional risks, create more jobs and allow consumers to save or spend more of their hard-earned money.

Policymakers must –

  • Make our regulatory framework more conducive to job and economic growth, ensuring that regulations solve problems, rather than benefit special interest groups.
  • Require a nonpartisan, in-depth cost-benefit analysis for every proposed regulation.
  • Secure congressional approval for any regulation with costs totaling more than $100 million.
  • Put in place safeguards that prevent legislating by the regulatory agencies.


Regulatory Reform Issues MSCI is Acting On

As part of the 2010 Dodd-Frank Wall Street reform bill, Congress required the Securities and Exchange Commission (SEC) to write a regulation requiring certain manufacturers to report to the SEC on their use of conflict minerals (gold, tin, tantalum and tungsten). The SEC’s regulation went into effect in 2014 and there is mounting evidence this regulation is costly, if not impossible, to comply with. In addition, it has not only failed to achieve its stated purpose—to reduce violence in the Democratic Republic of the Congo (DRC)—but also has actually harmed DRC residents.

Relevant Links
SEC “Conflict Minerals” Rule Articles from Edge and Connecting the Dots
Regulatory Reform Articles from Edge and Connecting the Dots