In response to the crisis, these iron-ore industries dramatically changed how they produced iron-ore, in the process doubling their labor productivity and pushing foreign competition out of the Great Lakes.
...I begin my analysis of productivity in Section 3 by describing the work rules that prevailed before the crisis. These placed restrictions on the tasks individuals could perform at mines, particularly repair work. First, machine operators were not permitted to perform even the simplest repair work on their machines. Second, repair staﬀ had restrictions on their work. In particular, there were a very large number of repair job classiﬁcations, close to thirty. A person with a given classiﬁcation was permitted to complete repair jobs assigned to this classiﬁcation but not others. In response to the crisis, work rules were changed to allow machine operators to conduct simple repairs and which reduced the number of repair job classes... a growth accounting exercise would show this growth (from changes in work rules) was “accounted” for by increases in total factor productivity, and in the capital-labor and materials-labor ratios.
Over the next five years, productivity doubled.
The increase in regulations is difficult to quantify, but consider that just last week the proposed TransCanada pipeline, known as Keystone XL, has had dozens of public meetings, hundreds of thousands of comments, and extensive consultations with the EPA, DOT, USDA, DOI, DOE as well as several other federal and state agencies. A recent abortion kerfuffle occurred when Virginia's Department of Health proposed regulations for abortion clinics that are consistent with the construction of new hospitals, and all the sudden liberals realized how insanely onerous these regulations are. The bottom line is that regulations are very costly, and they are growing, as Obama is pushing for more EPA regulations based on fanciful savings to health care costs.
Unfortunately, for Keynesians there's no interest in the effects of regulations on aggregate demand.