Thursday, October 1, 2015

Why So Much Regulation?

America is strangling under policies of excess regulation. These regulations are coming from several levels of federal, state and local government.  Is there any company without a large and growing "compliance" effort.  What consumer good is produced by the compliance department.

There are many ways to kill off the free market and stifle economic progress.  Excessive regulation is one of the more subtle.  An excess of regulation guarantees the power position of folks at the top of the pile and provides jobs for lawyers and clerks, who produce no products of value that any consumer would ever willingly consume.  These regulations kill off business formation and make criminals out of the poor who have the courage to step forward with their own entreprenurial efforts.

You don't need to deal with paperwork if you are a drug dealer, but if you do anything legitimate in our poorest communities, your are forced to endure an enormous amount of paperwork to satsify bureaucrats at all levels of government.  Otherwise you may be subject to civil and criminal penalties.

Selling lemonade at a lemonade stand would take more than 12 months to get the necessary approvals from various levels of government in most American cities.  So much for the lemonade stand.

No wonder, drug trafficking has such an appeal in the poorest communities.  If all forms of entrepreneurship are illegal (because as a practical matter compliance is impossible), then why not enter drug trafficking where the profits may be worth the risks.

But regulations serves the interest of rent-seekers.  A rent-seeker is someone who has no intention of providing a product or service that anyone would voluntarily purchase.  Instead a rent-seeker seeks to make their money by latching onto the regulatory world and punishing those who are trying to provide a product or service that folks would actually like to buy.  Rent-seeing activities are like leeches.  They suck out the blood of a vigorous economy and provide nothing in return.

America has become the land of the regulator.  In my state of Virginia, any home built with a single room that doesn't have electrical outlets cannot get an "occupancy" permit.  What conceivable reason can there be for this regulation?  If the homeowner wants to have a room without electrical outlets to protect small children, he/she cannot do it.  How did that become an issue to be determined by the state?  A family is forbidden to protect their children thanks to regulation.  There are so many examples where regulations make folks less safe and reduce their standard of living.

Who wins?  Lawyers and folks at the top of the pyramid.  These regulations don't bother them.  In some cases, Senators like Elizabeth Warren, exempt themselves from regulations that terrorize the average citizen.  After all, Elizabeth Warren, perched on top of the stage coach, need not bother to play by the same rules that she foists on every other American.

So, regulatory overkill continues to punish those at the bottom of the economic pile with little or no benefit to anyone but the bureaucrats (and their ever-present media fan club).

1 comment:

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