Thursday, February 2, 2017

Deregulation -- At Last!

No matter what your politics, at one time or another, everyone has come up against the regulatory state.  Some regulations, of course, are essential for any society.  The question is: how much regulation do you need?  Why?  Because almost every type of regulation reduces individual freedom and very likely reduces economic output as well.  There are costs.

So, what are the benefits?  The European Union forbids anyone in the EU under the age of 8 to blow up a balloon.  What are the benefits of this regulation?

So often, regulations are made by folks that have no experience in the real world, but are regulation careerists.  Their incentives are such that they believe more regulations are always better than fewer regulations.  Costs are often irrelevant to the regulators, because they don't bear any of the costs.  At least, that's what they seem to think.

Absent regulations, the American per capita income might be $ 200,000 per year.  Who knows?  That might also mean polluted air and water and mayhem in many facets of ordinary life. Where is the tradeoff?

For the past several decades, the view of the regulators has been that the economic costs of the regulations are irrelevant.  In fact, some -- Elizabeth Warren comes to mind -- seem to feel that regulation should actually be designed to be punitive, striking at the "bad guys."  Warren seems to think lowered income for the average American is a small price to pay if she can punish folks she doesn't like.

So, regulation has come to be used as a political weapon to punish your enemies.  Dodd-Frank is the poster child for this regulatory regime.  Dodd-Frank crushed the commercial banking system with regulations and the Obama's attorney general imposed arbitrary fines on the banking system and transferred many of the cash proceeds to political allies.  The result: the slowest economic recovery in American history.  Who paid?  You paid!  And, the average American suffered.  But Senator Dodd and Congressman Frank (and Elizabeth Warren) prospered.

Now, under Trump, we have a chance to roll back regulations that serve no other purpose than to punish one's political enemies.  Three cheers!

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