Do not think about, write about or deal with human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.
There are three kinds of government employees. The first is the necessary, a much smaller group than many believe. The second is the irrelevant, probably the biggest class. The third, illustrated here, is the group that does things which impede real economic activity.
I’m upset that the presidential candidates, all of them, rarely mention a huge problem: the quiet cancer that kills opportunity — regulation. The accumulated burden of it is the reason that America is stuck in the slowest economic recovery since the Depression.
I understand why candidates don’t talk about it: Regulation is boring. But it’s important.
The founders of this republic were willing to die rather than be subject to other people’s rules. Today we are so accustomed to bureaucracy that we’ve forgotten what it means to be free.
Taxation without representation was bad, with representation, it’s worse.
We now have a million rules — many so complex that even legal specialists can’t understand them. Yet bureaucrats keep writing more. And 22 million people work for government!
Okay, that wasn’t fair. Many of those 22 million deliver mail, build roads and do things we consider useful. But at least a million are bureaucrats. And if you are a rule-maker and you don’t create new rules, you think you’re not doing your job.
On his "Grumpy Economist" blog, the Hoover Institution’s John Cochrane points out that most of these rule-makers were never even elected, and legislatures rarely vote on their new rules. Yet "Regulators can ruin your life, and your business, very quickly, and you have very little recourse."
Regulators have vast power to oppress.
Their power not only hurts the economy, it threatens our political freedom, says Cochran. "What banker dares to speak out against the Fed? … What hospital or health insurer dares to speak out against HHS or ObamaCare? … What real estate developer needing zoning approval dares to speak out against the local zoning board? The agencies demand political support for themselves first of all."
Speaking up will bring unwanted attention to your project, extra delays, maybe retaliation. It’s safer to keep your mouth shut. We learn to be passive and put up with more layers of red tape.
Fortunately, a few Americans resist. At Boston’s Children’s Hospital, head cardiologist Dr. Robert Gross dismissed Dr. Helen Taussig’s new idea for a surgical cure for "blue-baby syndrome." He wanted to do things by the book. So she took the technique to Johns Hopkins Hospital instead. It worked. You don’t hear much about blue-baby syndrome anymore. The embarrassed Gross went on to tell the story many times to teach medical students to listen to new ideas. Breaking the rules saved lives.
But that happened years ago. Few doctors break the rules today. The consequences are too severe.
American entrepreneurs took advantage of a "permissionless economy" to create Google, Facebook, Amazon, etc., but they could accomplish that only because Washington’s bureaucrats didn’t know enough about what they were doing to slow them down.
Now regulators have their claws in every cranny of the Internet. Innovation will be much more difficult.
Today’s regulations are often vague. A typical edict: "The firm shall not engage in abusive practices." That sounds reasonable, but what is "abusive"? The regulator decides. Compliance is your problem.
If you have the misfortune to be noticed by the bureaucracy, or maybe a business rival complains about you, your idea dies and you go broke paying lawyers.
European regulators have adopted something even worse, called "the Precautionary Principle." It states that you may not sell something until it has been "proven safe." That too sounds reasonable, unless you realize that it also means: "Don’t try anything for the first time."
Since we don’t know all the rules, we’re never quite sure if we’re breaking any. Better to keep your head down.
And sometimes the rule-makers really are out to get you. Nixon used the IRS against political enemies. So did Obama IRS appointee Lois Lerner.
It’s time for Americans to fight back. As Gen. Douglas MacArthur said, "You are remembered by the rules you break."
America became the most innovative and prosperous nation in history because many Americans were adventurous, individualistic people willing to take big risks to discover things that might make life better.
Every day, bureaucrats do more to kill those opportunities. We’ll never know what good things we might have today had some bureaucrat not said "no."
Presidential candidates ought to scream about that.
The only way to stop the interference from regulators is to have fewer of them. Reduce government.
Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Days of Songs and Mirrors: A Jacobite in the ‘45.”
Cui Bono–Cherchez les Contingencies