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September 28, 2016 / 25 Elul, 5776
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Overregulation: The Problem We Can’t Outproduce


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American dollars.

American dollars.
Photo Credit: Serge Attal / Flash 90



http://hotair.com/greenroom/archives/2012/08/13/overregulation-the-problem-we-cant-outproduce-with-some-words-from-reagan/

In the period between 1950 and about 2005, Americans continuously sustained a hefty downpayment on our federal, state, and local governments’ spiraling debt, by upping our productivity, our economic output, and the scope of opportunity for everyone.

Overregulation and implied state ownership of what we produce has been a problem for us since Woodrow Wilson’s terms in office.  But until the last half-decade, the American people shouldered and outproduced greater and greater burdens of regulation and/or taxation, costly credit and inflation, and victim politics and litigation.  Operating in the conditions of relative economic and political freedom – more than most of the world, if not more than in our own past – the American people were a productivity engine unmatched in the history of man.  Spend more?  We’ll produce more.  Tax receipts will skyrocket.  If our governments can’t pay their bills, it won’t be because the American people aren’t producing.

The burdens have now caught up with us, however.  Tax rates, while they have gone up and down in the last 30 years, have hovered around a mean established in the 1980s.  Top rates have not skyrocketed as they did at some points in America’s past.   Yet the American productivity engine is faltering.  Unemployment remains high at over 8%, and America’s labor force participation rate has dropped to its lowest level since 1981 (which was in the trough of a major recession).

Credit is harder to get, but people don’t want that much of it anyway.  Consumers aren’t spending.  Housing values have plunged into an abyss, with no end in sight.  (A home virtually identical to mine was listed last week for about half what I paid for mine in December 2002.  Six months ago it would have been listed at about 65% of my original purchase price.)  In the current heat wave in the Southwest, California power companies that announced “flex alerts,” during which customers are asked to use less power, have been surprised that usage was well below what they thought it would be.  People can’t afford to pay for air conditioning as they once would have – and many homes are still standing empty after three, four, or five years.  Similar low demand has hit the US Northeast.  (This means, incidentally, that the power companies aren’t getting the revenue they were expecting.  Down the road, that isn’t going to be a good thing.)

It’s easy to say that people don’t want to work.  It’s also cheap and easy to talk about “fatcat” business owners who don’t want to hire people, or who are just being rich while the rest of us are miserable.

But most new jobs – about 70% — have always been created by small businesses in America, and those small businesses are being steamrolled by regulation.  Regulation is having a serious impact even on big business, and all its costs are passed on to the customer.  “Business” doesn’t pay for anything; you pay for it all.  If you don’t, the business isn’t viable, and you don’t have those big, clean grocery stores with thousands of products, or gas stations charging competitive prices on every corner.  Either you pay all the costs of regulation, or the product isn’t available.

One particular American president was closely attuned to the costs of regulation, and you won’t be surprised that it was Ronald Reagan.  Several times in the late 1970s, he spoke about this problem in his radio spots.  The points he made then resonate as if they were made at 10:00 this morning.

One 2 March 1977, Reagan talked about “Added Inflation” caused by government regulation*:

To inflation and taxes let us add another cost to all of us which is the indirect inflation brought about by excessive regulation and government statutes.

He went on:

… in 1974 the Federal Register needed 45,422 pages to list all the new U.S. Government decrees and regulations that year…

Those regulations add to the cost of doing business in a variety of fields and many ways which means they add to the cost of the things we buy.  For example Congressman Bill Armstrong of Colorado estimates, “Restrictive rate policies of the Interstate Commerce Commission add $5 billion per year in excess freight rates passed on to the consumer.”

Reagan cited other specific costs of regulation in this radio spot.  On 8 November 1977, he did a spot on the travails of the Greyhound bus company, which had had some very unfortunate encounters with federal regulators:

Greyhound happens to have the best safety record in the transportation business. …

J. E. Dyer

About the Author: J.E. Dyer is a retired US Naval intelligence officer who served around the world, afloat and ashore, from 1983 to 2004.


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