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April 17, 2014 / 17 Nisan, 5774
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Overregulation: The Problem We Can’t Outproduce

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But one day the company was hailed into federal court by the U.S. Labor Department.  The government charged the company with discrimination because it had an age qualification for its drivers. …

Next the Equal Employment Opportunity Commission attacked because Greyhound has a height requirement.  After years of experience the company’s safety people had set a minimum requirement of 5’7” for drivers.  EEOC charged this discriminated against people who weren’t 5’7”. …

EEOC demanded that Greyhound pay some $19 million to unspecified, unnamed individuals who might have been employed in the past if they hadn’t had that 5’7” height requirement. …

The ICC [Interstate Commerce Commission] has ordered the company to provide a terminal in every town of 15,000 population and up through which the buses run and keep those terminals manned and open day and night. If the ICC has its way Greyhound’s operating costs would be increased by $187 million and bus fares would have to be increased by 50%.

On 27 January 1978, Reagan talked about the disincentives inherent with regulations imposed by the Employee Retirement Income Security Act (ERISA) of 1974.

A relatively small law firm … has instituted a retirement plan involving profit and ownership sharing for its few employees. [This firm] informed [its] Congressman that the ERISA Act of 1974 having to do with pensions had resulted in making the cost of administering the law firm’s retirement plan greater than the plan’s benefits.

Reagan went on in this broadcast to recount the story of a small proprietor in Maryland, the owner of a sewing-machine repair shop.  The man, said Reagan,

…decided to hire one employee.  It seems this takes more than just running an ad and offering someone a salary.  He had write [send] for employer’s state and federal tax forms.

From the state he received a stack of forms including two notices he was required to put on the wall of his shop telling employees how to complain about unsafe or unsanitary working conditions and how to apply for unemployment compensation.  The federal government sent him a packet containing 44 forms ranging from 1 to 30 pages each.  He said, “I wouldn’t have time to do my sewing-machine work if I had to read all this.” …

The proprietor explained that he had thought he could help the unemployment situation by teaching some boy or girl a trade.  He added, “But they don’t make it easy for you at all.”

The IRS concedes his complaint is a familiar one among small businessmen but “ho-hummed” that most of them eventually get used to it.  Maybe – but just maybe a lot of them like the sewing-machine man change their minds about hiring someone.

That’s it, in a nutshell.  We get used to regulation.  It deters new hires, it puts small firms out of business, it makes everything cost more for us and reduces all our options and opportunities – but it operates by stealth, and most of us don’t even know it’s affecting us.  Who among us knows what’s in our body of federal regulations?  How many of us know that more than 81,000 pages were added to the Federal Register in 2010?

In the 1980s, the annual average was just under 53,000 pages; in the 1990s, it was over 62,000.  Why was it even bigger under Reagan than it was in the 1970s? Because of all the federal departments and agencies that had been created in the quarter-century prior to 1980.  The departments and agencies write the additions to the Federal Register.  You’re paying these folks’ salaries, benefits, and pensions –and for the costs of the regulations they write – but you probably have no idea what 99% of the employees in the civilian agencies and departments are doing all day.

Prosperity has met its match.  Regulation will kill prosperity by stealth unless we the people wake up to what’s going on.  We are wildly, insanely overregulated today, and if we don’t attack the idea of the regulatory state on those terms – on the premise that regulation itself is mostly a bad thing, and we need far less of it than we have – then we will never recover.  Regulation is already repressing and discouraging our economy, and after 40 years of a full-bore barrage from it, we have come to the end of the kick from freedom’s natural momentum and the tax-rate reductions under Reagan and Bush 43.

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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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6 Responses to “Overregulation: The Problem We Can’t Outproduce”

  1. Colleen Loughmiller says:

    Dyer (retired US Navy – intelligence) writes in Jewish Press that America cannot bear any more over regulation and has reached the end of its very productive economy! Another voice saying what Mitt is saying: Time for a change in the White House before America sputters and stops.

  2. Charlie Hall says:

    "Housing values have plunged into an abyss, with no end in sight."

    As they should have in places like Nevada and the Central Valley of California — there was never any justification for them having been so high in the first place. In my own neighborhood in NYC, housing prices have rebounded to pre-crash levels, or higher.

    And California could help its real estate market out a lot by repealing the "Welcome, Stranger!" provision of Prop 13, where a new purchaser can pay five times the real estate taxes of the house next door. No wonder why nobody wants to buy a house there!

    "Restrictive rate policies of the Interstate Commerce Commission ".

    Interstate bus service was deregulated in 1980, and the ICC itself was abolished in 1996 — both actions under Democratic Presidents. Unfortunately, we need better regulation of motorcoach services, as the last year's horrible crash in the Bronx showed. That bus should not have been on the road and 15 people are dead as a result. A lot of regulation is literally life-saving.

    "regulation itself is mostly a bad thing".

    The Torah would disagree. It mandates far more restrictions on business conduct than any regulatory system. Rabbi Dr. Aaron Levine z'tz'l wrote convincingly that following the Torah mandates would have prevented the 2008 crash.

    "Our freedom to start businesses has been seriously degraded."

    I sure don't see that — I see lots of businesses getting started here in the Bronx every year, mostly by immigrants who ignore propaganda like this.

    And some of those companies might get big: Three of the four largest companies in America — Apple, Microsoft, and Walmart — did not exist when I was born in 1957. Google, #8 on the list, is less than 15 years old.

  3. Charlie Hall says:

    And one might have thought that the author might have been able to have come up with some specific examples that are more recent than 30+ years ago, from an agency that doesn't even exit. The Clinton administration really did reduce regulation dramatically, and unfortunately in the financial sector it went too far in that. Note that Canada and Israel, which did NOT deregulate, did NOT have a banking crisis, and have robust economies today.

  4. Todd Kadish says:

    I'm surprised because I usually find articles in the Jewish Press to be models of integrity and deep, non-partisan analysis…

  5. Charlie Hall says:

    One can make a case that the US has overregulated some areas of the economy, although not the financial sector. But this doesn't make any case at all! I'm surprised the newspaper accepted it.

  6. Charlie Hall says:

    BTW regarding the JP's non-partisan nature, the JP usually endorses Democrats in local elections.

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