A lot of times the
opponents of regulatory reform appear to hold the view that the
regulatory process involves climbing the top of Mount Rushmore where
they fast and pray until Teddy Roosevelt, Woodrow Wilson, and FDR
write the new code on a stone tablet that is delivered by a bald
eagle and can never be altered lest the nation faces plagues and
famines of epic proportions and we should never question them.
While this is a bit
of a joke the fact remains that the opponents of regulatory reform-
argue there is no problem with how regulations are written, claim
line of the code will pass a cost risk analysis and seem to believe
business might lose money if they hurt their customers.
First the regulatory
agencies that enforce the regulations and benefit from a larger code
are the same people writing the code. The basic process goes as
following they propose a regulation, have a hearing where different
people comment- some times people with in the industry the regulation
will affect will come out in favor as they believe it will eliminate
competitors then finally the agency implement the regulation. The
fact this happens was shown quite clearly when Mitt Romany said we
need regulations to prevent people from opening banks in their
garage.
As regulations are
the law of the land this violates the constitution which requires
that congress make the laws and for the president to sign or veto
them and creates a conflict of interest as the more an agency
regulates the easier it will be for them to request more money from
congress. Right now the first step to fixing this problem is the
REINS act which would require congress to vote on a regulation if it
is expected to cost more than $100 million.
There might be good
arguments for some regulations- but just because those exist does not
mean every regulation falls into those categories so we need to
remove some regulations.
so we have the cost
of existing regulation- and the ways they hurt the average consumer.
The first way is by
making it harder to enter a field- this could be done by limiting
licenses, fees, or by limiting how a company could distribute their
product.
A few examples of
the last are the fact there are laws in some states that prevent car
companies from owning their own dealership, next we have regulations
that prevent a new cable company from opening up in your town.
There are also some
regulations in 36 states called Certificate of needs laws which
basically state that in order to open a new clinic or hospital you
would need to get the permission of existing health care facilities.
The argument given for the CON laws is that limiting the supply of
health care options will some how decrease prices by eliminating
duplication. While economics 101 states that restricting supply of
anything leads to higher prices.
No matter what level
of government has imposed these regulations- you need to ask what is
the real problem if someone tried to run a particular industry from
their house? If they risk blowing up the neighborhood there might be
some logic be hind that. If the business is just loud and bothers the
neighbors that is fine- but if your argument for a regulation banning
someone from selling home made cookies is the possibilities of food
poisoning- that is a little harder to accept because in improperly
sanitized industrial kitchen will result in you being as sick as an
improperly cleaned home kitchen.
Bernie Madoff ran
his scam from a push office
and there are people
running small banks and savings and loans in Europe from offices that
barely above their garage.
like his
documentary the bank of Dave show or RT report show.
https://www.youtube.com/watch?v=0fIGZOe-Oa0
Next there are
regulations which limit growth- the regulations with small business
exemptions will often fall into this category. People argue the
exemptions need to exist because specific regulation is expensive and
only a company with 50 employees would have the money to afford it.
This creates the situation where a company with 49 employees will not
hire employ number 50- unless they know they can cover the cost which
the big business in a field won’t have to worry about small fast
growing innovative companies from challenging them. So if you
honestly think a regulation is to expensive for a small company- then
you need to explain why it isn't to expensive for the consumers
and if you honestly think a company that grosses $1 billion dollars
should not do some thing then why is it fine for 1000 companies that
gross $1 million to do the same thing?
Then there are
regulations designed to counter the negative effects of older
regulations which we see with net neutrality- supporters point to the
regional cable monopolies to say we need it instead of going after
the regulations which created the monopolies in the first place.
The benefits of
deregulation might even show up on one of the favorite memes in
support of raising the minimum wage- the one that claims Australia has
a minimum wage of $14 US and the unemployment rate is about the same
as ours.
In the 1980’s and
1990’s the Australians and New Zealanders did tax and regulatory
reform-and the country did not fall apart so bad that Mad Max is a
documentary and they aren't dropping dead left and right due to air and water pollution down under.
The goal of regulatory reform should be sliming the code down so the rules are the same for every company in a field and to eliminate the parts of the code where the costs out weigh the benefits.
So if $14 in
Australia bought roughly what it does in the US and the unemployment
rate uses the same calculation methods that the US does- then you
should consider that this is because the tax and regulatory reform
freed up enough cash to enable companies to pay $14- and as I stated
before if you can make a profit starting people at $15 and charging
today’s prices then the same process could bring down prices and
given the choice I would rather see prices drop and wages stay the
same over seeing wages increase and prices staying the same as the
first will help savings go farther.
Sadly there a lot of
politicians and economists who would rather have the higher wages
which leads to the next topic monetary reforms.
