The real state of government regulation
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The real state of government regulation

Right wingers like to blame our lack of economic growth on excessive government regulations. While I would agree that there are likely plenty of regulations on the books that could be repealed without harming consumers, the truth is that we have plenty of big problems with industries that are under-regulated and cases where regulations are not enforced. All too often, this occurs when the people who suffer are poor. Here are a couple of examples.

In the first case, the LA Times published a three part series on Buy Here Pay Here car dealerships, which sell cars under a model similar to rent to own furniture stores. This industry is mostly unregulated, and involves loaning money to desperate car buyers at usurious rates. Many customers default on their loans and the cars are repossessed and sold to the next person doc one along.

In the second case, NPR and the Center for Public Integrity produced a multi-part series on how clean air regulations are not preventing industrial plants from discharging massive amounts of air pollution and damaging people’s health, mostly due to lax enforcement. Activists in Tonawanda, New York fought for thirty years to curb pollution from a nearby plant. The plant, in the meantime, systematically deceived regulators and continued its polluting ways. For all the talk of excess regulation, the plant remains open and is still producing pollution, albeit at a lower level.

For all the talk I hear about excessive regulation, what I read a lot of are stores about insufficient regulation. It’s also worth pointing out this Treasury Department blog post that examines what an economy that’s stagnating due to regulatory uncertainty might look like, and argues that the US economy is not showing those symptoms.

On a related topic, I found Tyler Cowen’s theory that regulatory enforcement depends more on the number of regulators rather than the number of regulations to have interesting implications. There’s an argument to be made that to implement an effective regulatory regime, it’s just as important to get rid of useless old regulations as it is to implement new ones.

6 thoughts on “The real state of government regulation

  1. While I would agree that there are likely plenty of regulations on the books that could be repealed without harming consumers, the truth is that we have plenty of big problems with industries that are under-regulated and cases where regulations are not enforced.

    Of course. I never understand how people say “too much regulation” or “not enough regulation” as if regulation was this mysterious single entity. I always wonder “regulation of what?” It is not only possible, but in fact it’s effectively impossible for it to be otherwise, that there will be too much regulation in some areas and not enough regulation in others.

    One of the wonders of people is that this should be so blindingly obvious, yet entire ideologies rest on the missing of this simple fact.

  2. Likewise for the ‘taxes are too damn high’ crowd. Which taxes? Where are we not getting sufficient value from our taxes? Etc. Drives me crazy when I hear that one.

  3. Here is a great example of useless government regulation putting folks out of work and hampering economic growth. Not a huge casualty (only $100k/year) but how many other examples of these are out there? Not to mention those that bought his product will now have to find something else which by all accounts is far more expensive and lasts far less.

    http://www.mercurynews.com/saratoga/ci_19385037

    Heck, my employer is working on SOX compliance and I can tell you right now it’s a job/productivity killer. We’ve wasted so much time/money on these audits when we could be serving our customers better.

    There is definitely a place for government regulations but to think we aren’t overregulated is absurd. Heck, just check out the FDA regulations for frozen pizza if you want a good laugh. The amount of each ingredient that can put on a pizza is highly regulated.

  4. I guess what I’d say is that we’re poorly regulated rather than overly regulated. There are all sorts of ways that people are being defrauded or harmed that are perfectly legal and probably shouldn’t be, and all sorts of regulations that are outdated or were put in place at the behest of rent-seeking interests.

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