On the one hand, many consumers love companies like Uber, Lyft, and Airbnb. And somewhere around 50 million people make a living in freelance businesses that provide them with the freedom to work the hours they wish, along with the flexibility to provide extraordinary customer service while building up a loyal clientele.
On the other hand, there are politicians whose immediate reaction to any such free market start-ups is that they are part of a “gig economy” and should be shut down because “they cannot be regulated.” It’s often the case when these same politicians are asked about the “other perspective” on the issue, i.e., free market, lightly-regulated businesses, they look puzzled and reply “what other perspective?”
In a recent article, Ronald Bailey, author and Science Correspondent for Reason, summarizes the results of economic growth theory models that conclude that the cumulative effect of increasingly burdensome government regulations over the last 60 years has been to make Americans nearly $40 TRILLION dollars poorer than we would have been were it not for the growth in governmental regulations.
According to those economic studies, the per capita income in the U.S. would be almost four times higher today, at $168,000 per person, instead of the current $48,000 per person it actually is, were it not for governmental regulations that stifle economic activity.
In 1950, the federal tax regulations and internal revenue code comprised 1.4 million words. Today, according to the Tax Foundation, those regulations have grown to more than 10 million words.
In 1950, the code of federal regulations comprised approximately 10,000 pages. As more regulatory agencies have been created, and as each of those agencies have developed more and more often self-serving regulations, the code of federal regulations has grown to more than 200,000 pages. And words like “shall” and “must” now appear more than 1 million times in those regulations. The Mercatus Foundation at George Mason University is the world's premier university source for free market ideas, and Senior Research Fellow Patrick McLaughlin created a highly entertaining 2-minute video on the growth in federal regulations.
Outside of the U.S. there is a marvelous concept called “paradores.” Basically, “house restaurants” that allow food-loving entrepreneurs to invite people into their homes, for a price, to prepare and serve them dinner, fine wines, and desserts, and to engage in entertaining conversation. I can’t even imagine the number of code and regulatory violations someone would be cited for and how quickly they would be shut down if they offered that charming experience in the U.S.
As Ronald Bailey states in his article, the economy is growing ever less efficient and “the growing burden of regulations could someday turn America’s economic growth negative” and that “in the long run that will not be tolerated by society.” Let's hope he's right.
Onward and upward!