Saturday, March 3, 2012

Then why isn't the economy booming? Tool.

Katrina vanden Heuvel--editor of The Nation--weighs in on the issue of the government's role in the economy and society at large with her latest op-ed, Challenging the Self-Made Myth. Stressing the arguments of a soon-to-be-released new book, The Self-Made Myth: And the Truth about How Government Helps Individuals and Businesses Succeed, Ms, vanden Heuvel says:
Over the last thirty years, anti-government arguments by conservative pundits and politicians have gained prominence, and the rhetoric this 2012 campaign season seems more toxic than ever. Republicans are relentlessly pushing the notion that lower taxes, less regulation and small government (except for defense) will magically end the recession and create a better country, and “job creators” will lift all boats. 
It’s BS.
The obvious questions: if bigger government, more government spending, and the like are such good things, why does the economy continue to ebb and flow, why is there still a business cycle, and why isn't growth through the roof right now, given the stimulus spending, health-care legislation, and increased regulatory powers we've seen under the current administration?

Any answer there, Ms. vanden Heuval? No, of course not. Because--and I can't say this any other way--you don't have a clue, don't know what you're talking about. The issues of the ineffectiveness of the Stimulus and of the costs to business of the healthcare legislation have been addressed ad nauseam, so let's take a quick look at the behemoth of government interference: regulation. The following chart shows just how bad things have gotten:


The number of rules and regulations impacting the citizenry--impacting business and the economy--continue to grow, year after year. And Ms. vanden Heuval would have us believe that this is a good thing as a matter of course, that these regulations are either positive or inconsequential factors, when it comes to economic growth:
A central thesis of the book is that the greater an individual’s success, the greater his or her dependence on public infrastructure, public investment in research and innovation, and regulations and fair rules—all of which business leaders in the book cite as essential to their own accomplishments.
Really, her biggest error lies in her inability to separate--to breakdown--the situation into specifics. Because the idea that there are far too many regulations and rules is not the same thing as the idea that there should be no regulations or rules.

In the realm of medical care, it has been posited--via research--that the typical doctor's office spends far too much time on paperwork, nearly four times as much as would be spent in Canada, for instance. And the new Obamacare legislation will only increase the load, as doctors struggle to follow new rules.

This is onerous regulation, no question about it. None of it is "vital" to a doctor's success and--to make matters worse--it serves to deprive patients of better care by limiting how much time doctors and nurses can devote to patient care. To suppose this is all a good thing, that it somehow leads to economic growth is beyond laughable. Yet, that is exactly the case Ms. vanden Heuval is trying to make.

And things are not much different in many other industries, where adherence to government regulation requires not only time and money, but often specialized employees who do nothing more than oversee compliance. Again, this is not a recipe for growth, but one for stagnation.

The idea that trimming the fat from the government's many regulatory bodies will lead "magically" to growth is just downright obnoxious. There's nothing magical about it, it's just common sense and easily verifiable in actual practice. That's not to say--again--that no rules or regulations are needed. Some certainly are. But the ones designed to achieve some sort of goal by government know-it-alls are--almost always--useless and costly. And it's these that need to go, if economic growth is what we're after.

Then again, maybe Ms. vanden Heuval doesn't really want economic growth...

Regardless, the chief point remains: if all of this stuff was of such a benefit, why doesn't the economy always grow? In fact, if this were the case, logically the more onerous regulations were, the more economic growth there would be. Right? They're a funny people, these liberals and progressives. Aren't they?

Cheers, all.

2 comments:

  1. Funny? Yes.
    I am, however, not laughing.

    "We are the chorus, and we agree, we agree, we agree."

    Remember where that is from, by any chance?

    ReplyDelete
  2. Bored of the Rings, if I remember correctly... ;)

    ReplyDelete