Viewpoint: Be wary of ever-increasing regulation

Talk about it

Now that the political left is firmly in control of the federal government — and verging on control of the state government — we are being told that a strong dose of government regulation is needed if we are to cure our economic and social ills.

We are told, for example, that had our financial markets been more stringently regulated, we could have avoided the current recessionary meltdown.

Or we are told that expanded state and/or federal regulation can reduce the cost of medical care, provide greater access to the health care system and, more expansively, improve the health of our population.

We must then ask ourselves whether increased regulation, regulation of economic activity especially, is either desirable or beneficial.

Of course, no one would seriously argue that all government regulation is bad.

Many laws and regulations are demonstrably necessary (e.g. traffic laws). Others are demonstrably desirable. But others are arguably, if not demonstrably, unnecessary or worse, harmful.

Moreover, even clearly beneficial regulations can be perverted over time, ultimately serving ends other than those originally intended.

This suggests, obviously, that we should be wary of politicians, interest groups and bureaucrats who tell us that our economic welfare, even our general well being, is best served by a highly regulated society/economy, a society that, it is likely, would come to resemble the Social Democratic societies of Western Europe.

But , more specifically, why should we be wary?

First, because regulation typically is an inefficient, cumbersome and costly way of achieving desired outcomes, economic outcomes in particular.

Because a large, dynamic society like ours is so complex, regulators are frequently forced to adjust, expand or amend the rules to meet the demands/needs of different industries, businesses, institutions, situations or even individuals.

Thus, in an attempt to be fair and/or realistic, regulators perforce churn out more voluminous, more complicated regulations which, paradoxically, become more and more difficult to interpret and enforce.

Consider the federal tax code with its numerous loopholes and its sheer volume, diverting hours of valuable time and talent to paper shuffling and worse, providing opportunities for tax evaders, enhancing the power of unelected bureaucrats and confusing (intimidating?) many “average” taxpayers.

Second, because regulation tends to slow, discourage or even stifle innovation and risk taking: regulatory laws and rules — besides being inefficient — are rigid, emphasizing conformity and uniformity.

Regulations are like gyroscopes, keeping the regulatory apparatus on a steady course but, at the same time, making it difficult to change direction.

Regulators typically do not like “surprises,” and, with exceptions, are often slow to recognize or react to technological or other changes in their external environment.

Or, as noted above, react to changes by piling rules on rules. Such views, however, are rejected by some who argue, inter alia, that we can compensate for the stultifying effects of regulation by providing tax or other incentives designed to encourage entrepreneurs and innovators.

Unfortunately, however, such policies tend to put the government in the position of picking ‘winners” and “losers,” encouraging government-private sector “partnerships” best described as “crony capitalism.”

Third, because regulators, although typically thought to be tough, unyielding policemen, may be co-opted, turning an adversarial relationship into a cozy, collegial relationship. This happens for any of several reasons.

Regulators may, for example, use their position as a means to take advantage of career-enhancing opportunities provided by the regulatee.

Or regulators may be overwhelmed by highly technical and/or politically powerful regulated entities.

Or regulators may be compromised by favors (bribes?) proffered by the regulatee.

Or because of a shared commitment to some ideological or political agenda, the regulatory relationship may become collaborative, not adverserial.

All this having been said, I am sure that some readers will object, thinking that my views are simplistic or worse.

More specifically, they may think that I have misrepresented and exaggerated the dangers of government’s intrusion into the private sector.

Although I concede that I have oversimplified a complex issue — governmental regulation is, indeed, an issue which cannot be treated exhaustively in a few hundred words — I think that I have, nonetheless, given good reasons for resisting the siren song of those who tout sweeping regulation(perhaps accompanied by “limited” nationalization) as an economic and social panacea.

St. Martin is a resident of Woodbury.

Tags: opinion, martin, regulation, viewpoint, woodbury, government