Dear Friends,
It seems to me, far from facilitating commerce, regulations are a huge drag on the economy. Not only do regulations produce friction and crush competition, they create incentives to rent seeking. The elite, who benefit from those regulations, claim free markets need to be chained. Else they are not free, nor will they function. Ignoring history, which is fine, since history is not taught in school anymore. Instead of benefiting society, regulations benefit the elite at cost to society. We pay the bills in higher costs for everything, more taxes and less freedom. There are literally thousands of well paid bureaucrats, whose job it is to write regulations, about anything they can think of. Eventually, nothing will be allowed without permission from the government. Then rent seeking will be the entire economy.
Regulations, are sold as a way to limit the negative outcomes of capitalism, help with its smooth operation and mitigate the effect of externalities. If that was the case, a case could be made for them, but that is not the case. Regulations are made by bureaucrats, who are political actors. For all the bluster about them being public servants, they see the public as their servants. Since regulations are written by nameless, faceless people, hidden in cubicles, unaccountable and unanswerable to anyone, but their political lords… they are written with an eye to benefit the politically favored at the cost to the politically disfavored. That is simply the way it is. Our feelings notwithstanding. Instead of limiting externalities then, regulation is a tool to rent seeking, for the politically favored.
Rent seeking, or crony capitalism, happens when a person or firm profits by getting around government imposed problems. The classic story is of a king, who sees commerce going down a river in his land, so he puts a chain across it and collects tolls. The tolls are rent seeking. If people get together and haul supplies around the chained river, to get around the toll, they are also rent seeking. Any and all activities that need to be done, because of the chained river, are rent seeking. Because they replace capitalism’s win win… with crony capitalism’s win lose. There is no benefit to the activity other than to get around the chain. Regulations amount to that chain. They create blockages that must be cleared by lawyers, creating lucrative make work, for the politically favored.
By that definition of rent seeking then, most lawyers, tax accountants, as well as organized crime, engage in rent seeking. Their profit provides no benefit to the people paying or to society at large. They are parasites enabled by government over reach. Even a trust attorney is a rent seeker. The laws involving creating a trust for your loved ones, is such a benefit, it must be closed to all but the most wealthy by regulations. How much extra does it cost to buy property today because of the ever increasing regulatory burden? In Vermont, there was a road that had been designed and litigated over for four decades. Finally all the permits were signed. The machinery was on site and construction was about to begin, and a lawyer filed a lawsuit, so after spending billions, the road was abandoned.
Imagine if all those billions that are now wasted paying rent seekers, because of regulations, was spent on things that would benefit mankind? The lot of man would rise like a cork released at the bottom of the Marianas Trench. Today the regulatory environment is why industry has fled the US. The most productive workers in the world were stabbed in the back by their own bureaucrats. Why would anyone build a manufacturing plant here, when the cost of the rent seeking will run into the billions? For that money somewhere else, the plant could not only be built, but run for the first five years! Regulations are in fact a swindle that is being played on us. They are friction to the economy, they create rent seeking and they prevent competition. Regulations only benefit cronies.
Sincerely,
John Pepin
