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Every single government regulation distorts human activity in the marketplace. This is true whether it’s a price support, prohibition, limitation, or minimum requirement. Consider a regulation setting the price of milk. If milk were priced at $100 per gallon, we would use a lot less of it. No matter the price, people make personal and business decisions about how much they value milk and how much they are willing to invest in the consumption or manufacture of milk. Imagine the impact of thousands of regulations.
In a recent Mises Institute article, Thomas DiLorenzo, professor of economics at Loyola College, says government regulation has transformed American corporations into “sluggish bureaucratic behemoths.” American businesses devote a significant amount of their resources to bureaucracy instead of profits. In the past 20 years, federal regulatory budgets have tripled and 10,000 regulators have been added to the public payroll.
Professor DiLorenzo says, “A blizzard of government regulation has transferred much of the decision-making authority of private enterprise to government bureaucrats. The courts and regulatory agencies have eviscerated…private property, freedom of contract, and freedom of association.”
Regulation, like kudzu, slowly strangles our ability to react to market forces by creating arbitrary barriers and incentives that constantly change. Ronald Coase from the University of Chicago Law School says, “There have been more serious studies of government regulation of industry in the last fifteen years or so, than in the whole preceding period. The main lesson to be drawn from these studies is clear. They all suggest that the regulation is either ineffective or that when it has a noticeable impact, the effect is so bad, that consumers obtain a worse product, a higher-priced product, or both as a result of the regulation.”
Business schools now offer more classes about business law and social responsibility, than free market capitalism. More and more top business executives have backgrounds in law, public relations, finance, or tax, as opposed to engineering or marketing. Navigating around political and regulatory potholes has become a valuable job skill.
With so much regulatory kudzu, you’d think businesses would be up in arms. Wrong. According to the Capital Research Center in Washington, corporate philanthropy supports socialist anti-market organizations 3:1 over free-market organizations. An economic miracle would occur if we abolished the Federal Trade Commission, Environmental Protection Agency, Occupational Safety and Health Act, Securities and Exchange Commission, Department of Energy, and Department of Labor.
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