Regulations


By CARL J. SCHRAMM:

Trump should set a goal: fix the business climate so a million Americans a year can start companies. . . .

More people have joined the ranks of the chronically unemployed, slipping into poverty at alarming rates as their skills decay and dependency on public assistance grows. Considering population growth, America needs at least 325,000 new jobs every month to stanch the growing numbers of discouraged workers. . . Merely bringing back factories from overseas will not solve this problem. Technology has made every factory more productive. Fewer workers make more goods no matter where they’re located. At the same time, fewer U.S. businesses are being started. . . .

New firms are the country’s principal generator of new jobs. Data from the Kauffman Foundation suggest companies less than five years old create more than 80% of new jobs every year. . . .

This absence accounts for an estimated seven to 10 million jobs that, had they existed, could have provided employment for every one of the nation’s discouraged workers. Simply put, the U.S. will never reach full employment without more startups. . . .

First, increase economic growth. More businesses start when GDP expands at 4% rather than 2%. Existing businesses look for new markets, often turning to young companies for innovative ideas. . . .

Mr. Trump should also focus less on Silicon Valley, which already receives disproportionate attention from Washington. . . .

Government must also widen the scope of innovation by stepping back and letting the market find the future. By promoting trendy ideas and subsidizing politically favored companies, government dampens diversity in creative business ideas. Why start an electric-car company when the federal government already has picked the winner?

The new president must also make it possible for local banks to get back in the business of financing startups. For 200 years, community lenders were the principal source of capital for startups. The application of complex Dodd-Frank provisions has led community banks to finance fewer and fewer promising businesses—despite their unique knowledge of local markets. . . .

Mr. Trump can also reverse regulatory sprawl and cut government-imposed requirements that add to every entrepreneurs’ costs and risks. Anti-growth policies like ObamaCare and minimum-wage increases make hiring workers prohibitively expensive. Municipal regulation is particularly onerous. Cities commonly use sanitation and building codes to protect incumbent businesses. Uber cannot operate in many cities because officials have chosen to protect local taxi cartels, denying their citizens the innovative efficiencies of the shared economy.

With these policies in mind, President Trump should set another goal: that his administration will create an environment that enables one million Americans to start companies every year.

 

Here

Hiding behind the high-minded notion of a “fiduciary” standard that purports to put customers’ interests first is a regulation that is expensive and onerous, and not a favor to investors in the end.

This is an example of how government works through the private sector to screw you. You might be tempted to blame some corporation for this cost and restriction of choice, but it is simply carrying out the orders of the government, the Obama Administration in this case. Here.

The common denominator of these two stories is government interference in commerce. Customers, in this case patients and flyers, are going about their lives getting medical care and flying respectively, are encountering poor service. Government regulations are stymieing their efforts. Both health care and aviation are heavily regulated, often by elected officials and regulators, for the benefit of themselves. They are preventing the employees working in these industries from providing the best products and services they can. You see, these employees have divided loyalties and they may not even realize it. They have to comply with government regulations while also trying to serve their customers.

Libertarian Populism seems like a good idea with great potential. Considering the problems Niall Ferguson describes and the ongoing economic stagnation, its worth a shot.

Technocracy as discussed, is a top-down regime. It relies on experts. This Virginia Postrel editorial remains a good start to understanding technocracy.

The primary problem I have with Big Business is when it teams with Big Government to create a Big Ass that sits on me and smothers me. We get fewer choices for everything personal and economic, more government regulations, higher taxes, and more moralizing. One of the most pernicious effects of government regulations is that business gets blamed for these regulations, when in fact the senior employees of these firms are simply carrying out the orders from above, above being the politicians who make the rules. It is only the fault of business people to the extent they team with government/politicians to make these rules for their own benefit, either to stifle competition or to curry favor with a special interest. This is rent-seeking and it only occurs with government cooperation.

A major problem with health care is that government has been involved since the 1940’s with various regulations and programs. Conservatives and Republicans have praised the US “health care system as the greatest in the world”. They don’t know how clueless they sound. For something to be great it has to meet stringent criteria, whatever that something is. A health care system that provides abundant products and services but is too expensive, overpriced, and is available through employment or government programs like in the US is not great. It stinks. A great US industry is discretionary retail, meaning stuff we buy as consumers because we like them, not because we need them. Clothing is a necessity but after some point, 50 pairs of shoes becomes a choice. Yet, we have so many choices of shoes, shirts, pants, dresses, underwear, jeans, etc at a wide range of prices. Everybody can pretty much find what they want online or at a physical, brick-and-mortar store. Now that is great.

Speaking of health care, Dan Mitchell has a post about Dr. Michael Ciampi, a medical doctor in the state of Maine who stopped accepting all forms of health insurance. Dr. Ciampi “can offer discounts to patients struggling with their medical bills. He can make house calls. . . . providing them a service that they value, they can pay me, and we cut the insurance out as the middleman and cut out a lot of the expense. . . . I’ve been able to cut my prices in half because my overhead will be so much less,” he said. Before, Ciampi charged $160 for an office visit with an existing patient facing one or more complicated health problems. Now, he charges $75. Patients with an earache or strep throat can spend $300 at their local hospital emergency room, or promptly get an appointment at his office and pay $50.”

Now that’s bottom-up change I can embrace. Big Government have teamed with Big Medical — hospitals, insurance companies, pharma, AMA — to maintain the status quo. Health insurance is way over-priced, we should be able to buy insurance with the same kind of choices and price-points as the consumer discretionary industry I described above.

Both parties and so-called liberals and conservatives are to blame for the government dysfunction and economic stagnation.

AT&T Inc. fired back at the Justice Department, saying its $39 billion takeover of T-Mobile USA would usher in more competition, improve wireless service and lead to lower prices.

The comments, filed in federal court in Washington, D.C., Friday, are AT&T’s first formal reply to the government’s effort to block the deal. At the heart of the rebuttal is the notion that T-Mobile USA is too weak to be an effective competitor and its removal from the market wouldn’t harm consumers.

Here. Consumer protections have a funny way of morphing into protection for established firms. I’d rather take my chances with the millions of decentralized choices in the marketplace instead of few centralized decisions by government bureaucrats.

This, like other government inquisitions inquires has the potential to create more regulations. This inquiry can be picked up by nosy politicians and result in more regulations, which have a funny way of turning into a cartel for those with political connections — pull. Prices go up, quality goes down. Think the big lawsuit against tobacco companies, airlines before deregulation in the late 1970’s, and more recently, Mattel toy company’s deal.

Thanks to lack of regulation, innovation and financial engineering, ETFs have democratized trading of exotic instruments such as currencies and commodities such as gold that were previously out of reach of retail investors.

Here.

Maybe this is what Democrats meant when they said regulations create jobs.

The Sarbanes-Oxley Act of 2002 became a boon for the Big Four accounting firms as public corporations were forced to tighten compliance in the wake of the Enron and WorldCom scandals. Now, the Dodd-Frank Act is quickly becoming such a gold mine that even Wall Street bankers, never ones to undercharge, are complaining that the costs are running amok.

Here.

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