The Future and the Regulated

Lawrence Summers, the enfant terrible of the economics profession, has written a thoughtful column on “Our Loss of Faith in the Future,” noting that today almost nothing seems to get done. He notes broken escalators at LaGuardia, bridges not repaired for years in Cambridge, and argues that our accounting systems fail to measure the costs of such downtime. Still a liberal, Summers suggests changes in accounting rules to measure such downtime losses. This might help a bit but many agencies already keep track of deferred maintenance and, yet, delays continue to increase.

Summers doesn’t mention the massive array of regulatory approvals needed now for almost all governmental and most private ventures. That point was raised in my recent column on the experience of a British businessman, Ernest Benn, writing in 1925 that when he began his business in 1900 he simply did things. By 1925, half his time was spent on the paperwork demanded by regulations. From building a room on one’s home to repairing bridges or sending people to Mars, the major barrier is no longer technology or financing per se but rather the thicket of regulations that slow everything. The result is akin to filling swimming pools with molasses and being surprised that speeds decline. Perhaps Summers’ next columns will attack this problem?