Pandemic Should Spur Large Scale Deregulation to Aid Recovery
Regulations are a big obstacle in fighting the coronavirus. They are also a major obstacle to economic recovery.
For no good reason, it was illegal to offer many telemedicine services until the virus forced regulators’ hand. Rules restricting crowdfunding and other financial innovations are making it more difficult for small businesses to get the capital they need to stay afloat. Other rules get in the way of homeschooling and telecommuting.
But how just big is the problem, and what are some ways to fix it?
According to the new Competitive Enterprise Institute study, “Ten Thousand Commandments,” federal regulations cost nearly $2 trillion per year, or more than $14,000 per household. The only thing in a typical family’s budget that costs more than regulation is housing — which itself is made more expensive by zoning ordinances, tariffs on steel and lumber, and arcane mortgage regulations.
If the federal regulatory state were its own country, it would have the eighth largest economy in the world, behind Italy and ahead of Brazil.
The United States, as the world’s largest economy, does an admirable job shouldering this burden during good times, just as a bigger dog can host more fleas. But the good times are gone now. Unemployment is nearing Great Depression levels. Retail spending has declined by record levels two months in a row.
When second quarter GDP numbers come out in July, they may well show the sharpest drop ever recorded, including the Great Depression.