Libertarian Economist Discovers That Regulation Doesn't Impede Economic Growth
Prominent libertarian and George Mason economist Alex Tabarrok may have finally buried the central tenant of conservative and libertarian economic policy that government regulation slows economic growth and thus harms the economy.
Rachel Cohen, writing in the Washington Monthly notes that Tabarrok's research "undermines one of the most deeply held convictions of the American right, one that unites libertarians like Tabarrok with mainstream conservatives: that regulations inevitably impose “deadweight loss” on the economy and are therefore an enemy of economic growth. This idea has been a mainstay of Republican politics since the Reagan era, and the Trump administration has taken to deregulation with missionary zeal. In fact, it’s probably the policy objective that the administration has pursued most successfully—rolling back the Clean Power Plan, repealing net neutrality, freezing the fiduciary rule, and on and on."
The premise that regulations come at the expense of economic activity—that we must always make trade-offs between safety and jobs—is so pervasive that even the American left tends to accept it, defending regulations as necessary evils to promote other social goods. Yet there has never been strong evidence that these trade-offs actually exist. To the contrary, federal regulations have often driven growth and innovation, whether it’s fuel standards spurring new electric cars and solar energy, or the Dodd-Frank law causing an entirely new industry—financial technology—to appear out of whole cloth.
So, has the government made policy mistakes regarding regulation over the last 30 years? Perhaps the answer is deregulation and allowing monopolies to form in important industries. Its a fascinating article. Read it here.