Republicans frequently talk about reducing government regulation. To many, this is a nebulous topic. It is also easy for the left to demagogue. But over the last 40-50 years, regulation at all levels of government — from filling in the various State & local surveys on employment or insurance or whatever to responding to the latest government bureaucrats phone call — is like putting sand into the gears of an engine. After the first grain is put in, the engine still seems to be running just as before. Even after a handful of sand, the engine seems to be working well enough. However, eventually the engine slows down, and given a little more time, it stops.
Evidence of a slowing engine?
This next chart is from Barry Ritholtz of The Big Picture. The data is from the Fed, but it is a graph that I have never seen. It is a graph of the last three recessions, with employment indexed at 100, and it shows what employment did from the beginning of the recession, and then from the end of the recession. I “pinched” the graph from an email from John Maudlin’s weekly email message (You can subscribe at www.johnmaudlin.com). Furthermore, from the beginning of the last recession in 2001 until today, we have had negative job growth (i.e. there are fewer total jobs today than in 2001), and this despite 30,000,000 more people in the country.
As you can see, as there is more sand in the gears, employment bounces back more and more meekly. Combine with stagnant earnings, and the overall jobs/economic picture gets uglier and uglier.
Having government attempt to overcome the sand in the gears by trying to pick winners and losers won’t work (The Soviets tried this for 70 years). So, the Delaware strategic fund money, the “stimulus” bill, the various bailouts, have all failed to generate true economic renewal. Why? Because they are each just a different type of sand in the gears. They are taking productive assets from entrepreneurs and risk-takers in the form of taxes and handing them to unproductive businesses.
Eventually, the engine just…. stops. We’re watching it happen.