Regulation and growth


As long as we're on the topic of regulation and growth, check out this post I recently wrote for Bloomberg View:
I’m very sympathetic to the idea that regulation holds back growth. It’s easy to look around and find examples of regulations that protect incumbent businesses at the expense of the consumer -- for example, the laws that forbid car companies from selling directly to consumers, creating a vast industry of middlemen. You can also find clear examples of careless bureaucratic overreach and inertia, like the total ban on sonic booms over the U.S. and its territorial water (as opposed to noise limits). These inefficient constraints on perfectly healthy economic activity must reduce the size of our economy by some amount, acting like sand in the gears of productive activity. 
The question is how much...If regulation is less harmful than the free-marketers would have us believe, we risk concentrating our attention and effort on a red herring... 
[F]ocusing too much on deregulation might actually hurt our economy. Many government rules, such as prohibitions on pollution, tainted meat, false advertising or abusive labor practices, are things that the public would probably like to keep in place. And reckless deregulation, like the loosening of restrictions on the financial industry in the period before the 2008 credit crisis, can hurt economic growth in ways not captured by most economic models. Although burdensome regulation is certainly a worry, a sensible approach would be to proceed cautiously, focusing on the most obviously useless and harmful regulations first (this is the approach championed by my Bloomberg View colleague Cass Sunstein). We don’t necessarily want to use a flamethrower just to cut a bit of red tape.

Also, on Twitter I wrote a "tweetstorm" (series of threaded tweets) about the regulation debate. Here are the tweets:















The regulation issue is really a very multifaceted, complex, and important series of different issue. It's an important area of policy debate, but can't be boiled down to one simple graph - and shouldn't be boiled down to one simple slogan.

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