I was pleased to read a recent post by Mark Perry, “Federal regulations have lowered real GDP growth by 2% per year since 1949 and made America 72% poorer.” It wasn’t the message that pleased me; it was the corroboration of what I have been saying for several years.
Regulation is one of the many counterproductive activities that is financed by government spending. The main economic effect of government spending, aside from regulation, is the deadweight loss it imposes on the economy; that is, it moves resources from productive uses to less productive, unproductive, and counterproductive ones. And then there is taxation (progressive and otherwise), which penalizes success and deters growth-producing investment.
All in all, the price of government is extremely high. But most voters are unaware of the price, and so they continue to elect and support the very “free lunch” politicians who are, in fact, robbing them blind.
Consider, for example, these posts by James Pethokoukis:
“Is the Era of Fast U.S. Economic Growth Coming to an End?” AEIdeas, July 13, 2013
“My Counter: Why U.S. Economic Growth Doesn’t Have to Come to an End,” AEIdeas, August 23, 2012
Pethokoukis’s thesis, with which I agree, is that government — not lack of opportunity — is the main obstacle to the resumption of a high rate of growth.
For much more, see:
The Price of Government
The Price of Government Redux
Ricardian Equivalence Reconsidered
The Real Burden of Government
The Rahn Curve at Work
The “Forthcoming Financial Collapse”
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth
The Deficit Commission’s Deficit of Understanding
The Bowles-Simpson Report
The Bowles-Simpson Band-Aid
The Stagnation Thesis
America’s Financial Crisis Is Now
Estimating the Rahn Curve: A Sequel
Lay My (Regulatory) Burden Down
More Evidence for the Rahn Curve