Obama Testifies That Regulations Kill the Economy
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Last Friday the Obama administration shelved an Environmental Protection Agency regulation that called for stricter smog allowances. The President decided to temporarily delay the new regulation because of the affect it would have on the economic recovery (what recovery?).
In other words, Obama is admitting that government regulations do impede economic activity. Some may reason that regulations are fine when the economy fires on all cylinders, but during a recession the business environment is too weak to absorb another burdensome cost. But as all learned economists realize, at the margin a cost added to any transaction will decrease exchange activity in some manner. As I posted a few weeks ago about a friend exploring the idea of a starting a tree farm on his property, the cost of the basic business plan was very affordable for he and his wife. But the cost of adhering to regulations and the hours of compliance paperwork no longer made the project desirable or worth the risk.
Pundits keep wondering aloud why the economy has not been able to get up off the mat and start some signs of job creation. Part of the reason, no doubt, is the massive anchor of government regulations weighting down businesses and consumers. The free market engine for economic growth has been dismantled.
Many years ago I stated that no greater testimony exists to the true nature of things than the actions of government or individuals. Last week Obama gave witness to the job killing nature of government regulations.
Related posts:
- The Fallacy of Job Creation A colleague with a Keynesian bent presented the following thought: corporations are reporting record profits and hoarding loads of cash while unemployment continues at high...