Saturday, December 15, 2007
The problem with regulation is that the cost of producing & enforcing regulations seems to be about 1/20th of what they cost those regulated. If disability rules, or many others, were funded by government payments then they would be genuine charity (ignoring that taxes are not paid proportionately to voting strength). Enforcing such costs on business is not sharing the pain it is merely moving it to somebody else. If the government had to bear the costs it creates it wouldn't do so.
the 20% figure comes from http://brianmicklethwait.signal100.com/podcast/
HabitsofHighlyEffectiveCountries.pdf I recommend this though you really have to be an economics anorak like me to read it all The precis is that economic freedom is a "necessary & sufficient condition" for success, that most government spending is counterproductive, though expenditure on fixed infrastructure like roads is usually worth it & to my surprise, that education spending does not generally have a positive effect.
The problem is this:
economic freedom is a "necessary & sufficient condition" for success
requires some explanation as to what is "success." Complete unregulated economic freedom will certainly produce a maximum return on investment to the investor. It can also product social instabilities. William Lloyd Garrison railed against slavery while dismissing injured workers without compensation, and dismissed all his factory workers when they reached the age of 35. This certainly made for productive mills, and demonstrated the economic superiority of free enterprise over slavery. Under slavery the social custom (and in some states legal requirement) was that aged slaves had the right to live in peace on the land they had worked; when I was a child in the segregated South, it was still the custom that a sharecropper had the right to live out his life in the house and on the land he had worked for much of his life. This was expensive and certainly didn't aid production; turning them out would have raised production.
I have said this many times: economic freedom, unregulated, is the sufficient condition for slavery to reappear. The free market will eventually sell everything for which there is a demand, including child prostitutes and human flesh.
On the other hand, a command and regulated economy is massively unproductive, as witness the Soviet system of Agriculture, NASA, and the American education system. Actually neither of us believe in ending the welfare state, merely in ensuring that there is a proper cost/benefit relationship & that the major beneficiries are the official beneficiries not the administrators.