More Jobs Through Less Regulation and Bureaucracy

cropped-bob-shapiro.jpg   By Bob Shapiro

The US needs more jobs.

While the headline unemployment rate shows the rate mostly recovered from the depths of the most recent Recession, by adding back in people who have given up hope of finding a job, plus those working part-time but really wanting full-time jobs, it shows US unemployment around 23% – at Great Depression levels.

Unemployment - ShadowStats

New business start-ups are a major source of new jobs, as well as being

a force for labor reallocation (people moving to new positions). Start-ups and labor reallocation, together referred to as Business Dynamism, both work to increase innovation, which is what raises the Standard of Living for all Americans.

Business Dynamism has been in a steep decline for 35 years, according to a study by Ian Hathaway and Robert Litan. They find this decline across industries and across states and cities of our great country.

Business Dynamism

The Atlantic Magazine investigated what the barriers to innovation are and found the number one obstacle – Government Regulation and Bureaucracy.

Looked at from the other direction, if regulation & bureaucracy pose the biggest obstacles to innovation, and the innovation comes largely from new business start-ups and job re-allocation rates, which is where the new jobs are created, then more jobs can come from greatly reduced regulation & bureaucracy.

Now, regulation & bureaucracy exist at the federal, state, and local levels. Many times, state and local laws are put in place to secure federal money, which is another reason to want a ban on federal monies going to states and cities (we’ve talked about this before).

Action Item: Reduce Regulation & Bureaucracy

  • Require an independent cost benefit analysis before any new Regulation may go into effect and before a new Bureaucracy may be created or expanded

  • Require that all existing Regulations and Bureaucracies be re-examined with an independent cost benefit analysis within 5 years. Any Regulation or Bureaucracy not reviewed within the 5 year deadline will become null and void.

  • Require that all existing Regulations and Bureaucracies failing a cost benefit analysis will become null and void

  • Pass a Constitutional Amendment prohibiting the federal government from providing part or all the funds for any program at the state or local level, thus removing a cause of much state and local level Regulations and Bureaucracies

 

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2 thoughts on “More Jobs Through Less Regulation and Bureaucracy

  1. Can you tell us exactly which business regulations in finance, healthcare, and let’s add the food industry, that are impeding on innovation? Then possibly give a quick rundown/cost benefit analysis of why they shouldn’t be in effect?

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    • In finance, it’s difficult to start a bank, although banks almost never fail. (Perhaps half of all businesses fail in the first year.) Banks are required to pay in to the FDIC for account insurance, which hurts the small banks and (relatively) help the big ones.

      In healthcare, the FDA operates for the benefit of the big pharmaceutical companies. I recall the FDA putting a couple of small businesses under – one for not registering to pre-fill syringes for hospitals, from which everyone benefited, and another company which couldn’t get it’s glucose monitor approved in the US, while the EU did approve it. Also, Americans cannot buy the same drug in Canada, where it is much cheaper.

      For many crops there are subsidies available which favor the big producers over the little guys. Using GMO seed is tough to get approved, and you have to jump through hoops to call your vegetables Organic. In cattle ranching, if your steer breaks a leg and can’t stand up, you can’s sell it for human consumption.

      As for why the regulation should go away, it assumes that people are stupid – too stupid to understand that for a business to be successful, it MUST do a good job in satisfying its customers, employees, and investors. If they don’t then they wind up putting themselves out of business. But if they do something harmful, etc then there already is a legal system and laws to protect customers, the environment, etc in court.

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