Stregulation: the throttling of an economy by regulations
The passage of every single piece of regulation by parliaments and their quangos has a financial cost. That cost is wholly absorbed by businesses. Who else? Ultimately, all wealth can only be extracted from those who create wealth.
Businesses pass on that cost. They must if they are to survive. It is by that simple mechanism that consumer prices rise ever higher. There are many other factors that affect prices, but regulation is the one that constantly pushes them in an upward direction.
This causes gross domestic product GDP to rise and thus government taxation revenue to rise. The problem is that at the same time as government revenue is rising and smug politicians feel that they are doing a terrific job, businesses and taxpayers are being crushed.
It is not that the economy is doing any better; quite the opposite. It is that at one end a vice-like, regulatory pressure squeezes businesses. That results in price increases, which in turn raises GDP. Which means that at the other end, more and more wealth has been, and is continuing to be, extracted and consumed by governments.
It is the amount gouged out of the economy by governments that is growing, not the economy itself.
That is why the core product of my business, which used to cost 35c fifty years ago, now costs $12.90. While that is a staggering increase in terms of the numbers, in terms of spending power my profit on the item has considerably diminished.
It’s a great sleight of hand that governments pull off. They gouge more and more wealth out of the economy, while consumers see prices going up and imagine businesses are making larger profits. The consumer indignantly demands more legislation to stop this rapacious greed.
Every single regulation results in a transfer of wealth from people to government.
How much more regulation can we afford? That is the most pressing question of this generation.