The problems attendant to government regulations are difficult for most to see during periods of economic expansion. They become glaringly and devastatingly obvious when the economy tanks – like now.
At the end of WW2, the governments of the Anglo and West European world were too disorganized to have much influence over ‘their’ economies. That freedom allowed economies to quickly begin to recover from the disruptions of the war. They boomed. Gradually over the subsequent decades, governments became more efficient with the result that economies began to wilt.
Then, in 1971, U.S. President Nixon abandoned the remnants of the Gold standard. Vast amounts of easy credit began to be pumped into the system.
After a decade of teething issues, prosperity became even more widespread. Unfortunately, it was unsustainable, and not only because the debt, unmoored from Gold, became out of control and unpayable.
A boom economy invites politicians to regulate in order to favour needed constituencies – i.e., to buy votes. Of course that is not the reason given; it is always presented as being good for the economy. Each regulation is implemented on the assumption of a permanence of condition and situation; of supply and demand. Each regulation makes it more difficult for businesses to react to changes in the marketplace. The longer that the boom continues, the more that the economy becomes locked in place by regulations.
Then, one day, the market is so moribund that, no matter how good the business operator, adaption to changing circumstances is no longer possible. That is the end of not only individual businesses, but whole industries.
People build civilizations; governments destroy them. Their weapon of mass destruction is regulations – ‘Useless Ingredients’ as Keith Weiner calls them. That they are. But they are far worse, far more deadly than just useless. They are the epitome of ‘the road to hell is paved with good intentions’. The superficial benignity of regulations cloaks the fact that each and every one of them acts as one more proverbial straw placed upon the camel’s back. In March of 2020, the economic camel’s back was finally broken and it keeled over, crushing the Golden Goose.
Regulations assume factors that are utterly at odds with the reality of a market. The prime piece of fallacious reasoning, that precedes all others, is that governments have any part to play in the economy at all. That they do not, should not, only becomes apparent after the collapse.
By then it is too late.
Many of the currently empty shelves in supermarkets and hardware stores will never be filled. And that is fine, because most people would no longer be able to afford the goods even if they were available.
This time it really is a New Era. The smell of dead goose will linger for a long time.