Here’s a letter I recently sent to the Midland Daily News.
To the editor:
Eric and Jodie Gardner recently stated that the economy was “destroyed through rampant deregulation and greed” (July 1).
“Saying that “greed” caused today’s problems is like saying that gravity caused the death of someone pushed from the top floor of the Empire State building. Some things are sufficiently constant in human affairs – and self-interest, even greed, is among them… it is the institutions and their accompanying incentives, rather than “greed,” that explain economic reality.”* In short, stating that greed caused our current economic conditions explains nothing.
According to David Henderson with the Cato Institute, there were actually increases in regulation leading up to the “destruction of the economy.” For instance, regulations averaged 71,590 pages annually during the Clinton years. During the administration of that great believer in laissez-faire, George W. Bush, we had an all time high of 75,526.
Between 1980 and 2007, the number of full-time employees of U.S. government regulatory agencies increased 63 percent, from 146,139 to 238,351. During that same time, the U.S. population increased only 33 percent.
U.S. government spending on regulation alone tripled, from $13.5 billion to $40.8 billion (all in 2000- year dollars.) As a percent of GDP, spending on regulation rose from 0.26 percent to 0.35 percent, a 35-percent increase.
The biggest growth came in so-called “homeland security,” where spending more than quintupled, from $2.9 billion in 1980 to $16.6 billion in 2007 (all in real 2000 dollars). The second-largest growth rate was in regulation of finance and banking, where spending almost tripled, rising from $725 million to $2.07 billion.*
The above information just goes to prove P.J. O’Rourke’s point: “The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn’t work and then they get elected and prove it.”
* Donald Boudreaux, “Greed” Is Not an Explanation (October 04, 2008)
* David R. Henderson, Are We Ailing from Too Much Deregulation? (November/December 2008)