Regulation

There's Too Much Red Tape (But Only a Little)

The case for wholesale deregulation is built on sketchy data.

Overdoing it.

Photographer: Meng Zhubin/ChinaFotoPress/getty images

I’m very sympathetic to the idea that regulation holds back growth. It’s easy to look around and find examples of regulations that protect incumbent businesses at the expense of the consumer -- for example, the laws that forbid car companies from selling directly to consumers, creating a vast industry of middlemen. You can also find clear examples of careless bureaucratic overreach and inertia, like the total ban on sonic booms over the U.S. and its territorial water (as opposed to noise limits). These inefficient constraints on perfectly healthy economic activity must reduce the size of our economy by some amount, acting like sand in the gears of productive activity.

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