Posts Tagged ‘Regulation’

Mathematical Malpractice Watch: Et Tu, Reason?

Sunday, June 30th, 2013

Oh, no, not you, Best Magazine on the Planet:

The growth of federal regulations over the past six decades has cut U.S. economic growth by an average of 2 percentage points per year, according to a new study in the Journal of Economic Growth. As a result, the average American household receives about $277,000 less annually than it would have gotten in the absence of six decades of accumulated regulations—a median household income of $330,000 instead of the $53,000 we get now.

You know, I hate it when people play games with numbers and I won’t put up with it from my side. I agree with Reason’s general point that we are over-regulated and badly regulated and that it is hurting our economy. Even the most conservative estimates indicate that bad regulation is sucking hundreds of billions out of the economy — and that’s accounting for the positive effects of regulation.

But the claim that we would be four times richer if it weren’t for regulation is garbage. As Bailey notes in the article, the growth in the US economy over the last half century has been about 3.2 percent. Without regulation, according to this study, it would have been 5.2, which is far higher than the US has ever had over any extended period of time, even before the progressive era. And because that wild over-estimate is exponential, it results in an economy that would be four times what we have now; four times what any large country would have now. The hypothetical US would be as wealthy, relative the real US, as the real US is to Serbia. Does anyone really think that without regulation we would be producing four times as much goods and services?

Even if we assume that we could produce an ideally regulated society, regulation is not the only limit on the economy. Other factors — birth rate, immigration, war, business cycles, education, technological progress, social unrest and the economic success of other countries — play a factor. A perfectly regulated society would most likely move from a position where its growth was limited by regulation to a position where its growth was limited by other factors (assuming this is not already the case)

The paper is very long and complicated so I can’t dissect where their economic model goes wrong. But I will point out that no country in history, including the United States, has ever had half a century of 5% economic growth. Even countries with far less regulation and far more economic freedom than we have do not show the kind of explosive growth they project. In the absence of any real-life example showing that regulatory restraint can produce this kind of growth, we can’t accept numbers that are so ridiculous.

Other studies, as Reason notes, estimate the impact of regulation as being something like 10-20% of our economy. That would require that regulation knock down our economic growth by 0.3% per year, which seems much more reasonable.

(H/T: Maggie McNeill, although she might not like where I went with this one.)

Tuesday Linkorama

Wednesday, November 28th, 2012
  • An interesting article on how child abuse panic is keeping men out of the childcare industry. My daughter had a male teacher at her school for a while. She really liked him and it was good to see her having a male role model in her life beyond me. But I also admired the man’s courage; I would not put myself in such a vulnerable position.
  • One of my favorite things to do as a grad student was to look up heavily referenced papers to see if they said what people said they said. At least a quarter of the time, they didn’t. Maggie McNeill just dug up a 30-year-old bit of Mathematical Malpractice that’s been cited incorrectly in support of innumerable bad laws.
  • A frustrating story about why we can’t watch WKRP in its original format. We really have to do something about fair use. The Republicans indicated that they might; then ran away from that position.
  • This video, of a hilarious bug in the FIFA 2012 video game, had me giggling.
  • I have to disagree with almost everything in this article claiming the alcohol industry is trying to make us drunks. It assumes alcoholism is entirely a function of government policy. And it mainly reads like a press release from the powerful forces trying to overturn the SCOTUS decision on out-of-state liquor importation, an issue of particular relevance to Pennsylvania.
  • Is airport security taking more lives than it is saving? Seems like.
  • I’ve been sitting on this story, about how doctor witheld information about a child’s medical future from the parents, for a while, trying to think of a way to approach it. Might still write a long form post. But I default to thinking people have a right to know. To presume to make that decision for them is arrogance. As our diagnostic tools get better, we need to give people the legal option: do you want know if we find anything bad? What happens if a cure is invented and this kid doesn’t know that he needs one?