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Yes, all regulation hurts economic growth. The mechanism is simple: regulatory compliance is a cost. If it's a fixed cost like most regulation, it becomes a bar

Yes, all regulation hurts economic growth. The mechanism is simple: regulatory compliance is a cost. If it's a fixed cost like most regulation, it becomes a barrier to entry. If it's a variable cost, it reduces labor productivity. HOWEVER, some regulation may improve net economic growth by improving the functioning of markets such that it overcomes the costs that compliance imposes. Therefore the discussion of regulation cannot be divorced from the quantitative and qualitative merits of the specific regulation proposed, and therefore must be considered on a case by case basis. The idea that regulation can be proven good or bad in aggregate is a fools errand.

alex_young 9y ago
>> Is there proof of this? > Yes, all regulation hurts economic growth. What about the proof of that? What basis are you making the assertion on? It seems like some regulation can promote growth. For instance, regulation on product safety increases consumer confidence in the safety of those products and creates a broader market for them.
- Kalium 9y ago
  Upon careful reading of the comment to which you are responding, I found that it neatly addresses very precisely the keen, sensible, and reasonable point you have raised. Perhaps you have had an experience significantly from mine?
  - hluska 9y ago
    That comment assumes we can all agree upon a textbook definition of 'economic regulation'. An economic regulation is generally defined as any legislation or administrative act that impacts either pricing a good or entering a market. If you follow that strict, conventional (in economics circles) definition, it's tough to argue with the comment. Outside of textbooks, economic regulation has a much bigger meaning such that a statement like that would be highly confusing and inflammatory. Outside of textbooks, economic regulation can refer to anything from health/safety legislation to antitrust legislation to taxes/tariffs/freer trade. Economic regulation = increased costs only works if you use a conventional definition of regulation...
    - Kalium 9y ago
      I understand where you're coming from and what you mean. I even understand why some people, reading the original comment, would stop after the confusing and inflammatory statement and not finish reading the rest of the fine comment. It's possible that such people might be best served to read the rest of the comment and cogitate for a moment before objecting. In this context, I found that the parent comment covers health, safety, anti-trust, and more under the umbrella of improving market function. I understand that others may have arrived at a different understanding of the comment.
typon 9y ago
That's a blanket statement without any evidence. Its like saying static checking always hurts productivity because you need to be compliant with the compiler. What if complying with regulations reduces costs? Why does it have to necessarily increase them?
- saosebastiao 9y ago
  Your analogy is spot on, because both are true. Regulation increases costs, and it may also reduce costs. Static checking increases costs, and it may also reduces costs. The whole point of what I wrote is that the net benefit depends on the tradeoff that is made between the two costs and that tradeoff will depend entirely on context and details, which excludes the possibility of coming to an aggregate conclusion (such as static typing is always better, or regulation is always good). For example, I would never do exploratory data analysis using Scala, but I would also never write a production system in R. In each scenario it is useful to separate the various costs and benefits and weigh them against each other, as opposed to taking an ideological stand like "STATIC TYPING OR DIE".
jdgoesmarching 9y ago
This guy economics. But seriously I'm tired of so many armchair Libertarians spouting their one semester of economics understanding. Most of them never read past your first statement.
- cgriswald 9y ago
  I point out there are three armchair points-of-view that are possible here which are, in my experience, equally tiresome: (1) All regulation is bad. (2) All regulation is good. (3) All regulation which is net positive is good. (3) may be more complex, but it can be an armchair position because it excludes the political and moral questions of who wins, who loses, and who decides. Importantly, (1) and (3) can also both be non-armchair points of view. It really depends what arguments are made in their defense. A libertarian, fully cognizant of the points made by the GP, can still believe (1) if his basis is moral grounds. Likewise (3), if it is defended on utilitarian grounds. Sure, if a libertarian argues (1) on an economic basis, it suggests a certain ignorance we could call 'armchair'. But I would argue that we largely ignore moral arguments. So, even a libertarian arguing (1) from an economics standpoint may actually be doing so not because he believes it, but because he believes his audience will reject his argument from his core belief; and I would be hesitant to call him 'armchair' (even though he is annoying) just as I would be hesitant to call a utilitarian 'armchair' if he avoids the political questions. Both can be wrong without being wrong.
pavlov 9y ago
> all regulation hurts economic growth [...] some regulation may improve net economic growth What definition of "economic growth" are you using for your first claim? It doesn't seem to match the common expectation. I'd assume that net growth is what we care about in the context of public policy.
michaelt 9y ago
Yes, all regulation hurts economic growth. The mechanism is simple: regulatory compliance is a cost. I've heard it said [1] that banning cigarette advertising is good for cigarette companies, as previously they had to compete to outspend one another to avoid losing market share. In other words, legislation moved competitors from an expensive Nash equilibrium to a cheap global optimum. Of course, this is a rare example, and a questionable one; it assumes tobacco advertising does not increase the total market for tobacco products. Given that tobacco companies lobby against such advertising bans, they clearly don't see such regulations as a net benefit for them. [1] https://en.wikipedia.org/wiki/Prisoner%27s_dilemma#In_economics https://en.wikipedia.org/wiki/Prisoner%27s_dilemma#In_econom...
- flukus 9y ago
  Most cigarette brands are owned by a couple of huge tobacco companies like Philip Morris (https://en.wikipedia.org/wiki/Philip_Morris_USA#Brands https://en.wikipedia.org/wiki/Philip_Morris_USA#Brands) and British American Tobacco (https://en.wikipedia.org/wiki/British_American_Tobacco#Current https://en.wikipedia.org/wiki/British_American_Tobacco#Curre...). They are barely competing, just trying to attract different crowds under different brands and to make a premium on luxury brands.

alex_young 9y ago

>> Is there proof of this? > Yes, all regulation hurts economic growth. What about the proof of that? What basis are you making the assertion on? It seems like some regulation can promote growth. For instance, regulation on product safety increases consumer confidence in the safety of those products and creates a broader market for them.

Kalium 9y ago
Upon careful reading of the comment to which you are responding, I found that it neatly addresses very precisely the keen, sensible, and reasonable point you have raised. Perhaps you have had an experience significantly from mine?
- hluska 9y ago
  That comment assumes we can all agree upon a textbook definition of 'economic regulation'. An economic regulation is generally defined as any legislation or administrative act that impacts either pricing a good or entering a market. If you follow that strict, conventional (in economics circles) definition, it's tough to argue with the comment. Outside of textbooks, economic regulation has a much bigger meaning such that a statement like that would be highly confusing and inflammatory. Outside of textbooks, economic regulation can refer to anything from health/safety legislation to antitrust legislation to taxes/tariffs/freer trade. Economic regulation = increased costs only works if you use a conventional definition of regulation...
  - Kalium 9y ago
    I understand where you're coming from and what you mean. I even understand why some people, reading the original comment, would stop after the confusing and inflammatory statement and not finish reading the rest of the fine comment. It's possible that such people might be best served to read the rest of the comment and cogitate for a moment before objecting. In this context, I found that the parent comment covers health, safety, anti-trust, and more under the umbrella of improving market function. I understand that others may have arrived at a different understanding of the comment.

typon 9y ago

That's a blanket statement without any evidence. Its like saying static checking always hurts productivity because you need to be compliant with the compiler. What if complying with regulations reduces costs? Why does it have to necessarily increase them?

saosebastiao 9y ago
Your analogy is spot on, because both are true. Regulation increases costs, and it may also reduce costs. Static checking increases costs, and it may also reduces costs. The whole point of what I wrote is that the net benefit depends on the tradeoff that is made between the two costs and that tradeoff will depend entirely on context and details, which excludes the possibility of coming to an aggregate conclusion (such as static typing is always better, or regulation is always good). For example, I would never do exploratory data analysis using Scala, but I would also never write a production system in R. In each scenario it is useful to separate the various costs and benefits and weigh them against each other, as opposed to taking an ideological stand like "STATIC TYPING OR DIE".

jdgoesmarching 9y ago

This guy economics. But seriously I'm tired of so many armchair Libertarians spouting their one semester of economics understanding. Most of them never read past your first statement.

cgriswald 9y ago
I point out there are three armchair points-of-view that are possible here which are, in my experience, equally tiresome: (1) All regulation is bad. (2) All regulation is good. (3) All regulation which is net positive is good. (3) may be more complex, but it can be an armchair position because it excludes the political and moral questions of who wins, who loses, and who decides. Importantly, (1) and (3) can also both be non-armchair points of view. It really depends what arguments are made in their defense. A libertarian, fully cognizant of the points made by the GP, can still believe (1) if his basis is moral grounds. Likewise (3), if it is defended on utilitarian grounds. Sure, if a libertarian argues (1) on an economic basis, it suggests a certain ignorance we could call 'armchair'. But I would argue that we largely ignore moral arguments. So, even a libertarian arguing (1) from an economics standpoint may actually be doing so not because he believes it, but because he believes his audience will reject his argument from his core belief; and I would be hesitant to call him 'armchair' (even though he is annoying) just as I would be hesitant to call a utilitarian 'armchair' if he avoids the political questions. Both can be wrong without being wrong.

pavlov 9y ago

> all regulation hurts economic growth [...] some regulation may improve net economic growth What definition of "economic growth" are you using for your first claim? It doesn't seem to match the common expectation. I'd assume that net growth is what we care about in the context of public policy.

michaelt 9y ago

Yes, all regulation hurts economic growth. The mechanism is simple: regulatory compliance is a cost. I've heard it said [1] that banning cigarette advertising is good for cigarette companies, as previously they had to compete to outspend one another to avoid losing market share. In other words, legislation moved competitors from an expensive Nash equilibrium to a cheap global optimum. Of course, this is a rare example, and a questionable one; it assumes tobacco advertising does not increase the total market for tobacco products. Given that tobacco companies lobby against such advertising bans, they clearly don't see such regulations as a net benefit for them. [1] https://en.wikipedia.org/wiki/Prisoner%27s_dilemma#In_economics https://en.wikipedia.org/wiki/Prisoner%27s_dilemma#In_econom...

flukus 9y ago
Most cigarette brands are owned by a couple of huge tobacco companies like Philip Morris (https://en.wikipedia.org/wiki/Philip_Morris_USA#Brands https://en.wikipedia.org/wiki/Philip_Morris_USA#Brands) and British American Tobacco (https://en.wikipedia.org/wiki/British_American_Tobacco#Current https://en.wikipedia.org/wiki/British_American_Tobacco#Curre...). They are barely competing, just trying to attract different crowds under different brands and to make a premium on luxury brands.