The Burden of Regulatory Lawlessness

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The Burden of Regulatory Lawlessness

At the dawn of the mass production era, in the early years of the twentieth century, regulation was almost nonexistent; the regulations that did exist were found almost solely at the state and local levels.

Enabled by the scale-dependent technologies of the steel age, big businesses ran roughshod over consumers, labor, and small businesses.

Between 1900 and 1975, a network of hundreds of regulatory agencies—including the FDA, EEOC, NLRB, SEC, and EPA—was put in place. These were intended to level the playing field, balancing the interests of big businesses with the power of big government. This centralized vision of bureaucratic government control was well suited to an economy based on mass-produced products that were sold to mass audiences via mass media and mass merchants.

However, the economy of the twenty-first century has moved well beyond the mass production paradigm. Digital technology—based on incredibly cheap microprocessors, software, and networks—has enabled entirely different business models, employment arrangements, and production dynamics than anything imaginable in 1950. Scale-driven competitive advantage still exists, but it has been totally eclipsed by network effects, flexibility, and innovation.

Ironically, America’s heavy-handed, centrally-planned regulatory apparatus remains optimized for an economy that existed prior to 1980. All too often, regulations related to product safety, employment practices, trade, and finance disproportionately benefit those in big businesses, big labor, and big government at the expense of consumers, small businesses, and NGOs.

As documented in previous issues of Trends, America’s $2 trillion regulatory compliance burden constitutes one of the largest institutional impediments to realizing the economic potential of the digital revolution, also referred to as the Fifth Techno-Economic Revolution.1

To fully appreciate the urgency of this problem, one must understand the pervasive pattern of unbridled regulatory expansion and bureaucratic lawlessness that has permeated the past fifty years.

To put it simply: Washington is out of control. Judges and unelected bureaucrats increasingly control the lives, livelihoods, and living standards of Americans. Under the current system, they have virtually no accountability even for major errors, calculated deception, or deliberate, often illegal assaults on our liberties.

The Trends editors frequently reference the Competitive Enterprise Institute (CEI) and its annual “Ten Thousand Commandments” report on federal rules...

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