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Politics can save the economy

What the American economy needs is more politics in economic affairs. No, I haven’t lost my mind – well, maybe not completely and not on this particular point.

The Supreme Court is already making us take the first small steps along this desirable path. The end of Chevron reverence in Running towards Raimondo moves decision-making about the details of regulations from the bureaucracy to Congress. This is the net effect of not only having to accept the bureaucracy’s decisions about what regulations mean. It is for Congress, politics, to state in more detail what is actually meant.

Now, the idea that the economy needs more politics is pretty out there, I grant you. Less disruption overall is the common ideal of free marketers and capitalists like myself. But we cannot ignore the important role that politicians have to play in economic matters.

As it stands, financial decisions are made far too often via bureaucratic regulations. The problem with this, and the legal decisions about such rules, is that the bureaucracy only looks to the specific task. Someone tasked with crafting rules on financial fraud, for example, will only look at fraud caught or limited by those rules without considering the effect of those rules on business formation, economic growth, or even just the simple freedom to do as you want.

Bureaucracy is concentrated on an overly fine level of detail. It is really necessary to work at a higher level than that. As the economist Thomas Sowell put it, there is no solution. There are only trade-offs. Trade-offs are the very meat and drink of rule-making. So, regulation that deals with the fine details of the law must be at a level that takes into account these trade-offs, the larger issues.

That level is called politics. It is also at that level that we, as taxpayers and consumers, have a say in those rules because we can, and do often enough, get rid of those we think have made the wrong decision. It’s a bit difficult with someone buried three levels down in the federal bureaucracy.

We may not like the way Congress works. It’s really not fun to watch the sausage being made. But it remains true that elected politicians are the only group that must, and therefore do, consider the trade-offs inherent in any decision about anything. They may not do it enough, they may do it poorly, but they are still the only ones doing it at all. Therefore, the more regulatory details they determine, the better.

This is not just to be provocative.

The Federal Register now reaches about 90,000 pages a year, all new and changed rules for what people are allowed to do in our economy, and all written by monomaniacs intent only on their own detail, with no one looking at the overall effect, which is the reason we have 90,000 pages per year, of course.

It is true that it is possible that one particular complaint has merit—that Congress simply does not have the bandwidth to handle the volume of administration and regulation that the modern regulatory state requires. Hopefully this means we would not only get better regulation, but also less of it.

We are doubly blessed, aren’t we?

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Tim Worstall is a British-born writer and blogger and a senior fellow at the Adam Smith Institute

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