Category: Regulation

government-regulation-in-business-red-tapeIn an attempt to cut down on the number of government regulations, president-elect Trump has proposed a “one-in, two-out” rule—for every new regulation implemented, two old regulation must be eliminated. This is similar to the “one-in, three out” rule that was adopted by the government of United Kingdom.

While this is a significant step toward reducing the ever-expanding number of total regulations, would it be enough to actually reduce the regulatory burden on Americans?

Philip K. Howard argues that it would not be enough, and proposes an alternative approach: principle-based regulation.

The Dodd-Frank Act became law in 2010, adding more regulation to a banking industry that was already heavily regulated.  The main purpose of this 2,300 page act was to give consumers protection against big profit seeking banks but the unintended consequences prove to be much greater.  The regulation was supposed to help the little guy but as Acton Director of Research Samuel Gregg writes at The Stream, it actually hurts the little guy.

President-elect Donald Trump claims that he wants to deregulate the financial industry but in order for this to happen successfully, we need to understand the argument for why such actions would be beneficial.  Gregg says this:

Consider, for instance, the costs associated with meeting the ever-growing demands of regulatory compliance. Such costs are more easily borne by large banks than smaller-sized institutions such as community banks. The result is that excessive regulation makes it harder for smaller banks to compete. That often puts access to capital out of reach for many people.

But perhaps the most harm which excessive financial regulation inflicts upon ordinary people concerns the ways in which such regulations can — and have — contributed to financial meltdowns. Such crises are far more likely to hurt those on the lower-side of the economic scale than the already-wealthy.


Today at Mere Orthodoxy, I argue that

the duty of the Christian statesman (or stateswoman) to the poor requires defending human rights, supplying urgent needs, reducing barriers to market entry, and guaranteeing access to the institutions of justice, seeking realistic, gradual reform as possible and prudent.

Of particular interest to readers of the PowerBlog, I dedicate substantial space to explaining and advocating for free markets:

Jobs are what the poor need, and jobs are created by businesses. People settle for bad jobs only when good ones aren’t available. Thus, eliminating barriers to market entry ought to be of primary concern to the Christian statesman, combatting the unjust inequality created by closed markets. Barriers to entry include onerous occupational licensing and patent laws, high corporate taxes, zoning laws, overregulation, and subsidies. These things close markets to new competitors because, even though it might seem against their interest (except for subsidies), large, established firms are more likely to benefit from them and lobby for them (which is called rent seeking)….

In free markets, properly understood, these barriers are kept to a minimum, increasing competition and wealth creation. The more businesses there are looking for workers, the more demand there is for labor. Thus, not only will there be more jobs, but wages will be higher as well. It should be no surprise that the decline in American entrepreneurship has coincided with wage stagnation. Beyond wages, an additional benefit of increased competition is that it also drives down the price of consumer goods, thus lowering the cost of living for everyone as well. Free markets help the poor—and everyone else—in terms of production (labor), distribution (wages), and consumption (lower cost of living).


epipen22Pharmaceutical company Mylan recently spurred a flurry of outrage after raising the price of their lifesaving EpiPen by 400%, leading many to decry “corporate greed” and point the finger at capitalism.

Unfortunately, such anger routinely fails to consider the systemic reasons as to why Mylan can charge such prices, resorting instead to knee-jerk calls for fresh tricks by the FDA and new layers of price-fixing tomfoolery from Washington.

Yet the problem, as detailed by Rep. Mick Mulvaney in a new video from FEE, begins with the very same interventions, back-room deals, and price manipulations that the critics now propose.

Why, we might ask, is Mylan able to wield this monopolistic power and exploit its consumers with little challenge? As Mulvaney demonstrates, the answer has far more to do with the FDA, Congress, President Obama, and the Affordable Care Act than a free market with free-flowing prices. (more…)



Vox recently published an article claiming that Charles Koch is right and Bernie Sanders is wrong about how the economy is rigged. Both agree that there are laws that unfairly favor some financially over others. Sanders often claimed during his campaign that the rich have used their money to lobby for laws that favor their interests over those of everyone else.  Meanwhile, Charles Koch has condemned excessive regulation and restrictions on economic freedom that allow the few to bend laws in their financial favor against the many. In looking at the real problem in the economy, Charles Koch’s analysis of the problem comes closer to the truth.


Dollar Banknotes, Handcuffs And Judge Gavel On Wood TableThe Atlantic magazine published an article on July 5, 2016 highlighting the growing problems in Louisiana with legal financial obligations (LFOs) and their effect on poor defendants and the recently incarcerated. Former prisoners usually have a hard time finding a stable income post incarceration and LFOs often require former prisoners to pay thousands of dollars upon release. The average amount in the state of Washington is $1,347, with interest rates that make the debt increase over time. One woman the article mentions owed $33,000 upon her release from prison, and after making minimum payments for 13 years owed $72,000. This is an extreme example, but for the poor — who are the most commonly imprisoned on the socioeconomic scale — any amount can quickly become overwhelming and cause them to face more jail time.

The relationship between the poor and prison is one that has always existed, but one that has become more of a problem in the United States in the recent decades. A 2015 report by the Institute for Policy Studies (IPS) found that our current welfare and criminal justice system actually hurts the poor more than other demographics and in many cases lands them in prison. Their conclusion is that the poor and minority populations in the United States are profiled and arrested at unjust levels. This is not a groundbreaking conclusion, but their findings show some of the extent of the current problem. The problems exist all over the system and pervade different aspects of society from school discipline to Civil Asset Forfeiture Laws.


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People often criticize the vast size and scope of the bureaucracy in the United States, but there is another critical issue involving the administrative state that is seldom discussed: the breakdown of the rule of law. The procedural rights that are necessary for a strong rule of law and are so often taken for granted are not guaranteed in the administrative state today.

Strong rule of law is one of the necessary elements for a free and virtuous society, and for a free and functioning market. There are many definitions and nuances in the principle of the rule of law, but the central tenets require that laws apply to all people equally and are enforced consistently and fairly. Proper rule of law precludes arbitrary enforcement, inaccessible or unclear laws, and inconsistent application. The breakdown of rule of law leaves political, religious, and economic freedom vulnerable, endangering the very foundation of our republic. Where rule of law is weak, tyranny and oppression reign.