#184 Competition is More Effective Than Regulations

The Christian Economist | Dave Arnott

Christians are called to take care of widows and orphans, because in the agrarian economy of Biblical times, those were the people who didn’t own land, so they were not capable of economically providing for themselves. In the 21st century, we as individuals can care for the less fortunate by two very different economic systems: Competition or Regulation. Regulations are regressive, harming the poor more than the rich. They also exercise taxation without representation, and they side-step the democratic process. University of Chicago economist Casey Mulligan has determined that the Biden administration’s rule-making has cost each American household more than $10,000, while the Trump administration’s reduction of rules saved each household $11,000. Every American household has $21,000 less in purchasing power as a result of the change from President Trump to President Biden. As President Obama noticed, “Elections have consequences.” And they matter most to the poor, who suffer a greater loss in purchasing power through regulations than the rich do. That’s because $21,000 represents a higher proportion of income to the poor, than the rich. But wait, it gets worse: To quote Mr. Mulligan directly from his letter to the Wall Street Journal, “That would be more than $10,000 in cost for the two years of President Biden’s rule-making that I examined, and almost $11,000 in savings for four years of President Trump’s. Mr. Biden is adding regulatory costs even faster than President Obama did, while Mr. Trump reduced them.” Opportunity Cost The simple economics question, “Is the juice worth the squeeze?” is what finance people term “Cost-Benefit analysis.” We all make those decisions, large and small, on a daily basis. You skimmed the headline of this podcast and decided the benefit you would receive from gaining the information is greater than the cost of spending the time to listen to it. In economics, we call that “Opportunity Cost.” You can’t listen to another podcast at this moment, because you’re listening to this one. The federal government goes through a similar analysis, performed by the Office of Management and Budget. They keep track of how many “significant regulatory actions” a President orders. That has been defined as an order that costs American taxpayers $100 million. That’s the squeeze. Now, the Biden administration wants to double it to $200 million. OMB also measures the “juice” that is produced from the order. In the past, that benefit was accrued only to Americans, but being the global citizens they are, the Biden administration says those benefits can accrue from outside the US. President Trump wanted to “Make America Great Again,” and the Biden Administration wants to “Make the World Great Again.” The current Administration is tilting at a very large economic windmill. Justice would say that money forcefully extracted from American taxpayers should benefit Americans. If you really think money spent by taxpayers in one country should benefit those in another country, please preach that sermon in another country, and convince them to appropriate funds that benefit Americans. No Taxation Without Representation The phrase “No taxation without representation” first appeared in a London newspaper in 1768. As you may remember, the phrase caught on in the colonies, and caused a revolution. It raised the question as to whether the Crown had the right to tax its colonial subjects. The colonists thought it did not. But that’s exactly what’s happening today. This is taxation without representation. Our forefathers fought a revolution over that idea. These are administrative orders that do not go through the democratic legislative process. They harm the poor - as mentioned earlier - and the young. Americans can’t vote until they are 18, but they have to pay for these regulatory costs in the form of decreased family spending power every year of their lives.