deregulate to stimulate

Expensive Jobs

by Ryan Young on August 27, 2010

in Deregulate to Stimulate, Economy, Stimulus to Nowhere

Through June, the government spent about $620 billion of stimulus money. The Obama administration claims that the spending has saved or created 2.3 to 2.8 million jobs.

For the sake of argument, let’s assume those job creation numbers are true. In fact, let’s pick the rosiest number — 2.8 million jobs.

At a price of $620 billion, that comes out to $221,428.57 per job. Startlingly inefficient.

Now consider that that $620 billion had to come from somewhere else. Some of that money came from taxes. That leaves less money left over for consumers and businesses to spend. Some of the stimulus money was borrowed. That leaves less capital for private companies borrow.

The private sector tends to spend less than the government to create a job. Since stimulus spending is spending more money to create fewer jobs than the private sector, it is actually causing net harm to the job market.

In place of the spending stimulus, I humbly offer a deregulatory stimulus. CEI VP Wayne Crews and I offer some specific proposals here.

Federal Register Hits 50,000 Pages

by Ryan Young on August 17, 2010

in Deregulate to Stimulate, Economy, Regulation

And it’s on pace to hit a near-record 80,447 pages. Over at the Daily Caller, I crunch some of the numbers and offer up some Ideas for regulatory reform, inspired by Wayne Crews’ 10,000 Commandments.

-The Federal Register’s accelerating pace is due to two things. One is implementation of the health care and financial regulation bills. The other is that, fearing a party change in Congress, lame-duck regulating may have already begun.

-Keeping Federal Register page counts in check is important. Keeping the contents of those pages in check is even more important. Comprehensive regulatory reform involves much, much more.

-Such as five-year sunsets for all new regulations unless specifically reauthorized by Congress.

-And a comprehensive look at the regulatory state in each year’s Economics Report of the President.

-And a bipartisan commission to comb through the books for harmful or obsolete regulations. They would hand their recommendations for repeal to Congress for an up-or-down vote, without amendment.

New “stimulus plan” brewing in Congress

by Michelle Minton on July 8, 2010 · 1 comment

in Culture, Deregulate to Stimulate, Economy, Employment, Odds & Ends

It is actually less of a “stimulus” plan and more of a “get government out of the way and stop inhibiting growth” plan. A bi-partisan group of Senators led by John Kerry (D-Mass) introduced S. 3339 in mid-may, a bill that would, among other things, reduce the federal excise tax that small brewers must pay per barrel they produce.

For the congressmen and Senators selling this proposition, it probably wasn’t the brightest idea to associate the tax-cutting-proposal with the word “stimulus” which now evokes memories of massive taxpayer-funded bailouts to government favored businesses that probably should have failed years ago due to inefficiency and sheer ineptitude.

Unlike the auto, construction, and real estate industries, small brewers in the US have made great strides in the last decade despite heavy taxes, discriminatory regulations, layovers from prohibition, and a recession. Craft beer is more popular among US drinkers than ever before. Given the opportunity in a free market, small The Three Beersbrewers could collectively take a large chunk of the market away from the monolithic “big beer” companies like Anheuser, Coors, Budweiser, etc. They could lower prices, increase production and distribution, hire more workers and contribute more in tax revenue. But there’s a built in disincentive for small brewers to grow–if they get too big they loose the one advantage they have over bigger brewers: the tax benefit.

So yes, cutting taxes will help small breweries stay afloat and grow, but it isn’t enough for true stimulation of the beverage industry. To create jobs, increase the number of small brewers, increase competition, and massively reduce the cost of purchasing beer, congress should eliminate the tax on beer.

Consider that brewers not only pay the federal excise tax, but also a state excise tax in addition to all the other fees and costs. In 2004 the Beer Institute estimated that taxes represented over 40% of the retail cost of beer. Imagine that! Without the tax burden on producers your craft brew would cost just $3.50 instead of $6, your Budweiser would cost $1.50 and a miller high life would only cost you your dignity (just kidding, I drink high life).sam-of-dogfish-head

And for some states protecting the small brew business is especially vital. Take Oregon, for example, which has more microbreweries per capita than almost any other state. Small brewers alone provide the state with nearly 5,000 jobs and over $2 million in revenue. In fact Oregon has more small breweries. While some legislators hear those numbers and can only see ways to leech off that success (as I wrote about back in February 2009) it is good that other legislators seem to understand the principle that if you get government out of the way of business, there are more jobs, more money, and more stuff. Perhaps if they could just apply that logic to all other businesses, including big brewing companies, we’d be a lot better off.

Will the Jobs Bill Create Any Jobs?

by Ryan Young on March 18, 2010

in Deregulate to Stimulate, Economy, Employment, Politics as Usual, Regulation

Over at the American Spectator, I explain why it won’t, but a deregulatory stimulus would. Main points:

-Anything that Washington giveth, it must first taketh away from somewhere else. The jobs bill is a zero-sum game.

-When government borrows more, less investment capital is left over for the productive sector.

-Taxes will have to be raised later to pay for today’s increased borrowing.

-Deregulation is a better approach. The biggest obstacles to job creation and economic growth are all in Washington.

Did Deregulation Cause the Great Recession?

by Ryan Young on December 8, 2009 · 2 comments

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, Regulation, Stimulus to Nowhere

Over at RealClearMarkets, I explain why the answer is a resounding no:

Rep. Phil Hare argues that “reckless deregulation” is one of the causes of the current economic crisis. That isn’t actually true. This year’s edition of the Competitive Enterprise Institute’s Ten Thousand Commandments report found that 3,830 new regulations came into effect in 2008 alone.

Over 30,000 total new rules passed during the Bush years. Hardly any were repealed. Businesses currently dole out the equivalent of Canada’s entire 2006 GDP – about $1.2 trillion – just to comply with federal regulations.

Where is the deregulation?

263,989 people make their living working for federal regulatory agencies, according to research from the Mercatus Center. That’s an all-time high.

12,190 of them regulate financial markets from Washington. More are based in New York and other financial centers. None of these figures include state and local rules and regulators. Those cost extra.

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