How Capitalism Will Save Us by Steve Forbes

Author:Steve Forbes [Forbes, Steve]
Language: eng
Format: epub
ISBN: 978-0-307-46311-1
Publisher: Crown Publishing Group
Published: 2009-10-09T16:00:00+00:00

The report also noted: “Despite some progress, foreign investment remains restricted, and judicial enforcement is both erratic and nontransparent. Because of pervasive corruption, impartial adjudication of cases is not guaranteed.”

Indonesia’s corruption is typical of government-dominated nations. That is the irony of an overregulated economy: it ultimately undermines a lawful society. People strive to circumvent rules they perceive as unfair. We observed in chapter 1 that this is the case in Russia, where private businesses skirt an overly meddlesome bureaucratic system by paying bribes in order to operate.

A democratic capitalist economy shouldn’t be entirely unregulated. But in today’s heated debates, too little attention is focused on the potential impact of a proposed regulation in the Real World. Any well-intentioned rule has benefits, at least for some. The question is whether those benefits are worth their cost. We discuss later in this chapter the largely ignored unintended consequences of the initial CAFE standards enacted in the mid-1970s. These regulations did produce more fuel-efficient cars, but with a major cost—higher accident fatalities.

Another example: the ban on the pesticide DDT. Environmental and health concerns led to prohibition of the insect killer in the 1960s and ’70s. Alternative methods for fighting malaria, such as netting, were supposed to serve as replacements, but they have been comparatively ineffective. Malaria epidemics have since killed over a million people a year, with fifty million deaths over twenty-five years. Were the benefits of banning DDT really worth so many lost lives?

Several years ago, South Africa started allowing judicious use of DDT. The spraying of small amounts was permitted inside people’s residences. There were no negative health effects. Quite the contrary: the incidence of malaria declined by 90 percent.

According to the Competitive Enterprise Institute, the cost to the U.S. economy of complying with the nation’s countless regulations came to almost $1.2 trillion—almost equal to the amount that the federal government collects in personal income taxes.

In 2008, Congress passed and the president signed into law 285 bills. Federal agencies finalized over 3,800 new rules and regulations. That’s just in a single year. Everyone wants rules to protect their welfare, health, and safety. The question is—how many?

Q ISN’T THE FINANCIAL CRISIS OF 2008 A HISTORIC EXAMPLE OF THE NEED FOR FAR MORE EXTENSIVE, RIGOROUS REGULATION OF FREE MARKETS?

A WHAT THE CRISIS DEMONSTRATES IS THE NEED FOR SOUND MONETARY POLICY, BETTER ENFORCEMENT, AND SENSIBLE ADJUSTMENTS TO EXISTING REGULATIONS.

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