The latest episode of the American Enterprise Institute’s regular podcast features a conversation with Kevin Hassett about economic growth, unemployment, and related issues (along with an odd discussion of Game Of Thrones).
Among the highlights:
Question: What effect does regulation have on economic growth, and what have we seen the current administration’s policies … Has it increased or decreased regulation overall, and what effect has it had?
Hassett: Well, regulation is something that — in a textbook — can be very good. So we can think of circumstances … if somebody has a monopoly over water, [and] you can only buy water from them, then it’s probably not good for society. You can think of things regulators can do that would make things better.
The problem is in, and this is the way … the first guy who went after this problem this way, George Stigler at the University of Chicago, the way he addressed it is if you look and see what regulators actually do, then they tend to make things a lot worse, rather than better. So we could say that you put a regulator in charge of that potential problem, then did that problem get better, and usually you find that it gets worse.
And the theory for why it gets worse is actually quite transparent. All you have to do is look at Washington and the things you read in the newspaper. So what happens is the powerful “regulatee” gets really good at managing its regulator.
