Thursday, September 24, 2020

Growth and regulation

Is economic growth inexorably slowing down? Such is the depressing conclusion of Nick Bloom, Chad Jones, John Van Reenen, and Michael Webb, who showed in a very important paper that it is taking more and more effort to find new ideas. It is also the conclusion of Robert Gordon's Rise and Fall of American Growth. They promised us flying cars, and all we get tweets. The marshaling of facts in these and related works is impressive and depressing. 

I'm attracted to the other much more hopeful (maybe) possibility: growth, really the continued betterment of the human condition, is possible, but it is just stymied by the ever-increasing web of law and regulation. 

Along today come two interesting posts courtesy Marginal Revolution (always must-read). The first is narrow, on nuclear power, the second much broader on how bad regulation spreads around the world. 

Where's my flying car  by Robin Hanson summarizes Where's my flying car by J. Storrs Hall, and places the blame pretty squarely on over-regulation, of nuclear power in particular, but of all technology in general. We didn't turn to twitter because there were no ideas, but because that was, for a while, the only unregulated area for growth. 

Gordon's central thesis was that our spurt of growth came from mastering fossil fuels -- essentially mastering electromagnetism -- and that's over. 

In the 1970s, the centuries-long growth trend in energy (the “Henry Adams curve”) flatlined. Most of the techno-predictions from 50s and 60s SF had assumed, at least implicitly, that it would continue. The failed predictions strongly correlate to dependence on plentiful energy. American investment and innovation in transportation languished; no new developments of comparable impact have succeeded highways and airliners. …

The war on cars was handed off from beatniks to bureaucrats in the 70s. Supersonic flight was banned. Bridge building had peaked in the 1960s. … The nuclear industry found its costs jacked up by an order of magnitude and was essentially frozen in place. Interest and research in nuclear physics languished. … Green fundamentalism has become the unofficial state church of the US (and to an even greater extent Western Europe). …

In technological terms, bottom line is simple: we could very easily have flying cars today. Indeed we could have had them in 1950, but for the Depression and WWII. 

If our pre-1970 energy use trend had continued, we’d now use ~30 times as much energy per person, mostly via nuclear power. Which is enough energy for cheap small flying cars.

I'm not sure how this works. Nuclear does not seem like a promising avenue for powering small aircraft! But the larger point -- nuclear power could easily have allowed our society to continue to use more power, without cost or carbon emissions, is surely true.  

The raw fuel cost of nuclear power is crazy cheap; almost all the cost today is for reactors to convert power, a cost that has been made and kept high via crazy regulation and liability. Like the crazy restrictive regulations that now limit innovation in cars and planes, destroyed the small plane market, and prevented the arrival of flying cars.

Anything that goes into a certificated airplane costs ten times what the thing would otherwise. (As a pilot and airplane owner, I have personal experience of this.) It’s a lot like the high cost of human medical drugs compared with the very same drugs for veterinary use.… Building of airports remains so regulated (not just by the FAA) that only one major new one (KDEN) has been built [since 1990]. …

I commented a while ago on light planes. Flying cars may be a stretch, but a new light plane that is no more complex than a car (Cirrus SR22 for example) costs $500,000. Most light planes even still in production were designed in the 1950s. There's plenty of knowledge evolution -- see the homebuilt market with remarkable planes if you're willing to build it yourself. But not FAA certified. 

I joked a while ago that a visit to a local airport resembles a visit to a Cuban used car lot.  There is no reason at all but regulation that you could not have a light plane that costs $50,000. (The actual Cuban car lot will soon appear in California, if governor Newsom's ban of all sales of new gasoline cars really goes in to effect. "Cuban car lot" got this blog blocked by social media censors a while ago, I will be curious to see if it happens again.) 

It seems virtually certain that if we had had [recent] cultural and regulatory environment … from, say, 1910, the development of universal private automobiles would have been suppressed. … 

With nuclear power, we’d have had far more space activity by now. Without it, most innovation in energy intensive things has gone into energy efficiency, and into smaller ecological footprints. Which has cut growth and prevented many things. 

The crazy regulation that killed nuclear energy is quite unjustified, not only because according to standard estimates nuclear causes far fewer deaths, but also because standard estimates are greatly inflated via wide use of a “linear no threshold model”, regarding which there are great doubts:

The blog post goes on. It is a fact that existing nuclear power has killed far fewer people than fossil fuel power (via air pollution), even including the meltdowns caused by the same Cuban car lot regulation that forces nuclear power to use antiquated unsafe technology designed at the same time as the Cessna 172.  New designs are safer still.  We can debate safety costs, but first let's focus on the benefits -- what if growth could have continued at the pre-1970 level? That's a huge amount of benefit. 


The world forager elite by Robin Hanson asks the deeper question: why doesn't competition among nations loosen the regulatory stranglehold? This one is valuable for its many examples: 

The US started out with a reasonable property approach to spectrum, but then Hoover broke that on purpose, to create a problem he could solve via nationalization, thereby gaining political power that helped him become U.S. president. Pretty much all other nations then copied this bad US approach, instead of the better prior property approach, and kept doing so for many decades.

The world has mostly copied bad US approaches to over-regulating planes as well. We also see regulatory convergence in topics like human cloning; many had speculated that China would be defy the consensus elsewhere against it, but that turned out not to be true. Public prediction markets on interesting topics seems to be blocked by regulations almost everywhere, and insider trading laws are most everywhere an obstacle to internal corporate markets.

Back in February we saw a dramatic example of world regulatory coordination. Around the world public health authorities were talking about treating this virus like they had treated all the others in the last few decades. But then world elites talked a lot, and suddenly they all agreed that this virus must be treated differently, such as with lockdowns and masks. Most public health authorities quickly caved, and then most of the world adopted the same policies. Contrarian alternatives like variolation, challenge trials, and cheap fast lower-reliability tests have also been rejected everywhere; small experiments have not even been allowed.

(Related, today a nice tweet reminding us that many local building codes prohibit much cheaper and more efficient factory built housing.) 

What stops competition among countries for sensible regulation? 

One possible explanation for all this convergence is that regulators are just following what is obviously the best policy. But if you dig into the details you will quickly see that the usual policies are not at all obviously right. Often, they seem obviously wrong. And having all the regulatory bodies suddenly change at once, even when no new strong evidence appeared, seems especially telling.

Robin speculates that regulation is run by a club of global elites who jump to consensus, 

It seems to me that we instead have a strong world culture of regulators, driven by a stronger world culture of elites. Elites all over the world talk, and then form a consensus, and then authorities everywhere are pressured into following that consensus. Regulators most everywhere are quite reluctant to deviate from what most other regulators are doing; they’ll be blamed far more for failures if they deviate.


Bryan Caplan asks a similar question -- why do all large companies endorse ultra-progressive wokeism? A Becker student would think a company that allowed their expression could hire moderate or right wing (out of the closet Republican!) employees at lower wages, and outcompete the others. After thoughtfully considering the possibilities, Bryan comes down to 

Explanation #5. Discrimination law covertly stymies the creation of right-wing firms.  Most obviously, any firm that openly and aggressively opposed #MeToo and #BLM would soon be sued into oblivion.

Tentative evaluation: Even more plausible.  Imagine what would happen if a firm’s top brass loudly declared that, “Discrimination simply isn’t a problem here” – and routinely fired complainers for contradicting the party line.  Picture a firm blanketed in propaganda telling workers to “Be color-blind,” “Laugh it off,” and “No one likes a tattle-tale.”  A small business in a conservative area might get away with this for a few years, but a Fortune 500 company that stuck to its right-wing guns would go down in flames.  

I've been watching in horror the spread of the idea that central banks need to use regulatory powers to force banks to de-fund fossil fuels or otherwise push climate-change policies, and now move on to impose inequality and social justice policies. (Like them or not, not the job of central banks via bank regulation.) It seems part of the same interesting phenomenon. 

Strictly legal pressure doesn't apply as easily to global regulatory convergence.  There is more of a desire to be part of the club, what Robin referred to as the " forager system of conflict resolution."

The convergence phenomenon also makes more sense of the cultural and political forces surrounding climate. Many people point out the difficulty of one state or one country adopting climate policies (California banning all gasoline cars by 2035 for example), when China builds a coal fired plant every year. But if a regulatory religion -- good or bad -- can sweep the world's elites, then maybe such efforts are worthwhile. 

If all this adds up, though, it asks the question just why "policy-making" technocratic elite, who have been so wrong about so much for so long remain able to impose such things on the rest of us. Why are they so immune from competition? 

Are we running out of ideas or just constrained by bad regulation to do anything with good ideas? Case not yet closed, I think. Quantifying the damage of regulation is awfully hard. 


  1. This question was raised a few years ago by Gordon's book, which earned an excellent riposte from his Northwestern U colleague Joel Mokyr. "Technopessimism Is Bunk" By Joel Mokyr

    I think that there is an excellent argument that every technology has an S shaped growth curve (the 747 flew 55 years after the Wright Brothers, but the 787 is an incremental improvement over the 747). It is also true that there really is not that much new technology out there to exploit.

    Clearly, we have beaten the internet to death. I think Twitter and Tik Tok are dis-economies. You mention nuclear power, but it has been around for 70 years and natural gas is so much cheaper that nuclear plants are being closed and not replaced. Nuclear's real hope is that it is the only CO2 free power source that works 24/7/365.

    However, given all of the above, I think there are more pressing reasons for sub-par growth, which are:

    1. Fiscal incontinence: Enormous deficits with no clear path to bring them under control.
    2. Regime uncertainty. Who and how the country will be run in 2021 is totally unclear. An un-constrained leftist regime could do an enormous amount of damage.
    3. The Fed has continued its uncertain foray into expanding its balance sheet like the universe expanded after the Big Bang. The Federal Reserve system is now carrying $137 of assets on each $ of capital, a ratio that would cause it to put a commercial bank into receivership. Further its ultra-low interest rate policy acts as a confiscatory tax on savers. How they can climb down from this situation without a catastrophe is not apparent.
    4. Institutional sclerosis in major chunks of the economy. Health care spending is about one fifth of the GDP. In no other OECD country does it exceed one eighth. It is not a function of wealth. By most measures Switzerland has a per-capita GDP equal to or greater than the US, but its health care system is only 11.5% of GDP. Bringing the US back into line with the rest of the OECD means either an enormous cut back in health care expenditures or an enormous expansion of growth in other sectors. Neither seems likely. Education, Law, and Government all have symptoms of institutional problems. (1.5T$ of student loans, 40% of grads in law unemployed, bankruptcy of cities and pension funds).
    5. Attempts to solve the "Climate Change Crisis" by enforcing "renewable energy" and similar mandates. The California electric car ukase is noted above. California electricity prices are quickly approaching German prices. You can prevent forest fires by logging, controlled burns and cutting fire breaks. But California want to do it by rejiggering the world's industrial system. That is neither expeditious or economical.

    I am not an optimist.

    1. I wrote: "I think Twitter and Tik Tok are dis-economies." Further proof of this assertion, as if it were necessary:

      "FDA to TikTok teens: the ‘Benadryl Challenge’ can kill you: The social media-fueled dare to overdose on the allergy medicine can cause death and serious health problems" By Nicole Lyn Pesce Published: Sept. 26, 2020

      The “Benadryl Challenge,” which has been posted on the video-sharing app TikTok, sees users intentionally overdosing on the over-the-counter allergy medicine diphenhydramine (better known as Benadryl) to induce hallucinations.

      Last month, a 15-year-old Oklahoma City teen died from an overdose of Benadryl that was blamed on the social media stunt. The “Benadryl Challenge” was also linked to sending three teens in Fort Worth, Texas to the hospital in May.

      So the Food and Drug Administration (FDA) issued a dire warning against taking high doses of the drug on Thursday, noting, “We are aware of news reports of teenagers ending up in emergency rooms or dying after participating in the ‘Benadryl Challenge’ encouraged in videos posted on the social media application TikTok.”

    2. many things wring with yor anlaysis.

      medical: if you reformed tort law as it applies to medical malpractice you could reduce medical costs by around 20-30 % at least, and that simply eliminates the insurance cost. As well, it would reduce the over prescription of drugs and test done to cover the doctor's and hospital's asses rather than for actual medial need. Medical practitioners are typically higher paid than their European counterparts. I don't know how effective the US medical markets are but I suspect improvements in competition management woud reduce costs too.

      All your other points are mostly very recent, but the problems of falling productivity, excessive returns to capital and stagnant real wages goes back decades.

      Your response to yourself though deeply saddening is anecdote and the behaviours as old as the hills. Many companies use twitter for customer communication, the internet still has huge productivity gains to delver, as does computing technology generally.

      New technologies on the horizon mostly reside in bio-tech but there is still a long way to go in exploiting other technology.

      One point you do not make is the ageing of western society. This leads to small 'c' conservatism in any areas, a drain on resources and impediments to supply side changes that the old don't much like. The Economist made this point recently that the changes we need economically are in many cases changes they don't want, But seniors still want pensions and support.

      Another major issue is crony capitalism and the failure of the markets.


    3. Much to agree with here, but I think it is strange you don’t include inequality. Quite clearly, to me at least, this is one of the major reasons behind your points 1, 2, and 3.

      As for healthcare, this is not just a US problem. Your own example, Switzerland is a case in point. 11,5% of GDP for healthcare?

      Much of me don’t healthcare is glorified cronyism and solution of problems that either is made up, or could be better fixed by people getting out and exercising.

  2. I have been interested for some time how would the history turn out had the Locomotive Act 1861 never passed. It is known that it did kill some early steam-powered intercity bus services in Great Britain, whether they would die off without it simply due to the increased development of the railway system is an interesting question.

  3. Oh so many things come to mind. Newsom's ban on internal combustion powered cars.What about planes? no more landings in California airports? Boats? Diesel locomotives pulling Amtrak trains? Automobile dealers moving to every other state in the union? And of course, Cuban car lots where cars are 60 year old retreads. Would out of state drivers be precluded from driving to CA.? Of course some of those gas powered vehicles are over the road semi's carrying goods to California consumers.The projected federal budget deficit for 2020 is 3.3 trillion. This has to have as chilling an affect on growth as the 2007 to 2016 sclerotic annual one percent growth of real GDP. The two heads of the 9 headed hydra are inflation and growth killing taxes. If consumers anticipate a huge tax bill and save at zero rates, where does the growth necessary to pay down the deficit, fund SS and health care come from? All of this along with these draconian regulations have me despairing the future. It seems we are represented by a confederacy of dunces masquerading as policy makers.

  4. The examples are idiosyncratic--flying cars?, nuclear power stations?, etc. "Flying cars", for example, would be classified as "aircraft", unless projected by momentum through a Highway 66 guardrail over the cliff edge onto the surf-washed rocks 80 feet below, and therefore subject to regulation; the operators ("drivers") would have to qualify as pilots and be licensed to operate the aircraft ("flying cars"). This is Hollywood movie script writer stuff. Not interested.

    Nuclear energy/power plants? Small scale nuclear power plants are likely to be licensed in the near future. This is an example of innovation that directly contradicts the blogs quoted in the above blog. The problems with nuclear power plants are two fold: (a) safety of the public, and (b) leakage of the waste products from the fission reaction when improperly stored. Public safety issues exist. Cf. Three Mile Island (; Chernobyl (; and, Fukushima Daiichi ( On a lesser scale, the waste products which are highly radioactive and remain radioactive for long periods of time, must be properly stored. The technology exists, but proof that the containment vessels will remain intact for that lengthy time period is absent.

    You show a chart with an exponential curve trending through a jagged curve that appears to flat-line (with bumps), and the narrative seems to be that because the jagged curve is no longer following the exponential curve (in trend), growth has stagnated. One might also plot human population on a similar chart with a similar exponential curve and a jagged curve that appears to be in the process of flat-lining. Quel surprise? One might also observe that the output of gold is following a negative exponential trend. When a resource is finite, and subject to depletion, output does tend to taper off as the marginal cost (in the sense that John Maynard Keynes, 1st Baron Keynes CB FBA, defined 'marginal cost') increases above the commodity price (cf., substitution effect of the backstop technology). One would tend to expect use of energy to taper off or flat-line, not because of regulation, but because alternative technology becomes competitive on a full-cost basis (incl. externalities). One does not have to look too far to see that vehicles produced by Tesla Motors are becoming as common as BMWs on the streets of our more affluent urban settlements. Because of regulation? Unlikely.

    For an example, consider the history of white bed sheets versus colored and patterned bed sheets. The volume of shipments of white bed sheets tapered off, plateaued, and then declined as consumer tastes changed to favor colored and patterned bed sheets. No regulation or regulators were involved. Simply consumer tastes changed. If you were a producer of white bed sheets, you changed and added colored and patterned bed sheets, or you lived with a shrinking market share. If you were a producer of Telex machines in an age of Fax machines, you saw your income decline. If you were a producer of Fax machines in the age of the Internet and email, you saw your income decline. If you're wedded to buggy whips in the age of the automobile, you're betting on the wrong technology for income growth potential.

    Blaming changes in technology or consumer taste on regulation and regulators is not going to do you much good. Either you change your business focus or you become very good at doing less business profitably.

    As for 'growth', all the models are wrong; but, some are useful. No attribution, but some wise economist must have made that observation originally.

    1. You seem to have completely missed the entire point of the post. To use your bedsheet example, it was not a simple change in tastes, but a 400% tax on white bed sheets that led to people finding substitutes. That is regulation. Had nuclear power not been so negatively affected by regulation, then another 60 years of R&D could have been put into nuclear technology, which would have almost certainly advanced it from a cost and safety standpoint. None of these things just happened because of consumer taste, government regulation grossly affected the incentives.

    2. Exactly. Think WPPSS (more commonly known as "Whoops!"); killed by endless lawsuits, massive regulation of the nuclear industry, and the supposed infinite supply of cheap water power in Washington State, the costs skyrocketed and the project was shelved. The two towers stand in mute reproach.

    3. Problem with nuclear power is that its capacity for destruction is way ahead of anything else. Thus if you count risk against benefit its not a clear case. if you add in the long term costs of power station closure and disposal of waste the costs spiral. Them add in the chilling effect on the public of Three Mile Island and Chernobyl....

    4. AnonymousSeptember 24, 2020 at 7:36 PM .... need your help finding reference to the 400% tax on white bed sheets. Mr. Internet did not help.

  5. Our rate of growth (GDP) has slowed since the good growth period of 1947 to 1973, and especially during the 1960s (and especially from 1961 to 1965/1966, the mid-sixties being peak performance) due to a number of factors, mostly due to economic policies that favored moderation (stability) over higher rates of growth that could have possibly lead to less stability in a world where globalization was reaching full fruition, especially after the fall of communism in Eastern Europe.

    That post-WWII period was characterized by an industrial economy, much like described by Gordon. But since the 1990s our economy in the U.S. and other advanced economies has been characterized as a transition to service sector activities in lieu of industrial/commercial activities. I don’t know if we are in an Information Age but we are certainly in a age of a Knowledge Economy where personal skills are highly regarded. This whole period has been one of disruption and growing gaps in income inequality. If economics is about the distribution of resources to satisfy the wants and needs (be they material or some other wants and needs) of a society then the question is who has been benefiting in this world where we are trying to promote democratic values.

    I do not think we have done very well in this transition. I think Shoshana Zuboff hit it right in her book of about a year ago ‘The Age of Surveillance Capitalism’ where she said that what constitutes economic behavior, and therefor what we place value on, needs a realignment to reflect a more modern (read that as post-industrial) society. Redefining value to reflect the wants and needs of a post-industrial society will cause a change in economic policy, the role of government, and can result in much higher rates of economic growth. The wants and needs of people are unlimited; and therefore, there is always potential for greater rates of economic growth through the various cycles of growth we have historically gone through.

    1. YOu also need to factor in demographic change - an ageing population means fewer workers per non productive persons thus higher taxes or borrowings. But also the insidious effect of the more conservative older people on innovation and change.

    2. I do not agree with the demographic change. It is labor productivity that can overcome the demographic issue. It is not as if we have had good labor productivity since 2004 when compared to previous periods.

  6. Interesting post.

    As an immediate practical consideration, the worst regulations today in the US pertain to property zoning.

    Tough nut to crack. Oddly enough, many of the same people who lionize free markets then wish to retreat to government-enforced commercial deserts to live in.

    As far as I can tell, almost nobody wants to create rights for street vendors.

    1. Yes, after people pay sky-high prices for property with certain attributes they do fight tooth and nail to prevent any erosion of those attributes. I am guilty of this as well. I purchased a home that backed up onto a farm. I do not want any development of this land as I specifically chose it and paid a premium for this reason. The value is destroyed if this farmland is heavily developed and I incur a huge loss in its event.

      Perhaps government response should be to build the cheap housing in low cost areas and then pay the businesses to move there?

    2. Low cost areas? You mean, like, former farms?

    3. Touche. I meant to say cheap areas that do not already have residential communities around them. The community I live in has perhaps 150 recently built homes. Most living there would lobby hard against rezoning of the land right around the community. But there are large areas of land where the cheap government housing would be the first thing built. No NIMBY during construction if there are no other backyards around. Although not led by the government, that was how several communities in the area were developed and grew - they just weren't designed as cheap housing, but the same thing could happen in those cases as well.

    4. Anonymous, in England we call this Nimbyism. Not in My Back Yard.
      And its a major and increasing problem that western nations are ageing, and old people with wealth but no skin in the game with regard to work (others work, they just collect pensions) act ina avery ocnservative adn selfish manner. They hurt business growth by forcing regulation that stunts business growth so they can retire happily.

    5. Benjamin ColeSeptember 24, 2020 at 6:44 PM ..... your observation strongly suggests that regulation is dominated by provisions protecting established corporations from upstart competition.

  7. Nick Bloom, Chad Jones, John Van Reenen, and Michael Webb,
    Wow, what a survey! And a great job, thanks to these authors.

    A possible new avenue:

    Valued added chains have grown longer as represented by their charts on urban growth. I think they covered this, at least indirectly.
    But, we reach a point where transaction rates to maintain value chains are beyond human comfort. The depreciation cycles are longer than we live, and living includes the ability to stop and say hello. For example, walking around staring at our hand held screens. That is uncomfortable for us.
    Getting around this hard barrier requires something akin to a modest singularity, and that possibility is what is missing from the model. The idea of a singularity is the an underlying digital process operates outside of human knowledge.

  8. Alas, it ain't the quantity of energy consumed that matters, but rather the price.

    Don't like CO2? Go nuclear, cheap and safe nuclear, friends. :-)

  9. The only rational argument in favor of test and isolate is that it provides a huge contract to be exchanged with cronies for consideration. The most recent deaths have mostly been chronically ill since the onset of the epidemic. Yes, some have succumbed to viral load overwhelming natural defenses.

  10. I suspect (i) the regulatory drag on ECONOMIC growth is large/real, but (ii) the regulatory drag on TECHNOLOGICAL growth is largely fiction. China has little regulation and many engineers, yet no flying cars, no vast web of cheap nuclear energy, etc. There's minimal regulatory restraint on military tech development -- where most advancement comes from anyway, if history is any guide -- yet the growth trend there seems much the same, if not slower than on the commercial side. And let us not forget the ultimate form of regulatory drag is not applied to technological development activity at all; corporate R&D centers pay zero tax.

    The reason we don't have flying cars and ubiquitous nuclear is that those technologies are less valuable than people think. A self-driving car would be of greater use than a flying one to 99.9% of people. In the world of energy what's needed is cheap storage, not even cheaper generation. And in any event our most brilliant minds are currently working on quantum computing and AI, which are (potentially) far more valuable to humanity than anything in the transport or energy sectors.

    The point here is not to lose focus on how damaging overregulation has become in many areas of life (especially healthcare!). I'm rather just sounding a note of caution against becoming the center-right equivalent of the left-wing person who tries to blame every problem on income inequality. Overregulation causes MANY problems, not ALL the problems.

  11. I don't think we're running out of new ideas or new technologies. Thinking of bioinformatics, the entirety of genetics, small particle stuff, and quantum computing...

    I am curious, but alas uniformed, as to how either de facto or de jure quantum computing is regulated or controlled.

    1. The prior question about quantum computing is when will it will move to the production stage. The hype/production ratio is getting awfully high.

    2. hb September 25, 2020 at 11:43 AM .... regulation will happen as soon as an incumbent producer feels the need for protection from competitors.


    Nathan Goldschlag and Alex Tabarrok found in a 2018 study that regulation did not explain the decline in entrepreneurial activity over the last 3 decades. While regulations depress entrepreneurship, it is not to any greater degree than in the past.

  13. For regulators, regulation is a self-licking lollipop--more is always better. That's what happens when results are rarely tracked and no pragmatic cost-benefit analysis is ever done. When even Canada requires some regulations to be removed in order to impose new ones, our approach to regulation is clearly obsolete.

  14. "Quantifying the damage of regulation is awfully hard."
    Might this recent paper be a good attempt?

  15. I am not sure why I would want a flying car but road vehicles are on specified roads in part to keep driving safe. Air traffic control would be a nightmare (where are all those drones?). Nuclear waste is definitely a big concern and as well weaponry. We've made so much of a big deal about Iran and in the past WMD in Iraq. Why wouldn't there be similar concerns here?

  16. The US growth rate has gone down as more and more of the US govt budget has gone to transfers. People like transfers, but there is a cost.

  17. "but it is just stymied by the ever-increasing web of law and regulation. "

    That's why so much of the growth is in new fields, currently free from the incumbents glorying in their protective regulation, and not in older fields where they reside.

  18. Regulation effect is multiplied by how it changed the innovation dynamics.

    I'm sure it is intuitive to you. But you are not explicit about it.

    Like the old argument that maybe steam engines are as good as internal combustion. But steam hasn't been developed due to randomly initiated path dependencies.

    The naive counter argument to your post is that if an idea is really worth it, it will be worthwhile to suffer regulation for.

    This, however, ignores that innovation goes in steps, most of which do not have massive transparent certain value.

    Those steps are killed by regulations and liabilities

  19. The Internet offers the best return of any dimension of capital deployment. Partly that the nature of the thing - scalable, expandable, incrementally more capable and cheaper per unit.. but also left alone by the Jackbooted until recently. All these points are offered in opposition to the physical world and regulation. Energy in particular - although, on the Third Hand, let us all recognize the hard-to-believe progress in energy efficiency that HAS occurred. Thinking humans, left any freedom, will employ those big juicy brains of theirs.

  20. Reform, or regulatory fashion (often badged "reform")comes with elements of both elite adoption and reinforcement from the centre. Example? The electricity market design developed in NE USA, the adoption of which was funded in the Phillipines and Vietnam, to name just a couple, regardless of the spatial features of those markets that rendered significant elements of the "reform" burdensome on local industry participants and consumers, but which freed the road to World Bank and ADB loans for future electricity investments.

  21. "(California banning all gasoline cars by 2035 for example)"
    Last I heard China is banning sale of new fossil-fueled cars beyond 2025. So California is just playing catch-up while Fed is not playing at all. The "USA parking lot" is likely to become a reality. With K-cars perhaps. Could be a lot of fun. Remembering what Red Green (Possum Lodge) did with them.
    A lot of good stuff is cheap and therefore does not contribute to the growth metric.
    Measured growth is a result of ordinary folks having more spending-money. Henry Ford realised that.

  22. Two theories.

    1. Regulation is an institution, a culture. It is not geared towards economists types of optimizations, but towards following various sacred rituals of the regulation mindset.

    Which lowers the assumptions behind the "why not compete etc"
    On the churches we aren't asking it that vigorously...

    2. Conservatism and other ideas are rational in regulation, and are part of the reasoning.
    Do we really want laws to flim flam on a whim?
    We do not. Otherwise, endless issues would arise. And whoever get legislative power could do an uncounted number of horrors too.

    I can see laws from centuries back being kept. And even reformers avoiding too hasty and huge changes.

    There are costs to this attitude. But this is not unreasonable.

    Conservatism also calls for copying regulations.

    3. Having different regulations from others has various costs.
    In product standard, this is obvious. Because of exports, you do not want to have multiple production lines.
    But legislation is difficult and complicated. Using a "true and tried" law text from another country has an efficiency bonus.

    Blame issues also exist.


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