What timing. I just wrote a blog post on how crony capitalism is hurting American business dynamism. In particular, regulation makes it harder for new firms to enter a market and gives an edge to large incumbent firms who can lobby for favorable new rules. And as I write, ” … fewer startups means fewer disruptive new competitors to force big business to innovate or die.”
Then I see this Mercatus Center study from Antony Davies:
A new metric provided by RegData counts the number of “binding words”—“shall,” “must,” “may not,” “prohibited,” and “required” —that appear in the Code of Federal Regulations , and cross-references those word counts with the industries to which they apply.
A comparison of the RegData data to production-efficiency measures provided shows that industries that are subject to less regulation have significantly higher production-efficiency measures than do industries that are subject to more regulation.
Over the period 1997 through 2010, the least regulated industries expe rienced 63 percent growth in output per person, 64 percent growth in output per hour, and a 4 percent decline in unit labor costs. Over the same period, the most regulated industries experienced 33 percent growth in output per person, 34 per cent growth in output per hour, and a 20 percent increase in unit labor costs.
The anti-growth formula: More regulation = less competitive intensity = less innovation and productivity.