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Nothing will come of nothing, as overregulation leers

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Rockbiter: Near my home there used to be a beautiful lake, but then it was gone.
Tiny:
Did the lake dry up?
Rockbiter:
No, it just wasn’t there anymore. Nothing was there anymore. Not even a dried up lake.
Tiny:
A hole?
Rockbiter:
No, a hole would be something. No, it was … nothing. And it got bigger and bigger.
— "The NeverEnding Story" (1984)

"The NeverEnding Story" is a 1984 film loosely based on a fantasy novel by the German author Michael Ende. The story centers on the story a boy, Bastian, is reading about a land called Fantasia that is being erased by … nothing.

The Nothing is obliterating Fantasia because basically kids aren’t reading. In brief, Bastian saves Fantasia by engaging in the book. In so doing he reified Fantasia as something.

The moral of the story is that children voluntarily not reading was causing the death of imagination, and in its place would be nothing — not even a place. And no one would be able to envision not what should be there (now that there is no there), but what should or could be.

The true menace of the Nothing is that even a hole, a gap, would still be Something. Not being able to imagine any something is an ontological threat.

The Nothing and North Carolina commerce

What brings to mind the Nothing is a series of news items over the past few days:

  • The News & Observer reported that North Carolina deer farmers "accuse[d] the state Wildlife Resources Commission of targeting their industry, unfairly stoking fears about a disease fatal to white-tailed deer and being overly aggressive while raiding farms with un-permitted deer." A new state law had lifted a moratorium on deer farms, but the commission voted in October to exempt white-tailed deer and elk from that law, citing concerns they are prone to chronic wasting disease.
  • The Charlotte Observer’s "Bank Watch" discussed banking regulations with Thad Woodard, CEO of the North Carolina Bankers Association, who discussed the need for oversight of the Consumer Financial Protection Bureau, a federal bureau created ostensibly to protect consumers after the financial crisis of 2008 but that has been operating "unencumbered," per Woodard. Expanding and "duplicative" regulations carry exorbitant compliance costs. Woodard described such overregulation as "sitting like a heavy weight on the banks and inhibiting their ability to do business." Especially harmed are smaller community banks in low-growth rural communities.
  • The North Carolina General Assembly is preparing to consider "new state regulations in 2015 for fast-growing ‘sharing economy’ companies such as Uber and Airbnb," the News & Observer reports. Established taxi services and inns, which already deal with extensive and expensive regulations, complain about lost business from this new avenue of competition.
  • The village council of Whispering Pines passed a new land development ordinance affecting beekeepers, according to The Pilot. Now in order to keep bees, beekeepers must first "apply for a minor special use permit, obtain certification after attending a beekeeping course, alert their neighbors that they intend to tend bees so that the neighbors will both be informed and have a formal avenue for protest if necessary, and other provisions."

Granted, these all seem like "nothing" individually, but comprehended in full they are bites at the entrepreneurial imagination. They are not four discrete events but four recent samplings from an ongoing stream of overregulation.

A common theme — as it is so often with regulation — is protectionism for established providers against competition from new entrants and new ways. Hurdles, red tape, compliance costs, meddling, and so forth all work in effect to stifle and end economic activity.

They are small takeaways compared with the estimated $1.86 trillion annual cost of federal economic, environmental, health, and safety regulation — but they are additional costs that add up. Empirical studies of state regulatory burdens were even more likely than studies of state tax burdens to find negative economic effects. That is why state regulatory reform is so important.

Econometric studies can at least estimate the consumption by Nothing. Appalachian State’s John Dawson and N.C. State’s John Seater recently found that the growth of (just federal) regulation since 1949 has reduced the national GDP down to about one-fourth of where it could be.

Dawson and Seater found that:

Federal regulations added over the past fifty years have reduced real output growth by about two percentage points on average over the period 1949-2005. That reduction in the growth rate has led to an accumulated reduction in GDP of about $38.8 trillion as of the end of 2011.

That is, GDP at the end of 2011 would have been $53.9 trillion instead of $15.1 trillion if regulation had remained at its 1949 level.

Again, those costs don’t include local and state regulations (or, worrisomely, more recent hyperregulatory gut-punches such as the Affordable Care Act, Dodd-Frank, or the ever-expanding EPA dictates).

Still, they show the U.S. economy has red-taped itself out of nearly $40 trillion in GDP and left itself with a mere $15 trillion. Our economy could be four times bigger. We could be four times wealthier.

What innovations do we not have? What technologies do we not enjoy? We cannot know what isn’t in place because we don’t know of all the places that there could be.

In another scene from "The NeverEnding Story," almost the climax, the book’s hero, Atreyu, meets the fearsome helper of The Nothing, G’Mork. There we learn that the Nothing is not without a certain appeal:

Atreyu: What is the Nothing?
G’mork:
It’s the emptiness that’s left. It’s like a despair, destroying this world. And I have been trying to help it.
Atreyu:
But why?
G’mork:
Because people who have no hopes are easy to control. And whoever has control has the power.

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Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. Serving as Senior Fellow of Regulatory Studies and also Research Editor at the John Locke Foundation, Jon gets in the weeds of all… ...

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