Saturday, November 17, 2012

Have regulations hurt American competitiveness?

The University of Pennsylvania's RegBlog on that fraught subject:

After concluding that the United States’ competitive advantage may have weakened in the past half-decade, Globerman and Georgopoulos proceed to investigate changes in the American regulatory environment. Relying on data collected from various survey responses, they conclude that “the preponderance of evidence … suggests that the burden of regulation on the private sector has increased in the United States relative to other OECD countries, at least since 2005.” The authors rely on survey data, as opposed to quantifiable measurements, because in their view there is no scholarly consensus on how to quantify a country’s regulatory regime.

The World Economic Forum’s Global Competitiveness Report provides the bulk of Globerman and Georgopoulos’s data. According to the authors’ reading of that report, the United States was ranked seventh in 2005 for having the smallest burden of government regulation but slipped to eighth by 2011. In 2005, the United States ranked third for the fewest number of days required to start a new business, but by 2011 it had slipped into a tie for sixth.

Perhaps most striking, say Globerman and Georgopolous, is that the United States slipped from being tied for third for perceived strength of property rights in 2005 to fifteenth by 2011. They note, however, that there was no change in the U.S. ranking based on respondents’ assessments of the number of procedures required to start a new business.

While politically understandable, it was a bad time in the United States to unleash the dogs of regulation. For almost four years, our national regulatory policy has been sharply at odds with our fiscal and monetary policy, which explains in part why the latter have been so ineffective.

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