Killing the American Dream

I sort of have an idea of what the “American dream” is, but I stuck the phrase in Google to see what would pop out.  Here’s what did:

“[T]he ideal that every US citizen should have an equal opportunity to achieve success and prosperity through hard work, determination, and initiative.”

I was sort of thinking along the lines of “owning a home” or “owning a business,” but I don’t think this is a bad summation of the dream.  And based on this definition, we are seeing this American dream being systematically killed.  Here’s some evidence from a recent piece in the Wall Street Journal:

The progressive explanation for the slowest economic recovery in nearly 70 years is that expansions after financial crises are always like this. There appears to be no statute of limitations on this excuse, which is especially convenient every four years. But those who want more than a political rationalization might look to the all-time presidential record of costly regulation set by the Obama Administration.

That’s the news from a report to be released soon showing that President Obama’s regulators have completed their 600th major rule. A major rule imposes costs of more than $100 million. For those keeping score, that’s an average of 81 big ones a year, or roughly one every three days the government is open. Who says our bureaucracies are inefficient?

Remember all of that talk about a “do-nothing Washington” and “gridlock?”  Well, all that has gone the way of the Dodo.  And it didn’t just start under the current administration:

The two George W. Bush terms were no deregulatory prize, contrary to progressive myth, having pushed out 496 major rules. These included such charms as rules to implement Sarbanes-Oxley and the expansion of Medicare.

The cost of all of this regulation, in terms of real dollars and cents, is staggering:

Sam Batkins of the American Action Forum, who did the study, calculates that the economic cost of all this adds up to $743 billion, based on data provided by federal agencies. Mr. Batkins doesn’t say this, but that estimate is almost surely an understatement because agencies routinely low-ball the costs and overestimate the benefits of the rules they propose.

Mr. Batkins offers some comparative cost perspective: $743 billion is larger than the GDP of Norway and Israel combined, and it amounts to a regulatory tax of $2,294 on every American. This eventually shows up in higher prices, or fewer jobs created, or reduced profits and wages.

The cost in terms of our freedom is also staggering.  How so?  Well, let’s take another look at that definition again:

“[T]he ideal that every US citizen should have an equal opportunity to achieve success and prosperity through hard work, determination, and initiative.”

Governmental rule making and regulation creation cost real dollars, but these things also create a legal maze that, over the long haul, can only be navigated by those with the resources to do so.  Many businesses, especially those that aren’t well capitalized, will choose to leave the market place rather than pay the cost of regulation.  (The short analysis of this is that their return doesn’t out weigh the risk involved.)  Similarly, people that want to start a business that may be involved in a highly regulated industry will often lack the capital or resources to overcome the red tape.

The inability of people and businesses to move easily into and out of markets leads these markets to be filled with only the biggest players.  These entities with much larger resources have the ability to deal with onerous regulations — and may even encourage these — and in many cases wind up functioning as a quasi-governmental unit.

Yes, regulation is needed in certain areas.  But overall, regulations usurp the authority and power of the free market.  Overall, regulations sap your freedom.  Consider for a moment how the free market, or capitalism, is supposed to work.  A need is identified, someone moves to fill that need, and then the market reacts.  If the product or service is good, more demand is created and those who fill that demand are rewarded.  If the product or service isn’t good, the market reacts and those who have made a move to fill this demand are rewarded in a negative way.

For this, capitalism, to work in the best way, I think two things are key:

  1. Education – Ignorance is not bliss in a free market.  Those without at least a basic education level aren’t able to address risks in a way to protect themselves and, ultimately, some will feel compelled to provide this for them (e.g. the government).
  2. Christianity – Whether you agree with Christianity or not, you would have to agree that the tenets of Christianity — if followed — help the market to work best.  Consider the passage of Scripture found in Philippians 2:3-4, “Do nothing from selfish ambition or conceit, but in humility count others more significant than yourselves. Let each of you look not only to his own interests, but also to the interests of others.”  This is incredible!  Who does this on their own without something to prompt them?  When this works, this serves as a way to self-regulate the market.

Without these two things, capitalism tends to veer off towards the courses of greed and corporatism.  When things are ALL ABOUT THE MARKET, things usually turn into ALL ABOUT THE MONEY.  Money is important and receiving a return on an investment is not immoral or against the precepts of following Jesus Christ.  But when things are all about the money and when they aren’t balanced with education and the common grace that flows out of a country that chooses to honor Christ, well…  Well, we get what we’re getting now.  We are regulating ourselves to death and killing the American dream.

 

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