“Federal Regulation and Aggregate Economic Growth” by Seater, John J and Dawson, John W.

    “In 2011, nominal GDP was $15.1 trillion. Had regulation remained at
    its 1949 level, current GDP would have been about $53.9 trillion, an
    increase of $38.8 trillion. With about 140 million households and 300
    million people, an annual loss of $38.8 trillion converts to about
    $277,100 per household and $129,300 per person” (p. 160).

    Surely preventing wealth creation is part of the picture that depicts lack of progress in this country.

  • LLC

    An interesting video, to be sure. But, typically, it does not address the ever increasing problem of what to do with the displaced workers. Retraining and relocation are only partial answers. We just elected a new President of questionable value to our species by ignoring the plight of displaced workers. And those segments of the population who will find the greatest difficulty finding employment in the future are, paradoxically, the most prolific reproducers. When are we going to get real about this? And, also, lets not pretend that all regulation is equally valueless. Sometimes it is necessary to accomplish social justice goals, the importance of which outweighs financial goals, especially when those business goals are based on shortsightedness or willful self-blindness. Smith’s ‘invisible hand’ is neither omnipotent nor omniscient.

    • Brian Burtt

      Does anybody have practical thoughts on how to allow, let us call it necessary-regulation (say, rules against food contamination, or fraudulent claims), while dis-allowing sabotage-regulation? Something procedural, legislative? Or do we need a wholesale cultural shift that insures every piece of legislation is subjected to intense public scrutiny in this respect? (Which seems both unlikely, and a large diversion of people’s attention from the pursuit of their own lives.)

      • LLC

        I’m afraid that as long as crony capitalism is as profitable to both politicians and their corporate backers, it going to be an uphill fight at best. Going to a public campaign finance system would be a great start, but I don’t see that happening in my lifetime.

      • IceTrey

        Yes, you need a law against poisoning people. Exactly how that is done is up to the individual.

      • Puppet’s Puppet

        “Safety” is the single biggest excuse for sabotage-regulation of consumer goods and services (it’s one of the biggest tools used against Uber, in fact), so promoting a culture of “only regulate for safety” will not be nearly enough to eradicate rent-seeking. The usual minarchist answer is “only fraud should be illegal,” but even this isn’t free of problems if we choose to fight it with statute or regulation–witness the FDA’s current preposterous efforts to define “natural.” And leaving it to tort jurisprudence, as is most commonly suggested, doesn’t strike me as doing much in practice but making the “lawmaking process” more decentralized and ad hoc.

        It’s a tough nut to crack.

      • j_m_h

        While probably a very messy, and probably still imperfect, approach might be to apply a standard to all regulation: The purpose of economic regulation is to support the functioning of well ordered markets that produce socially positive outcomes. The general criteria being rules government market interactions should result in market incentives that place downward pressure on output prices and upward pressure out output quality.
        So those might be nice words but how does that then weed out the “sabotage-regulations”? This is where me blend in our common law heritage and allow any regulatory rule to be taking into a local court and if shown to be contrary to the stated goal (downward price incentives and upward quality incentives in the given market) then those local conditions could reject the force of the regulation even if its origins is from a higher political structure (e.g, State or Federal). Part of the burden here should be to show the removal of the rules doesn’t result in an even worse condition. If, say, a Federal regulation is successfully challenged in X number of location then that regulation should be seen a excessively flawed, dropped from the books and, if any are interested, new regulation would need to be drafted in a way that clearly addresses the earlier flaws.
        I would think expiration dates would also be of some use here.

    • Sean II

      I’ve recently been fighting a change of mind on this point.

      For years I accepted the standard econ line that says: “absent some interventionist barrier… displaced workers will always find other uses for their labor…the ZMP worker is mostly a myth, etc.”

      More and more I think we’re facing the falsification event for that idea. More and more it looks like the NMP or ZMP worker is a real and growing problem.

      One thing you can bet on: econ will be the very last field to face this fact, trailing art, politics, sociology, etc.

      • Puppet’s Puppet

        What is certain is that cash transfers will always, always be better in every way for dealing with this than market regulation. I can’t imagine that anyone actually believes there might be no ZMP workers, so if we want these people taken care of it can’t all be negative income taxes.

        I’m not entirely sure this issue has been ignored by economists. For one thing, the idea that some people are simply unable to work has been considered since the days when econ was a branch of ethics. What is problematic is that I think it’s usually been assumed that such persons are easily identifiable and well positioned as a group within the capabilities of society’s altruism network. (I.e., infants, elderly, or disabled relatives would be cared for by course by family; public (voluntary) charity would be enough to take care of the small remainder.) We should always have been less glib about this than we have been. We need to be very careful, very conservative, about the altruism we assume; because to assume too much is Utopian. We are supposed to be the ones who envision progress for men as they are, not for men as we want them to be.

        And it may well turn out that the number of people who cannot work is or will be much bigger than most have ever conceived. We should be asking ourselves how we’d react to this anyway, even if we don’t think it is likely. But here again, I don’t think economics has done such a poor job of asking these types of hypothetical, “philosophers’ questions.” For decades people like Friedman, McCloskey, Rothbard, and many others have been willing to defend markets on the terms of leftist desiderata, even if they themselves ultimately had other moral foundations. This led many of them to be the intellectual pioneers of government cash transfer proposals like UBI and EITC–for them, a second-best to a completely nonredistributionary government; for others, perhaps “refugees” from the statist left, a first choice if push came to shove.

        And again, recently we seem to have seen a flowering in interest in cash transfer schemes, both for private charity and government policy. This has been due in large part to technological advancements putting a larger emphasis on empirical results, and it has both the government and NGO charity-industrial complexes starting to sweat a bit. The “effective altruism” movement seems to be a huge thing lately among the tech crowd (not to open that matter again!) with these people putting their wonkish do-gooding tendencies to work for greater liberty and real-world effectiveness instead of against it. Not just government welfare bureaucracy, but self-serving rackets like Susan G. Komen, and genocidal rackets like Live Aid, may be a thing of the past if this catches on.

        In fact, it seems to be tech futurists who are doing the most to draw attention to the possibility that most people may be ZMP. This vision is driving a lot of their UBI interest. Ridiculous as they usually are, it probably takes a futurist nowadays to look at a future of growth without employment and see it as a good thing. Ah, everyone can just live off a giant UBI as they form garage bands and comment on philosophy blogs, they say. Any poor person since the neolithic revolution would recognize the obsolescence of work as nothing short of their wildest fantasy, and it’s a sign of just how profound our present perversion is that it would cause nothing but fear and hand-wringing from mainstream sorts today. Whatever happened to the days when our nation and our lives had a sense of purpose? Our government must do whatever it takes to get buggy whip factories opened in every county in this country, so people can have a sense of dignity once again!

        There ain’t no short-handled shovels,
        No axes, saws, nor picks.
        I’m bound to stay
        Where you sleep all day,
        Where they hung the Turk
        That invented work,
        In the Big Rock Candy Mountains.

        • Sean II

          I feel obliged to warn you that song takes – how shall one say? – an uncomfortable path, nearer the…end, as it were. Do watch your six.

          Back on topic, I think the below excerpt from Bryan Caplan (who is, not at all coincidentally, an open borders fanatic), sums up the attitude most economists have toward the idea there might someday be a significant fraction of people who are worthless at any price, vis-a-vis the labor market.

          “Non-economists have been falsely predicting the technological obsolescence of human labor for centuries. Economists have been correcting them for about as long. Clearly ZMP’s psychological appeal far exceeds its true relevance. This creates a very high burden of proof for anyone who claims that the ZMP nightmare is finally a reality.”

          That last part is a grave mistake. A series of false predictions for X does not in fact influence the future probability of X. (Caplan and co. famously make the same error in other realms – e.g. “Skeptics predicted transformation of our culture from the influx of Italians, Irish, Germans, Poles, and Jews. They were wrong again and again, therefore…nothing bad will happen if tomorrow we allow a massive influx of Somalis”.)

          I realize it’s tedious and all, but each new claim must be judged on its merits. The fact that the machine-loom didn’t actually make any large group of people permanently obsolete 200 years ago doesn’t actually tell us if machine-learning will or won’t make people obsolete tomorrow.

          The argument has always been: somewhere along the line, there’s a point where we might run out of things-to-do for people with a limited capacity for learning new things, a point where re-tasking won’t work anymore for workers at certain margins in the spectrum of human capital.

          One key piece of evidence, already available, can be found in the extreme mal-employment of workers at the lower bound of what used to be white collar work. The people who once served as 2nd Assistant Bookkeepers – IQ=105 -110ish – have been almost completely replaced by software, and it’s easy to see where many of them ended up. These are the people who staff the harmful sectors of our “economy”. They’re college administrators, government bureaucrats, grievance studies majors, quango apparatchiks, etc.

          We can bullshit ourselves these people are “working” because they get W-2s, but they aren’t. Most are either un-productive or counter-productive.

          Now, I realize that the Econ model says “No problemo, once Excel takes away the job they would have done in 1980, they’ll simple fall back on cleaning toilets”. But that’s not what happens. Our culture won’t permit anything like that to happen. We’ll do all kinds of crazy things before we allow, say, the 105 IQ daughter of a 125 IQ attorney end up driving an Uber.

          Indeed, it seems like we’ll even let us ourselves create an entire sub-world of fakery and foolery just to avoid it. At great expense, too!

          Of course a similar problem exists at the low end of the blue collar human capital spectrum.

          Here it’s not just a lack of marketable talents and skills. There’s also a severe shortage of conscientiousness. Which means: even if you CAN in theory earn a living by picking up boxes or scrubbing floors, employers will go out of their way to use capital-labor substitution as a means of avoiding your troublesome behavior.

          Quick MBA puzzler: how much profit must you wring from 100 minimum wage men, to cover the cost of the violence that comes from having 100 minimum wage men on your property.

          Answer: sell your business and go back to law school.

          • King Goat

            “A series of false predictions for X does not in fact influence the future probability of X. ”

            Maybe for coin flips, but for people or societies this view would suggest there’s nothing to learn from history. At the societal level are we not to take from communism’s failures on many levels in Russia, in China, in North Korea, etc., no burden of proof when the next communist scheme is proposed? Or as individuals, are we to say ‘well, those last two letters from international royalty needing my bank account didn’t end well, but this new one in my inbox is an entirely new matter!”?

          • Sean II

            You think it’s common sense telling you the best way to predict the behavior of Somalis is by observing the behavior of Germans and Irishmen?

            No, that’s not common sense. That’s the sort of idea one can only believe after years of expensive education.

          • King Goat

            When almost exactly the same parade of horribles was trotted out for the German and Irish, with all the same scientific veneer, well, yes.

          • Sean II

            “Once people fretted over the difference between Collies and Shelties, but they were wrong. Turns out the difference is slight, and those two breeds have little trouble getting along.

            Now people fret over the difference between Collies and Pitbulls. But we can safely assume they’re wrong, and be very stubborn about it, because of what happened before.”

            See how stupid that is?

            It amounts to saying “the behavior of Pitbulls can be accurately predicted from the behavior of Shelties”.

            No, it can’t.

          • King Goat

            Not saying it’s safe to conclude, just that skepticism is warranted.

            When ‘concerned scientist’ and activist groups tell us for a decade we need to slow down industry because of a population bomb, and their alarmism turns out to be much ado, and then they do the same, with similar results, with the ozone layer, and then again with greenhouse gases, etc., then when they now say ‘OMG its global warming, polar bears will be surfing and we’ll all be underwater!!’ it’s sensible to be skeptical. Why wouldn’t we apply similar reasoning to the latest round of immigration alarmists?

          • j_m_h

            But for the most part he Germans and Irish came with something of a common cultural background. That’s not the same for the Somalis. That’s something that does need to be accounted for in any comparison of inflows.

          • King Goat

            I think it might be too easy to exaggerate how culturally similar a 19th century Irish and German peasant had in common culturally. But, luckily for my argument the anti-immigration alarmists have been so wrong about so many groups I can just pick another example, say, the Chinese or Japanese, both quite culturally different than ‘Anericans’ and both decried in similar ways to how Somallis are now.

          • Theresa Klein

            Speaking of ‘Big Rock Candy Mountain’…. I sort of read the song as mocking the idea of religion. He’s basically a preacher going around to hobos preaching about the hobo heaven, which is a ridiculous parody of the Christian heaven.

          • Sean II

            It’s not just a parody of Christian heaven. The buggery part makes it also a satire of Islamic hell.

          • j_m_h

            I think I agree that the assistant bookkeeper displaced by Excel doesn’t become the janitor but I think the argument is that we end up with a lot of scope for relatively unproductive (from a given perspective) workers because a sufficient surplus exists for distribution within all but the smallest businesses. It’s only when that surplus starts to contract we see these people as ZMP. Moreover, the culture resets at this point and those Excel-displaced workers do start looking at the janitorial/house-keepinghelp wanted positions.
            (Wondering is you’re also thinking about the recent news from Amazon and it’s approach to brick and mortar stores.)

    • IceTrey

      “Sometimes it is necessary to accomplish social justice goals,”

      There’s no such thing as social justice in libertarianism.

      • LLC

        My friend, I fear you may be missing what is perhaps the single biggest point of this blog.

        • IceTrey

          To give people a false impression of libertarianism? You do realize attaining any social justice goal requires the initiatory use of force which is completely rejected by libertarianism?

          • King Goat

            So you don’t think any social justice goal has or can be achieved by something like boycotts?

          • IceTrey

            As I understand social justice the government is always involved. A boycott is just capitalism. If you’re talking about equality of opportunity then of course libertarianism is the answer since everyone is considered a minority of one.

          • King Goat

            Of course if you’re going to define social justice as involving something necessarily anathema to libertarianism then you can conclude all social justice is necessarily anathema to libertarianism.

            I don’t think any proponent of social justice would find the Montogmery Bus Boycott to not be included, and it involved no initiatory use of force.

            Social justice involves goals. Boycotts are tools. Tools can be used for all kinds of goals, and goals can be achieved by using a variety of tools.

          • IceTrey

            The article is about regulation and LLC’s comment was “And, also, lets not pretend that all regulation is equally valueless. Sometimes it is necessary to accomplish social justice goals,”.

          • King Goat

            Perhaps you should have said “there’s no such thing as achieving social justice goals using government tools such as regulation” rather than “There’s no such thing as social justice in libertarianism.” Even given the context that seems like a broader type of statement (especially when paired with your later statement, just as broad, “You do realize attaining any social justice goal requires the initiatory use of force which is completely rejected by libertarianism?”).

          • j_m_h

            This discussion reminds me a bit about a lot of the literature regarding market failure where many examples were provided showing how the good outcomes were not due to government intervention. E.g. The Lighthouse in Economics. One observer, however, pointed out that in every case the solution was the result of a combination of market and government.

  • Theresa Klein

    No time to watch the video.
    Do you mean is “Is it morally permissible?”, or “is that what’s being done?”, or “does it work?” ?

    Also, why would anyone want to sabotage “progress”? I’m sure most people think that whatever policies they support constitute progress.

    Personally, I think that there is a small slice of the left that explicitly uses regulation to hamstring the “capitalist system” as they see it. From my perspective, they are sabotaging progress. But I’m sure that’s not how they see it. If the situation were reversed, I probably wouldn’t eschew regulation as a means to hamstring my political opponents either.

  • Counsellor

    In the interactions of individuals and groups in what is referred to as “our economy” certain dynamics are generated in the adjustments of individual and group objectives which occur in the circumstances of their transactions. “Regulations,” by their designs and purposes, can (and do)
    alter the circumstances in which interactions occur , and thereby disrupt the generation of dynamics of that economy. That disruption can (often does) result in a “freeze” of the dynamics, which can (and does) lead to levels of stagnation.

    Those effects are to be expected when the objectives of a third, non-participating, party are interposed in the processes of adjustments of objectives by the actual participants.