Common Sense EconomicsSection 2 Element 3

Limits on Government Regulation

2

Limits on Government Regulation

Economic progress comes through limiting government regulation that reduces trade and retards economic progress

Regulation, Competition, and Economic Growth

Competition promotes the efficient use of resources and provides a continuous stimulus to improve, innovate, operate efficiently, keep costs down, and cater to the preferences of consumers.

A heavily regulated business climate tends to reduce competition and lead to a lack of economic progress…

4

It’s Hard to Know What Will Work…

Ken Olson, chairman/founder of Digital Equipment Corp., 1977: "There is no reason anyone would want a computer in their home."

Fred Smith’s (FedEx) Yale University Senior Project Grade Remark: "The concept is interesting and well-formed, but in order to earn better than a 'C,' the idea must be feasible."

5

It’s Hard to Know What Will Work…

Would you have invested?

6

It’s Hard to Know What Will Work…

Who would have thought….

Regulation, Competition, and Economic Growth

For Example: Lets look at my home state of West Virginia!

Regulation, Competition, and Economic Growth

For Example: Lets look at my home state of West Virginia!

The Regulation Dice Game!

Let’s play a game to see how different regulatory environments affect economic growth!

World Bank DataCountry Ease of Doing

Business Rank# of days it takes to start a business

# of procedures it takes to start a business

Income per capita (2010 data)

Singapore 1 3 3 $41,120

Hong Kong 2 3 3 $31,757

United States 4 6 6 $47,153

Average 2.33 4 4 $40,010

Rep. of Congo 181 160 10 $2,970

Venezuela 177 141 17 $13,590

Haiti 174 105 12 $671

Average 177.33 135 13 $5,744