Bureaucracy kills productivity growth

Now, of course, this is a boss complaining that the bureaucracy won’t allow him to do what he wants to do:

The UK competition regulator is stifling innovation and entrepreneurship by taking too long to make decisions, according to a senior Adobe executive who is overseeing its $20 billion takeover of Figma.

In an interview with The Times, David Wadhwani, president of Adobe’s Digital Media business, said: “The process should not take 15 months to get to this stage. I think we can all agree that expediting these kinds of decisions is important for innovation and for doing the right thing by consumers and customers to make these decisions faster and move more quickly.”

In November, the Competition and Markets Authority (CMA) said it was minded to block Adobe’s multibillion-dollar takeover of the app interface design business Figma because it could harm competition in product design, image editing and illustration. A final decision will be made by the end of February next year.

We’re even prepared to accept, for the moment and for this argument only, that the concerns of the CMA are valid. Maybe it will cause problems in some corner of this market. You know, maybe.

But now the point we’ve made before. There are two types of economic growth, there’s simply processing more economic resources into more output. Not very green, it’s also how all of the Soviet Union’s growth turned up. More iron ore and coal to make the steel for the machines to dig up more iron ore and coal. There’s also becoming more efficient at our use of economic resources. This is what produced about 80% of the economic growth in the market economies in that long 20th century.

Becoming more efficient is also known as increasing productivity. We can talk about total factor productivity (how efficient we become at using everything) or the one that politics currently whines about, labour productivity. How much more value do we gain from an hour of human labour?

This productivity increase - it comes from either doing new things, or doing old things in new ways. As above, this has historically been 80% of total growth. The speed of GDP growth is the speed at which we do those new things or things the new way. This is also the same, in concept, as the speed of productivity growth.

So, now we’ve a bureaucracy taking 15 months to even decide whether they might have a concern about someone suggesting a new arrangement for doing something or other.

Sure, that new thing might be bad. Might be good too. But at some rate of bureaucratic cogitation the time spent to think through it causes as much damage to economic and productivity growth as simply allowing a bad thing to happen.

We’re not getting richer precisely and exactly because we’ve a bureaucracy deciding how we should be getting richer.

The answer is obvious - simply abolish the Competition and Markets Authority. Replace it, perhaps, with something efficient, that doesn’t, by definition, make us poorer. Or a coin toss, likely to do less harm.

Given that example we have of a sensible political reaction to bureaucracy in Argentina, so, where’s that chainsaw gone?