This is something I've been wondering about for a long time
Two recent pieces. First, Tyler Cowen:
Michael Mandel, an economist at the Progressive Policy Institute, compares many regulations to “pebbles in a stream.” Individually, they may not have a big impact. But if there are too many pebbles, a river’s flow can be thwarted. Similarly, too many regulations can limit business activity. When the number of rules mounts, it can become hard for a business to know whether it is operating within the law’s confines. The issue is all the more problematic when federal, state and local constraints all apply. Our public sector is overregulated, too. For instance, the tangle known as government procurement has exacerbated problems with the Affordable Care Act’s health insurance exchanges. The required formal processes made it difficult to hire the best possible talent, led to nightmare organizational charts and resulted in blurred lines of accountability. It’s hard to turn on a dime and fix such problems overnight, no matter how pressing the need.
Secondly, Matt Ridley:
Political freedom eventually tends to undermine economic freedom in other ways, as is plainly evident in the furring of the bureaucratic arteries of the West. As the economist Mancur Olson pointed out, democracy is open to influence by special interests and these quickly capture the political process, influencing legislation to erect barriers to entry against competitors, to direct subsidies to themselves and to help officials maximise the budgets of their agencies — what economists call rent-seeking. That was roughly what destroyed Chinese prosperity before, under the Ming empire — an economically dirigiste regime that Europe increasingly resembles.
I understand the point, or at least the intended aim, of many of the regulations that beset me in my own working life. But I am increasingly coming to the opinion that no small company will take on a new project in anything resembling a primary or manufacturing industry inside the EU. That of course means no new companies either and that in turn means the near death of invention and innovation as both of these come primarily if not exclusively from new entrants, not from incumbents sharpening up their act.
In my gloomier moments I do wonder if that is, as Ridley fortells, what the future holds for us. An economy increasingly strangled, as was Ming China, under the weight of regulations. Which leads, in my cheerier moments, to wondering whether I will still be hale and hearty when the revolution comes and we rise up to strangle all the bureaucrats. For I am increasginly convinced that it will be the slow stranguation of the economy by ever more bureaucracy that will sap all of the life out of Europe.