Virtually Impossible to Find – Unless One Looks

by Don Boudreaux on January 2, 2018

in Growth, Regulation

Here’s a letter to the New York Times:

In “The Trump Effect” (Jan. 1) Binyamin Appelbaum and Jim Tankersley favorably quote Jared Bernstein’s assertion that “[t]he notion that deregulation unleashes growth is virtually impossible to find in the data.”

Mr. Bernstein’s denial that evidence exists of a negative relationship between regulation and economic growth is startlingly mistaken.  Here are just two (of many) instances of what Mr. Bernstein describes as “virtually impossible.”

In a 2003 paper, Alberto Alesina, Silvia Ardagna, Giuseppe Nicoletti, and Fabio Schiantarelli found that “various measures of product market regulation are negatively related to investment, which is, of course, an important engine of growth.”  And in a 2016 study, Bentley Coffey, Patrick McLaughlin, and Pietro Peretto reported the following: “Using a 22-industry dataset that covers 1977 through 2012, the study finds that regulation – by distorting the investment choices that lead to innovation – has created a considerable drag on the economy, amounting to an average reduction in the annual growth rate of the US gross domestic product (GDP) of 0.8 percent.”

One can dispute the methods and conclusions of these and other such studies.  But googling “deregulation” and “economic growth” makes it virtually impossible to take Mr. Bernstein’s assertion seriously.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030


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