Tuesday, August 30, 2011

Outrunning The Bear – Part 3

This is a post in three sections, roughly centered on these three themes:  Where We Are - How We Got Here; Why Nothing Will Change Soon; and Where We Should Be Going.

Part 3 - Where We Should Be Going

An old joke has two friends out camping and hiking in the mountains.  While in the woods, they stumble across an angry bear, which begins to move menacingly towards the two friends.  One friend suddenly takes off running.  The second calls to the first:  “Hey, you’re not going to out run a bear.”  To which the first replies: “I don’t have to outrun the bear, I just have to outrun you!”

The United States is in the midst of its most trying economic circumstances in 80 years.  There are three primary crises facing us:  Loss of confidence in the ability of our government to get control of runaway budget deficits; Loss of the US Dollar’s position as the international monetary unit of trade; Loss of confidence in our government’s ability to pay its debts without inflating them away.  Failing to successfully resolve any one of these crises will precipitate a huge loss of asset value and profound structural economic changes.  The stock market’s wild swings over the last few weeks show how tenuous the situation has become.

On a local level there is little we can do about these macro issues.  However, there is much we can do to position ourselves to be more attractive than the communities with which we compete for capital investment and jobs.  We must make Colorado Springs a lower cost place to do business.  Put another way, we must be more productive than our competition.

All of our local governments should commence a deliberate review of their regulations.  The problem which must be recognized and addressed is that many nearly all government regulations reduce productivity.  Indeed, they are a huge drag on productivity, adding costs without creating either better products or more of the product.  We must quantify the costs of the regulations and re-examine their benefits with the goal of reducing and eliminating the burden regulations place on businesses.  We must compare our regulations with those of the communities with which we compete for investment and jobs.  Everything must be on the table, land use codes, building codes, environmental codes, employment regulations, everything and anything that affects the cost of doing business.

This will not be easy; regulations are like nearly all government programs.  They were created to correct some perceived problem.  They create populations who exist to perpetuate the regulatory program, either because they support the goal of the regulation, or because their income is dependent on the continued existence of the regulation.  For example, it is much more expensive to produce electricity through photovoltaic cells than with a coal fired power plant.  Yet both environmental groups and solar power companies alike support and encourage the expansion of utility rebates for home based solar power installations, and the rest of the customer base subsidizes them through higher rates.

Eliminating or reducing a program of regulation requires not only voting against the proponents and beneficiaries of the regulation, it requires an acceptance of the risk of harm the program was designed to prevent.  However, a wealthy community can afford regulations that lower productivity.  A community in debt cannot.

No comments:

Post a Comment