It is 2023, eight years after 2015, the year of flying cars and climate-controlled clothing that Marty McFly traveled to in a time machine. In our own world, the ruling elite wants to ban cars to control the climate. How did we get here? What caused the discrepancy between our vision of a more advanced future and the reality we face now?
We had reason to expect it. From 1860–1970, the United States grew at an average of over 5 percent per year. But starting in the 1970s, and for the last five decades since then, America has experienced an average GDP growth rate of 2.7 percent. Had the previous growth rate continued, the economy would be at least 65 percent larger than it is today. The current GDP would be an additional $15 trillion, or $45,000 per capita.
The gap in unrealized potential is massive and accounts for the discrepancy between our past visions of the future and our current reality. If people knew about the future that was stolen from them, they would be outraged. The loss of a potential that was never known usually cannot affect people, but there is a growing sense that something doesn’t add up.
In the new reality of anemic growth, a strange mix of cutting-edge technology and crumbling infrastructure is emerging. This is mirrored in contemporary science fiction, which is more likely to depict a dystopian future than one like that envisioned by The Jetsons or a Jules Verne novel. How did this happen? What sent us so wildly off the path set by previous achievements?
There is a common political narrative that the “laissez-faire” push to deregulate and cut taxes under Reagan in the 1980s resulted in a consolidation of wealth and corporate power that led to our current malaise. The main problem with this narrative is that there was no recent laissez-faire moment. Regulation and public spending continued to increase through the 1980s. When the government couldn’t raise taxes high enough to keep up with spending, it just inflated the money supply, a strategy that became easier when the gold standard was fully abandoned in 1971.
Starting in the late 1960s, the number of pages published in the Federal Register exploded (figure 1). The number of pages of the Code of Federal Regulations, which is thought to reflect the overall regulatory burden, has increased by a factor of 10, from twenty thousand to over two hundred thousand pages (figure 2).
Figure 1: Total pages published in the Federal Register (1936–2022)
Source: Regulatory Studies Center.
Figure 2: Total pages published in the Code of Federal Regulations (1950–2021)
Source: Regulatory Studies Center.
The longest period of low growth in our history is also characterized by the expansion of the regulatory state. Corporate consolidation skyrocketed in the same period. In 1970, the top four companies in any given industry made up on average 20 percent of the market share. Today, the top four companies in any given industry control roughly 80 percent. Regulatory monopolies create single points from which special interests can control whole markets and enrich the wealthiest people. They are fully endorsed by the elite institutions yet sold through the pretense of keeping vulnerable consumers safe from asymmetries of power.
People who legitimately care about the poor or the environment should not support these federal agencies. The viewpoint that regulations lead to improved standards puts the cart before the horse. If the US regulation of the maximum amount of pesticide residue allowed on produce were imposed on a developing country, that country’s agricultural production would be wiped out overnight.
Reducing the use of chemicals, when done correctly, saves resources and improves soil quality and yield, but it also requires a great deal of knowledge and technology. Without being able to know exactly when insects will arrive, it may be necessary to spray every day for weeks to minimize the chance of catastrophic failure. Without knowing how to implement a system of crop rotation correctly, the soil will likely degrade over time. Without testing, mapping out, and integrating the soil into the tractor’s spray system, it won’t be possible to limit fertilizer use to the areas that need it.
The regulatory strictness of a country tends to vary directly with its level of economic development because mandates require infrastructure. Eventually, tractor components that can identify and kill weeds with an electric current will largely eliminate the demand for herbicides. A law will then be passed, with much self-congratulation, that bans herbicides, reinforcing the advantages of the bigger players and creating new barriers for the smaller.
Mining deaths dropped dramatically with the advent of electrical lighting and ventilation technology. The decline was not affected in any observable way after the creation of the Occupational Safety and Health Administration (OSHA) because the government only legally codifies standards after the relevant technology and knowledge has entered the market. They do, however, take credit for the improvement and write the standards in a way that favors the specific practice of a particular industry association or corporate cartel.
This preference often takes the form of regulations that favor scale, which is why local food supplies have shrunk while centralized supply chains run by a few companies have come to dominate the market. It is ironic that regulators claim to be protecting consumers: surveys show that 96 percent of consumers think locally produced food is “the freshest, healthiest and most nutritious food.”
Regulatory restrictions slow the rate of innovation by creating barriers to market entry but also by protecting corporations that operate within the confines of the regulatory standards from legal liability for harming consumers or the environment.
Regulatory capture was described by Lao Tzu 2,500 years ago in China. “In the kingdom the multiplication of prohibitive enactments increases the poverty of the people” and “the more display there is of legislation, the more thieves and robbers there are.” Such policies drastically increase income inequality, not to keep you safe but so that special interests can bring back mercantilism by controlling markets as guilds once did. The resulting lack of options facilitates technocratic control of society. Nothing would hurt the average billionaire more than to see the average American stop falling for this ruse.