Politicians claim they make our lives better by passing laws. But laws rarely improve life. They go wrong. Unintended consequences are inevitable.
Most voters don’t pay enough attention to notice. They read headlines. They watch the Rose Garden signing ceremonies and hear the pundits declare that progress was made. Bipartisanship! Something got done. We assume a problem was solved.
Intuition tells us that government is in the problem-solving business, and so the more laws passed, the better off we are. The possibility that fewer laws could leave us better off is hard to grasp. Kids visiting Washington don’t ask their congressmen, “What laws did you repeal?” It’s always, “What did you pass?”
And so they pass and pass – a thousand pages of proposed new rules each week – and for every rule, there’s an unintended consequence, or several.
It’s one reason America has been unusually slow to recover from the Great Recession. After previous recessions, employers quickly resumed hiring. Not this time. The unemployment rate is still near 8 percent. It only fell last month because people stopped looking for jobs.
Dan Mitchell of the Cato Institute understands what’s happening.
“Add up all the regulations and red tape, all the government spending, all the tax increases we’re about to get – you can understand why entrepreneurs think: ‘Maybe I don’t want to hire people. … I want to keep my company small. I don’t want to give health insurance, because then I’m stuck with all the Obamacare mandates.’ We can see our future in Europe – unless we change. Ann Jolis, who covers European labor issues for the Wall Street Journal, watches how government-imposed work rules sabotage economies.
“The minimum guaranteed annual vacation in Europe is 20 days paid vacation a year. … In France, it starts at 25 guaranteed days off. … This summer, the European Court of Justice … gave workers the right to a vacation do-over. … You spend the last eight days of your vacation laid up with a sprained ankle … eight days automatically go into your sick leave. … You get a vacation do-over.”
Such benefits appeal to workers, who don’t realize that the goodies come out of their wages. The unemployed don’t realize that such rules deter employers from hiring them in the first place.
In Italy, some work rules kick in once a company has more than 10 employees, so companies have an incentive not to hire an 11th employee. Businesses stay small. People stay unemployed.
“European workers have the right … to gainful unemployment,” says Jolis.
Both European central planners and liberal politicians in America are clueless about what really helps workers: a free economy.
The record is clear. Central planners failed, in the Soviet Union, in Cuba, at the U.S. Postal Service and in America’s public schools, and now they stifle growth in Europe and America. Central planning stops innovation.
Yet for all that failure, whenever another crisis (real or imagined) hits, the natural instinct is to say, “Politicians must do something.”
In my town, unions and civil rights groups demand a higher minimum wage. That sounds good to people. Everyone will get a raise!
The problem is in what is not seen. I can interview the guy who got a raise. I can’t interview workers who are never offered jobs because the minimum wage or high union pay scales “protected” those jobs out of existence.
The benefit of government leaving us alone is rarely intuitive.
Because companies just want to make a buck, it’s logical to assume that only government rules assure workers’ safety. The Occupational Safety and Health Administration sets safety standards for factories, and OSHA officials proudly point out that workplace deaths have dropped since it opened its doors.
Thank goodness for government, right? Well, not so fast. Go back a few years before OSHA, and we find that workplace deaths were dropping just as fast.
Workers are safer today because we are richer, and richer societies care more about safety. Even greedy employers take safety precautions if only because it’s expensive to replace workers who are hurt!
Government is like the person who gets in front of a parade and pretends to lead it.
In a free society, things get better on their own – if government will only allow it.