A lot has happened in Paris and France since the last visit of the Free Market Road Show to the city of light. That is why the message delivered by the FMRS -which can be summed up in “free markets and free people”- is needed in France perhaps now more than ever.
When in France, do as French do – meaning be suffocated by regulation and red tape. Luckily, we were privileged by the presence of Lawson Bader, president of the Competitive Enterprise Institute (CEI), to address this issue.
Bader opened his remarks pointing to the often ignored fact that regulations are “hidden taxes”. Another key feature of regulations is that they generate huge opportunity costs by making the entry to the market harder. The result: they hamper the use of our creative energies. This, in turn, makes even the idea of becoming an entrepreneur unlikely. As Bader said, “it is hard to be an entrepreneur”.
Furthermore, there is an undeniable link between regulations and the growth of government corruption. “The higher the rate of regulation, the higher the level of corruption”, as Bader put it.
Regulation not only hurts entrepreneurship and the economy. It also weakens the democratic process. For instance, the American government is now passing regulation through memoranda, which are “suggestions” to bureaucrats. This means that an unelected part of the government has the power to pass regulations which have a huge impact on businesses. Please bear in mind that the regulatory burden in the US is 1.8 trillion dollars. That is bigger than Canada’s GDP.
Mr. Bader’s conclusion: “The regulators are the bad guys and the entrepreneurs are the heroes”. Amen.
Joshua Gilder’s talk was also related to the negative effects of regulations. He focused his analysis on the hysteria about GMOs, chemicals, and food production.
The precautionary principle, as defined by the European Commission in 2000 states that “…where scientific evidence is insufficient, inconclusive or uncertain and there are indications through preliminary objective scientific evaluation that there are reasonable grounds for concern that the potentially dangerous effects on the environment, human, animal or plant health may be inconsistent with the chosen level of protection”. Since even the Commission admits that science cannot be certain, the solution is to leave the decision to the discretion of politicians – who are obviously the most enlightened members of society, aren’t they?
This line of thinking is not restricted to Europe. In the US, it is literally killing innovation in agriculture. While it takes three years of studies and testing to approve new cars and eight to approve new airplanes; it takes thirteen years to approve a new genetically modified seed.
How to kill agricultural innovation? It takes 13 years to pass a new GMO through the regulatory process.
Population continues to grow and we need more food. Organic activists say food production is “easy”. However, in Europe agriculture has turned into “high price gardening” – better for subsidies than for productivity. Or as the Nobel laureate and father of the “green revolution” Norman Bourlag said: “There are 6.6 billion people on the planet today. With organic farming we could only feed four billion of them. Which two billion would volunteer to die?”