Thursday, March 30, 2017

Regulation and Population

All the old paintings on the tombs
They do the sand dance don't you know
If they move too quick
They're falling down like a domino

After President Trump signed orders that roll back Obama era environmental regs, leftist media jester Michael Moore tweeted that "Historians in the near future will mark today, March 28, 2017, as the day the extinction of human life on earth began, thanks 2 Donald Trump."

Ignoring the logical problem, if we take Moore's statement literally, of how historians would be capable of accurately marking time related to human extinction unless they somehow survive the event, let's consider a pertinent general question. What is the effect of government-imposed regulation on human population?

Mises explained it well. Prior to the industrial age, primitive production processes were highly regulated by government primarily for the benefit of the wealthy. Because the distribution of wealth was highly skewed, far more people were being born into poor conditions than into rich conditions. Productivity, or output per person, declined as the denominator grew faster than the numerator. In time, a significant fraction of the world's population lived on the edge of death.

Facing extinction, entrepreneurs began defying law and tradition by marshaling economic resources in order to produce goods for the masses ("mass production"). This was the onset of capitalism. As Mises observed, capitalism can be seen as "everyone's having the right to serve the customer better."

By definition, capitalism's growth was inextricably linked to deregulation. Markets rewarded societies that lifted restrictions on production. As restrictions on production were lifted, more was produced. As more was produced, scarcity was alleviated. As scarcity was alleviated, population growth dramatically increased throughout the world.

But don't markets foster unpleasant externalities such as pollution that hurt standard of living and require government regulation? As Rothbard observed, government regulation has not been a proven solution to pollution problems. For example, two areas of society where private property rights have generally not been permitted to broadly function, air and waterways, have been primary grounds for pollution. Since government permits the pollution of air in some regulated fashion, entrepreneurial actions have focused on technologies that enable pollution at the regulated rate, rather than on air pollution-free technologies.

The more appropriate role of government is to help people protect their property against invasion. If, for instance, air pollution from production sends unwanted substances through the air and into the lungs and onto the property of innocent victims, then it is the role of government to stop these acts of aggression. Unfortunately, as Rothbard noted, government long ago altered laws away from protection of private property and toward the permitting of aggression via pollution.

The general proposition is this. When governments impose regulations of any kind on production, then production is restricted. When production is restricted, there is less wealth available to sustain life. Standard of living declines as does population growth. As regulatory burden grows, so does scarcity. At extremely high regulatory burdens, extreme conditions of scarcity, such as famine and disease, threaten human existence.

Rolling back government-imposed environmental regulations serves to increase production. More prosperity associated with increased production moves the human race further away from extinction. Government's proper role is to protect people against harm demonstrated to be done to their personal property from production externalities of any kind. Such policy would focus entrepreneurial attention on innovations that eliminate those externalities and further increase prosperity.  

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