I was at a meeting this morning with with people from across the economy. We had a farmer, an accountant, a banker, two city economic development people, a university dean, and more. While the meeting had another purpose, we ended it by going around the room and having people tell us how things were going in their industry.
I was shocked that almost everyone complained about increased bureaucracy and regulation. For example, the farmer’s complaints included a “social responsibility” audit. Even people who worked for quasi-government or government funded enterprises complained about new requirements. Only the accountant was happy; regulation increases his business.
Complaints about regulation and bureaucracy are common. I hear them all the time. However, I’ve never seen such widespread complaints. In a group of this size, I would expect maybe three people to complain about regulation, but at this meeting, it was practically universal.
This doesn’t bode well for the recovery. However well intentioned, new broad-based regulatory requirements will serve as sand scattered throughout the gears of economic activity. It creates additional costs–costs that are likely to exceed the benefits–and uncertainty. This is exactly the opposite of what we need for robust growth.
It also doesn’t bode well for our forecast. We have a very difficult time bringing this type of thing into our models. It probably means that our models are a bit optimistic, and that is a bit scary.