Regulation is not the problem

Conservatives with minds as capable of subtlety and irony as David Brooks’s are rare. Recently, however, Brooks fell into an outrageous right-wing cliché, asserting that “a growing government sucked resources away from the most productive parts of the economy—innovators, entrepreneurs and workers—and redirected it to the most politically connected parts. The byzantine tax code and regulatory state has clogged the arteries of American dynamism.”

What sucked away resources from innovators and entrepreneurs was Wall Street’s emphasis on trading and creating exotic new financial instruments instead of helping new businesses get started and existing ones expand. And money that the government might have spent on financing new jobs through investment in schools and infrastructure had to be devoted to wars that Bush’s tax cuts did not pay for. As for regulations, our present economic distress stems far more from too little than from too much.

A survey of small businesses conducted by McClatchy newspapers came closer to the truth than Brooks had done. Though one owner declared that “higher taxes aren’t good for business,” another argued that “the rich have to be taxed,” and the study concluded that “there was little evidence” that a “fear of higher taxes” was responsible for tepid hiring.

Finally, the study found that “none of the business owners complained about regulation in their particular industries.”

Charles Peters

Charles Peters is the founding editor of the Washington Monthly and the author of a new book on Lyndon B. Johnson published by Times Books.