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Chapter 7 is entitled “Who Protects the Consumer?” Most of the quotes below are drawn from the second and third page of this section. I thought it was so insightful that I highlighted it, and read it to my wife. If you have a high school student in your house, you should have them read this part.
This section begins with the Friedman’s acknowledging that there must be some sort of consumer protections in place in the marketplace. The question they ask is whether government interventions into the market work to protect the consumer, or work towards some other end. I think this is particularly relevant today with as much intervention as we have seen by the current administration.
The Friedmans note that government intervention into the market increased after FDR’s New Deal. Quoting the Friedmans,
Yet intervention remained fairly moderate and continued in the single industry mold. The Federal Register, established in 1936 to record all the regulations, hearings, and other matters connected with the regulatory agencies, grew, at first rather slowly, then more rapidly. Three volumes, containing 2,599 pages and taking six inches of shelf space, sufficed for 1936; twelve volumes, containing 10,528 pages and taking twenty-six inches of shelf space, for 1956; and thirteen volumes, containing 16,850 pages and taking thirty-six inches of shelf space, for 1966.
This growth seems large, but it is nothing compared to what would happen in future years. In the 1970’s the ,”…number of regulatory activities tripled…”. The Federal Register, would grow in 1978 to 36,487 pages and 127 inches. I hate to think what the size of the Register is today. But there is another side of this “growth”. While the Register grew and grew:
…economic growth in the United States slowed drastically. From 1949 to 1969, output per man-hour of all persons employed in private business — a simple and comprehensive measure of productivity — rose more than 3 percent a year; in the next decade, less than half as fast; and by the end of the decade productivity was actually declining.
So, like today, the federal government grew, while the private sector contracted. Regardless of how well meaning the intentions of the individuals who enacted the federal agencies were, they didn’t help the private sector. Instead, they hurt it by adding more and more regulations that were required and more and more fees that had to be paid for. The Friedmans include a great quote in this section that really sums it up:
As Edward Teller, the great nuclear physicist, once put it, “It took us eighteen months to build the first nuclear power generator; it now takes twelve years; that’s progress.”
For Next Week: I want to cover up to “Government Revenue From Inflation” in Chapter Nine for next Sunday. Have a great week.