January 28, 2023
How Efficient is Government Spending?
Part 3: Mandates and Regulations
By: Art da Rosa, PE, MPA, CFM
One of the functions of government is to regulate by passing laws. Our governments do pass a lot of them, for the purpose of regulation. These regulations come in form of Laws, Executive Orders, Agency Regulations, Ordinances, etc. Spending Bills are laws that mandate government spending. Not infrequently, Spending Bills also dictate how money is spent. For this reason, I am willing to argue that regulations dictating how capital will be spent is in fact government dictating spending—including private monies.
But, how would these regulations have anything to do with spending? Or do they simply add to inefficiency and increase spending?
SEARS Modern Homes
From 1908 to 1942, Sears, Roebuck & Co sold kit homes. They were well-designed, sturdy, easy to assemble, popular, and affordable. The buyers of these kit homes still had to do the plumbing, electrical, and foundation work. Even with the additional work, a moderate size family home could be built for approximately $10,000.
Despite their popularity, kit homes have been discontinued. The justifications were many: uncontrolled craftsmanship, accidents, fire, etc. Under the guise of public safety, they were regulated out of existence.
Rather than bemoaning the myopic views of the government, a more relevant lesson should be on the far-reaching ways in which government regulations can impact the economy, or control capital.
Rest assured that the practice of creating regulations to control all aspects of the economy continues today.
Does it surprise you that your government wants to dictate how you should spend your money? One of the latest methods is ESG, which stands for Environmental, Social, and Governance. This is a scoring system that will force private investment away from some businesses and into some other businesses. I remember Glenn Beck talking about it in his radio show.
But, will ESG lead to efficient capital spending? Before you conclude, an important question needs to be asked. Under ESG, who gets to decide which business or type of business to invest in? A parallel question is, under ESG, who gets to decide which business or type of business to avoid? You? Your government? Experts, acting on behalf of the government? If it is not you, then it will not be efficient.
If you are not free to make your own decisions, then it was decided for you.
While ESG is relatively new, we have been living under other existing mandates, such as Affirmative Action and the Welfare System. There are many other mandates to be sure. These two, I hope, suffice to make my point.
Recognizing the potential of offending someone, I want to clearly state that this article is not about any individuals or group of people, but rather our government dictating how we should spend our capital.
Mandates and regulations are laws. They shape our mentality and behavior. Immoral laws lead to failure. Freedom is the Answer!
Art da Rosa is the founder of the book discussion group Patriots for Liberty and Constitution. Beginning in February, he will be leading the group in a discussion of Henry Hazlitt’s classic book, Economics in One Lesson.