Commentary: Threats to Competitiveness in a Political Environment

This essay may seem depressing but I hope the reader will appreciate the underlying, if unspoken, optimism. Whatever Washington does, America is nothing if no: preoccupied with competition and commerce. No matter how grim things may sometimes seem, optimism has a way of emerging. You might remember that Bush met with Tony Blair in the Azores that weekend before his fateful speech giving Saddam a 72 hour ultimatum, and recall what a tense time that was. I was watching NASCAR that Sunday, and an alarm sounded and a crawler came across the TV screen that made our national priorities so plain it was a bit scary. I jotted down the exact quote. President George Bush warns Saddam: 'tomorrow is the moment of truth for the world.' Details after the race. Apparently, nothing's going to interrupt NASCAR or America's competitive spirit generally! But that competitive spirit does face challenges. On top of the $2 trillion in tax revenues the government now collects, agencies issue over 4,000 yearly regulations. Costing some $800 billion annually, regulations exceed pretax corporate profits and Canada's GDP. When Washington can't raise taxes to pay for its ends, it regulates. Indeed, according to Americans for Tax Reform's (ATR) new Cost of Government Day report, we all worked until July 7--over half the year--to pay the costs of taxes and regulations. This is one day earlier than last year, and good news of sorts in that respect--but what of the future? Is it a promising trend, as ATR wonders? Now, for perspective, I'm a limited government type, a libertarian, who thinks that apart from security and judicial functions, the role of government ought to be constitutionally limited to picking a state bird. But both parties leap the bounds of their traditional liberal and conservative labels: Republicans signed on to substantial economic regulatory measures, such as financial regulations in the wake of the Enron scandal; while Democrats favor restrictions on free speech spanning campaign finance and the structure of the nation's media firms. Meanwhile, heavy recent government spending anticipates a regulatory boom that can hamper competitiveness in a number of spheres. For example, Bush's Education bill heralds greater entrenchment of public over private education--and state mandates galore; the Medicare prescription drug benefit means new medical mandates and constraints on doctors and insurers (the ones who remain); Combined with other regulatory attacks on biotechnology and on the few remaining liberalized areas of medicine, such as doctors' prescribing drugs for off-label uses, the prescription drug medicine industries face real threats from FDA. Not surprisingly, homeland security concerns since September 1 l, 2001 have generated much of the new spending and attendant regulation. As it stands, 300 of over 4,200 new rules in the works emanate from the new Department of Homeland security. These encompass the obvious such as the Transportation Security Administration's screening of checked bags and bag matching at airports. Meanwhile new Food and Drug Administration (FDA) regulation of food manufacturer and processor shipments, meant to protect against terrorist contamination or disruption, promises real headaches. Over 425,000 Food manufacturers and processors will be required to provide daily updates to FDA on food shipments. But at least these have a security rationale: contrast those with the new multi-billion National Nanotechnology Initiative, that Bush signed into law in December 2003. That move invites vast government regulation of this already threatened frontier industry (EPA) for little apparent reason other than to send government dollars to home congressional districts. The regulatory future of the nanotech industry can easily be sacrificed for the sake of pork and a misguided attempt by Republicans to be regarded as sensitive to safety concerns that the technology does raise. …

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