"Stop the Presses: University of Chicago Discovers Regulation Works"

[applegrove]

Stop the Presses: University of Chicago Discovers Regulation Works

by David Morris at ILSR

http://www.ilsr.org/stop-presses-university-chicago-discovers-regulation-works/

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But his expectation was wrong. The study came to a conclusion that surprised Mr. Mahoney and his colleagues: The regulation worked. It cut down the costs of credit cards, particularly for borrowers with poor credit…we find no evidence of an increase in interest charges or a reduction to access to credit.”

The study…estimates that the law is saving American consumers $20.8 billion a year.

“Looking at the data forced us to rethink our understanding of the effects of regulating consumer financial products,” Mr. Mahoney told me. “The data changed our view of the world. That is what’s so exciting about being an empirical economist.”

Now that Mr. Mahoney’s empirical research has changed his “view of the world” perhaps he could do his University of Chicago colleagues, and the country a service by widening his lens. He would quickly discover that government regulations often accomplish exactly what they set out to do–save lives and protect consumers at the lowest possible cost (e.g. mandatory seat belts, elimination of leaded paint and gasoline).

Once Mr. Mahoney persuades himself that government rules benefit society he might take the next step in his journey toward apostasy and go beyond regulation to explore government ownership. And here too he will encounter empirical evidence that upends his worldview that business outcompetes government. He will find, for example, that using government employees usually is more cost effective than contracting out to private firms. Government health insurance outcompetes private insurance companies. Government-owned water utilities have lower rates. Government owned prisons have lower costs and better safety.




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