How many times have you heard politicians say slashing regulation will unlock growth? Strip away “red tape” they say and business will flourish, investment will pour in and prosperity will follow.
At one time it was the mantra of the right. Now Labour has taken to parroting the same nonsense. Instead of delivering prosperity, deregulation all too often attracts economic parasites and greedy opportunists, the kind of global locusts that sweep down, strip a sector bare and move on. The water industry in England is a classic example.
Put simply, calling for deregulation is lazy politics, often stoked by those who hold power over politicians.
When regulations are removed (or simply not enforced), corporations don’t suddenly become more productive, or more innovative, or more competitive. Rather they gain the ability to push costs onto others, which invariably means the public sector picks up the bill. Think water again, though there are numerous other examples.
Our government departments and regulators are now so captured by vested interests that the rules get written by those who will benefit most. Draw back the blinds on the Ministry of Defence, Environment, Housing – to name just three government departments – and you see the massive price we are paying as a nation. On a global scale, the financial crisis of 2008 was a failure of regulation.
The damage of deregulation tends to manifest either financially or environmentally. So the next time you hear a minister trumpeting the need to get rid of regulations, ask yourself who will benefit and what the damage will be.
post script:
There are some stupid, pointless regulations, of that there is no doubt. And they should go. But this should not be used as cover for removing valuable protections.