Free the economy from red tape

By Monte Solberg ,QMI Agency

Last week, in a column on the U.S. debt crisis, I said, “neither a borrower nor a lender be” was a quote from Benjamin Franklin.

Sun readers were having none of it and a couple of dozen people e-mailed to remind me it was of course Shakespeare who wrote those words.

A few e-mailed to pose hurtful questions about my intelligence.

The point, however, was debt in the U.S. and around the world is a wee bit of a problem.

Obviously one way to tackle debt is to reduce spending, which is a good idea at any time knowing as we do there is always some fat in government. Clearly, cutting spending is necessary, but I note it is also not sufficient.

To tackle debt we must also increase economic growth, thereby increasing government revenues. Governments around the world have tried to do that mostly by stimulating their economies with all kinds of new spending. Unfortunately, the only things that got stimulated were lefty economists and public debt.

But there is more than one way to grow an economy. One of the most effective ways to make the economy boom is to slash regulation.

Back in the late 1970s and early 1980s, the United States partially deregulated interstate trucking. Almost immediately shipping costs went down and interstate economic activity went up. The fact companies could now count on less expensive shipments of inventory when they needed it meant they didn’t have to tie up as much of their capital storing inventory in their warehouses.

The net effect was big and small businesses became more profitable and tens of thousands more jobs were created in the trucking industry. That single change played a major role in helping the U.S. economy boom after years of stagnation.

Sad example

On the other hand, one of the saddest examples of how regulation and red tape kills economic growth has to be the Mackenzie Valley pipeline. After 27 years of red-tape hell, the project finally received approval. Unfortunately the approval came so late it may not ever be built. It’s the sickly poster child for massive job and wealth-creating mega-projects that have been crushed to death under mountains of regulations, hearings, rules and two generations of bureaucrats.

The good news is the Conservatives pledged in their election campaign to reduce federal regulations by 20%. They also promised any new regulations introduced as part of new legislation will be accompanied by a one-for-one reduction in regulations somewhere else.

I totally get that governments promise things all the time only to get distracted by the next shiny thing to come along. In this case, however, the responsibility for swinging the broad-axe falls to small business minister and self-described libertarian, Maxime Bernier. As industry minister, he took charge of the department and unapologetically, and some would say cavalierly, pushed his officials to be much more market oriented.

Let’s hope he does the same as he slashes red tape. Done correctly, he could help reignite the Canadian economy while winning the gratitude of entrepreneurs everywhere.