After regulation exploded in 1970, innovation hit a sustained speed bump.
"In the United States, which drove most of the “golden quarter’s” progress, 1970 marks what scholars of administrative law (like me) call the “regulatory explosion.” Although government expanded a lot during the New Deal under FDR, it wasn’t until 1970, under Richard Nixon, that we saw an explosion of new-type regulations that directly burdened people and progress: The Clean Air Act, the Clean Water Act, National Environmental Policy Act, the founding of Occupation Safety and Health Administration, the creation of the Environmental Protection Agency, etc. — all things that would have made the most hard-boiled New Dealer blanch."
Within a decade or so, Washington was transformed from a sleepy backwater (mocked by John F. Kennedy for its “Southern efficiency and Northern charm”) to a city full of fancy restaurants and expensive houses, a trend that has only continued in the decades since. The explosion of regulations led to an explosion of people to lobby the regulators, and lobbyists need nice restaurants and fancy houses.
Maybe it’s just a coincidence that progress suddenly slowed down, but I don’t think so. Indeed, the Obama administration ’s brilliantly successful policy for promoting private spaceflight ventures (basically one of benign neglect) can be seen as evidence that we can actually get the kind of progress we used to get, when we regulate lightly, like we used to. Who knows, if we regulated pharmaceuticals like we did in the early 1960s, perhaps we’d get as many major new drugs as we got in the 1960s. (“The time for a new drug candidate to gain approval in the United States rose from less than eight years in the 1960s to nearly 13 years by the 1990s,” notes Hanlon.)
Of course, excessive regulation isn’t just slowing technological progress, it’s also making us poorer. A recent study from the Mercatus Center found that the increase in federal regulation since 1980 has reduced economic growth by 0.8% per year — which over time means that the economy by 2012 would have been 25% larger, adding up to about $13,000 more for every American. The number would be much bigger, if they’d used 1970 as their baseline.
