- Liberals and conservatives disagree over whether government intervention helps or hurts the economy
- Bureaucracy reflects the democratic priorities of the legislative and executive branches
Do government bureaucrats impose regulations that hamstring the economy?
This is a tough one.
Many believe that the web of government regulations enforced by the federal bureaucracy does stifle economic development. These advocates of deregulation argue that regulations are costly and force businesses to raise their prices, which in turn makes business less competitive in the global economy. Moreover, the argument goes, regulations inhibit innovation. They protect obsolete production methods and suck up resources that could finance innovative research.
But others argue that government regulation is essential in order to maintain America's economic, social, and environmental health. Without government regulation, they say, we would have unsafe food and drugs, predatory commercial practices, and exploitation in the workplace and in the marketplace. The belief that industries will regulate themselves is naïve, these supporters of regulation argue—like trusting the fox to guard the chicken coop.
Both sides advance well-developed arguments and cite history in support of their positions. Proponents of deregulation point to the airline industry. Its deregulation in the 1980s led to industry innovation, falling airfares, and the democratization of air travel. Opponents of deregulation most recently cite the financial crisis rooted in America's mortgage industry. They argue that deregulation dating to the 1970s and the failure of government regulators to adapt to changing industry practices led to the largest financial crisis since the Great Depression.
Joseph Schumpeter wrote that "Bureaucracy is not an obstacle to democracy, but an inevitable complement to it."10
Perhaps this observation provides the most useful context for understanding our federal bureaucracy. It can be inefficient, frustratingly complex, erratic in its priorities, and sometimes redundant in its functions. But it is also a reflection of a diverse population with varying and changing needs and the democratic government that must be responsive to those needs.
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