Fear not evil of recession. “Happy days are here again.” So, here we go, one more time. Another round of psychological pump-priming a sleepy economy. As usual, support comes from an optimistic media relying on foggy, incomplete and one-sided interpretive economic evidence. The sales pitch: Booming exports, business investment, household net worth, and unshakeable belief in the Federal Reserve 3.0% GDP forecast.
Hopefully, this uplifting spirit and subtle art of Federal tax and spend policies will beget a festive table of good jobs and security. However, despite a history of soothsayers being faithfully wrong about economic trends, let’s accept that a recovery is happening, and perchance, not a mistaken reality.
One exception to full endorsement of economic recovery, however, is persistent foreign trade deficits. The problem with trade deficits over so many years is they permanently destroy American jobs … in particular, good paying manufacturing jobs, and lots of them.
The U.S. will probably end 2013 with a trade deficit of around $675 billion. The net result of a $950 billion deficit in oil/gas and manufactured goods, partly offset by a $200 billion favorable balance in re-exports, plus $75 billion in agricultural products, scrap and waste recyclables, all of which are inconsequential to domestic job growth.
Government legislators, who see economic growth as inherently bad for planet earth, are also a constraint on economic growth. Their enactments mirror attacks by ecologists, sociologists, economists and scientists alarmed by possible climate change, air and water pollution, social disintegration, and depletion of natural resources that sustain human and animal life.
Consequently, we have a massive amount of Federal regulations that are being enacted as vital in what is viewed as an effort to correct free market failures, unchecked Capitalism, wasteful technologies, fierce competition, excessive profits, and lavish economic growth.
A recent study published in the Journal of Economic Growth, reveals that an average of 2,700 government regulations per year (excluding state and local) were passed into law over a 50 year time period. The research also claims that, “Federal regulations over a period of 50 years led to accumulated reductions of 2% per year in real GDP or a foregone loss in output of almost $40 trillion at the end of 2011.
However, not all Federal regulations are bad or have a negative impact on efficiencies, productivity and economic growth. What’s important is the degree of interference the government exercises in free market Capitalism to promote “the common good.” For example, studies show there’s a positive effect on the economy from regulations that deal with property rights and contract enforcement.
More specifically, the Sarbanes-Oxley Act of 2002 requires certification by management on accuracy of financial reporting for the protection of investors and other business negotiations. However, some view the “SOX” regulation as going too far in requiring management and auditors to establish elaborate, very costly controls and reporting methods to verify adequacy of enacted rules.
Nevertheless, government overdo comprehends that compliance and enforcement are different aspects of regulation. The latter relies on voluntary obedience. The former on the surety of a government overseer. Still, there’s mounting evidence from classical economic theorists that government regulations are generally wasteful, restrict trade, promote monopolies, and inhibit prosperity.
Thanks for reading
 A song title popular during 1930s depression by J. Yellen, (that’s Jack Selig), not Janet Yellen, the new Federal Reserve chairperson.
 Government data available only for 3rd Qtr 2013. Annual results available late January, 2014.
 Estimate based on BEA data for 3rd Qtr. 2013.
 Domestically assembled, duty free foreign materials, converted into finished products for foreign customers
 E. J Mishan, The Cost of Economic Growth, 1967 is a comprehensive study on decline in human welfare.
 Federal Regulation & Aggregate Eonomic Growth, J.W. Dawson, J Seater2013
 Prominent among classical theorists on free markets are: Carl Menger, Ludwig von Mises, M. N. Rothbard, Eugen von Bӧhm-Bawerk, Henry Hazlitt, source: Free Market Center,