Notable & Quotable: Presidential Economics

‘Most regulations . . . are like a boulder in a strong-flowing river.’

Sept. 20, 2016 7:03 p.m. ET

From “Can U.S. Presidents Much Affect the U.S. Economy?” by David Henderson, writing Sept. 19 at the Library of Economics and Liberty:


We live in a regulatory state, with hundreds of thousands of regulations and tens of thousands of new regulations (both large ones and tweaks to current ones) annually.

Regulation has a big effect on the economy and a determined president can either increase regulation and make it much more punitive or decrease regulation and make it less punitive. Most regulations . . . are like a boulder in a strong-flowing river. Throw in one boulder and the river finds ways around it. But throw in a thousand boulders and the river’s flow slows considerably. . . .


President Ronald Reagan in the Oval Office, 1981. PHOTO: GETTY IMAGES

When Ronald Reagan came into office on January 20, 1981, he inherited price controls on oil and gasoline that were originally imposed by Richard Nixon and extended by Gerald Ford.Jimmy Carter, even though he was a regulator at heart, saw some of the damage done by price controls and signed abill in 1980 that phased out price controls so that they would end in October 1981. The bill, however, gave the president discretion to end the controls earlier. Reagan, who understood the effects of price controls and had spoken out against them during the campaign, used that discretion to end the controls on January 28, 1981, 8 days after getting inaugurated. . . .

The result was a semi-boom in U.S. oil production (from 8.6 million barrels per day (mbd) in 1980 to a 1980s peak of 9.0 mbd in 1985) and a body blow to the OPEC cartel. Oil prices fell and that helped the 1983-1984 economic boom. . . .

Now to President Obama. He has some of the most hostile regulators in recent U.S. history. One regulatory agency can hold up a pipeline, another can cause people to line up at airports (although George W. Bush did most of the damage on that front), another can reset the threshold pay after which employers have to pay overtime and can change the rules for unionization to make it easier for unions to monopolize the supply of labor to particular firms or industries, etc. Those boulders add up.