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A public policy blog from AEI
It’s always hard to be skeptical of studies that, you know, totally reinforce your views. Those are the good studies! For instance: I deeply want to believe research finding burdensome regulation has significantly depressed US economic growth. If nothing else, such results give hope that faster growth and more innovation is amenable to better policy.
So I very much liked a Mercatus study last year finding US economic growth has been slowed by an average 0.8% per year since 1980 due to the cumulative effects of regulation. Also a favorite of mine: A 2013 study from economists John Dawson of Appalachian State University and John Seater of North Carolina State University, Federal Regulation and Aggregate Economic Growth, that estimates the past 50 years of federal regulations have reduced real GDP by roughly two percentage points a year, or nearly $40 trillion.
Both studies show pretty sizable effects from smarter regulation or deregulation. Those big impacts don’t mean the studies are wrong, but should automatically raise a cautionary flag. As Carl Sagan once said. “Extraordinary claims require extraordinary evidence.”
Then again, the story of how the federal communication regulations may have limited US technological advancement make those big effects seem more plausible. A new Reason magazine piece tells the story of how the FCC delayed cellphones by decades:
When AT&T wanted to start developing cellular in 1947, the FCC rejected the idea, believing that spectrum could be best used by other services that were not “in the nature of convenience or luxury.”… A child conceived at the same time as cellular would have been 37 years old by the time the first commercial cellphone—Gordon Gecko’s $3,995 Motorola DynaTAC 8000X brick—was released onto the market. Once the blockage was cleared, progress popped. Soon, the science fiction vision of the Star Trek communicator was reality.
A 2016 National Affairs piece by Brent Skorup also tells the tale of how the FCC limited tech advancement:
One of the best examples of the FCC’s opposition to competition that undermines its regulatory silos was the FCC’s cozy but counterproductive relationship with the Bell telephone monopoly. Major technological innovations were delayed for decades in part because Bell was protected by the FCC from normal competitive pressures. Television over a telephone wire, largely prohibited by law until the mid-1990s, was developed in 1927. The first mobile telephone service, linking moving cars, debuted in 1946. The FCC had several hearings about subscription TV throughout the 1950s and allowed only a few local experiments. But these innovations were stifled by a slow-moving bureaucracy, and the result was a monopoly that served the public interest only incidentally. … Both broadcast and cable television were held up by similar regulatory practices. … Communications scholar Don LeDuc notes that “the television systems of 1952 could have been operating in 1940…[and] possibly as early as 1937,” and it would have hastened the end of the radio era but for the FCC’s failure to permit such services.
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