14 March 2012

Whence Regulation: Redux*

 So why was the Nepalese government opposed to the mill? The answer is that the monarchy and the elite surrounding it, who controlled the government, were afraid of becoming political losers. Economic progress brings social and political change, eroding the political power of elites and rulers, who in response often prefer to sacrifice economic development for political stability.

Ultimately, any time you see any proposal that will obviously pose signinficant costs on the economy, you can be sure that it’s the result of some government official somewhere being scared that ordinary citizens might be getting too powerful.  And we can’t have that because citizens aren’t smart enough to handle power.

* Here are two more posts on this subject.

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