Eight Stupid Rules that are a Drag on the U.S. Economy

by Timothy Lutts

I originally wrote this list of eight stupid rules in September 2012, and the good news is that there has been some progress since then. The Federal government looks like it will finally make progress on immigration reform, and numerous states keep making progress on marijuana. (April 2013)

toomanylawyers#1. The American Rule 
Americans litigate far more often than the residents of other countries. In fact, the share of our economy spent on litigation is at least twice that of Germany, France, England and Northern Ireland, respectively. Why? Because our system of risks and rewards is screwed up. In every other country in the world, the loser pays at least part of the other party’s legal fees; this rule not only inhibits the filing of nuisance suits with little merit, it helps encourage law-abiding behavior. In the U.S., however, the American Rule encourages the filing of nuisance suits that clog the court system, rewarding above all the lawyers. That’s one reason the U.S. has more lawyers per capita than any other country; there’s a lawyer for every 265 Americans. And because the people who “run” the country in Washington are generally lawyers, there’s little incentive to change.

#2 The Continuing Federal Prohibition of Marijuana
Nearly a century ago, we learned that prohibiting the production, trade and consumption of goods that the public wanted diverted public money to a vast criminal black market that supplied that want—and gave us the likes of Al Capone, Machine Gun Kelly and Dutch Schultz (real name Arthur Flegenheimer). Today we have the same situation with marijuana. Polls show that 56% of Americans support legalizing and regulating cannabis (the tax revenue would be substantial) and 80% support medical marijuana. Yet an estimated $30 billion a year continues to go to law enforcement to fight the drug war, in the process perpetuating lawlessness on both sides of our Mexican border.

#3 The U.S. Postal Service Monopoly
Thanks to the Internet, the U.S. Postal Service has become a slow-motion train wreck. In response, the U.S.P.S. is cutting costs—by reducing service to its customers!—but doing nothing to address the main problem. And Congress just kicks the can down the road. The radical solution is to free the U.S.P.S. from its outdated mission and to allow free-market competition so we all get better service.

#4 Taxi Medallions
The conceit that city fathers know best how many cabs is the right number ignores the wisdom of the free market and perpetuates a market that makes medallions so expensive only professional companies can afford them … which raises costs for customers.

#5 Liquor Licenses
Ditto.

#6 Immigration Laws
Forget about the problems at the Mexican border. Ignore the Miami/Cuba issue. The real tragedy of our immigration laws is that we continue to force visitors who graduate from our excellent colleges to return to their home countries! This brain drain—particularly in math and science—weakens American competitiveness while strengthening other countries. Even Bill Gates couldn’t get Washington to act, though signs are that change will be achieved eventually.

#7 Ethanol and CAFE laws
The requirement that ethanol be added to gasoline has made corn—and everything made from corn—more expensive, while contributing to the global food crisis. And the labyrinthine Corporate Average Fuel Economy (CAFE) requirements have us forced us to drive smaller, lighter, less safe cars or trucks and SUVs (which remain exempt) rather than giving us the choice of keeping safer heavy cars and driving less. If these laws were repealed, and replaced by a simple national gas tax, we’d have cleaner air, cheaper food and more choices!

#8 The Farm Bill
Born as a helping hand for struggling small farmers, it now rewards the largest professional agricultural companies like Butterball, Tyson, Sunkist, Cargill and Monsanto. It encourages the production of junk food—through subsidies for sugar, corn and high-fructose corn syrup—thus contributing to the epidemic of obesity and diabetes in the U.S. And it includes the Supplemental Nutrition Assistance Program (formerly known as food stamps), which is a nice idea but poorly implemented; I recently stood in line behind a woman who used hers to buy a jug of wine. (It was made by Gallo, one of those large agricultural companies that know how to play the game in Washington.)

Now here’s a question for you.

Which of these eight “Stupid Rules” bothers you the most?

Which do you disagree on?