Stopping Inflation III

In the previous two posts, I pointed out how we have restricted instead of expanded the supply of crucial commodities leading to higher prices. Higher prices are just another way to say inflation. Another way to raise prices is to add to costs. According to Forbes, the United States is no longer in the top 15 countries to do business. While U.S. News & World Report rates us the 6th best nation overall, it drops us down to #45  in their “open for business” category. Why isn’t the U.S.at the top of the business-friendly? What does it mean for prices now and into the future?

I discussed Ezra Klein’s lament that the Government couldn’t do things reasonably a few posts ago. Government policy determines whether a place is an excellent place to get things done. Comparing a Government-sponsored high-speed rail in California and a private venture in Florida, the latter exists while the other is a rumor. Already owning the right of way, the private railroad didn’t have to deal with governments. Unfortunately, most businesses don’t have that luxury. Hence our poor ratings.

Two things vex people in dealing with governments: who are the responsible person I can deal with, and how much time will it take to get approvals? Faced with these hurdles, it’s no wonder many businesses decide to set up shop elsewhere. Being bounced from one agency to another while being hit with lawsuits from environmentalists, nimbies, native Americans, and preservationists have been the fate of far too many ventures.

For those unable to go elsewhere, costs can be open-ended and only recovered at higher prices—a housing project scheduled for one-year development that takes three results in expensive houses. How we can turn this around while still respecting the concerns of others is the challenge. 

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