The U.S. is more heavily regulated now than it was in 1980

An excellent NYT column by Tyler Cowan on the recent financial meltdown shows that deregulation is not at all the cause of the recent meltdown:

Still, the Bush administration’s many critiques of regulation are belied by the numbers, which demonstrate a strong interest in continued and, indeed, expanded regulation. This is the lesson of a recent study, “Regulatory Agency Spending Reaches New Height,” by Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University, and Melinda Warren, director of the Weidenbaum Center Forum at Washington University. (Disclosure: Ms. de Rugy’s participation in this study was under my supervision.) For the proposed 2009 fiscal budget, spending by regulatory agencies is to grow by 6.4 percent, similar to the growth rate for last year, and continuing a long-term expansionary trend.

For the regulatory category of finance and banking, inflation-adjusted expenditures have risen 43.5 percent from 1990 to 2008. It is not unusual for the Federal Register to publish 70,000 or more pages of new regulations each year.

This snapshot of the ongoing growth of regulation in the financial and banking sector is consistent with other long-run trends, including the fact that based on the Fraser Economic Freedom of the World rankings, the U.S. is one of only eleven nations that have less economic freedom now than in 1980.  Among the others that have declined in economic freedom are Venezuela and Zimbabwe.  Our economic freedom ranking peaked at 8.55 in 2000, after eight years of Clinton, and has been steadily declining throughout the Bush administration.  This year the U.S. is tied for eighth place on the rankings, with both Chile and Canada being ranked as more "free market" than is the U.S.

Tyler's article shows that bad regulation and subsidies is the real cause of the meltdown, and that much of the regulation actually made the problem worse.  Well worth reading in its entirety.

And, of course, I always recommend reviewing the Economic Freedom of the World rankings.