Out of the 35 members of the OECD, the US has the 9th most restrictive regulations on products and markets. The Council of Economic Affairs (CEA) recently published a report stating that Trump’s current deregulation efforts and his plans to regulate less in the future will have increased US real incomes by $3,100 per household over the next 5-10 years…
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Out of the 35 members of the OECD, the US has the 9th most restrictive regulations on products and markets. The Council of Economic Affairs (CEA) recently published a report stating that Trump’s current deregulation efforts and his plans to regulate less in the future will have increased US real incomes by $3,100 per household over the next 5-10 years. The article also goes through the other positives of deregulatory efforts: lighter requirements of drug approvals by the FDA, bringing competition and driving drug prices down; and reversing the flat fee structure of internet providers like Netflix, allowing heavy users to pay less and reducing compliance burdens on small firms to keep them in business. Trump also deregulated payday loans, allowing for more freedom in the short term lending space.
Why does this matter? In recent years, there has been a divergence on regulation trends in major economies – Europe and China have increased regulation, while the US has reduced it. This has likely contributed to US economic outperformance. It has also been a hallmark of the Trump administration, meaning a Democrat victory at next year’s Presidential election could engender a reversal and therefore negatively impact growth and asset markets.
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