From the Fraser Institute

By Matthew D. Mitchell

President Trump has made deregulation a priority and charged Elon Musk’s Department of Government Efficiency with suggesting ways to cut red tape. Some progressives are cautiously supportive of deregulation. More should be.

From Jimmy Carter to Sen. Ted Kennedy (D-Mass.), progressives once saw the wisdom of cutting red tape — especially if that tape tied the hands of consumers and would-be competitors in order to privilege industry insiders.

After the election, Sen. John Fetterman’s (D-Pa.) former chief of staff, Adam Jentleson, encouraged Democrats to embrace “supply-side progressivism,” calling for “limited deregulation that advances liberal policy goals.” He pointed to successful Democratic candidates like Marie Gluesenkamp Perez (D-Wash.) and Jared Golden (D-Maine), both of whom have raised the alarm about overregulation.

Vice President Kamala Harris recognized that the regulatory state sometimes hurts those whom it is supposed to help. In campaign proposals to address the housing crisis, she vowed to “take down barriers and cut red tape, including at the state and local levels.”

Cautious Democratic support for deregulation may surprise those who think only of the Sen. Elizabeth Warren (D-Mass.) approach. Warren once claimed that “deregulation” was “just a code word for ‘let the rich guys do whatever they want.’”

In reality, regulations often help the rich guys at the expense of consumers and fair competition. New Deal regulations, for example, forced prices up in more than 500 industries, causing consumers to pay more for necessities like food and clothing when a quarter of the workforce was unemployed. Economists have documented similar price-raising regulation in agricultural, finance and urban transportation. In other cases, regulations require customers to buy certain products such as health insurance. Licensing rules protect incumbent service providers in hundreds of occupations despite little evidence that they protect consumers from harm.

More subtly, regulations can protect industry insiders by limiting the quantity of available services. State certificate-of-need laws in health care, for example, limit dozens of medical services in two-thirds of states, raising prices, throttling access, and undermining the quality of care.

That’s one reason why Rhode Island’s Democratic governor wants to reform his state’s certificate-of-need laws.

If you don’t believe that regulations protect big businesses instead of their customers, take a closer look at how firms lobby. In 2012, the National Electrical Manufacturers Association lobbied to maintain a ban on incandescent light bulbs. Why? Because it raised the costs of smaller, rival firms that specialized in making the cheaper bulbs. Local car dealerships lobby to preserve state restrictions on direct car sales, which limit potential competitors that sell online.

In international comparisons, researchers find that heavier regulatory burdens depress productivity growth and contribute to income inequality.

In the U.S., the accumulation of regulations between 1980 and 2012 is estimated to have reduced income per person by about $13,000. Since low-income households tend to spend a greater share of their incomes on highly regulated products, they bear the heaviest burden.

Progressives can help break the symbiotic relationship between special interests and overregulation. Indeed, they’ve often been the first to identify the problem.

Writing a century ago in his book “The New Freedom,” President Woodrow Wilson warned that “regulatory capture” would grow as government itself grew: “If the government is to tell big businessmen how to run their business, then don’t you see that big businessmen have to get closer to the government even than they are now? Don’t you see that they must capture the government, in order not to be restrained too much by it?”

The capture Wilson warned of took root. By the early 1970s, progressive consumer advocates Mark Green and Ralph Nader were noting that “regulated industries are often in clear control of the regulatory process.” The problem was so acute that President Jimmy Carter tapped economist Alfred Kahn to do something about it.

In his research, Kahn meticulously showed that when “a [regulatory] commission is responsible for the performance of an industry, it is under never completely escapable pressure to protect the health of the companies it regulates.” As head of the Civil Aeronautics Board, Kahn moved to dismantle regulations that sustained anti-consumer airline cartels. Then he helped abolish the board altogether.

Liberals such as Nader and the late Sen. Ted Kennedy (D-Mass.) supported the move. Kennedy’s top committee lawyer, future Supreme Court Justice Stephen Breyer, later noted that the only ones opposed to deregulation were regulators and industry executives.

Their reform efforts unleashed competitive forces in aviation that had previously been impossible, opening up airline routes, lowering fares and increasing options for consumers.

It’s an embarrassing truth for both Democrats and Republicans that none of Carter’s successors, including Ronald Reagan, have pushed back as much as he did against the regulatory state.

Trump faces an uphill battle. He’ll stand a better chance if progressives acknowledge once again that lower-income Americans stand to gain from deregulation.

MxM News

Quick Hit:

Ontario Premier Doug Ford has vowed to retaliate against President Trump’s 25% tariffs on Canadian goods by cutting electricity exports to the U.S. Ford made the statement at a Toronto mining convention, warning that America “needs to feel the pain” if it imposes the tariffs. The move underscores rising tensions as Trump enforces stricter trade measures, citing national security and economic interests.

Key Details:

• Ontario Premier Doug Ford said he would halt electricity exports to the U.S. “with a smile” if Trump’s tariffs go into effect.
• Ford pledged to match U.S. tariffs dollar-for-dollar, emphasizing Canada’s role as a major energy supplier to America.
• Trump confirmed that the 25% tariffs on Canada and Mexico will take effect Tuesday, with no further negotiations.

Diving Deeper:

Tensions between Canada and the U.S. escalated Monday after Ontario Premier Doug Ford signaled he is ready to retaliate against President Trump’s tariffs by cutting off electricity exports. Speaking at a mining convention in Toronto, Ford declared, “If they want to try to annihilate Ontario, I will do everything — including cut off their energy with a smile on my face.”

Ford, whose province is a key supplier of electricity to several U.S. states, emphasized that America depends on Canada’s energy exports and should “feel the pain” if it moves forward with the trade penalties. “They rely on our energy,” Ford said. “They want to come at us hard, we’re going to come back twice as hard.”

The premier also indicated that he is aligned with Canada’s federal government in opposing the tariffs. “The provinces have a big say in it, but it’s the federal government that’s leading the charge, and we’re going to stand shoulder-to-shoulder no matter who’s in the federal government.” Ford said he intends to implement matching tariffs, stating, “That’s exactly what we’re going to do.”

President Trump confirmed that the 25% tariffs on Canada and Mexico will take effect Tuesday, signaling there is no room left for negotiations after a previous one-month delay. Trump initially held off on the tariffs following discussions with Canadian and Mexican leaders, but after what he described as insufficient action on border security and drug trafficking, he decided to move forward. “The tariffs, they’re all set. They go into effect tomorrow,” Trump said, adding that “no room” remained for Canada or Mexico to strike a deal before the deadline.

The president also reiterated his call for manufacturers to shift operations to the U.S. to avoid penalties. “What they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs,” Trump said.

With the trade dispute intensifying, it remains unclear how far Ford is willing to push his threats, but his rhetoric signals growing frustration north of the border. Whether Canada follows through with a retaliatory energy cutoff could have major implications for U.S. states reliant on Ontario’s power grid.