Economic Law Gone Wrong: How We Good Outcomes Arise From Bad Laws

Law is big, burdensome, and overwhelming for many of us–and that’s even before we forget that in the U.S. alone there are more than fifty separate governments keeping track of what we can and can’t do. Sounds ridiculous, right? State government and federal government must all work with one another, and they all have different laws making it virtually impossible to do so. Some of those laws are missteps trying to achieve similar goals, but we can learn from the mistakes and still move forward because they inspire competition. Here’s how.

Here are a few questionable laws:

  • Californians were barred from ordering goose liver pate as an appetizer.
  • Music therapists in Georgia must be licensed, the requirements for which are determined by already-licensed music therapists. Think about that.
  • Students in Tennessee are barred from wearing saggy pants so as not to disrespect their elders.
  • Interior designers in Connecticut must be licensed.
  • Retailers in Connecticut must provide you with a free product if that product rings up for a higher price than labeled.
  • Virginia motorists cannot drive if they are not wearing shoes.

The economic effects of these laws aren’t all that savory. In California you can smoke up instead of appetize yourself. In Georgia your competitors determine how easy it is for you to obtain a music therapy license you probably shouldn’t need in the first place. Students in Tennessee will probably find other ways to disrespect their law-making elders. Artsy folks in Connecticut will probably sell their designs regardless of laws trying to bar them from doing so. Retailers won’t start giving Connecticut shoppers free merchandise. Instead, they’ll change the signage to reflect that prices could be higher than they appear.

It’s actually because of these absurd laws that state governments so effectively compete with one another. States with bad policies must in turn respond to those with good ones. If one state passes laws legalizing a recreational marijuana industry, the other states are forced to do so as well or fall behind. That’s because at the end of the day, the consumer decides where and on what to spend money. Each dollar is a vote, and we vote every day.

Bad decision-making on the part of businesses is reflected when people in turn refuse to shop at those businesses. When decision-making on the part of governments goes the wrong way, the reality is reflected at the polls–when people cast a more literal vote to push that government out the door. That’s how laws change over time and mold our society into an economic success. Laws aren’t concrete. They’re experiments. And experiments are like to change over time, the same way our laws and the economy that fuels our country ebbs and flows.