Trump’s pledge to roll back regulations isn’t inherently bad, but the way he’s going about it is problematic in just about every way.
Trump’s second term has brought about a new level of bureaucratic hollowing, leaving no capacity to manage regulations already in place. So, we’re left with a backlog of outdated policies, with an admistration who has no intention of enforcing them. Imagine the nightmare this creates for anyone trying to operate under those circumstances.
What we need is a functioning government with experienced staff who can regulate these systems and give clear guidance to those who need it. The bar is low, but the current administration is still trying to play limbo.
Hey all, Peter Zeihan here. Coming to you from Colorado. Taking a question from the Patreon page today, specifically about regulation in the United States. Donald Trump says that he’s going to strip out ten words of regulation for every word that gets put in. This is up from his first term when he said the ratio was going to be 5 to 1.
And will this have a meaningful impact? The person was asking the question, was quite circumspect about this. And he realizes that some regulations are good. So it’s just a question of whether this is a pro or con at large. Overall it’s con, but probably not for the reasons that you’re thinking, the two most regulatory heavy administrations that we have had in modern history are the Biden administration and the Obama administration, and by far the most administrations we’ve ever had are Trump one and Trump two.
But they’re very different beasts. The Obama administration stacked itself with people with no real world experience. There was only like five years total of people who’ve had a real job. Most of them came from academia and ideologues and think tanks and people who had never actually participated in the real economy. So a lot of their regulatory structures existed because the president hated to take meetings.
And so he never went to Congress for anything. And so they made up what they thought the ideology would demand and try to force that on corporate America. And needless to say, it made a lot of mess. The Biden administration was kind of the opposite, and that most of the people who were in the administration had real world experience, either as mayors or governors or corporate titans.
And so while there were still a lot of regulation that went in, it wasn’t nearly as crazy.
Trump very different beast. In Trump one, the Trump administration, we’re all going to be right back that up. President Trump didn’t think he was going to win in his election with Hillary Clinton. And so when he became president, he tapped the Republican brain trust very heavily in order to build out his cabinet.
And all the senior positions in the bureaucracy. And in doing so, a lot of people with corporate experience became bureaucrats. And in doing so, when they came across regulations that they knew from personal experience were stupid, they stripped them out or modified them to make it less onerous for the business community. And so, as a rule, the business community was broadly pro-Trump throughout the bulk of his first administration.
That’s not where we are with Trump. Two, President Trump spent his time out of power during the Biden administration, purging the Republican Party of anyone who might ever come across as knowing anything, because he wanted to make sure that everybody knew he was the smartest person in the room. And the easiest way to do that was to dumb down the room.
So he comes in to president the second time around. There’s no longer a brain trust and the Republican establishment, for him to tap. And then he goes into the bureaucracy and fire the top 1500 or so people, but doesn’t necessarily replace them. So what we have is this weird dichotomy. And yes, the regulatory frameworks, the the system that builds out new regulations that has been frozen in very, very, very, very, very few new regulations have gone into place under Trump.
Two, however, these institutions are not staffed out, so they’re also not going through the old regulations and purging them or trimming them or amending them or getting rid of them or whatever it happened to be. So in some ways, we now have the worst both worlds. We have this massive regulatory hangover that dates back to the first Obama term, a lot of stuff that still hasn’t been cleared out.
At the same time, we now have an administration that isn’t putting any brain power whatsoever into cleaning up that system. So yes, we’re not getting new regulations. And broadly speaking, for the business community, that’s a plus. But then we’ve got this massive overhang of stuff that is outdated or ill conceived, or never went through Congress or never went out for review.
That is still on the books, and you’re legally required to still follow them. The Trump administration is telling people just don’t follow them then, which puts business in the worst of all positions. They’re legally liable if they violate the corporate codes. But this federal government is saying that they won’t enforce the corporate codes. So we get this rule of law problem.
At the same time, we have an outdated and overburdened regulatory structure, and corporate America is left in the middle trying to decide which specific legal risk they want to deal with. Not a pretty situation to be in. The solution is for the government to be the government, but the government can’t be the government without people.
