Myopic Regulators Hurt the Poor

To help simplify this analysis, imagine that there are only two components of a good life: agency and material goods. Agency is the ability to make choices and have those choices be capable of enabling real change at least in a person’s immediate circumstances. While an individual doesn’t need agency in every part of life, most people would prefer to have some level of agency over the things that are important to them. Material wealth is a combination of physical items that keep people alive and fulfill their various wants. Most people want some combination of agency and physical well-being with most wanting a lot of both. This is why people with an extremely demanding job that pays them very well do not feel satisfied. They have nearly endless money, but they don’t have the agency to use it effectively. Regulators conflated both of these factors and ended up making the poor worse off through their inability to understand. Most regulators experienced lives with an unusual amount of agency. Whether or not they try to, regulators have lives with a much higher level of personal agency than most of society, and in particular the poor. Because this is something that cannot be observed, externally they are unable to see the poor’s lack of agency as clearly as their lack of material resources. All of their solutions systematically overemphasize creating a fixed state of material provision while not accounting for the underlying lack of agency that causes the other share of the poor’s discontent.

Regulators evaluate the welfare of the poor through examining their material welfare. While this is sensible, this approach alone can lead to a worsening of the initial problems that caused the poverty. An understanding of material problems faced is important, but without changing the obstacles to agency, poverty will never improve. Many people are poor because they feel that they have an extremely constrained set of options. If they’re not willing to make massive sacrifices, then they feel they can never escape their poverty. Although the world itself is constrained, some governments and systems create environments that are very difficult for people to act in and other regulatory environments give people the freedom they need to act in a wide range of situations. The wealthy assume that if they transfer resources, then poverty will be solved. For most regulators, they never experience this sickening lack of agency and can’t understand why people with stable government payment streams do not feel capable to succeed. 

Only a reduction in regulations, particularly on small businesses, can solve the gap of perceived agency between poor people and the wealthy. Regulations that stifle every form of creativity are particularly hard for the poor to flourish. While regulation can create an end state where the poor have resources to consume, the ability to create will ultimately be far more important to their trajectory. Receiving federal benefits and consuming them does not lift people up, rather it reinforces their dependency and treats them as though they were cattle in some planned facility. Overly specific regulations push people into funnels of actions that make their actions similar to the actions of others. The wealthy, not being so constrained by these regulations, have more choice to act uniquely, so they don’t even conceptualize a world where this lack of options is felt. A lower level of regulations allows greater disruption and reduces the moat of established businesses and gives new entrants a fair chance. Those at the bottom of the income distribution have a far greater percentage of their life’s activities, determined by regulation, so even a marginal reduction can greatly benefit them.

Ultimately, freedom is far more important than wealth, and it gives people the best chance to develop a wealth that endures. There is no amount of wealth that can fix the fundamental problems of tyranny. People will continue to be upset with their lives if they are over regulated, even if they have enough money to pay for a comfortable existence. The difference between tyranny and freedom is the difference between life and death. The poor feel this and the rich are never constrained enough to realize how lucky they really are. Regulators have a responsibility to understand how their unique life experiences make them often miss important lessons when creating laws for different types of people. The poor do not want state paternalism, if they accept it out of necessity in a world where their options are limited. Poor children are trained to be dependent by an overbearing state, but their imaginations are unable to understand why they feel so unhappy. They can only sense the desperate weight of their lack of agency.