Simple, Consistent & Fair Reguations Boost Economic Growth

The great economist Milton Friedman once said: the business of business is business.

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It’s a zany one-liner that gets at something deeper, in particular on government regulation.

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We see the best outcomes when governments limit themselves to setting clear, fair rules and enforcing them consistently. This approach is about principles above micromanagement, and it unlocks the power of markets.

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The government has an important role to play in many areas from defense to our judicial system to the environment. But there are more and less obtrusive ways for them to pursue their goals.

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For example, our thousand-page US tax code is tremendously complex. The tax rate is open to debate, but can anybody really argue that this arbitrary and byzantine tax system is good for the economy? Clear, simple, fair rules would be better.

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Another example is efforts to reduce carbon emissions through a hodgepodge of tax incentives, subsidies, and specific rules related to oil, gas, and coal. What a mess. If the government wanted to drive effective change, they should set a single tax on carbon emissions and let the market figure it out. Companies will instantly understand the new rules of the game, and proceed accordingly.

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Tariffs, subsidies, righteous regulations, etc. are all examples of the government picking winners and losers in the market. The record is clear that governments are not good at this. Even if their ideas are well intentioned.

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Private companies, like Alliance, pick winners and losers every day. We’re constantly evaluating new properties and deciding how to increase the value of our portfolio. We work on behalf of our investors and are accountable for the results we deliver. This is not the same for government bureaucrats.

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For generations, American companies have led the world, in part because the US government has known how to stay out of the way. Markets combine the collective wisdom of everybody, and everybody is smarter than any bureaucrat. Let’s not forget what works.

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‍Frequently Asked Questions (FAQs)

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What is an unbalanced growth strategy in economics?

An unbalanced growth strategy focuses investment on select high-impact sectors, but it works best when supported by simple rules rather than bureaucratic micromanagement. When regulatory reform removes obstacles, markets allocate resources more efficiently and encourage stronger economic growth strategies. Clear frameworks, such as a straightforward carbon tax policy rather than overlapping incentives, avoid distortions. This clarity also helps investors evaluate long-term metrics, such as residual value. It further strengthens confidence in financial evaluations such as commercial real estate appraisals.

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What are the benefits of a free market economy?

A free-market economy benefits consumers and businesses by promoting competition, innovation, and efficient pricing. When governments maintain fair and straightforward rules, the benefits of deregulation include greater business confidence and stronger economic growth strategies. A predictable environment makes it easier to analyze investment metrics, such as a good gross rent multiplier. It also supports precise evaluation of opportunities such as healthcare REITs. Overall, free markets thrive when regulations are consistent rather than burdensome.

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Who benefits from the free market economy?

Consumers, businesses, and investors benefit in a free market because competition leads to better products, pricing, and innovation. Investors can more easily evaluate considerations like commercial real estate depreciation or navigate real estate investment risks when regulations are stable. The free market economy benefits expand when governments enforce simple, fair rules rather than intervene excessively. This stability also encourages better long-term planning, supported by clear metrics like residual value. Ultimately, prosperity increases when markets not bureaucrats guide economic decisions.

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What is regulatory reform?

Regulatory reform simplifies or modernizes government rules to make them more transparent, fairer, and more effective. This creates a predictable environment that supports economic growth strategies and reduces market friction. A streamlined approach, such as replacing fragmented incentives with a clean carbon tax policy, helps businesses plan more effectively. It also improves decision-making in areas such as assessing a good gross rent multiplier and conducting commercial real estate appraisals. Ultimately, regulatory reform reinforces the blog's principle that simple, consistent rules strengthen markets.