Regulatory and financial reforms to combat cronyism and modernize our economy

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We're not running out of big ideas. But a U.S. economy afflicted by cronyist regulation and laws may be less and less able to convert those ideas into game-changing, job–creating businesses. -JAMES PETHOKOUKIS

Though American workers deserve a safety net to protect them from the ups and downs of economic life, big businesses do not. Unfortunately, as James Pethokoukis argues, the federal government offers all kinds of protections to politically influential businesses that shield them from the upstart rivals that, if given half a chance, could make America’s economy more innovative and productive. The result is that new business formation has steadily declined over the last three decades. New businesses are the source not only of the new ideas that make us richer, but also of the new jobs that create opportunities for American workers. Conservatives need to reverse this decline if the economy is to grow, and if upward mobility is to be restored.

The surest way to foster a more entrepreneurial economy is to limit regulation, reform the financial system, and allow for “permissionless innovation,” in which innovators of all kinds are given the room they need to experiment with new business models without fear of running afoul of incumbent-protecting regulations.

James Pethokoukis is the DeWitt Wallace Fellow at the American Enterprise Institute and a CNBC contributor.