April, 2021

Regulation and the Perpetuation of Poverty in the US and Senegal

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Regulation, particularly for those who are poor and marginalized in the political process, has stood in the way of the market innovation and creative destruction that was instrumental in the Great Enrichment. The effect of regulation in the United States has been highly regressive and tends to trap many people in poverty. In Senegal, regulatory burdens, in terms of both time and financial resources, are so heavy that it is nearly impossible to start a small business. Consequently, many entrepreneurs choose to remain in the extralegal sector with no legal rights or protections. Furthermore, large multinational firms in Sene- gal are able to use their financial advantages and influence not only to better navigate the regulatory environment but also to gain special exemptions unavailable to small entrepreneurs. The result is an under-developed legal small business sector and an economic climate rife with distrust and corruption.