Wednesday, August 15, 2012

The Debilitating Cost of Government Regulation

Too infrequently when the  political rhetoric flies do we step back and consider the issue dispassionately.  Too often we succumb to emotional appeals without analyzing the matter in a logical, fact-based fashion. 

The August 13th edition of BARRON'S cites an upcoming report by the Competitive Enterprise Institute called Tip of the Costberg.  The study measures the cost to the economy of businesses complying with federal regulations.  During the first half of this year the cost was $1.806 TRILLION.  To put that number into perspective, the federal budget for 2012 is $3.6 trillion which means the cost of regulatory compliance for business is equivalent to 50% of the national budget.  

Imagine how many jobs would be created if that money were invested in the private sector economy instead of fattening the same bureaucracies that snoozed while Bernie Madoff skimmed billions from his clients.  

1 comment:

  1. I'm no fan of bad regulations and there are a lot of bad regulations out there, but the cost of complying with regulations isn't paid to the government. The cost isn't necessarily a drag on the economy either. Most compliance things are spent in buying and installing equipment or reporting data on various activities. Much of those activities involves spending on people and equipment, which are all private sector investments, aren't they? In an odd way, all regulations create jobs in both the public and private sector.

    I wonder how much of the $1.8 trillion involves capital equipment, such as air and water pollution abatement equipment? That's all private sector spending and capital investment.

    It's also hard to see how there are too many banking regulations or enough enforcement of those regulations, as you mentioned.

    Just another view....