Regulations have their uses, but has the United States Government gone too far?
Restrictions can be protective or destructive depending on their actual effect which is usually much different from the intended effect. The growth of regulatory rules in America over the past few decades comes from a willingness to do anything versus the necessity to do the right thing.
The IRS tax code alone has grown by 14,703% since President Roosevelt’s New Deal.
Some of the increase comes from an unwillingness of bureaucrats to remove old, ineffective or otherwise unnecessarily burdensome rules. The rest is politicians and appointees trying to curry favor up-the-chain and from the voter by ‘doing something’. But, what does it all cost?
Yeah… the amount of money spent on complying with regulations would amount to the GDP of the fourth largest nation in the world – if it was a nation.
Those costs don’t just affect companies – they take a real toll on families. The full Mercatus study finds that if regulation had kept pace with history, Americans would be much better off:
- If regulation had been held constant at levels observed in 1980, the US economy would have been about 25 percent larger than it actually was as of 2012.
- This means that in 2012, the economy was $4 trillion smaller than it would have been in the absence of regulatory growth since 1980.
- This amounts to a loss of approximately $13,000 per capita, a significant amount of money for most American workers.
The costs are not just that corporations pay a ton of money to stay in compliance. It also makes for a prohibitive environment for new, smaller companies that cannot afford an army of accountants, lawyers and compliance experts.
The full study focuses on how regulatory accumulation, or the buildup of regulations over time, changes the approach that businesses have in making decisions and investments that could lead to innovation and technological growth.
These changes affect the economy, and a core finding of the study is that U.S. growth was reduced by an average of 0.8% per year from 1980 to 2012 due to this regulatory accumulation. An exponential effect is created over time as companies are forced to invest fewer dollars into activities like R&D and hiring new staff. Instead, they must divert money and time to areas such as compliance or acquiring licenses.
Bureaucrats are overreacting to the public outcry that something must be done to cure society’s ills. That usually means ‘doing anything’ instead of deciding if anything at all should be done. When a house is on fire, just ‘doing something’ could mean using dynamite to extinguish the flames. The house would be completely destroyed, but it would no longer be ablaze.
When will the executive and legislative branches begin a serious effort to remove ridiculous, ineffective or otherwise unneeded regulations?
Here are some craptastic regulations we found on just a cursory search of the internet (some federal, some closer to home):
The Equine Equality Rule: “As of March 15 (the Ides of March, no less), hotels, restaurants, airlines, and the like became obliged to modify “policies, practices, or procedures” to accommodate miniature horses as service animals. According to the Department of Justice, which administers the rule, miniature horses are a “viable alternative” to dogs for individuals with allergies or for observant Muslims and others whose religious beliefs preclude canine accompaniment.” 
Private Investigators License for computer repair: “The state of Texas now requires every new computer repair technician to obtain a private investigator’s license. In order to receive a private investigator’s license, an individual must either have a degree in criminal justice or must complete a three year apprenticeship with a licensed private investigator. If you are a computer repair technician that violates this law, or if you are a regular citizen that has a computer repaired by someone not in compliance with the law, you can be fined up to $4,000 and you can be put in jail for a year.”
Business Privilege License for Bloggers: “The city of Philadelphia now requires all bloggers to purchase a $300 business privilege license. The city even went after one poor woman who had earned only $11 from her blog over the past two years.”
So much more exists, but everyone’s already seen the Wasteful Spending List,
And if that’s not enough, watch a tower of regulations almost crush someone trying to demonstrate the monstrosity:
That’s how the government slows down growth. Here’s how they spend the money they get from companies that manage to survive despite bureaucratic idiocy:Wake up Right! Subscribe to our Morning Briefing and get the news delivered to your inbox before breakfast!