Rules, Rules for All

Posted on April 30, 2014 by


Readers should check out this short article in on United States regulatory costs (April 30, 2014).  The article is entitled “U. S. Regulatory Costs are World’s No. 10 Economy.”  As the title suggests, the total cost in one year to affected parties of all Federal regulations is larger than all but ten of the GDP numbers of the nations of the world.  To put it another way, the per household cost for each American family is around $15,000 in one year.  It’s like an extra tax that no one sees directly, but which is paid by someone. That is pretty mind-boggling. In raw numbers, the estimated (likely the figure is higher) cost of regulations is $1.86 trillion.  Canada’a GDP was $1.82 billion last year, India’s was $1.84 billion.  

On this blog we have written several articles dealing with government regulation, so I am not doing a full analysis of regulation in general. Rather I want to leave the reader with just a short take on all this.  We would like to assume that regulation is designed to address and correct various significant negative external effects–air and water pollution, food purity and safety, drug safety, etc. And we would further like to believe that agencies writing the regulations have performed a thorough cost-benefit analysis in which they have identified correctly and measured correctly the costs of the regulations as against the benefits achieved by them.  They naturally (?) would adopt regulations achieving the highest benefits at lowest cost.  Unfortunately, we frequently find no such thing:  Either there is no analysis at all or if there is, it is sloppy and biased.  Moreover, agencies themselves have a certain incentive to keep churning out more rules, and to expand the scope of their missions (“mission creep”).  If we want to go back further to the root, we can blame Congress, which continues to enact vague, overbroad, and unlimited legislation, then giving the regulatory agencies virtually carte blanche authority to “implement” it through rules–thousands of rules, about 4,000 last year alone.  So we the citizen-taxpayer end up with huge spending, combined with heavy-handed regulation that stifles innovation and productivity, and no additional benefits to show for all that.  Small businesses especially suffer costs, but so do ordinary people.

I wish I had some optimistic words for you at this point, but I don’t yet.  Perhaps the time will come.  Do read the article.