It’s easy to see how government damages the economy as a taxpayer. Every dollar the government takes from you is another less dollar you have to spend in the private (a.k.a. the real) economy. Plus, as they continue to accumulate debt, that’s just more interest on the debt we have to pay. For every dollar you send to the government, you’re already guaranteed to get less than a dollar back in value.
Some of the costs government imposes aren’t as easy to see. Take regulation as an example. Often believed as a way of keeping business in check, businesses can also use regulation to their advantage (a phenomenon known as “regulatory capture.”). Why would a company like Philip Morris support heavy restrictions on tobacco advertising? Because it’ll prevent future competitors from joining the market. Why do the big banks favor Dodd-Frank? Because the costs it imposes disproportionately burdens small banks. The list of examples could go on for an entire series of articles.
Another cost of regulation is time. Every minute spent complying with a regulation is a minute that could’ve been spent towards furthering the business. According to a recent report by the National Association of Manufacturers, “the average U.S. company pays $9,991 per employee per year to comply with federal regulations. The average manufacturer in the United States pays nearly double that amount—$19,564 per employee per year. Small manufacturers, or those with fewer than 50 employees, incur regulatory costs of $34,671 per employee per year. This is more than three times the cost borne by the average U.S. company.”
So, for employing a single worker at a small manufacturing plant, the regulatory cost is roughly that of hiring two minimum wage workers all year. And we wonder why jobs are being sent overseas.
Luckily for us, we may finally see a reversal in the unbroken trend of increased regulation during every presidential term. The only time when the number of net regulations actually decreased was during Reagan’s first term. Among the executive orders President Donald Trump took after taking office is one which required two regulations to be repealed for every one to be implemented. It would ensure that only the most vitally needed regulations would be passed – and would help drain the swamp of the useless ones.
And in the meantime, Trump’s cabinet is already taking steps to cut down on regulation.
Commerce Secretary Wilbur Ross said Friday that he and others on the economic team of President Donald Trump “are up to our eyeballs” in their search for government regulations to be undone.
Speaking on CNBC Friday morning, Ross said he would seek the input of business groups including the National Association of Manufacturers, the U.S. Chamber of Commerce, the National Federation of Small Businesses and others. He estimated that the Trump administration may ultimately save U.S. businesses “way into the tens of billions of dollars and very possibly approaching a hundred odd billions of dollars.”
“Many of these were put in by executive orders and by agency rules, and those wouldn’t require acts of Congress. So we are up to our eyeballs in trying to make sure we identify all the problems,” Ross said. “So it’s a lot to do there. I think that will be one of the most fruitful areas that the administration can attack quickly.”
H/T Politico
The Code of Federal Regulations is going to be on the chopping block – hopefully the Federal Government’s $3.5 trillion budget is next. Are you glad to see that the Trump administration is fulfilling its pledge to “drain the swamp’? Share your thoughts below!
