Regulations

Elsewhere, I discussed government regulations just a bit. Tis a very big topic as you will see. A recent interaction with some of my students and teaching colleagues has resulted in me taking a closer look.

It seems to me that there is way too much government regulation and that it is choking commerce and other aspects of our lives.

Well, that’s a start. Now let’s take a look. Remember the usual rules apply, this is not a thesis, just some of my rumination that perhaps will advance thought somewhere, hopefully, in my head at least.

As was pointed out in my George and Government Regulation post, common wisdom seems to indicate that there are those in favor of government regulation and those against it. As I noted there, I don’t think it’s that simple and I do think that simplistic viewpoint taints any decent discussion of the topic. So let’s put that nonsense aside.

Who are they?

So who are the regulators? The federal and other governments state and local contain the legislators who create laws. These governments also contain certain regulatory agencies that they created like the Securities and Exchange Commission (SEC), the Food and Drug Administration (FDA) and on and on.

In California alone there are over 500 state agencies. They employ over 350,000 folks not including the folks they contract to do stuff. All of these folks get salaries, medical benefits, and pensions at the expense of the taxpayer.

Now the hand in the cookie jar image implies a negative but as I perused the list of CA agencies there were many that sound like duplicates, there is no clear process for house cleaning the list, and there is little incentive at the municipal level to contain this spending. Perhaps the negative is deserved.

What are these entities up to?

Government funds its activities with taxes or borrowings. The activities are voted on by representatives of the people. Expenditures have some transparency because they are in the government’s budget. These same representatives can create the agencies which create the programs that the people must follow. The agency may be funded, to a degree, by taxation and debt but the people must also kick in with compliance costs as these agencies create their rules.

With these agencies, a mechanism is in place to increase the size of government without it appearing in the government budgets and without all of the actions of the mechanism being voted on by the representatives of the people.

Instead of Taxation Without Representation that the fellows below saved us from, we have Regulation Without Representation.

How Much

The Federal Register is the official record for the approved acts of the US Government. It is intended to provide some transparency into the workings of the government, yeah, right. In 2010 it had 81,405 pages. When I graduated from college in 1965 it had 17,000 pages. Either the government got a lot more transparent in that time or a lot bigger. What do you think?

The Federal Register is where proposed and final rules, created by all of the agencies, are documented. The 2009 register noted 3,575 final rules created that year. There were 3,830 for 2008 and 3,718 for 2006. Now I could dig out all the numbers but if those  numbers are representative, we have a lot of rules.

Clyde Wayne Crews, Jr. studies this stuff and publishes Ten Thousand Commandments, an annual snapshot of the Federal regulatory state.

The costs of these rules are compliance costs that usually end up passed on to us, the consumers of company products and services that are subject to the rules.

One study showed that in 2008 these compliance costs totaled $1.75 trillion. Since there are more added every year, when you compare this number to the 2010 federal spend of $3.45 trillion, regulatory costs exceed half of the total cost of government.

In 2008 regulatory costs exceeded total corporate profits of $1.46 trillion, they dwarfed the taxes collected from corporations of $157 billion and from individuals of $936 billion (2010).

These costs represent over 12% of the country’s GDP. It’s amazing what we can’t see… Add in the regular (irregular?) government spend and the total cost of government is around 35% of the total economy.

Too Much?

Gut reaction… WAY too much.

Some, sort of random, numbers:

  • Regulatory costs are about double what the government takes in from us in income taxes
  • Nearly 38,000 final rules have been issued since 2001
  • In 2010 there were 3,573 final rules issued vs. 217 bills voted in by congress. Unelected bureaucrats are creating 1600% more laws than our elected representatives. (To be fair, this needs some sorting out since some rules are the result of the legislation.)
  • At one point in 2010 there were 4,226 regulations in the works, 845 of which would impact small business. This was about a 12% increase over 2009.
  • 547 of the 4,226 would impact state governments
  • 346 of the 4,226 would impact local governments

The regulations slam small business, the greatest job creating engine that we have available to us.

As the rules cascade into state and local arenas they drive up the costs that we have to cover for them. Remember the federal burden is 35% of the total economy. I don’t currently have any figures for what the state and local burden adds in.

Notice that nowhere did I discuss the number of rules that were eliminated. There probably are some, but would you dare to hazard a guess on the order of magnitude of that number?

We are clearly drowning, not in the rising waters caused by global warming, but in the rising tide of the hidden activities of our governments federal, state, and local as they try to control every aspect of our lives.

Dad and Mom taught me individual responsibility. Clearly understanding what that means and how it can impact your life can be read about in a great book by Jack Canfield, The Success Principles. Truly understanding what it means to be responsible for your own life is worth looking into.

Do you want to live your own life or have someone live it for you?

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