Regulation: The Stealth Economic Killer

Posted: Aug 09, 2013 12:01 AM
Regulation: The Stealth Economic Killer

Some rules are needed to keep order in a society, promote fair dealing, safety, etc.  But, regulation isn't free.  The cost of compliance is added to everything that is grown, mined, manufactured, processed, sold, and consumed.  Cost of regulatory compliance is a real cost of operation for businesses that effects market competitiveness of goods and services and thus can stifle job creation as well as salaries and wages.

Taxation is tangible.  State, local, and federal tax obligations are paid directly.  They show up on a P & L in a line item, or at the bottom of a receipt at a checkout counter.  Taxes are visible and easily quantifiable.

But, the cost of regulation is stealth.  Seldom does anyone calculate, itemize, post and publish the actual cost of the myriad of rules that control our lives and everything we produce and consume.  The cost is just embedded in the price.  Whether it’s a box of corn flakes, the energy to heat and cool our home, or a new car, the consumer has almost no ability to know how much of the price they are charged is due to compliance with rules along the way imposed and policed by government to produce the end product for the consumer. 

Just as the cost of taxes ultimately gets passed on the consumer, so too does the cost of regulation – except the cost of regulation vastly exceeds the total revenue paid in corporate taxes in America.  Additionally, the Obama Administration has been promulgating regulation at unprecedented levels. 

CEI, the Competitive Enterprise Institute, is one of a growing group of organizations that monitors and quantifies the 80,000 or so pages of federal regulations in America.  Annually, CEI published an update called Ten Thousand Commandments They also provide current updates throughout the year. Following are the bullet points for the August 5 weekly report, the full text of which can be found here.

-Last week, 82 new final regulations were published in the Federal Register. There were 80 new final rules the previous week.

-That’s the equivalent of a new regulation every two hours and three minutes — 24 hours a day, seven days a week.

-All in all, 2,160 final rules have been published in the Federal Register this year.

-If this keeps up, the total tally for 2013 will be 3,684 new final rules.

-Last week, 1,707 new pages were added to the 2013 Federal Register, for a total of 47,077 pages.

-At its current pace, the 2013 Federal Register will run 78,989 pages, which would be good for fourth all time. The current record is 81,405 pages, set in 2010.

-Rules are called “economically significant” if they have costs of $100 million or more in a given year. No such rules were published last week, for a total of 17 so far in 2013.

-The total estimated compliance costs of this year’s economically significant regulations ranges from $5.78 billion to $10.39 billion.

-So far, 149 final rules that meet the broader definition of “significant” have been published in 2013.