Dear Reader,
President Trump recently affixed his distinctive signature to Executive Order 14192.
From which:
- The Order requires that whenever an agency promulgates a new rule, regulation, or guidance, it must identify at least 10 existing rules, regulations, or guidance documents to be repealed.
Ten regulations subtracted — for each regulation added! I like it!
Here is a question:
How much wealthier — or poorer — would you be today absent 50 years of government economic regulation?
That is, how much wealthier or poorer would you be… had the United States government stood paws off these past 50 years… and let the economy run free?
Your choices are these:
A): 3.0 times wealthier
B): 2.2 times wealthier
C): 1.9 times poorer
D): 3.3 times poorer
Yet perhaps you would be identically rich or identically poor.
Regulation counts neither plus nor minus. Let us then add a further selection:
E): No richer or poorer
Have you selected your choice?
The Answer
Here is the answer: A.
That is, you would be thrice as wealthy absent 50 years of economic regulation.
This we have on the grand authority of the Adam Smith Institute:
- Federal regulations added over the past fifty years have reduced real output growth by about two percentage points on average…It’s worth thinking about that for a moment. Each individual American, the society as a whole, would be three times richer than they are if there had not been that explosion of regulation of the economy since WWII.
Assume the calculations meet accurate specification.
Every $1 in your wallet would be $3. Every $100 would be $300. Every $1,000 would be $3,000.
If your account presently runs to $100,000… you would have instead $300,000 on your hands.
And so on. And so on. And so on.
Maybe Some Regulations Are Worth the Cost?
Do certain regulations justify their expense?
I concede the possibility exists. For example:
Industry may put a toxic compound into the air — chemical X, hereforward.
A less malign substitute — chemical Y — may cost industry more money to implement.
Yet under the imperative of public health, government mandates the costlier Y.
X goes out and Y comes in.
The cost of business thus increases.
Industry slides these added costs onto its customers’ laps. These users must pay a greater amount for the identical product.
Is society poorer? No, society is not necessarily poorer.
It must spend more money on industry’s product, it is true.
Yet you must consider society’s future medical expenses.
Future medical expenses, that is, to address the cancers and other maladies springing from chemical X’s ongoing use.
And — and — a less sick people is a more productive people.
Thus I approach regulation in the spirit of practicality and reason.
Yet here is the danger of even “sensible” regulation…
The Camel’s Nose Under the Tent
Government is like the desert camel horning in on the tent.
Once the beast gets its snout under the tent, the bulking body soon follows.
The tent’s occupants are suddenly in siege… unable to evict the ungulate intruder.
Once government noses its way into the economy through “sensible” regulation… its immense bulk soon follows.
Once lodged therein, government ransacks the refrigerator, settles upon the sofa… and seizes control of the television.
This camel doubles as a mother-in-law who will not leave.
As Mr. Tommy Jefferson observed long ago:
“The natural progress of things is for liberty to yield, and government to gain ground.”
Rarely has government gained such ground as the United States government under Joseph Robinette Biden.
Over $15,000 Per Household
Reports the National Association of Manufacturers:
- U.S. federal government regulations cost an estimated $3.079 trillion in 2022 (in 2023 dollars), an amount equal to 12% of U.S. GDP… Considering all federal regulations, all sectors of the U.S. economy and all firm sizes, federal regulations cost an estimated $12,800 per employee per year in 2022 (in 2023 dollars).
So much for the year 2022. What of the year 2024?
The American Action Forum informs us that:
- The story of federal regulatory costs in 2024 was quite simple: It was the largest year on record. With nearly $1.4 trillion in total estimated costs, 2024 accounts for nearly half of all final rule costs recorded… going back to 2005.
- For further perspective, the next three costliest years behind 2024 (2021, 2012, and 2010) combined are still less than half of the costs recorded this past year.
In all, reports Mr. Clyde Wayne Crews of the Competitive Enterprise Institute:
- Federal regulatory burdens cost the average household more than $15,000 per year — more than food, clothing, education, or any other household expense except for housing. In total, regulation imposed a $2.1 trillion total cost, rivaling the $2.3 trillion income tax cost.
$15,000 per household — each year — and rivaling the income tax!
Caesar Wants Way Too Much
“Render unto Caesar what is Caesar’s,” instructs the Book of Matthew.
The average United States household has been rendering unto Caesar $15,000 in annual regulatory expenses alone.
I must conclude Caesar is a highly greedful fellow.
He likewise tilts the gaming board in the big guy’s direction… and away from the little guy.
That is because the greatest regulatory burden falls upon the little guy.
Once again the National Association of Manufacturers:
- Compliance costs fall disproportionately on small businesses… Small firms with fewer than 50 employees incur regulatory costs of $14,700 per employee per year — 20% greater than the cost per employee in large firms ($12,200).
- These estimates are consistent with prior studies, which indicate that the cost of regulatory compliance disproportionately affects small firms.
Thus David confronts Goliath in a heavily handicapped condition.
The Seen vs. The Unseen, Revisited
In last evening’s issue I reflected on Mr. Henry Hazlitt’s “seen” versus the “unseen.”
In reminder:
- The bad economist sees only what immediately strikes the eye; the good economist also looks beyond… The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.
The bad economist cannot see the $3 in your wallet… that 50 years of regulation have reduced to $1.
Only the dollar bill strikes his unseeing eye.
The good economist sees the $3 that could have been yours.
Alas, you never did see it.
Regulation robbed you.
Regards,
Brian Maher
for Freedom Financial News
