The Burden of Government Regulations

Just as we were wondering yesterday, along with Danny Vinik of the New Republic, what could be going wrong with the economy, the Competitive Enterprise Institute published its annual review of the burden of federal regulations. Entitled Ten Thousand Commandments, a handy summary of it can be found here, and the full report can be read here.  Also, links to previous years’ reports can be found here.

Among the tidbits found in the summary, I found these to be especially worrisome. 

• The costs of Federal regulations to American consumers and businesses  in lost economic productivity and higher prices is estimated to be $1.88 trillion in the last year- about 10% of the nation’s annual GDP. If you  think that you do not pay this cost, think again.  Businesses must pass all costs on to the consumer if they are to remain solvent. You might object that the companies could absorb a portion of these costs and just take a smaller profit. If they were to do this, you and all your fellow citizens would suffer opportunity costs. The companies would have less money to invest to increase the size of the economic pie we would like to enjoy.
• If we would divide the national regulatory costs among all the nation’s families, each household would have to pay an average of $14,976. Since the average family budget is $51,100, this per household cost would amount to about 29% of the average family’s expenditures.
• This statistic is truly stunning! The regulatory compliance costs to businesses exceed the revenue the IRS is expected to collect from both individual’s and companies’ income tax by more than $160 billion. No wonder companies are having problems making a profit.

This list should be added to yesterday’s list of reasons for the poor health of the economy that Vinik did not consider.

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