One of the big problem with regulatory policy is that typically new regulations are only added – never subtracted.
A good example of this is the federal tax code, which is now 74,608 pages long.
It’s an astonishing 148x longer than it was under President Franklin Roosevelt’s New Deal:
If all you have is a hammer, everything looks like a nail. Regulators add new regulations to “solve” problems, but there is much less political will to actually go back and sort through any outdated, ineffective, or convoluted regulations of the past.
Over time, this has created a massive regulatory burden that continues to snare the growth potential of many industries. According to one study, the cumulative effect creates a burden with a dollar value greater than the GDP of many of the world’s largest economies.
Regulatory Burden in the U.S. is a Whopping $4 Trillion
The following graphic comes from a recent study by the Mercator Institute and it shows that the U.S. regulatory burden alone is bigger than the economies of Germany, France, Brazil, Russia, or the U.K.
The full study focuses on how regulatory accumulation, or the buildup of regulations over time, changes the approach that businesses have in making decisions and investments that could lead to innovation and technological growth.
These changes affect the economy, and a core finding of the study is that U.S. growth was reduced by an average of 0.8% per year from 1980 to 2012 due to this regulatory accumulation. An exponential effect is created over time as companies are forced to invest fewer dollars into activities like R&D and hiring new staff. Instead, they must divert money and time to areas such as compliance or acquiring licenses.
There are now over one million words denoting “constraints” in the Code of Federal Regulations – and the total size of the code is roughly 180,000 pages according to Mercator’s database.
Big deal.
What would we do with another 4 trillion circulating in the private economy anyway?
Take the case of lead paint in housing.
In the 1970-1980s Congress began a program to renovate Public housing to eliminate lead Paint exposure to residents of low income housing. It had nothing to do with private housing.
Then in the 1990s the only affect to private housing was the requirement to notify a buyer of the potential of lead based paint at the time of sale of a house if a house was built in the 1970 or before, it was strictly advisory, No other requirements beyond that.
Skit to today—
MY stepson is a contractor that does home remodeling. If he comes across a project to remodel a house that was built in the 1970 or before, he will notify the homeowners that if he is to remodel their house, the area that is to be remodeled, to meet EPA, will need to be tested for lead paint. (Several hundred dollars by specialist in lead paint testing) If no lead paint is found then proceed as normal. If lead paint is found then the demolition has to be done by crews that are specialist in doing demolition where lead paint is present. We’re now talking adding thousand extra to a project just to meet lead paint regulation of the EPA.
As a result of these requirements my stepson has lost a lot of projects. Many people will seek out re-modelers that ignore EPA requirements, many of those are not licensed contractors and they can skip those extra costs and are willing to risk dealing with EPA fines which are substantial if caught. Also these un-licensed contractors are taking great legal risks.
For my step-son he won’t take the risks of paying these fines and losing his contractor’s license and so he loses out on a lot of work, and those homeowners that go with him and follow the rules end up paying substantially more on their projects.
This is just one example were Government regulations have added huge cost that would not exist without these regulations.
So if you’re one of those homeowners that are faced with thousands extra on a remodeling project just to meet EPA regulation that didn’t exist not many years ago, then yeah for you it’s a big deal.
You failed to mention all the extra training ($$$), licensure ($$$), certifications ($$$) and I’m sure, extra insurance ($$$) your son-in-law is required to have in order to comply with the EPA regs. If I remember correctly, these regs were not new laws passed by congress; they were created wholly by the EPA. Talk about taxation without representation…
Meanwhile, in Flint, MI, the goobermint can’t keep lead out of the freakin’ drinking water.
Your correct it was originally created by congress and then the EPA took it and ran with it to create the monster it is now.
you’re not your — I know, I know
One key reason why small businesses fail: new owners do not know what they do not know. Until one of the many govt minions arrives to tell them, fine them, tax them, regulate them, shut them down.
A person would need to be crazy to start a small business these days.