Regulation Nation (redux)

 

 

"Its not that bad - its just a few simple rules to follow..."

 

More than one person has said the best thing Congress can do to help business is to go out of session. That was the old days. The new "normal" is this - we no longer need Congress to "muck up the system". We now have an imperial Administration. Within this Administration, the department heads and czars can, by fiat, issue regulations which have the same effect as law. Think I am exaggerating? Ask the coal industry.

What many do not understand is this - every regulation issued cost money. Some in the "low information" class will say, "Who cares? Big business can afford it!" Those who understand business, understand differently - to a business, regulation costs are just a cost of doing business. Those costs will be passed on to the ultimate customer. The economists call this a "hidden cost" or "hidden tax". Whatever you call it, someone has to pay the freight, and it is usually the poor saps at the end of the line - us.

In January 2013, The American Action Forum issued a report on the cost of regulations:

The federal government imposed an estimated $216 billion in regulatory costs on the economy last year (2012), nearly double its previous record. That figure represents a mixture of lifetime costs – how much one regulation will affect the economy over time – and annualized costs, because agencies estimate regulatory costs differently.
The same report calculates that the regulations put nearly 87 million hours of paperwork burdens on the economy, or the equivalent of a year’s work for some 43,000 full-time employees.

The concerning part of this explosion of regulations will be the new health care law. This monster law has spawned an unholy offspring - 20,000 pages of regulations. And they are still being written! How much will this 2,600 page law along with 20,000 pages of ancillary regulations cost? Last week, one well respected pundit was asked that question. His answer - "incalculable."

Regulations have one more sinister side effect. They can drive an industry out of business. Lets go back in time. In 2008, Candidate Obama said this in San Francisco - "If somebody wants to build a coal-powered plant, they can, it's just that it will bankrupt them." Recently, knowing this would never get through Congress, the President used fiat authority to cripple the coal industry through additional excessive regulation. It does not seem to matter that we get between 20 and 25% of all our energy from coal. It does not seem to matter we have over a hundred years supply of coal left. It does not seem to matter that the coal industry employees thousands of workers. It does not seem to matter the price of our electricity will go up like a roman candle.

So there you have it. As one author has recently put it, we live in "regulation nation". This is a crushing cost to businesses as well as consumers. Those who have worked in business understand this - those who have never worked at a real job (like the Administration), do not. And that - is the problem.