George Rebane
[This is the transcript of my regular KVMR commentary broadcast on 16 May 2014.]
We just heard about another manufacturer leaving Nevada County and California, heading for Texas. KACO New Energy is a ‘green’ company that makes solar panel electronics. Their move will relieve them of the double whammy of manufacturing here in a mountainous backwater that is also located in arguably the most business destructive state in the Union. In the meantime the torrent of lies out of Sacramento and Washington hyping our economy grows by the day.
The latest job report is a farce when considered in light of the record reduction in the country’s workforce, now down to 62.8%. If you remember your fractions from grade school, and apparently most people in the country don’t, then you know that any such quantity can be increased by making the denominator shrink. And that’s where we put the number of people who work, including those who still believe they can find a job. Any number of dubious new jobs you stick in the numerator will then improve the unemployment rate.
But what really puts a drag on the country’s economy is the heavy burden of regulations that in reality are an off-budget tax, a tax which the nebbishes voting for big government never think about. The Competitive Enterprise Institute publishes a yearly update on regulations titled ‘Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State’. In it the authors point out again and again the several ways government raises monies it wants to spend – direct taxation, borrowing that increases the national debt, printing money out of thin air, and indirect taxation through its ever growing regulatory labyrinth.
The latter is the invisible tax that is neither seen nor debated. Nevertheless its effects are still felt, but even then they are misconstrued by Main Street. In that way elected politicians duck responsibility for their centrally planned programs, shifting any blame quietly onto the federal government’s bureaus and agencies. Wrap your mind around this – in 2013 compliance with federal regulations cost Americans over $1.8T. The federal government’s outlays of over $3.5T now account for 31% of the country’s economy, and that is before the full costs of Obamacare kick in. Add to that the states’ and local governments’ share, and all layers of government account for almost half the spending that makes up our GDP. What we need to keep in mind is that these monies come as a drag on the productive sectors of our economy – private sector workers and business people doing their best to generate the wealth, attempting to keep the whole thing above water.
Our regulatory compliance costs total more than the entire GDPs of countries like Canada and Australia. We have to hire legions of lawyers to continually study, interpret, and argue both sides of cases arising from the 80,000 pages in the federal register that contain over 87,000 rules – unfortunately I don’t have time to go into the equivalent amounts of additional state and local regulations. The federal regulatory burden alone amounts to almost $15,000 per household annually. To provide some perspective, this eats up 23% of the average household’s income, and 29% of its spendable budget. CEI reports that for the average American household the regulatory costs exceed “every item in the household budget except housing – more than healthcare, food, transportation, entertainment, apparel, services, and savings.”
Small businesses suffer most. That is the sector that creates and maintains most of the jobs that keep this country afloat. But small businesses are hit particularly hard by regulatory costs and pay more per employee, averaging over $10,000 annually, than do the big corporations that average less than $8,000 per employee.
In Washington and the state houses politicians get credit for spending that buys votes. But since they are able to dodge the true costs of their giveaways, they have no motivation to stop passing laws, each of which pumps out another seventy plus regulations that drain money from the private sector. In the end it is we who are dumb enough to reelect these people again and again. So which regulation happy politicians are you voting for in this election year?
My name is Rebane, and I also expand on this and related themes on georgerebane.com where the transcript of this commentary is posted with relevant links, and where such issues are debated extensively. However my views are not necessarily shared by KVMR. Thank you for listening.
rebanesruminations.com 
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