You’ll often hear business figures talking about the problem of
regulation, something along the lines of “regulations threaten growth!”
But without hearing specific examples, it can be pretty easy to dismiss
the problem.
Regulations aren’t that bad, surely! But in reality, they are that bad, and have the potential to be even worse.
A Small Business Administration study found that “the annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008.” And you can bet that number has not been going down since then. That is $1.75 trillion that businesses must spend on compliance issues, not on investment, hiring, and growth.
That does not even include the cost of the bureaucracies overseeing these mountains of regulation! The regulations themselves keep money out of the productive private sector, and then the taxes required to pay for regulators, inspectors, and commissions further hurt taxpayers.
And the SBA study points out that the cost is greatest on small businesses. Firms with fewer than 20 employees — the vast majority of American businesses — face a 40 percent premium in regulatory costs per employee compared to larger businesses.
This is because while some regulations scale with the size of the business, others are fixed costs that cost the same to a small, one-person sole proprietorship as to a 10,000-employee corporation.
If politicians are really serious about small business, like they all claim, then they would try to roll back the regulatory burden.
Regulations aren’t that bad, surely! But in reality, they are that bad, and have the potential to be even worse.
A Small Business Administration study found that “the annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008.” And you can bet that number has not been going down since then. That is $1.75 trillion that businesses must spend on compliance issues, not on investment, hiring, and growth.
That does not even include the cost of the bureaucracies overseeing these mountains of regulation! The regulations themselves keep money out of the productive private sector, and then the taxes required to pay for regulators, inspectors, and commissions further hurt taxpayers.
And the SBA study points out that the cost is greatest on small businesses. Firms with fewer than 20 employees — the vast majority of American businesses — face a 40 percent premium in regulatory costs per employee compared to larger businesses.
This is because while some regulations scale with the size of the business, others are fixed costs that cost the same to a small, one-person sole proprietorship as to a 10,000-employee corporation.
If politicians are really serious about small business, like they all claim, then they would try to roll back the regulatory burden.
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