The cost of regulation is killing American drive and entrepreneurialism

Perhaps America, like its professional sports, needs a competition committee that analyzes every new regulation proposed by the federal government.

Troy Marshall 2, BEEF Contributing Editor

December 29, 2016

4 Min Read
The cost of regulation is killing American drive and entrepreneurialism

While President Obama may officially be on vacation, the administration, as expected, has embarked on a last-minute regulatory binge aimed at advancing agenda items they didn’t have the political capital or the politic al will to enact. Advancing these “midnight” agenda items by executive fiat also creates headaches for the new administration, making it more difficult to implement changes they had promised. It is kind of sad, but as they say, all is fair in love and politics.

The real disturbing part of this last-minute regulation bonanza is that the political drama tends to overshadow the real and significant costs associated with these regulations. I’m never quite sure how economists put costs on these things, but the estimates are that federal (just federal) regulations cost the economy roughly $2 trillion a year. Amazingly, that equates to about 12% of our economy. The Federal Register which contains all the regulations we are supposed to follow is over 80,000 pages and growing exponentially.

The cost of regulation is disproportionately born by small businesses and organizations; the big guys can hire the attorneys, accountants and employ staffs to work with and manipulate the rules. For small entities, the mountain of paperwork, regulatory constraints and costs amount to a defacto barrier to entry.

While most ranchers were focused on dealing with the cold snap that swept through the country and the holidays, the EPA and Department of Interior were busy putting in place new regulations that are expected to cost $5.1 billion per year, and amazingly require at least 350,000 hours of paperwork from companies, according to an article in Investor’s Business Daily. And there are a host of smaller regulations being implemented as well.
The numbers are staggering. Just since 2009, the new regulations implemented by EPA and Department of Interior are estimated to have added $349 billion in regulatory costs. 

It seems, though, that the cost-benefit analyses of these regulations are never discussed. The battle over the growth of government and these newly-imposed regulations promises to be immense, and there is a lot of history to suggest that the Democrats will be proven correct in their belief that the Republicans, despite controlling both houses of Congress, will not have the stomach for the fight.

As one Democratic strategist said, it doesn’t matter whether it’s us or the Republicans threatening a government shut down, we know how to blame them for it.

Few deny the growth-killing impact of over regulation, but nobody wants to be blamed for putting federal employees out of work or not caring about whatever noble intention these regulations are supposed to address. Somehow, the conversation has to become about sensible regulation, because most everyone agrees that some regulation is needed. The question is, where does the intrusion stop and the free market take over?

It will be up to everyday citizens and small businesses to hold D.C. accountable and to reel in the negative impacts of regulation, because big business understands that the most heavily regulated industries are insulated from competition and enjoy the most consistent returns and highest margins.

Regulation has a way of benefitting federal employees, big business, and politicians and codifies crony capitalism. It is the overall economy and the average citizen that pays the price through lower wages, higher taxes and lower overall economic growth.

The Trump administration has promised to address the situation, but so have several of their predecessors who found they didn’t have the stomach for the fight. Regulation has the support of the mainstream media, big business, the political class and the federal bureaucracy, and that has been a difficult force to overcome.

The Trump administration is aware of the negative impacts of over-regulation, but it is yet to be seen whether or not they have the political acumen and will to reign in its growth and roll it back to the point where American ingenuity and drive can be unleashed again.

Professional sports should be the model. They understand that changing the rules changes the game, and they have competition committees to analyze the impacts of the rules and determine if they improve the game and improve the level of competition.

Perhaps we need a competition committee that analyzes every new regulation proposed by the federal government – does it improve the overall position of America now and in the long term, and does it benefit the American economy and worker? If those questions were honestly applied, I’m guessing the Federal Register would be reduced by 50,000-60,000 pages almost overnight. 


About the Author(s)

Troy Marshall 2

BEEF Contributing Editor

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock and World Champion Horse Judging teams. Following college, he worked as a market analyst for Cattle-Fax covering different regions of the country. Troy also worked as director of commercial marketing for two breed associations; these positions were some of the first to provide direct links tying breed associations to the commercial cow-calf industry.

A visionary with a great grasp for all segments of the industry, Troy is a regular opinion contributor to BEEF Cow-Calf Weekly. His columns are widely reprinted and provide in-depth reporting and commentary from the perspective of a producer who truly understands the economics and challenges of the different industry segments. He is also a partner/owner in Allied Genetic Resources, a company created to change the definition of customer service provided by the seedstock industry. Troy and his wife Lorna have three children. 

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