Tuesday, October 26, 2010

Think Taxes are High? Government Regulations Cost Even More

We are overregulating ourselves to death. It’s not really us, it’s the people in Washington making the regulations, and there are an awful lot of them. It’s their job. It’s what they’re paid to do. But we elect the people in Washington who then appoint the people to the regulatory agencies who make the regulations, so, when you look at it that way, we are doing this to ourselves.

And it’s killing us economically.

When we Tea Partiers start fussing about big government, this is what we’re talking about: the increasingly costly burden placed upon us by governmental rules and regulations. It’s one of those things that we suspect is happening because we see prices rise, but we don’t know exactly why.

If you’ve been in a grocery store lately, you know what I mean. Here in the Backwards household, I do the grocery shopping, and I’ve noticed how much prices have increased in the past four years or so. Many items have doubled in price during that time. I remember this began when gasoline prices approached $4 dollar per gallon. This made everything that was transported by truck more expensive, because the businesses that deliver their products had to pay more money in the form of higher fuel prices, which got passed along to the people who buy those products, namely you and me.

We all understand how and why that happens. And we’re not too angry about it as long as we understand that there may be a valid reason for a price increase, and providing the increase isn’t too much. Business owners don’t necessarily like price increases, as it tends to make them less competitive. After all, the whole point of capitalism is to have low prices for high quality goods.

But when a business incurs an increased cost for no valid reason, then we have a problem. And we have a big problem when it comes to the costs of government regulations. As the size of government increases, the more regulations are created. The more regulations are created, the more they add to the cost of doing business. This can only happen for so long until we can no longer afford to do business.

We’re at that point today.

Finding the actual core cause for any price increase can be difficult. But there are some cases where we can find the cause relatively simply. Let’s go back to the price of groceries for a moment. When the price started going up, most folks knew why: increased transportation costs. But when the price of gas went down, the cost of groceries stayed high. Why? Because around that time, Washington wanted us to start making fuel out of food, namely corn. This sounds like a good idea on paper, but when you understand that most of the meat we buy in the grocery store is fed corn prior to being slaughtered for market, and that corn is present in a great many foods, and that corn is now being made into fuel, then the price of corn goes up. That increase is passed along in the form of higher prices. So we wind up paying for every new governmental regulation.

Every single one.

This hasn’t gone unnoticed. Gus Van Horn over at Pajamas Media has a great article about this very thing. He also links to this study of the cost of regulation for businesses and households in America. It should concern everyone that the cost is high and increasing every year. As one chart in the study shows, the cost per American household to comply with regulation rose at an annual rate of 2.4%. If you compare that with the inflation rate of around 1% (excluding groceries and gasoline), then you can see why prices are going up for everything. Regulatory compliance now costs us almost as much as do taxes. For example, in 2000, the regulatory cost was $10,300. By 2008 that cost was over $15,000. That’s almost a fifty percent increase in just eight years.

Is there any question why our economy isn’t expanding?

Did your salary go up that much during that time? Yeah, mine neither.

However, there are many in Washington who want us to pay even more for the things we need. Do you remember how candidate Obama said that his plan for a cap-and-trade energy bill would make everyone’s utility bills “necessarily skyrocket?”

Why would you want that for the nation, Mr. President? Do you really think that, after a while, you’ve made enough money but you haven’t paid enough for electricity? Why would you want to impose that sort of suffering on your fellow citizens?

Unless, of course, you don’t consider us your fellows at all, and instead consider us an enemy?

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