American Elephants


Overregulation Costs Manufacturers Over $2 Trillion a Year! by The Elephant's Child

American business has been telling the federal government regularly that they are overdoing the regulation, and it is damaging the economy. The federal government yawns and says uh huh. Obama’s attitude seems to be that is what business does — complain about regulation — pay no attention to them — it isn’t important.

Now the National Association of Manufacturers has stated firmly that manufacturers are the backbone of our nation’s economy and employ more than 12 million men and women who make things in this country. To maintain manufacturing momentum and encourage hiring, the United States needs government policies more in tune with the realities of global competition.  Our regulatory system produces unnecessarily costly rules, duplicative mandates, impediments to innovation and barriers to our international competitiveness.

That’s straightforward talk from Jay Timmons, president and CEO of the National Association of Manufacturers. So they put their money where their mouth is, and produced a new report that shows the macroeconomic impact of federal regulations.

The burden of regulation falls most heavily on small manufacturers who employ less than 50 employees— at $34,671 per employee, per year. The burden on medium size manufacturers who employ 50 to 99 employees — $18,243 per employee per year, and  for large manufacturers who employ more than 100—the cost per employee is $13,750 per employee per year. The total cost of federal regulations in 2012 was $2.028 trillion (in 2014 dollars). The annual cost burden for an average U.S. firm is $233,182 or 21 percent of the average payroll. Eighty-eight percent of those surveyed said that federal regulations are a top challenge for their firm.

Everybody has talked about “the worst recovery since World War II,” but the White House seems to have no understanding at all of why it is so slow. They have kept pumping money into the economy, giving out more benefits, and that money is supposed to circulate and multiply as it passes from hand to hand. Nancy Pelosi was quite certain that unemployment benefits paved the way to recovery all by themselves.

Democrats don’t much like manufacturing or businesses who expect to earn profits from their activity. They have always regarded profit as a bit of a dirty word, money only earned by greed. Because business is greedy, it needs a firm hand and careful regulation. That’s why they have such a hard time trying to figure out how to create more jobs (infrastructure!) and jump-starting a growing economy.

Well, it matters what kind of business it is. If it is building wind farms and making solar panels, it is good. If it’s making guitars that are hugely popular with rock stars, you had better not be using any endangered wood for the frets. Your stock will be confiscated by the SWAT team that will arrive to shut down your business. (Enter Gibson Guitars in the search function just above Bob Hope’s head in the sidebar).

The business of regulation is handed off by Congress to various agencies, and the agencies’ underlying business is to assure their own continuing employment at high government salaries — so they are careful and thorough in devising regulation and oversight of the regulation, and continued monitoring of each business involved.

That in turn means forms and paperwork and legal requirements, which means that each business has to hire an extra bunch of people to comply with the paperwork requirements. The biggest cost of regulation is the full-time equivalents hired to do the paperwork. And it is serious business. Most of the agencies now have their own SWAT teams to burst into your business and make sure that you are really complying. So it really isn’t funny when the first lady decides that restaurants should show the calorie counts of each ingredient on their establishment’s signage and menus in the interest of reducing obesity.

That’s just the regulation. The tax system for American business has increased the burden to such an extent that we have moved down to 32nd in the ranking of heaviest burden on business and loss of competitiveness.  Obama thinks he is taxing rich CEOs and greedy businesses, but it is the workers who bear the burden of high taxes. We are chasing capitol out of the country to go where it is more welcome and will be better treated. Democrats call this “tax inversion” and are trying to devise laws to keep companies from moving. (Economic Patriotism!) They could just lower the taxes, which would bring in more income)

Economies don’t grow because of nice nonprofit organizations that care about people. They grow because of hardworking businesses who turn a profit and are able to hire and grow and expand.  It’s called Capitalism, which has made America the most prosperous and innovative country in the world. Prosperity is created by free markets and free people, not by the heavy hand of government.


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