Slaves To Government Regulation
One of the ways to rationalize government employment is to write regulations. It is a simple process: for every new regulation more policing agents must be hired to ensure the regulations are abided by. Those who receive payment for such employment include those who produce and process the paperwork, as well as those who actually go out in the field to see if the regulated are actually doing what they have been instructed to do or not do, as the case may be.
The costs of such regulations are larger than one might think. According to the Small Business Administration, the total cost of such regulation was $1.75 trillion in 2009, and for small businesses the cost per employee was $10,585. Obviously this cost is not borne equally by all employers. Some will pay more, some less. But if one considers the fact that part of these costs is accounting costs and pure regulatory paperwork costs, then one can see every business will pay a substantial amount. And always remember; in doing paperwork, nothing of substance is accomplished.
To use the truck transportation industry as one example, government paperwork mandated by the Department of Transportation adds approximately 10% to administration costs. In banking, the percentage expense in administration required by government is much higher. Without question the federal Department of Education will add costs to every local school system, such costs having nothing to do with the education of children. And the regulations can be very mundane. For a bank, offering a cup of coffee to one person and not the next is illegal. In the trucking industry a driver must fill out a piece of paper verifying where he sleeps at night.
The point is, regulators need an excuse to exist. That excuse lies in producing paperwork. If there is a regulation that must be followed, then someone must produce, examine, report on, and file the paperwork. If an agency wants to get bigger, all it need do is require more paperwork, that is write more regulations. As lawyers are the largest portion of our elected representatives, they are all for more paperwork, because they think paperwork is what is important. (They should try wearing or eating some paper). Further, the tort lawyers find that not following the paperwork is a reason to sue someone and transfer money to themselves.
Perhaps we all need some regulation. I’ve often said that mankind is not civilized enough for anarchy, so I will admit there is a need for government regulation. Yet regulation should be reasonable and should not overly interfere with the functioning of the society. It should enhance society. It should not stifle the economy; its hould enhance the economy. But enhancing the economy is not the purpose of the regulators, whether elected or bureaucratic. The purpose of bureaucracy becomes the self-perpetuation of the bureaucracy.
Make no mistake: perpetuation of bureaucracy is not solely the province of government. Private business will also suffocate itself with bureaucracy. The difference is in private business an excess of bureaucracy will cause the failure of the company. The prospect and occurrence of failure is what keeps private business competitive. This does not occur in government. Failure does not happen. Sloppy, wasteful behavior results in more programs and higher taxes.
If business spends a significant amount of time and money on regulation, then that is time and money not spent on productive activities. It is a hidden cost to the taxpayer or consumer. Thus in addition to paying taxes to support the regulator and his paper work, the consumer must also pay the hidden cost of complying with unnecessary regulation. Let us be clear, if the Small Business Administration is correct, the cost of regulation is approximately 12% of the Gross National Product. If one takes that hidden tax and adds it to the actual taxes government takes from you directly, which is about 27% of all income, then you see that government costs you almost 40% of your income each year.
So each week you can figure Monday and Tuesday are spent working for someone else. In 1865 they said slave labor was gone from the United States. No, it’s not. Whether those fighting knew it or not, the Yankees went to war to make everyone a slave to government. Obviously they were successful.
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