I'm entirely against the principle of regulations in a market economy. Why? Because I believe they raise prices due to less choice (i.e. less competition). Also, I believe regulations allow irresponsible people to stay on the free market with the government's guidance, while an unregulated marketplace would get rid of unintelligent entrepreneurs that don't think about consumers.
But one claim I often hear is that regulations kill jobs. I can see how environmental regulations kill jobs, by making businesses pay more for environmental-friendly facilities, etc. But what about the hundreds of thousands of other regulations in our law books? Do they really kill jobs? Can you give examples?
The Small Business Administration recently said that the regulatory cost in America was as high as 1.75 trillion dollars. How do we calculate such a number? And is it accurate?
Pierre-Alexandre Crevaux:I can see how environmental regulations kill jobs, by making businesses pay more for environmental-friendly facilities, regulatory compliance etc. But what about the hundreds of thousands of other regulations in our law books? Do they really kill jobs? Can you give examples?
Get it now?
My guess is they use tax data to figure the cost of regulatory compliance for businesses, and then add it together to get a single number, or something to that effect.
Seems there's a minor issue of terminology in play. Regulations don't necessarily kill jobs because many of those jobs weren't able to come into existence in the first place. As far as how the costs are measured, have you looked at one of the reports?
Complying with regulations has a measurable cost. People must be hired to make sure they are complied with. Much money is spent on compliance. Compliance is an unproductive activity. Wherever you have unproductive activity you have the invisible cost of what could've been done with that money--known as the opportunity cost.
The opportunity cost of compliance is all the productive activities that money could've been used to do. That would've meant productive investment, and hiring productive workers. And since productive workers and investments generally produce a return and lead to more productive returns, and non-productive activity does not, we'll never truly know just how many jobs and production complying with regulations are actually costing us.
The sick thing about regulations is that large company are often in favor of them, and help craft them, because a large company can more easily bear the cost of compliance than a small firm, meaning that the regulations serve to entrench the large companies in their position and protect them from competition by smaller firms.
Thus, meat packing regulations, when they were first proposed, were favored by large meat companies, knowing it would be a disproportionate burden on corner-meat markets. Look at the market now--your corner meat vendor is gone and supermarkets have taken over the market entirely.