March 06, 2017
Robert Samuelson devoted his column this week to the issue of government regulation. He refers to an estimate from the industry-funded Competitive Enterprise Institute that “the costs of complying with federal rules and regulations totaled nearly $1.9 trillion in 2015, equal to about half the federal budget ($3.7 trillion in 2015).” It is important to understand the nature of this estimate.
Suppose that I have been in the habit of dumping my sewage on my neighbor’s lawn. Now imagine the government puts in place a regulation prohibiting me from doing this so that I have to install a sewage system to dispose of my sewage in a more proper manner. The Competitive Enterprise Institute estimate would count the cost of my sewage system as a cost of regulation.
This is of course not a cost to the economy, it is just a situation where they forced me to stop imposing costs on my neighbors. This is how one can get a figure like $1.9 trillion a year as the cost of regulation.
Anyone seriously looking at regulations would want to know their net cost. Many regulations, such as bans on smoking, which have led to huge reductions in incidents of cancer, bans on leaded gas, which led to large reductions in crime in addition to the direct health benefits, and the 1990 Clean Air Act, have had enormous economic benefits. Honest people would be sure to mention this fact in discussing the impact of regulation.
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