There is no denying that the plethora of government regulations spewing out of Washington, D.C., state capitols and local governments impose tremendous costs on economic growth. But a new working paper for the Mercatus Center at George Mason University finds that these regulations are even more costly than the sum of their parts.
Using data from the Bureau of Economic Analysis, U.S. Census Bureau and a custom-made database that quantifies regulatory restrictions by industry, the authors examined regulations in 22 industries between 1980 and 2012 and found that regulation reduced average annual economic growth by 0.8 percent. By 2012, the added regulatory millstone had cost the economy about $4 trillion a year in foregone growth--nearly $13,000 per person.
The Mercatus study underscores that when considering the costs of additional regulation on innovation and economic growth, we must be mindful not only of the administrative costs, regulatory costs and opportunity costs, but also the extra costs of regulatory accretion. Let the cutting of the red tape begin!
Editorial on 05/18/2016