The 34.9% and their government enemies

Today is Presidents Day, a day when you discover who government considers to be “essential.”

The “essential” workers — police officers and firefighters, among others — work today. (So will presidential candidates, not that they’re “essential.”) The nonessential government workers, including nearly all of the U.S. Postal Service, do not work.

The 34.9 percent — those who work for private-sector employers, those who, in Tim Nerenz‘s words, “create the wealth that sustains us all” — are also working today.

What the employers of the 34.9 percent are not doing today is hiring, according to Neal Boortz:

A recent Gallup Poll shows that 85% percent of small business owners say that they are currently not looking for any new workers

Why are they not hiring?  Of those who said they were not hiring, 48% cited their concern about possible rising healthcare costs (Read: ObamaCare).  Another 46% said that they were worried about new government regulations.  Who can blame them?  The economy, of course, is also a huge factor.

And here’s one more interesting stat: 71% of small businesses surveyed said that revenues from sales wouldn’t justify hiring additional workers.  The cost of employing people, thanks to government regulations, is not worth it to an employer, even if they are successful at generating revenue. …

There are countless stories of businesses having to endure the burdensome reach of our government.  Government is impeding growth, rather than fostering a positive growth environment.

Boortz isn’t the only one to notice our overregulation (from those who, I assume, aren’t working today). The Economist:

The problem is not the rules that are self-evidently absurd. It is the ones that sound reasonable on their own but impose a huge burden collectively. America is meant to be the home of laissez-faire. Unlike Europeans, whose lives have long been circumscribed by meddling governments and diktats from Brussels, Americans are supposed to be free to choose, for better or for worse. Yet for some time America has been straying from this ideal.

Consider the Dodd-Frank law of 2010. Its aim was noble: to prevent another financial crisis. Its strategy was sensible, too: improve transparency, stop banks from taking excessive risks, prevent abusive financial practices and end “too big to fail” by authorising regulators to seize any big, tottering financial firm and wind it down. This newspaper supported these goals at the time, and we still do. But Dodd-Frank is far too complex, and becoming more so. At 848 pages, it is 23 times longer than Glass-Steagall, the reform that followed the Wall Street crash of 1929. Worse, every other page demands that regulators fill in further detail. Some of these clarifications are hundreds of pages long. Just one bit, the “Volcker rule”, which aims to curb risky proprietary trading by banks, includes 383 questions that break down into 1,420 subquestions. …

Dodd-Frank is part of a wider trend. Governments of both parties keep adding stacks of rules, few of which are ever rescinded. Republicans write rules to thwart terrorists, which make flying in America an ordeal and prompt legions of brainy migrants to move to Canada instead. Democrats write rules to expand the welfare state. Barack Obama’s health-care reform of 2010 had many virtues, especially its attempt to make health insurance universal. But it does little to reduce the system’s staggering and increasing complexity. Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000. There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis. ..,

Complexity costs money. Sarbanes-Oxley, a law aimed at preventing Enron-style frauds, has made it so difficult to list shares on an American stockmarket that firms increasingly look elsewhere or stay private. America’s share of initial public offerings fell from 67% in 2002 (when Sarbox passed) to 16% last year, despite some benign tweaks to the law. A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It’s a wonder the jobless rate isn’t even higher than it is. …

America needs a smarter approach to regulation.

The aforementioned “smarter approach to regulation” was first touted by the “Third Way” Clinton administration. That didn’t work out so well. In fact, the argument could be made that “smart” attached to a government activity makes it an oxymoron.

Free Enterprise adds some visual aid:

While the regulatory pile-on is bipartisan, this chart from the Jobs Creators Alliance shows the number of “economically significant rules” has gone up more steeply in the last few years under the current administration. The White House concedes their new rules have cost businesses $25 billion, more than double the costs from the two previous administrations:

Two groups benefit from overregulation — the government employees who take legislators’ brilliant ideas and turn them into law, and companies large enough to hire employees to deal with the Washington- and Madison-generated red tape. Nerenz pointed out:

Most people are stunned to learn that only 20 million Americans (6.4%) make, mine, build, or grow things. And even that is a bit inflated, as many of the jobs in those companies that make things are administrative positions which exist only to provide information to government agencies and assure compliance with regulations.

Free Enterprise touts a legislative solution:

A step toward a solution is also bipartisan, the Regulatory Accountability Act, sponsored by Sens. Rob Portman (R-OH), Mark Pryor (D-AR), and Susan Collins (R-ME). It would require agencies to weigh the costs and benefits of proposed rules, add more transparency and public input to the rulemaking process, and ensure agencies use sound scientific and technical data in their analysis.

It’s a way to uncoil the regulatory python around the American economy, allowing it to spring free to create jobs and prosperity.

A comment in the Economist story suggests another, and possibly better, way out of this regulation hell:

Taking money out of politics won’t hinder the rent seeking efforts of the big corporations and labor unions–it will only hurt smaller groups. The big special interest groups will elect politicians and promise them their rewards once they are out of office. Many politicians, bureaucrats, go to work for the industry they were monitoring after their careers in politics are over. A better solution would be to implement what public choice economist and Nobel laureate, James Buchanan, put forward: constitutional restraints on the power of politicians. An unregulated political marketplace with self-interested political agents making transactions with corporations and unions, externalizing costs to us, is the problem.

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Categories: US business, US politics, Wisconsin business, Wisconsin politics | 4 Comments

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4 thoughts on “The 34.9% and their government enemies

  1. Pingback: What Those Who Are Working Are Really Doing Today | Wis U.P. North

  2. Pingback: When a tax cut is a tax hike « The Presteblog

  3. Pingback: Not enough « The Presteblog

  4. Pingback: The 0.0018 percent « The Presteblog

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