Have you ever tried to run in waist-high water? It’s not easy, but it’s a useful exercise if you want to experience what it’s like to comply with government rules, regulation, paperwork, and red tape. Especially if you want to understand why it’s getting harder for American companies to compete against firms from other nations.
The Wall Street Journal reports on some new numbers released by the White House Office of Management and Budget.
The effort needed to comply with federal bureaucracy now has a number. According to new government estimates released this week, Americans spent 8.8 billion hours filling out government forms in fiscal 2010. …In all, the paperwork burden has increased by around 19% over the past decade, up from 7.4 billion hours in fiscal 2000, the White House Office of Management and Budget said.
The article explains that there is plenty of blame to go around, showing that politicians of both parties seem perfectly happy to bury Americans under a mountain of red tape.
Between 2002 and 2005, federal agencies reported significant increases in paperwork demands. Republicans controlled Congress and the White House for almost all that period. In 2005, laws including the Bush administration’s Medicare prescription-drug overhaul, created what is now estimated to be an extra 250 million paperwork hours. At the same time, the biggest single-year jump in the past decade came in 2010, when individuals and businesses spent an extra 352 million hours responding to paperwork requests from agencies prompted by new statutory requirements.
Some of the example will help you understand why the economy is having trouble creating jobs.
Last year, employers needed almost 70 million additional hours to claim a new credit for hiring more workers, and restaurants spent 14.5 million hours to display calorie counts for their menus, according to figures submitted to OMB by the departments of the Treasury and Health and Human Services. In fact, the Treasury was the source of most of the paperwork burden in 2010, hitting 6.4 billion hours, or 73%. …The winner of the largest year-on-year increase was the Securities and Exchange Commission, which decided it actually took twice as long to complete its forms than it previously thought, upping its estimates to 361 million hours from 168 million. A spokesman declined to comment.
The real cost of all this regulation is measured in lost economic output, jobs not created, and mandated inefficiency. According to the Small Business Administration, that amounts to a whopping $1.75 trillion per year.
But if you just want to measure the cost of the man-hours required, the Administration has an estimate.
The OMB said it hadn’t attempted to put a financial cost on the paperwork requests, but noted in its report that “it is clear that the monetary equivalent would be very high. For example, if each hour is valued at $20, the monetary equivalent would be $176 billion.”
Considering much of the compliance burden falls on the business community, the $20 per-hour figure is obviously way too low.
But whatever the actual total, remember that the man-hours are just one small slice of the burden.
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[…] it better to focus on the overall burden by sharing data about aggregate cost, job losses, time wasted, and foregone […]
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[…] writing about the burden of regulation, I often share big numbers about aggregate cost, job losses, time wasted, and foregone […]
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[…] Americans spend 8.8 billion hours every year filling out government forms. […]
[…] If those numbers don’t make you sit up and take notice, how about these ones? Americans spend 8.8 billion hours every year filling out government forms. The economy-wide cost of regulation is now $1.75 trillion. For every bureaucrat at a regulatory […]
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[…] That being said, I don’t think the above chart is completely persuasive. The White House argues, with some justification, that this data simply shows that they underestimated the initial severity of the recession. There’s some truth to that, and I’ll be the first to admit that it wouldn’t be fair to blame Obama for a bleak trendline that existed when he took office (but I will blame him for continuing Bush’s policies of excessive spending and costly intervention). […]
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[…] knew enough to discuss the overall cost of regulation, the amount of valuable time diverted to comply with red tape, and some of the research on regulation and job […]
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Not ignorance – at least not for long. Bureaucrats choose to impoverish us greatly to benefit themselves.
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Again, my $0.02 > call it an estimate guided by a hunch but I’d put the ratio of sensible regulation to needless regulation @ 17/83 > that is, only about 17% of the regulations on the books produce any meaningful benefit above the cost of compliance; the remaining 83% aimed at stymieing on party for the benefit of another…the standard political back-scratching.
Just look @ the German plants in the South (BMW and Mercedes) > if I am not mistaken, the state government ordered the National Guard to clear the ground for South Carolina’s BMW plant some time ago, so that the company would not have to pay a private contractor for the earth-moving > my mind is a little fuzzy on the precise details, but the end result is that each person employed @ the BMW facility cost about $170,000.00 each. I can’t even begin to imagine the regulatory burden that hit them once they were established.
All in all whereas some regulations are favorable (clean water/air anyone?) government gets way too greedy and never knows when to stop.
Like I said, just my 2% of a single dollar bill….
Consider that a big part of paperwork overkill comes from a dark cloud of ignorance hanging over bureaucrats at desks in Washington. They just don’t know what is going on, yet they want to make decisions to guide the lives of the peasants.
They press each year to collect more information. They feel justified in this because they know of all the bad decisions they have made, and they want to do better. Of course, no amount of paperwork will allow 100,000 bureaucrats to make the right decisions for (say) 30 million businesses. No amount of paperwork will expose the numerous deviations from official policy that they wish to punish, in search of optimal work and production at optimal safety.