If Obama Wants to Create More Jobs, He Should Get Rid of Regulatory Bureaucrats

Last year, I reported on a study from the Small Business Administration that estimated that federal regulation costs the economy a staggering $1.75 trillion every year.

But that number is so large that it’s hard to understand what it actually means, so let’s look at some new research to better understand the impact of red tape.

You may remember the “Surf City” song from Jan and Dean that kept repeating “two girls for every boy.”

Well, if that was heaven (at least for guys), we’ve now discovered hell.

Here’s part of the executive summary of a paper by the Phoenix Center, which estimates that  every regulator means 100 fewer jobs in the productive sector of the economy.

…we use fifty years of data and modern econometric methods to provide an estimate of the relationship between government spending on regulatory activity and economic growth and job recovery. We estimate that reducing the size of the regulatory bureaucracy may grow the economy and invigorate the labor market. Even a small 5% reduction in the regulatory budget (about $2.8 billion) is estimated to result in about $75 billion in expanded private-sector GDP each year, with an increase in employment by 1.2 million jobs annually. On average, eliminating the job of a single regulator grows the American economy by $6.2 million and nearly 100 private sector jobs annually. Conversely, each million dollar increase in the regulatory budget costs the economy 420 private sector jobs.

These findings are remarkable. Heck, even if the authors are wildly inaccurate and the regulatory burden only leads to 10 jobs lost per bureaucrat, this is still a very damning indictment.

No wonder that even the pro-establishment crowd at the World Economic Forum ranks the United States as only 49th in the world when measuring “burden of government regulation.”