The Cost of Regulations – Trading Liberty for Security

I frequently write regarding the Enumerated Powers-  the restrictions on the power of the three branches of federal government. The vast majority of these regulations fall outside these limits. If we were to have a truly constitutional government, most of this would be handled at the state level. However, we do not live in that world.

Perhaps if the average person were to learn what this overreach costs them, they would demand a change in the business as usual.

We are constantly told how big bad business takes advantage of the poor. What about big bad government? The cost of regulatory compliance is now higher than the individual and corporate tax burden. The nonprofit Competitive Enterprise Institute released a study revealing that regulatory compliance costs $1.885 trillion annually, while our tax burden is $1.82 trillion. “It’s a huge hidden tax that amounts to about $15,000 per U.S. household each year,” the study noted.

The Mercatus Center did an analysis on the regressive effect of regulations and the disproportionate negative effects on low-income families. One does not have to have a Ph.D. to understand that the cost of regulatory compliance is an operating expense that is passed on to the consumer.

In fact, NO fine, NO fee, NO tax is EVER paid by the company. It is passed to the consumer as part of the cost of the product or service.

Poorer households rely more on heavily regulated goods. This graphic shows how heavily regulated goods represent a higher portion of the spending of poorer households.

Let’s look at one of the most heavily regulated industries there is-  the auto industry.  Back in the early 1980s, my wife and I looked for an economical car. We lived in a very rural area and put a lot of miles on our car. Our research led us to a VW Rabbit diesel. Our highway mileage was in the mid to upper 50s, 56 mpg was quite common, and if conditions were right, 60 mpg was not out of the question.

Here we are in 2016, and our VW Jetta TDi gets 39-45 mpg. What’s up with that?  Well, the government is up with that. You’d think technology would have mileage much better today than in 1982, and it does. But you can’t have it. Who says? Your government says.

You know my Jetta TDi? That same car in Europe gets 78 mpg, nearly double! Do any of you drive a Nissan Qashqai SUV? Here you can expect 26 mpg, but in Europe, that same car gets an average 56 mpg! More than double!

Our government tells us these cars do not meet US standards. Standards for what? Europe, in many cases, has higher environmental standards than the US. Perhaps it is safety standards? I’m sure that is a factor, but why is that mandated rather than an option? I can easily buy a motorcycle that has no seatbelts or airbags. Why is that legal and a high mileage car is not?

I have seen some suggest it is the evil oil companies who do not want to lose money from such high efficiency. I do not believe it. The latest breakdown of the cost of a gallon of gas I could find was from June 2015, the price was $2.49 a gallon at the time. Three-fourths of the price was the cost of crude and refining. 8% was marketing and distribution, and 18% was taxes. That’s right, state and federal government make more per gallon of gas than the oil company or the gas station.

An ultra high mileage car threatens the revenue of the government.

This is another example of why centralized government is so dangerous. Obviously, revenue has to be collected to maintain roads and bridges; I would suggest this should be done at the state and local level, so it is appropriate for the people there. We have already seen some states bemoan how lower fuel consumption has affected their tax revenue.

VW introduced the XL-1 a couple of years ago, but it is still not in normal production. Until there are serious changes in Washington, you will never see it here. This car is a two place hybrid that gets 180 mpg in all city driving and as high as 300 mpg on level roads and constant speed. Average combined mileage is over 200 mpg. Naysayers will tell you these cars are not feasible because they are so expensive. However, I recall that when flat screen TV first came along, they were over $10,000. Free market brought that price way down, way down.

Liberty from Flickr via Wylio

© 2007 Shibby777Flickr | CC-BY-SA

The average household pays $15,000 per year in this hidden tax, what could you do with 15K?

I could not find if something such as these high mileage cars were factored in that figure. Certainly, manufacturing mandates such as airbags and crash standards are included. The Department of Transportation says over all age groups, the average man drives over 16,000 miles and woman over 10,000. If the average couple drives 25,000 miles, that equates to $2,250 for gas if you average 25 mpg. If you could get 50 mpg, cut that in half. Could you use another $1,000?

Progressives would have you believe I want dirty water and air, that I don’t care if people die or get sick. I believe that the free market and education will take care of these issues, in addition to state and local government.

The 13th amendment supposedly ended slavery. I would suggest we are all slaves to an abusive master, Washington, DC.

We see ourselves as free. We are free to do what we are told we may do. Want to plan for your own retirement and medical care? You may not-  you must pay for and use Social Security and Medicare.

Want to use YOUR money until taxes are due? You may not-  you are forced to let the government use your money interest-free and if they decide you owe more, you are guilty until they accept your explanation – IF they accept it. You don’t want to pay for things you find objectionable? Tough, you have no choice. You don’t want to pay farmers not to raise crops or pay for things you neither want nor need? Too bad, you have no choice, and neither do the farmers. After all, central planners in Washington DC are much smarter than you, (sarcasm intended).

The cost of regulations is huge, both financially and in lost liberty.  We are no more free than Cinderella.  We have been conditioned to accept what we are told is best for us. We do not live in a fairytale; there is no fairy godmother or handsome prince. There is only us. Nothing will change unless we make it happen.


Photo Credit: “Grab that cash with both hands and make a stash,” © 2012 frankieleonFlickr | CC-BY


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