The Regulatory State: Central Planning & Bureaucracy On A Rampage

Tyler Durden's picture

Submitted by Pater Tenebrarum via Acting-Man.com,

The New 10,000 Commandments Report – It’s Worse than Ever

Before we begin, we should mention that the US economy has long been one of the least regulated among the major regulatory States of the so-called “free” world, and to a large extent this actually still remains true. This introductory remark should give readers an idea of how terrible the situation is in many of the socialist Utopias elsewhere.

 

climbing_in_bureaucracy__alfredo_martirena

Even in the US though, today’s economic system is light years away from free market capitalism or anything even remotely resembling a “laissez faire” system. We are almost literally drowning in regulations. The extent of this regulatory Moloch and that the very real costs it imposes is seriously retarding economic progress. It is precisely as Bill Bonner recently said: the government’s main job is to look toward the future in order to prevent it from happening.

A great many of today’s regulations have only one goal: to protect established interest groups. Regulations that are ostensibly detrimental to certain unpopular corporatist interests are no different. Among these is e.g. the truly monstrous and nigh impenetrable thicket of financial rules invented after the 2008 crash in a valiant effort to close the barn door long after the horse had escaped. They are unlikely to bother the established large banking interests in the least. The banking cartel is probably elated that it has become virtually impossible for start-ups to ever seriously compete with it. The same is true of many other business regulations; their main effect is to protect the biggest established companies from competition.

 

bureaucracy...

 

The Competitive Enterprise Institute (CEI) – evidently named after a species close to extinction – has just released its 2015 report on the regulatory State, entitled “The 10,000 Commandments” (download link at the end of the article). Here is a summary of the grisly highlights (now would be a good time to get the barf bags out):

“Federal regulation and intervention cost American consumers and businesses an estimated $1.88 trillion in 2014 in lost economic productivity and higher prices.

 

If U.S. federal regulation was a country, it would be the world’s 10th largest economy, ranking behind Russia and ahead of India.

 

Economy-wide regulatory costs amount to an average of $14,976 per household – around 29 percent of an average family budget of $51,100. Although not paid directly by individuals, this “cost” of regulation exceeds the amount an average family spends on health care, food and transportation.

 

The “Unconstitutionality Index” is the ratio of regulations issued by unelected agency officials compared to legislation enacted by Congress in a given year. In 2014, agencies issued  16 new regulations for every law — that’s 3,554 new regulations compared to 224 new laws.

 

Many Americans complain about taxes, but regulatory compliance costs exceed what the IRS is expected to collect in both individual and corporate income taxes for last year—by more than $160 billion.

 

Some 60 federal departments, agencies and commissions have 3,415 regulations in development at various stages in the pipeline. The top six federal rule making agencies account for 48 percent of all federal regulations. These are the Departments of the Treasury, Commerce, Interior, Health and Human Services and Transportation and the Environmental Protection Agency.

 

The 2014 Federal Register contains 77,687 pages, the sixth highest page count in its history. Among the six all-time-high Federal Register total page counts, five occurred under President Obama.

 

The George W. Bush administra­tion averaged 62 major regulations annually over eight years, while the Obama administration has averaged 81 major regulations annually over six years.

(emphasis added)

 

1-cost of regulation

Look at it and weep: the estimated cost of federal regulations and interventions alone in 2015 – click to enlarge.

 

If one adds taxes and the damage done by the Fed’s incessant money printing to these regulatory costs, it is a miracle the economy hasn’t imploded yet. Note the deeply undemocratic nature of the regulatory process: The vast majority of the rules – all of which have the power of law – is concocted by unelected bureaucrats in the form of “administrative law”. It would otherwise simply be impossible to make up thousands of new rules every year. As unproductive as the bureaucracy is, it is still smothering the economy with this onslaught. This will probably never change, unless the entire system collapses one day. After all, the people tasked with making the rules need something to do.

 

2-Cost per household

The cost of federal regulation per US household, compared to various major household expenditure items – click to enlarge.

 

Growing Like a Weed

 

assistant director

 

A look at the Federal Register shows that the growth in regulations is essentially a permanent feature. There are no longer any significant time periods during which the number of rules actually declines. It is probably no coincidence that the charts below are eerily reminiscent of charts showing total federal debt or charts depicting the growth in the money supply. The only thing that is no longer showing any respectable growth is the economy. Of course, no-one should be surprised by this.

Federal Register pages per decade. One wonders how people survived the practically lawless 1940 – 1970 period. Note that if we were to go back in time by another 30 years, we would see that the federal government wasn’t even a footnote in most people’s lives.

 

3-Federal Register

Over the past 22 years, almost 91,000 final rules and regulations were published cumulatively. We are just guessing here, but we believe that between the time the average citizen gets out of bed until shortly after he has slurped his morning coffee, he has violated at least five laws or regulations already – click to enlarge.

 

4-Cumulative rules

Cumulative regulations published in the Federal Register – almost 91,000 in the past 22 years alone – click to enlarge.

 

Monetary costs are just one aspect to this. There is also the wasted effort and psychic cost that is incurred when people realize that there are many things they simply cannot do, even though they would harm no-one and would actually provide a service to their fellow men. It will often prove extremely difficult to fight the red tape and still establish a successful business venture at the same time. Certain sectors of the economy have been closed off to the private sector completely (see the example of roads below). Very often start-ups with little capital cannot hope to compete in certain business sectors, as the regulatory obstacles are simply impossible to overcome.

Recently a US trucking organization has penned a manifesto in which it is bitterly complaining about crumbling roads and bridges across the US and urging the government to “do something”. The authors should take a long, hard look at their sad collection of statistics and realize that this is what actually happens when the government monopolizes a sector of the economy.

Another aspect is of course social control. By making a criminal or a potential criminal out of everybody, the mountain of laws and regulations can always be brought to bear against citizens or organizations that have somehow displeased government officials or managed to attract their wrath. One can see a variation of this principle at work in modern-day criminal court cases. People who are indicted for a crime are usually faced with a whole plethora of charges apart from the main charge. The intention is to force them to accept a plea deal whether or not they are innocent. The point is obviously not to serve the cause of justice.

However, we don’t want to digress too much here. The purely economic cost on which the CEI report focuses is distressing enough all by itself. One only has to think the problem properly through. Similar to other government interventions such as interest rate and money supply manipulations by the central bank, these enormous costs hamper the economy to such an extent that economic progress is slowed to a crawl. Who knows what we could have achieved by now if this were not the case? Perhaps people would already be able to reach the ripe old age of 150 and still feel like spring chickens in their early 100ds. Concerns over material well-being that continue to bedevil so many people today may already be orders of magnitude smaller. As Israel Kirzner once remarked in this context:

“We are not able to chart the future of capitalism in any specificity. Our reason for this incapability is precisely that which assures us . . . the economic future of capitalism will be one of progress and advance. The circumstance that precludes our viewing the future of capitalism as a determinate one is the very circumstance in which, with entrepreneurship at work, we are no longer confined by any scarcity framework.”

However, for this to be true, free market capitalism must be able to breathe. We won’t be able to enjoy the fruits of entrepreneurship if it is smothered at every opportunity.

 

dilbert-steering-committee

 

Conclusion

As revolting as the full picture is, we recommend reading the entire “10,000 Commandments” report, which can be downloaded here (pdf). Above we show only a very small selection of the charts and data contained in the complete report. One thing should be clear to everyone reading it: This is a major problem that deserves a lot more attention than it usually seems to get.

bureaucracy-2

 

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A Lunatic's picture

Legislative, Judicial, and Executive branches of government; the true Axis of Evil.......

Usurious's picture
Usurious (not verified) A Lunatic May 14, 2015 10:25 PM

thanks to DEBT-BASED fiat currency.......they go hand in hand......the debt must grow....and so the gov must grow........go back and read Mako trav7777 and francis.........this has all been explained by commentors who have been banned by ZH.......

Anusocracy's picture

On a personal level, people are afraid of cancer. On a societal level, people embrace cancer.

suteibu's picture

And it all trickles down to the local level.  Imagine all of these middle management private and corporate bureaucrats who retire on large pensions who feel the need to volunteer their vast "experience" and free time to local politics, community associations, etc. 

And you wonder where all of the cretins who like to tell you what you can and can't do on your own property came from.

ebworthen's picture

Command and Control, all by design.

doctor10's picture

Among many other reasons, interest rates are so low, is that capital is worthless in the USA today. We live in a hyper-regulated, hyper-taxed, hyper-litigious society; any "start-up" business that has the horsepower to deal with the above has to then deal with a predatory mega-REIT and their "triple-net" BS; add to that 22K per year for sole-proprietor/small business health care-you are DOA.

The USA is closed for business.

LetThemEatRand's picture

Another article that attempts to conflate regulation of "ordinary" people with the desirability of laissez faire capitalism.  We have unregulated crony capitalism for TPTB.   It's the rest of us who are regulated, and guess who pushes the laws on the rest of us.  If you think the solution is to give those guys more power you are either an idiot or an ideologue.   Kings and Queens throughout history regulated everyone else, too.  The solution was not to deregulate the people who regulated the serfs.  Cut the head off the snake, and then let's talk.

booboo's picture

define "cut the head off the snake" and lets talk. There is a regulation for everything and none of them exempt people with money so the problem is with the regulators. (ok, so Eric Dickholder refuses to indict anyone in the banking industry) What else?

LetThemEatRand's picture

I don't even know where to begin.  As one example relevant here, do you think Lehman resulted from too much regulation of Lehman?  Do you think Central Banks are overly regulated?  Do you think that regulations of any major bank or hedge fund are enforced?   If you think the same laws apply to TPTB that apply to us you are delusional.

Think for a second.  The laws that keep ordinary people down are there for a reason, and it ain't to keep the hedge funds and central bankers and military contractors in check.

Soul Glow's picture

Hey man the SEC is hard at work watching midget porn, give 'em a break!

:)

MonetaryApostate's picture

Just take a look at the legislation for Obamacare.....

http://cnsnews.com/sites/default/files/imagecache/medium/images/Obamacar...

 

The system has failed & is completely detached from reality...

It is detrimental to the nation at this point...

America has legislative cancer.

Anusocracy's picture

The solution is to separate those who want government from those who don't want government and see which group does the best.

MonetaryApostate's picture

The problem is, that's precisely where we are today, and the country is in fact split in two...

Moreover, SNAP is getting cut, so let's see what that leads to next...

Going to be very ugly times ahead folks...

 

This kind of ugly...

https://www.google.com/search?q=great+depression+era&espv=2&biw=1672&bih...

booboo's picture

"I don't even know where to begin."

Try answering my question for starters.

Anusocracy's picture

Lehman happened because the government created the conditions for Lehman to exist.

malek's picture

LTER, I don't even know where to begin responding. 

Do you really believe Lehman would never happened with more regulation?
How do you make regulation not just foolproof, but psychopath-proof, and not just from circumventing it but also from slowly undermining it??

ClowardPiven2016's picture

Hey booboo....Hillary Clinton can steal a picnic basket and the forest ranger will just wink and look the other way. Not so for you.

 

booboo's picture

Try pulling a building permit in any major metropolitan municipality. It will turn even the most strident statist into a fire breathing libertarian in the the four months, 5000 pages and tens of thousands of dollars of money/manpowert expended.

22winmag's picture

When the shit hits the fan, the permit nazis will be hanging from lamp posts before politicians and cops.

FreeMoney's picture

Try building near water for the full experience.

STP's picture

My little bro, designs Air Conditioning systems for the 1% here in Los Angeles County and he has to work with the County Planning and Permit Office.  Stressful, isn't even the word for it.  The little Indian dickhead bureacrats behind the counter, love nothing more, than to inflict petty suffering and extraneous bullshit upon a builder or designer.  They will sneer and then scoff at your protests.  Their attitude, is, "I'm the Government, you will comply.  What you say, means nothing, because I have the power to shut down, delay or kill your project, even if I'm wrong."

williambanzai7's picture

In one of this weeks post there was a citation to a study, probably by more bureaucrats, rating the US No 46 worldwide in terms of ease of starting a new business.

I think this is ridiculous. We must be at the very bottom of the list.

Intelligence_Insulter's picture

It's easy to start a new LCC, you just have to buy out the previous failing business.

Intelligence_Insulter's picture

Free market capitalism just hasn't been implemented correctly.  It's the best path to prosperity. 

SofaPapa's picture

No ism will ever be implemented correctly.  This is the first law of history.  Humans create unjust systems.  If it's a system, it is unjust.  By definition.  The limit on just how unjust whatever system is in place is comes from the homogeneity of the founding population.  If the people under the system feel bonded to each other and have mutual respect, then the system will start out okay.  But as that breaks down, every system increases exponentially in injustice.  We are almost to the "sell-by" date of this one.

Anusocracy's picture

Unjust how? Decided by whom? Unjust is a very vague term.

http://www.thefreedictionary.com/unjust

1. Being in violation of principles of justice or fairness; unfair:

SofaPapa's picture

I have said more than once in comments recently that the only truly just system philosophically would be anarchy.  Every individual would rise or fall based on their own individual merits.

I have also said that because human beings are innately coded to authority (some are driven to wield power, others to accept authority), anarchy is impossible according to human nature.

Thus we are stuck with the various systems that we have had since the beginning of our species.  Some have been more successful, others less so.  But I think the success of most "systems" has to do more with the populations involved than with the particular rules applied.

What we have right now is far from a system which most people feel instinctively bound to (the best measure of "fairness" there is?), and is working very poorly for the bulk of the population.  Based on popular mood, I think it's safe to say the current ism is fundamentally not working, and that is true globally, not just in the US.

Anusocracy's picture

Anarchy is impossible according to man's nature, it is only possible with human nature. There is very little difference between man and animals, whereas no animal can be human. Like an animal, a man will sacrifice as many people as needed to save the collective, humans wouldn't create a situation where that would be needed.

No species evolves in a monolithic manner and H. sapiens ranges from savage to human, with human on one tail of a bell curve.

shovelhead's picture

Not too sure about that...

I've always had pretty good luck with Onanism.

Then again, there's not much to screw up.

SofaPapa's picture

I had to go look that one up.  :)

Anusocracy's picture

Freedom and government are opposites.

ucde's picture

Kudos to a well-researched article and the 10,000 commandments paper looks interesting. I happily concede that government in general has metastized in the US to something of gargantuan proportions. 

I also think that many parts of corporate America are overgrown with bureaucracy to the point where the inside of some corps I worked for was like a madhouse. Basically a bunch of tattle-tales, ratting each other out to the higher-ups and sucking d1ck to get advanced (metaphorically). But thats human dynamics, when you have a bunch of low-minded people in a room fighting over advancement. Its going to get stupid very fast, and it has.

But let's not pretend that deregulation didn't play a central role in what has happened with us. Don't talk about laissez-faire like its some guarantee that decisions will be made coherently, with a long term vision, and geared towards the well-being of the social commons. The history of our country from the 80s and 90s onward clearly demonstrates that deregulation can be just as bad as overregulation. See Paul Craig Robert's The Failure of Laissez-Faire Capitalism and the works of Michael Hudson for further reading. 

Central planning can be used to advance the common good. We don't build societies as anarchist individual libertarian/Randian archetypes, lone guns out there on the frontier. For example, if QE money had been given to American citizens in the form of a Basic Income, we would have had a de facto debt jubilee, where Americans would own their own homes, own their own cars, and not be in student loan debt; many new businesses would have been created, as has been demonstrated in Basic Income experiments in other countries.

The creation of fiat money is the one input node in an otherwise closed system -- it represents the entry point of new energy into the system. The location of that entry point of fresh money into the system is more of a determinant than any other single factor, since the faith and social capital mobilized and accumulated in western societies from the industrial revolution to 1960 was the biggest source of intangible wealth (yes, new concept) which the world had seen up to that point. We are all capitalizing on that faith and social capital, which forms the bedrock of our system, more so than the gold deposits which supposedly haunted the vaults of the US 1940-1971. The one is a symbol for the other.

The idea in this blogosphere which I most vehemently oppose is the idea that no fruitful investment in the nation's social capital is even possible, in absence of some guaranteed return on investment scheme and 5 year plan. The mental viruses that infect American thought are many; the desire that we devolve into a Randian everyman-for-themself non-society is not even a step backward in time, because American society has never been that way before, its a step sideways into a fantasy past dreamt up by Russian cultural refugee scum and people who are too full of anger to acknowledge the depth of their indebtedness to society as a whole. 

In other words, point the money spigot at the middle classes, and give everyone enough to live, pop the bubble in asset prices, and at least Americans will own the things they need to live. Dissolve the FIRE sector, cannibalize military spending, bring the narco economy under state control by legalizing drugs, and all of a sudden we aren't as completely and totally poor as we are now, begging for a one-room apartment with a fistful of Aunt Yellen's ClownBux. 

ClowardPiven2016's picture

"The creation of fiat money is the one input node in an otherwise closed system -- it represents the entry point of new energy into the system".

If by "new energy" you mean debt enslavement, then you are absolutley correct.

ebworthen's picture

And feeding Wall Street with $17 Trillion in debt on the Public's back has sold the future.

Not to mention the sell out of the nation by off-shoring productive capacity while waging pointless wars to feed the Military Industrial Complex, and the lives lost for nothing.

Lazarus Taxon's picture
Lazarus Taxon (not verified) May 14, 2015 10:11 PM

figs, hose, nuggets.

SillySalesmanQuestion's picture

Kids can't even have a lemonade stand without it being "regulated."

kchrisc's picture

The 5th. says that "...nor be deprived of life, liberty, or property, without due process of law..."

The 9th. amendment states that the people have and retain all rights, not just those "enumerated."

The 10th. says that powers not delegated to the DC US are retained by the states, or the people.

There are only two proper reasons for and uses of law . One, for justice; The holding of an aggressor against another's Life, Liberty, and/or Property accountable. Two, for constraining governmnet.

The people and states have powers that are only limited by what are enumerated to the DC US, and the people retain all rights, even those not enumerated. Regardless, any and all actions of government against people and their Property must only come about after a due process (written procedure) of law--court and trial.

So, according to the "Law of the Land," all of their so-called "regulations" are null and void.

Liberty is a demand. Tyranny is submission..

22winmag's picture

When the shit hits the fan, it won't just be politicians and cops hanging from lamp posts.

 

It will be building inspectors, health inspectors, permit officials, zoning board members, city councilors, and countless other assholes who earn their living raping and regulating small businesses and independent contractors.

polo007's picture

http://www.marketwatch.com/story/draghi-hits-back-at-argument-qe-fuels-inequality-2015-05-14?link=MW_home_latest_news

WASHINGTON (MarketWatch) — In a major speech delivered in Washington, European Central Bank President Mario Draghi hit back at a popular argument that low interest rates, and quantitative easing in particular, not only hurt savers but also benefit the wealthy disproportionately and fuel inequality.

The remarks are notable as the criticism of the ECB’s action is similar to that faced by the Federal Reserve and other central banks for similar policies. The ECB‘s main interest rate is just above zero, and it announced it would start buying bonds in September.

Draghi said that there’s distributional effects from monetary policy inaction -- younger households in particular would be most affected and they tend to be net debtors.

“They tend to be net debtors, with debt denominated in nominal terms, and are therefore most exposed to rising real debt burdens. In contrast, older households tend to have positive net wealth, some of it held in nominal assets. Inflation undershooting therefore results in redistribution from younger to older households,” he said.

While acknowledging “there are always distributional consequences to monetary policy decisions,” Draghi says it’s necessary to raise aggregate demand by encouraging firms and households to bring forward spending decisions.

He didn’t deny that quantitative easing boosts asset prices.

“It is true that our low policy rates, forward guidance and asset purchases raise the current market value of financial assets and thereby benefit the holders of those assets,” he said. “But what matters more is the exact mirror effect of this rise in asset prices, which is a lower cost of equity for entrepreneurs, a lower cost of finance for investors in real projects, and a lower cost of borrowing for consumers.”

“Financial assets are always, in the final analysis, a claim on the wealth generated by the productive part of the economy,” he added. “So it is in their interest that output growth remains on a robust path as this maximizes the likelihood that their claims are honored in full.”

He also said there’s little sign of financial instability — defending central bankers from another oft-heard criticism.

“At the moment there is little indication that generalized financial imbalances are emerging. As a matter of fact, the two most important indicators of growing financial imbalances — real estate prices and credit growth — show only tentative signs of turning upwards,” he said.

damicol's picture

Why the fuck would you waste your time listening to a lying cock sucking cunt like that

luckylongshot's picture

The assumption behind all these rules is they actually help. However if you look at the evidence it shows that the less government we have the better we do. Case in point is Belgium, which recently went for 2 years without a functioning government. What happened? The best period of economic performance in Belgium's entire history and the stronget economic performance of any country in the EU over the period.

phoenixdark's picture

B.ovine S.catology.  lack of regulation and oversight is our problem today. 

damicol's picture

Fucking bureaucrats, the fucking parasitic evil that spreads like a malignant cancer in a fucking dying HIV raddled patient.

The most despicable depraved  slimy profession any cunt could ever aspire to. Profession, ha i do mean criminal sojourn for the the fucking most useless and parasitic cunts in society.

Burn the fucking lot of them and start afresh

Out of interest, I have a very rapidly growing business that caters for self employed and SME's that off shores there business or part of it.

Believe it or not, unlike tax evasion, bureaucracy evasion is perfectly legal. Only the multi nationals practice it and understand it but they put barriers in the way of everyone else.

We remove the barriers, make it simple, easy and best of all utterly eliminate any and all US bureaucracy and taxes on the off shored  parts

You could save  around 29 % of your costs just by eliminating that filthy bureaucracy, add to the fact that other costs are a fraction of US costs and you are a competition beater.

That's is before what you can count in the time saving the hassle the worry and every other facet of dealing with  some crab louse like 6 ft parasite permanently feasting on your flesh.

The pure evil of bureaucracy and its fucking ugly evil sister  socialism is hard for most people to see.

Escape. Evade bureaucracy and get your life back.

Run a business or trying to start up, and want more info, you can contact me at manloloko7@gmail.com

 

 

 

justsayin2u's picture

We will not claim success until there is at least 50% of the population employed in government absorbing 80% of what the rest of us make.  Id say 50% but my total fed/state/local is already north of 60%.