The Cost Of Government Regulation: $1.75 Trillion

Tyler Durden's picture

From Bill Buckler, author of The Privateer

The Cost Of "Intervention"

The Competitive Enterprise Institute (CEI) is a small “think tank” in Washington DC which puts out an annual report called: “Ten Thousand Commandments”. The report deals with the regulatory agencies of the US federal government and the cost of the regulations they continually introduce - and enforce. This report would be typical of the regulatory function of pretty well every government in the world.

In all interventionist economies, regulations are not set by the “lawmakers”. The “lawmakers” merely pass the laws, their enforcement is left to the various bureaucratic departments of government. And in order to “enforce” the laws, the bureaucrats see it as their function to impose regulations - countless thousands of them. The cost of complying with these regulations is met by those being regulated. It does NOT show up in the annual budgets (funded or unfunded) of the government.

In their Ten Thousand Commandments 2012 report which was released in June, the CEI estimates the cost of US government regulation at $US 1.75 TRILLION. That is just under half (48 percent) of the budget of the federal government. It is almost ten times the total of all corporate taxes collected and almost double the total collected from individual income taxes. It is also one-third higher than the total of all pre-tax corporate profits. It is the hidden cost of doing business in an interventionist economy. The fact that the cost of complying with these regulations is substantially higher than the total of corporate profits is a stark illustration of the end result of economic intervention. That end result is capital consumption.

In the US, the federal government lists its regulations in what is called the Code of Federal Regulations. These rules of the economic “game” cover 169,000 pages and more than ten new ones are added every day, seven days a week and 365 days a year. In 2011, the US Congress passed a total of 81 new “laws” while government agencies issued 3,807 new regulations. As the CEI points out, if there ever was an example of government without the consent of ANYONE - this is it.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
naiverealist's picture

I find this report just a little too "convenient". 

Everyone likes to blame regulations for tying the hands of entrepreneurial interests, but they have to remember that some of these regulations are built to give corporations advantages over smaller businesses.  Even foreign humanitarian aid comes with rules and regulations that medical supplies have to be purchased from American companies with American aid money, and American medical supplies are the most expensive in the world.  Remember all the pharmaceuticals GWB "gave" to Afridan nations to help in their fight against AIDS.  All it was was cash pledged to foreign nations so they could buy the drugs from American pharmaceutical companies, thereby the gesture was merely a US subsidy of the pharmaceutical companies!

How does this come about?  Through rules and regulations.

There are many, many more examples of how government is actually working for the corporations through the Departments of State, Agriculture, and Commerce both within and external to this country.  But this report just lumps it all together as a "cost" to the country.  When you and I are paying for it, and the corporations are paying little to no taxes (even on a state and local level - but, hey, if they were paying taxes, they would only add it to the prices we pay for their goods and services as the lowest guy on the totem pole carries all the weight) this report just falls into the pile marked "why big government is evil".

Trajan's picture

fine, lets split the differences then.


lets say , oh a third of those regs really are required and are a valid cost of doing biz, then add another 10% for the beat each other like rented mules= stifle competition amongst each other, ala UPS colluding to force  FedEx to unionize, another 20% to allay the usual statist caterwauling- your numbers are all wrong crying, that leaves us where?

lets say an even $700 Bn?...that aint chump change....unless you're congress but I digress.

Svener's picture

That would depend on which industry. I have many regulations I have to follow in my work. I would say 99.5% make sense and frankly I WANT them there. If they were not there some things could get very ugly and no I won't provide details. I could do things much cheaper but it would cost lives and though no one would know it for quite a while our stock price would be based on falsehoods and slippery data. Not all regulation is good but as a member of the consuming public I am darned glad they are there. Be careful what you wish for.'s picture

What stops businesses from bribing bureaucrats and politicians to overlook their lack of compliance to the regulations?  And as we all know, when they do get caught they'll simply pay a fine which is smaller than the profits from avoiding the regulations. All compulsory, hierarchical systems follow this pattern.

LetThemEatRand's picture

The Mob has corrupted many police officers, and has bribed juries and judges to escape criminal charges.  Shall we get rid of the police, the jury system and judges because they can be and are corrupted?  That is your vision of the oligarchs running the show, though you'll never admit it to yourself because it reflects that your entire belief system is sophomoric if not simple-minded.

CH1's picture

Shall we get rid of the police, the jury system and judges because they can be and are corrupted?

Actually, that's a helluva good idea.

Law (including juries) that's emancipated from the state is pretty damn cool.'s picture

If security and adjudication were provided in a free market then responsible individuals would have recourse to protection which was not compromised by fraudsters. In the current system one has no choice but to comply with laws which are written and enforced for the benefit of elite fraudsters. When people have choices they have more options and therefore a better chance at obtaining that which they seek. That ought to be self explanatory.

LetThemEatRand's picture

It is self-explanatory like a man who lives in the clouds is self-explanatory to a religious person.  In your religion, a free market will never include those who cannot afford protection and those who will be thugs and rule over the others by force.  The elite fraudsters of whom you speak as the current ruling class will not become even more powerful once the pesky corruptable political class and law enforcement apparatus is no longer in existence.  And all unicorn rides will be free.'s picture



In your religion, a free market will never include those who cannot afford protection


Where do you get this stuff? Of course there would be people who couldn't afford protection. But those people would be paid for by others because it would be more advantageous to bring them into the system than to leave them outside of it where they would either become victims of crime or criminals themselves.


The fact remains that I chose to live by a rational assessment of my own nature and situation while you appeal to an elite class with esoteric knowledge for life instruction. That makes you the religious nut.



CH1's picture

In your religion, a free market will never include those who cannot afford protection and those who will be thugs and rule over the others by force.

LOL... the blue pill went down easy?

Sorry, some of us have experience with real free markets. We know they work (charity and all) and we have no need to prove anything to you.

Anusocracy's picture

Your entire belief system resulted in 400 million deaths in the 20th century. It is time for a society based on voluntary cooperation and not force wielded by sociopaths.


What you believe in has resulted in thousands of years of war, slavery, destruction, and theft. Go back to the animal world, subhuman.

LetThemEatRand's picture

The sociopaths of whom you speak are the ones who will rule over you directly in your fantasy free market sans representative government.  Speaking of which, you blame representative government for war?  How then do you explain every war that was fought in history when the strong ruled the weak by force, which is what happens when you take away the collective power of the people via representative government?  Do you think the power to build weapons and raise armies exists only in societies with elected governments?

Anusocracy's picture

Dear Clueless,

  The sociopaths are ruling over us now and are extracting resources (stealing) from us to be able to achieve that rule. Name any form of government, it's still a killing, destroying, stealing machine.


The strong (government) presently rules over the weak (productive individuals) by way of representative democracy now. Nothing has changed from the past, as to the strong ruling the weak: the power to build weapons and raise armies exists in ALL governments. So let's get rid of government.

And are you aware of the fact kings often had to borrow money to wage a war?

LetThemEatRand's picture

Dear Circular Reasoning,

And what do you suppose those strong and wealthy sociopaths will do when there is no government at all?  Go home because you asked them nicely?  For most of human history, government consisted of a single man or a small group of men who took land by force, built armies and took more land by force, created laws that suited them, enforced those laws through violence, extracted labor and wealth from the weak by force or threat of force, and so on.   "Government" is not just a concept that you can eliminate by employing a simplistic philosophy.   Human beings will always be victims to sociopaths who will lead other men and women.  Ask all of human history.  Representative democracy is a brilliant check and balance that has major flaws, but it beats the shit out of your vision because it gives the average guy at least some power whereas in your system he would have zero.'s picture



And what do you suppose those strong and wealthy sociopaths will do when there is no government at all?  Go home because you asked them nicely? 


How would the bankers have gotten their bailout without government guns to back them up? Please explain how those bankers could have looted average folks savings for a trillion bucks without the support of government.

LetThemEatRand's picture

Are you really trying to make the point that wealthy sociopaths only exist because of government?  They take advantage of whatever system exists. If there is no government, they step into the vacuum and create one and write their own rules (and you'll have no say in what those rules are, unlike now where you have at least a vote).   Every King that ever came to power did so by creating his own rules, or by inheriting the wealth and station of his predecessor who did so.  You must ignore human history completely in order to accept your naive view that a group of powerful people will not rule the rest of us regardless of what we want to call it.'s picture



They take advantage of whatever system exists. If there is no government, they step into the vacuum and create one and write their own rules


Intelligent and educated individuals can act willfully against such an outcome. Does freedom guarantee perfect results? Of course not. But it sure as hell beats asking the elite to take your money and kill your kids. Don't you see a problem with your suggestion that we must allow government to run roughshod over us because if we didn't then government would run roughshod over us?


 You must ignore human history completely in order to accept your naive view that a group of powerful people will not rule the rest of us regardless of what we want to call it.


Right. Powered flight was impossible before 1903. Therefore the Wright Brothers were just silly dreamers who ignored history. If God had wanted man to fly he'd have given him wings. And that's why there is no such thing as an airplane. Nice sermon.

tmosley's picture

You are right, we should just let our sociopaths continue to do what they are doing forever.  Hey, let's go find some libertarians and beat the shit out of them instead of showing the slightest bit of indignation against the current system.

Because the only alternative to the current incarnation of the current system is total anarchy.  There is absolutely no thing between the two.  In fact, we need some MORE government and bad regulation, since we are already uncomfortably close to an absolutely stateless society.

Anusocracy's picture

Dear Genetically Obtuse,

Government allows those who are sociopaths to leverage their evil. How many people does a sociopathic leader kill directly? Damn few.

How many can the government under his control kill? Obviously, millions. Or billions.

You want representative democracy, you can have it under panarchism.

Just leave those of us who don't want it alone

That's what you can't wrap your brain around.


RiverRoad's picture

All that regulation-writing reminds people to send in their campaign contributions.

FreedomGuy's picture

I think the estimates of regulatory costs are low. There are many many effects besides the direct costs of an accounting department. Many of the comments here elucidate that.

Svener, what I believe is that you would do most of the things in the regulatory code without the regulatory code anyway. What people who favor lots of regs seem to assume is that without them nothing good in this world would happen. Everyone would be completely evil, careless and false. That's stupid, even arrogant. Regs are developed by and for people on the pessimistic side of life. While there is a place for that you will never get anywhere new and good. In fact, pessimists virtually always take over companies after the founders and run them into the ground. They are the "no-nonsense" realists that cause most of the companies to fail while swearing to know exactly what to do and making sure you work 90 hours per week (if salaried).

When I discuss Obamacare I ask people, did government invent doctors, their certifications, training, medications, MRI machines, hospitals, insurance or anything else? The answer is "Hell, no!" Then why do you think the government is the "expert" in ruling all these things? Westerners have become so indoctrinated in the idea that except for government all human life on earth would least civilized life. I suggest the opposite. Governments start wars, put people in reeducation camps, starve their populations (N. Korea) and send Jews to ovens on a scale even your worst fears of freedom could not imagine. By the way, they do all this legally and according to their laws.

The reason government expertes could not close the well at the bottom of the Gulf of Mexico was because they did not know how. They don't even know the engineering involved but Congressmen with law degrees regulate it.

Svener, if complying with 99.5% of regs means you are a thoughtful and good guy in what you do, great! If you are then you would do them anyway, I can tell you in my line of work they are a huge and costly impediment and are used to limit competition. Not so great.

lotusblue's picture

No regs = corporate anarchy!

poluted land.water,air. Birth defects from chemical pollutants.

Pretty much back to the feudal system of the dark ages.

Elimination of Glass- Seagall and other finance regs tell the story!

tmosley's picture

Right, because laws against pollution and assault are regulations, and would clearly be thrown out with the bathwater.  Because the system that ended feudalism and the Dark Ages had so many and varied regulations, and we have only been cutting back since that time.

I'm not sure I can put any more sarcasm in than that.

You only need Glass Seagall when you have a central bank.  You didn't get peacetime depressions prior to the implimintation of a central bank/use of fiat currency.  Only short panics and post-war depressions.

sun tzu's picture

i'm glad srbanes oxley and dodd frank were passed. the markets have been perfectly honest since 

km4's picture

Neil Barofsky on how the Bush and Obama administrations handled the whole 'TBTF bailout' episode
FAIR GAME; Neil Barofsky’s Journey Into a Bailout Buzz Saw — Fair Game - NY Times

Mr. Barofsky’s assessment of his former regulatory brethren is crucial for taxpayers to understand, because Congress’s financial reform act — the Dodd-Frank legislation — left so much of the heavy lifting to the weak-kneed.

“So much of what’s wrong with Dodd-Frank is it trusts the regulators to be completely immune to the corrupting influences of the banks,” he said in the interview. “That’s so unrealistic. Congress has to take a meat cleaver to these banks and not trust regulators to do the job with a scalpel.”

Finally, Mr. Barofsky joins the ranks of those who believe that another crisis is likely because of the failed response to this one. “Incentives are baked into the system to take advantage of it for short-term profit,” he said. “The incentives are to cheat, and cheating is profitable because there are no consequences.”

tmosley's picture

We have the costs on the government side, now what is the direct cost to the private sector?  The opportunity cost?

I would wager that it is multiples higher in the first case, and at least an order of magnitude in the latter case.

TheGardener's picture

Direct impact might be overrated and limited to just halving
output and with all the reverse incentives and subsidies by another half. Opportunity cost for out of space entrepreneurs who still dare to venture out in this environment are surely astronomical. All or nothing on a scale did not look any prettier 20 years ago.

merizobeach's picture

In real terms, I think the cost has been the rise of China, in more than one way: first, that industry could've stayed locally (had government facilitated its staying rather than leaving), and now that China has been developed, we can only hope that its demise might be equally parabolic, because if America's reign of tyranny on the world has sucked, then we don't even have vocabulary to describe what China would do to the world as a primary superpower.

LetThemEatRand's picture

You do realize that you are making the case for slave labor and no environmental rules in the U.S., right?  Those are the factors that make it cost effective for Western businesses to build factories half way across the world.  Your preferred model is a race to the bottom.  But I'm sure that like almost all of your ilk, you believe you will personally benefit so fuck everyone else.

Buckaroo Banzai's picture

Calling bullshit on your straw man argument.

The point is not that a little bit of regulation is bad; the point is that the absolutely absurd levels of regulation we have are in fact crushing us.

Have you ever been involved in running a business? If so, you would quickly understand how crippling these regulations are. They serve only to enrich the bureaucrats, the politicians, and the giant corporations who are happy to comply because of the huge barriers to entry they create.

Everyone else is a loser.

LetThemEatRand's picture

Funny how every fact that conflicts with your ideological vision becomes a straw man argument.   Of course true believers will always reject those facts that conflict with their belief system and/or attack the person who presented the facts (e.g., by suggesting I know nothing about business, when in fact I am a small business owner).   Of course pure ideology like religion is comforting so carry on.

Anusocracy's picture

It is interesting that you ignore the 10,000 or so years of failure of your belief system.

Four hundred million killed in the 20th century. Tens or hundreds of trillions of dollars of wealth stolen or destroyed

What's it going to be in the 21st? Four billion? Quadrillions wasted? The destruction of civilization? All because you and your ilk are wired to worship government and don't have the cognitive ability to resist it.

No thanks.


LetThemEatRand's picture

It is interesting that in your fantasy ideology based world we've had 10,000 years of representative democracy which is the system I believe is superior to all others.  Seems to me that before the 1700's or so, we mostly had the strongest ruling everyone else by open force.  With a few notable exceptions that didn't last long in comparison to human history as a whole, there were no elections and there were no rules at all for the ruling class.  They  had no one they had to bribe or corrupt.   Your model of dismantling elected government in favor of the strong doing what they want would return us to humanity's ugly past.  No thanks.

Anusocracy's picture

Ten thousnd years of an elite group of rulers living off the blood and sweat of productive people. Democracy hasn't changed anything except make the ongoing con more difficult to see through. All governments are parasites. They are killing, destroying, stealing machines.

Here is a book for you to read: Law for the Elephant - Property and Social Behavior on the Overland Trail by John Phillip Reid.

A reader's comment:

The Overland Trail that spread to the gold fields of California and Oregon was a trying ordeal; it tested the will and endurance of the American character. The experience of the trail not only shaped America geographically, but socially, politically, and economically as well. The trail also shaped another American institution: law. Law and the Overland Trail is a topic that deserves greater study to determine charaterisitcs of the overland trail and the development of law in America. Law during antebellum America focused on capital speculation and corporate structure, and a bed of safe property law allowed corporate proliferation to occur. Reid examines inherent social and legal developments of the Overland Trail with great detail by examining a plethora of sources. He examines diaries, papers and other records for inferences to legal conduct. Reid explores the use of property law on the Overland Trail. He concludes that property law was something that was inherent to Americans in general, and not something forced upon them by corporate America (p. 335). The trail is unique in American legal history, because it shows how Americans administered law in a lawless land. Reid starts the book with general assumptions about the trail, emigrants and jurisprudence. He notes that the emigrant is a typical American: man women, child, old Young, ethnic, educated and uneducated. This mass of humanity seeking a new existence, in a place presented as a paradise, was not a lawless immoral group as legend, and some scholarship dictates. In assuming so, Reid states that, "Easily overlooked is the possibility that law could be the common denominator, explaining both the definitions people shared and the conduct they followed" (p. 10). Reid examines a common thread: property rights. The remainder of the book examines the interrelationships, uses, and behaviors associated with property and property rights. He notes that the creation, operation, and dissolution of joint stock ventures operated with a high degree of jurisprudence. An interesting aspect explored is the concept of ownership. Except for natural resources such as water, property was an abstract concept. Emigrants abandoned property as the hardships of the trial demanded, to avoid liabilities associated with traveling weight. Emigrants obtained supplies by barter, or by acquiring discarded property (p. 293). Reid notes that the transfer and handling of property, whether by and individual, or partnership was peaceful, and rarely was violence employed as a means of resolution (p. 341-54). Reid concludes by stating, "Instead, they respected the rights of property owners much as if still back east in the midst of plenty. By respect for their neighbor, and their neighbors property, they were, more than not, adhering to a morality of law" (p. 364). Law for the Elephant is an excellent macro interpretation of property, legal, and social relations of California gold rush emigrants. Another advantage the work provides us is an understanding of why current views of property came to be. The research is well covered, and the readability of the book is excellent. The book not only provides generalizations about law and the Overland Trail, but gives insight into how emigrants acted at the micro level as well.

Milestones's picture

A very interesting read of an oddball topic. Thanks               Milestones

tmosley's picture

So the fact that we spend ten times more on regulation than we bring in from corporate taxes seems perfectly efficient and acceptable to you?

Talk about being blinded by ideology. 

I notice you continue to bitch and moan about individuals and producers, but still no word or work on reform of regulators.  You see people complaining about inefficient regulators and you go after them like a mad dog, even though that is the exact same argument you yourself make when backed into a corner.

StychoKiller's picture

The point made was:  getting hit with a toothpick is barely noticeable, getting hit by a 2 by 4 is painful, BUT -- getting crushed under thousands of redwoods will kill you!  Check yer premises.

Anusocracy's picture

There was a study done in the 90s that pointed out that the time cost of federal tax compliance amounted to 5.4 billion hours - the work output of the state of Indiana for a year.

That's like wasting the entire lives of 8000 people.

Each year.

Rastamon's picture




....and the libertarian Milton Friedmanite CULT's destruction of gov't regulation has cost the WORLD $1.5 QUADRILLION and MILLIONS OF LIVES


not even a GOOD attempt





tmosley's picture

WTF are you even talking about?

Please show me where libertarian policy has been implimented anywhere on the planet Earth.

merizobeach's picture

Yes, just the name of the place would be enough; I could google how/where to apply for the visa.

GeorgeHayduke's picture

Anyone else see the irony in this statement? I thought Libertarians were people who got the job done and made things happen.

I've been waiting my entire adult life for the Libertarians to go buy an island somewhere and set up their utopian example of living for all to see and envy. I'm now 51 and still I wait....

There are a few conclusions to this situation:

1. really wealthy people who could assist in making this venture happen aren't really libertarians as the myth itself tries to conclude, so their own self interest prefers a serf-styled system like our current one, which Libertopia would turn into quickly itself. So why bother?;

2. the Libertarian system first needs to have a Statist system eliminate the indigenous people in and area and build the appropriate infrastructure for the libertarians to then come in and show everyone else how it's done;

3. Libertarians are all so self absorbed in their own self interest that they cannot get together at even the most basic levels to go make this happen.

4. It's a whole lot easier to get righteous and proselytise with the libertarian myth on message boards and claim victory there than to actually make it happen.

I am sure there are many other why we have no Libertopia to set an example for us in the real world, but that's a good start.

Buckaroo Banzai's picture

It was tried 236 years ago in North America. Worked until 1865 or so.

Libertarians aren't the problem. The problem is, most humans prefer enslavement over liberty. Especially the ones who like to do the enslaving.

GeorgeHayduke's picture

Sorry, but that's a myth too. This country was set up as a corporation to enhance the freedom, wealth and property of the ownership class. They really didn't care about the property of anyone else...women, slaves, indentured servants. This system was merely a half step up from the serf/feudal systems of earlier ages.

I'm not so sure the problem is that people prefer enslavement over liberty rather than people have been lied to about history and have been repressed through all kinds of laws and cultural barriers to keep them enslaved, For all the excitement and bitching that goes into our major elections every four years, 98% of the presidents, congress, and courts purpose is maintain the status quo of wealth and power for the already wealthy and powerful. It was made this way from the start.

Anusocracy's picture

I don't support the US government. It owns everything within its borders, all to the benefit of our Lords and Masters.

It is just a con run on the productive people living here.

Milestones's picture

And "we the people" are the sovereigns of that government IF we get off our collective asses and start acting like OWNERS instead of slaves.