Infographics: The Regulatory Burden in the U.S. is a Whopping $4 Trillion

There is no such thing as a free lunch. Government actions comes with costs: either direct or indirect.

Part of the indirect costs constitute time, money and effort exerted to comply with regulations. This is called the compliance costs.

At the Visual Capitalist, Jeff Desjardins explains the onus of compliance on the regulatory-bureaucratic state:

One of the big problem with regulatory policy is that typically new regulations are only added – never subtracted.

A good example of this is the federal tax code, which is now 74,608 pages long.

It’s an astonishing 148x longer than it was under President Franklin Roosevelt’s New Deal:

If all you have is a hammer, everything looks like a nail. Regulators add new regulations to “solve” problems, but there is much less political will to actually go back and sort through any outdated, ineffective, or convoluted regulations of the past.

Over time, this has created a massive regulatory burden that continues to snare the growth potential of many industries. According to one study, the cumulative effect creates a burden with a dollar value greater than the GDP of many of the world’s largest economies.

REGULATORY BURDEN IN THE U.S. IS A WHOPPING $4 TRILLION

The following graphic comes from a recent study by the Mercator Institute and it shows that the U.S. regulatory burden alone is bigger than the economies of Germany, France, Brazil, Russia, or the U.K.

The full study focuses on how regulatory accumulation, or the buildup of regulations over time, changes the approach that businesses have in making decisions and investments that could lead to innovation and technological growth.

These changes affect the economy, and a core finding of the study is that U.S. growth was reduced by an average of 0.8% per year from 1980 to 2012 due to this regulatory accumulation. An exponential effect is created over time as companies are forced to invest fewer dollars into activities like R&D and hiring new staff. Instead, they must divert money and time to areas such as compliance or acquiring licenses.

There are now over one million words denoting “constraints” in the Code of Federal Regulations – and the total size of the code is roughly 180,000 pages according to Mercator’s database.