The Economic Anchor of Over-Regulation

Sep 25, 2012 | Business & Economy, Business-Friendly Environment, Economy, Talent

Oppressive government regulations are a very common complaint of Chamber members. I hear it with numbing regularity. In the name of safety or fairness government passes laws and regulations that place enormous burdens on businesses. The business costs of compliance have an aggregate cost to the national economy. On his blog, “Economics One,” economist John B. Taylor recently wrote “While correlation does not prove causation, regulations, whatever their benefits, tend to raise the cost of doing business and thus discourage business expansion and economic growth.” Taylor contrasts the economic policies enacted during the recessions of 1981-82 and 2007-09. During the former, the number of federal regulators declinesd while the number of regulators has grown dramatically during the latter. The results can be seen with a robust 5.7 percent recovery from the 1980s recession compared to a very anemic 2.2 percent recovery now. Taylor’s blog post is short and you can find it here.