Do not think about, write about or deal with human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.
Wherein we see that the New Elite do well however the rest of us do.
James L. Gattuso
Want to work in a field that has more than quadrupled in size since 1960? Consider being a regulator for the federal government. Even during the last recession, the regulatory agencies were hiring.
In 2015, the U.S. government employed more than 277,000 regulators. To put that number in perspective, it’s 50,000 more workers than General Motors Co. employs throughout the entire world.
It has cost our economy over $100 billion during the Obama administration.
The Fourth Branch of Government
We’ve all heard of the regulatory agencies that constitute the “fourth branch” of government. It has cost our economy over $100 billion during the Obama administration.
But it wasn’t always like this. We haven’t always lived in a world where unelected bureaucrats could fine a man $55,000 for taking photos of his friend’s art project.
Thankfully, Susan Dudley from George Washington University in Washington, D.C., and Melinda Warren from Washington University in St. Louis, Missouri, have tracked the growth of federal regulatory agencies, allowing us to see how we got into the predicament we’re in now.
Using data from the annual federal budget, Dudley and Warren have recorded the number of federal regulators and the amount of taxpayer money given to them for each year since 1960. All monetary figures that they report are in inflation-adjusted 2009 dollars.
Tip of the Iceberg
While their data show federal regulation has exploded since 1960, it’s important to realize that they included only regulatory agencies that explicitly restrict business transactions in the private sector.
That means the 277,000 regulators they recorded in 2015 didn’t include anyone from the Internal Revenue Service, Social Security Administration, Defense Department, or the Centers for Medicare and Medicaid Services—even though these agencies account for roughly one-third of all final rulemaking actions in a typical year.
From 2014 to 2015, the economy grew by only 2.6 percent, while the regulatory business grew by 4.3 percent.
When the rider gets heavier than the horse, the horse dies.
However, even without these agencies, it’s apparent that the size of federal regulation is massive compared to what it once was. From 1960 to 2015, the amount of taxpayer money allocated to federal regulators increased by more than 1,800 percent, from $3.06 billion to $57.05 billion.
The growth of federal regulatory agencies has not been limited to any particular field or industry.
From 1960 to 2015, the budget of the Federal Aviation Administration increased from $241 million to $1.36 billion, the budget of the Comptroller of the Currency increased from $63 million to $1.13 billion, and the budget of the Federal Energy Regulatory Commission increased from $40 million to $286 million. Since its beginning in 1970, the Environmental Protection Agency added over 10,000 employees to its payroll.
Even when the rest of the country is doing poorly, the regulators do well.
From 2014 to 2015, the economy grew by only 2.6 percent, while the regulatory business grew by 4.3 percent. So if you’re looking for work and the private sector isn’t hiring, you can always try finding work as a bureaucrat in the industry that never shrinks.
The cost of regulation goes far beyond the outrageous salaries and benefits paid to those of the New Elite, the government workers. The multiplier of real costs lies in the inefficiency, lost time and cost of compliance. It takes a lot to suppress free enterprise, but the government does its best.
Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.”
Cui Bono–Cherchez les Contingencies