- The Washington Times - Tuesday, April 26, 2016

ANALYSIS/OPINION:

The estimated cost of U.S. regulations is larger than Germany’s economy, according to a new study by George Mason’s Mercatus Center.

If U.S. regulations were held at levels observed in 1980, the difference between the current U.S. economy and a hypothetical economy where regulatory accumulation was halted, is about $4 trillion, according to the study released Tuesday.

That would make the cost of U.S. regulations the fourth-largest economy in the world, clocking in higher than the gross domestic product of Germany, France and the U.K., among others.

“Regulations force companies to invest less in activities that enhance productivity and growth, such as research and development, as companies must divert resources into regulatory compliance and similar activities,” Mercatus researcher Patrick McLaughlin wrote. “While 0.8 percent may seem small, economic growth is an exponential process—next year’s growth depends on this year’s growth, which depends on last year’s, and that means the gap between what the economy could be and what it is grows over time at an increasing rate.”

The cost of U.S. regulations over the decades has cost the average American worker $13,000, the study found, equaling about one-quarter of the U.S. economy in 2012.

The researchers studied 22 different industries from 1977 to 2012.

“In order to better understand the cumulative cost of regulation, a comprehensive look at all regulations across many industries over a long period of time is imperative,” they noted.

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