Figure 135

Total Direct and Indirect Costs of Federal Government Regulation

The costs of regulation rose sharply during the 1990s.

Annualized regulatory costs (1991 dollars, $blllions)

Annualized regulatory costs (1991 dollars, $blllions)

'98 2000

Source: Department of Commerce data.

Paperwork Costs Transfer Costs Efficiency Costs

Other Social Regulation Environmental Regulation

'98 2000

Source: Department of Commerce data.

As shown in Figure 13.6, the costs of environmental regulation amount to 27.6 percent of the total. Clean air and water controls are especially significant and are expected to rachet upwards after 2000 when the full effects of the 1990 clean air amendments are felt. Other social regulation with important cost consequences (9.4 percent of the total) includes regulation of worker safety and health, auto safety, nuclear safety, and job security. Regulatory costs measured in terms of lost efficiency (efficiency costs, 10.7 percent) are thought to be especially important in transportation, international trade, communications, and agriculture. Indirect regulation, which transfers costs from producers to consumers, are another big regulatory cost item (19.6 percent). "Voluntary" controls over imports of autos, textiles, and agricultural products such as sugar cost billions, while entrenched pressure groups make them hard to eliminate. A final major source of regulatory costs is paperwork, now estimated to account for roughly 6 billion worker hours per year and 32.7 percent of the total cost of regulation.

With roughly 285 million Americans, SBA figures suggest that total regulatory costs average roughly $2,530 per year for each man, woman, and child in the United States. Other reasonable estimates put this per capita cost at $3,300 per year, an amount equivalent to almost $1 trillion per year, or roughly 13 percent of gross domestic product. Given this magnitude, consideration of the total costs of regulation must play a prominent role in decisions about what and how to regulate.

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