Forbes publisher Rich Karlgaard runs the numbers to convey the negative economic impact of runaway federal regulation.
Suppose the U.S. economy, since 1949, were giving up 2% extra growth per year because of bad economic policy. Or, as Ramsey might say, because Presidents, legislators and unelected regulators were born stupid or try their best to act that way.
Now, 2% a year doesn’t sound like much. Most of us could spend 98% of our budget next year without too much pain. The quip about compound interest is noteworthy only because it would take a genius like Einstein to observe something so profoundly simple yet subtly opaque.
But run the numbers yourself–and prepare for a shock. If the U.S. economy had grown an extra 2% per year since 1949, 2014?s GDP would be about $58 trillion, not $17 trillion. So says a study called “Federal Regulation and Aggregate Economic Growth,” published in 2013 by the Journal of Economic Growth. More than taxes, it’s been runaway federal regulation that’s crimped U.S. growth by the year and utterly smashed it over two generations.
Not all regulation is bad. …
… So let’s, for the sake of argument, posit that some regulation has been good for us, while many other regs have only hurt economic growth. Let’s also argue that sensible regulation, combined with the retirement of outdated regulation, could have brought about the same improvements to health and safety–but at a cost of 1% potential growth per year, not 2%. Where would the U.S. economy be today?
–The 2014 GDP would be $32 trillion, not $17 trillion.
–Per capita income would be $101,000, not $54,000.
–Per capita wealth would be $480,000, not $260,000. It would probably be higher than that, since savings rates might be higher.
–The U.S. would have no federal, state or municipal debts or deficits.
–Pensions would be solid. So would Social Security.
