You’re Breaking the Law

How many laws have you broken today?

It’s impossible to know for sure, given that regulations now affect just about every facet of our lives. That’s doubly true for businesses, which were not exactly coddled by the Obama Administration (although exceptions were made for generous Democratic donors, such as Goldman Sachs and Tom Steyer).Productivity

The federal tax code alone is now 74,608 pages long, or 187 times longer than it was a century ago. Depending on what you include and how you count the pages, the Affordable Care Act (ACA) has produced anywhere from 10,000 to 20,000 pages of new regulations, while the Dodd-Frank Wall Street Reform and Consumer Protection Act, developed to increase oversight of the financial industry and reduce risk, has produced more than 22,000 pages of regulations.

The regulatory state was taken to a new level by President Obama, who didn’t even bother getting support from Congress during his second term. He and the bureaucratic brethren (and sistren) he appointed to regulate worked overtime and broke all records for creating new laws to restrict our freedom, stifle economic growth, concentrate power in Washington and prevent the new Republican administration from doing its job.

That making America great again isn’t the goal of the Obama Administration is made clear by the volume of new regulations being approved. In August, we reported that he set a record by becoming the first president to approve 600 major rules (e.g., rules that each impose a cost of more $100 million). While George W. Bush was no slouch, having approved 496 major rules during his two terms as president, Obama blew past him and just kept going.

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Do You Like Being Told What to Do?

Listen, this whole system of yours could be on fire and I couldn’t even turn on the kitchen tap without filling out a twenty-seven B stroke six … bloody paperwork.                                                                                                                                                            Harry Tuttle in “Brazil” 

Americans didn’t used to like being told what to do.  We fought the Revolutionary War so that we wouldn’t have to take orders from England.  We fought the Civil War to end slavery and make every American free.  We fought two world wars to hold on to that freedom.

And then along came big government.  Medicare to help the old.  Medicaid to help the poor.  Food stamps and medical leave, help for the disabled and guaranteed wages, regulations to reduce pollution and prevent financial wrongdoing.  And much, much more.88468_Words-and-Actions-by-Eric-Allie-Caglecartoons-515x356

Some of it was good.  Some of it was needed.  But much of it wasn’t.  Do we really need more than 80 federal welfare programs to provide money, food, housing, medical care and social services to low-income Americans?  Wouldn’t maybe three or four be more efficient?

It’s difficult to pinpoint exactly when regulations got the better of us.  You could argue that it goes back to 1930, when the protectionist Smoot-Hawley Tariff Act helped cause the Great Depression and the New Deal made the impact worst.  You could argue that it was during the ’60s, when the Great Society programs and the War on Poverty took place.  As we (and many others) pointed out last year, during the 50th anniversary of the War on Poverty, after spending $20.7 trillion (based on 2011 dollars), the poverty level today is essentially unchanged at about 15% of the American population.

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Wages Will Increase When Productivity Does

There are three things we can say about income with a degree of certainty:

  1. You’re earning less than you did before the financial crisis.
  2. You are overdue for a raise.
  3. You are unlikely to get a raise anytime soon.

If these three statements fit your personal circumstances, you can take some consolation in knowing that you are not alone and that there is likely not much you can do about it.  Using the financial crisis that began in 2007 as a baseline, the Economic Policy Institute found that wages have dropped by an average of up to 5.9%, depending on the category of worker to which you belong. Employees with advanced degrees are the only group that didn’t see its income drop, but that group didn’t see its income rise, either. declining-wages

While the rate of inflation has been low throughout that period, it is still eroding your purchasing power and affecting your standard of living.

Why is income lower today than it was in 2007?

Lower Profits.  A major reason you’re earning less—and why you’re unlikely to get a raise anytime soon—is that your employer is earning less.

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