Thursday, June 14, 2007

How to Become a Third-World Country

It's easy. Just elect a Congress like the one we have; then create regulatory agencies which have an agenda that has nothing to do with the National Interest. Toss in a number of Federal and State judges who live on a planet which has two or three moons, and voila! it's just a matter of time.

“The total regulatory burden on manufacturers is estimated at $162 billion,” the National Association of Manufacturers reported in its 2006 study, The Escalating Cost Crisis. “This represents an increase of 10.2 percent since 2000,” NAM reported, noting that this burden is a major contributing factor to the continuing loss of American manufacturing jobs to overseas competitors, as well as an ongoing impetus for U.S. manufacturers to move offshore — or perish.

However, the NAM calculations do not begin to tell the whole story of the horrendous havoc that the regulatory state is wreaking upon our economy. According to the Competitive Enterprise Institute (CEI), the total federal regulatory burden to the American economy is closer to $1.16 trillion annually. In its 2006 study, Ten Thousand Commandments, CEI reports that regulatory costs “exceed estimated 2005 individual income taxes of $894 billion, and are far greater than corporate income taxes of $226 billion.” These costs are also “more than triple the $318 billion [2005] budget deficit.” The regulatory costs combined with federal budget outlays of $2.472 billion “bring the federal government’s share of the economy to 29 percent, compared to 27 percent a year ago.”

Either number is significant--but the larger one is astonishing.

Of course, just building and staffing a plant is only Step One. Then there's fueling it:

“If we look back to the mid-1990s,” the NAM points out, “the United States enjoyed a 30 percent cost advantage with regard to natural gas on a trade-weighted basis.” However, says the NAM 2006 report, The Escalating Cost Crisis, “the steady increase in U.S. prices since then is purely the result of policy decisions that have limited development of domestic reserves and Clean Air Act mandates that have increased demand” for natural gas.

(Between 2003 and 2005, the seasonally-adjusted price of natural gas doubled.)

Of course, there's a solution. But we have regulators and Judiciary in the way:

According to the U.S. Minerals Management Service, areas of America’s outer continental shelf (OCS) currently banned from development likely contain a mean estimate of 18.92 billion barrels of oil and 85.79 trillion cubic feet of natural gas recoverable by current technical means. However, federal environmental policies are preventing us from accessing that treasure trove of desperately needed energy, even though drilling presents almost no environmental danger. No other nation in the world prohibits development of its offshore energy.

Don't even bother to talk about nukes...

And, of course, somebody has to PAY the regulators, judges, and CongressCritters.

The NAM report, The Escalating Cost Crisis, found that for U.S. manufacturers, “the corporate tax burden was both the heaviest burden in absolute terms and the largest contributor to the deterioration in the U.S. structural manufacturing cost gap, adding 2.0 percentage points to the U.S. cost disadvantage. This is largely due to the fact that U.S. statutory rates were unchanged, even as several other trading partners continued to lower their rates.”

In addition, the research and experimentation (R&E) tax credit, an important and long-standing provision of the tax code designed to encourage innovation and new product development, expired at the end of 2005, which is “equivalent to a nearly 9 percent increase in the overall manufacturing tax burden.” Thus, notes the NAM, “the excess tax burden of U.S. manufacturers relative to their foreign competitors has worsened considerably in the past three years.”

The linked article also mentions outsourcing--as a consequence of the above--and, of course, the Permanent Slave Class existing now--the one that GWB wants to transmogrify into "Z" Visa holders.

You know. The ones who cut the lawns for Regulators, Congressmen, and Judges.

1 comment:

JJ said...

The regulatory costs/barriers in the US are NOTHING compared to the trade barriers thrown up to US goods by China, Japan, Brazil, etc....

I'm not a fan of protectionism, but a solid import/regulatory reciprocity plan sounds pretty good 'bout now... OK China, if you require this for US goods, then we require the same for China goods, and so on....