PeakTrader.com

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PeakTrader said...

Perhaps, the most powerful factor in the slow recovery is rising regulatory costs:

The Regulation Tax Keeps Growing
September 27, 2010

"The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008...new policies enacted in 2010 for health care and financial services will increase this burden."

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Over-regulated America
The Economist
Feb 18th 2012

"A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee."

My comment: $10,000 times 150 million is $1.5 trillion.

I suspect, regulations, in general, have less than $1 in benefit for each $2 in cost.

If true, then the average U.S. worker is throwing away over $5,000 a year, just for compliance.

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The study above that concludes regulations add $10,585 in costs per employee seems to be only federal regulations, and not state and local.

Another study, a 2011 econometric study based on 50 years of data, "Regulatory Expenditures, Economic Growth and Jobs: An Empirical Study," concludes:

"A 5% reduction in the regulatory budget, which equals about $2.8 billion in spending, increases GDP by roughly $75 billion and the number of jobs by about 1.2 million annually.

In recent years, however, the size of the regulatory budget has risen sharply, with the Obama Administration proposing numerous new regulatory agendas.

Each regulator (or employee of a regulatory agency) costs the American economy, at the margin, $6.2 million in economic output and about 98 private sector jobs each year."

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So, it seems, if Obama deregulated, instead of accelerated regulations, the country would be at full employment and the Fed would be in a tightening cycle to slow economic growth.

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PeakTrader said...

Ed R, is less foreign demand for dollars, exchanging more domestic goods for foreign goods, and working more for foreign goods an improvement?

U.S. trade deficits free-up domestic resources, which can be redeployed (to raise GDP) or unemployed (to lower GDP).

Many of our trading partners exchange their goods for U.S. dollars, instead of U.S. goods, and invest those dollars in U.S. Treasury bonds.

So, there's more money available for U.S. education and less money is needed from the U.S. private sector.

Consequently, the U.S. not only leads the world, it leads the rest of the world combined in the Information and Biotech Revolutions (in both revenues and profits), in part, because of more spending on education and more investment in emerging industries.

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Also, I may add, in raising U.S. living and labor standards, an increase in the minimum wage of $0.50 costs less than $2 billion, which is very little compared to the up to $800 billion a year U.S. trade deficits in the mid-2000s.

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VangelV, there's a positive correlation between education and income.

Last time I looked, most of the workers in the U.S. are American and U.S. per capita income is much higher than other large countries.

Also, there are hundreds of major economic forces pushing and pulling a large economy, not one or two that you may find in a textbook.

Moreover, there are all kinds of implications, both positive and negative.

In an optimal system, the goal is to maximize the positives and minimize the negatives, simultaneously.

"Reading an economic textbook" is not enough to even begin to understand economics.

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You begin to understand economics after completing a couple of degrees in orthodox economics.

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VangelV says: "Confusing correlation with causation is not exactly a valid support for a thesis."

It's likely, over generations, higher education causes higher income and higher income causes higher education.

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http://www.blogger.com/comment.g?blogID=28997633&postID=7825720573688271474

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