Suppose for a moment that paint and paper were heavily regulated in the 15th and 16th century, causing the writers, thinkers and painters of the time to pursue another profession.
If union protectionist regulations were in place in the early 1900s to guard against the growth of competition spurred by assembly line manufacturing processes, Henry Ford would have likely chosen a less efficient and more costly way to produce his Model T.
The birth of the modern Internet in the 1980s and the global economic, social, and political revolution it continues to fuel would tell a much different story today if its content and access was heavily regulated from its inception.
Some of the world’s greatest moments and eras occurred not only despite the absence of regulations, but often in large part because a lack of inhibiting regulations at the time opened up the door of unlimited possibility. In other moments throughout history, over bearing and intrusive regulations forced people seeking freedom and autonomy to risk everything they had to recapture that independence.
America was not built by regulations; America was built by people seeking freedom who were willing to take risks. Unfortunately, today, we have seen the rapid growth of regulations that puts the priority of the government over the dreams of the governed. This trend is taking its toll on American greatness and a recent report commissioned by the National Association of Manufacturers details the impact.
The NAM study shows that complying with federal regulations costs Americans $2.028 trillion in lost economic growth annually. This equates to roughly 12 percent of total GDP, precious dollars that could be flowing into our economy at a time when we need all the investment we can get.
This impact will be felt directly in Louisiana, especially considering that we are on the verge of a manufacturing renaissance that has the potential to revamp our economy in a way that will benefit our people for generations. Over $60 billion in new manufacturing projects have been announced in our state and more are expected to come on line in the years ahead.
Unfortunately, the NAM study shows that these types of manufacturing jobs face a disproportionate share of the regulation burden, estimated at $19,564 per employee per year—nearly double what the average U.S. business pays to comply with federal rules. Small manufacturers pay more than three times as much as the average U.S. firm—that is $34,671 per employee per year that small manufacturers could otherwise use to grow their businesses and create jobs.
In Louisiana, this cost is significant, considering the Louisiana manufacturing sector contributes an estimated $55.1 billion to the economy and accounts for 7.4 percent of our workforce.
As part of its study, NAM surveyed its members regarding their experience with federal regulation. Almost 90 percent of respondents identified federal government rules as a challenge to their businesses. Attracting and retaining productive employees came in a distant second. Respondents to NAM’s survey also ranked labor and environmental regulations as those for which they incurred the highest costs.
LABI’s small business members and manufacturers also frequently identify regulatory issues as their top business challenge and this threat grows by the day. It causes them to think twice before investing, creating new jobs and even taking risks to develop the new product or service that can lead to unimaginable opportunity.
Those surveyed were asked whether they wished to add other comments on the subject of federal regulation. Several took the opportunity to vent regarding the timing, complexity, and administrative requirements of regulations. It was noted that regulations bring uncertainty and reduce global competitiveness, leading to payroll reductions, discouraging growth and adding inefficiencies.
Americans need to take back control of our country from the regulators and start trusting our people more. Besides being in line with the foundation of this nation and responsive to the intentions of our Founding Fathers, it just makes economic sense. We know this because history has proven time after time that ingenuity from the individual usually drives the creation of the next economic renaissance, not some broad based regulation intended to protect the interests of the government.
To create a more competitive economy where manufacturers can innovate and make better products instead of spending hours and resources complying with inefficient, duplicative and unnecessary burdensome regulations, we must ease the burden on these innovators. Give them the confidence and freedom to create the next product that will change our lives.
We fondly recall and celebrate those notable moments throughout our history and wonder how we ever functioned before they occurred. If we truly want to trust our people and encourage the next innovation, it is time to start learning from the past and stop regulating the present in a manner that discourages innovation from happening in our future.