benefit of all humanity.
These exciting predictions come with a big caveat, however: This second industrial revolution and the bigger economic âpieâ it will create wonât necessarily benefit everyone, unless we change the way we prepare Americans for the workforce. Brynjolfsson and McAfee correctly argue that we need to transform our education system to meet the employment needs of this new, innovation-driven economy. Progress will also depend on government getting out of the way and allowing entrepreneurs to keep inventing new ways to combine technology and human labor to create new industries and jobs.
Today innovation is being stifled by an anti-innovation tax code and by patent trolls who target innovators with actions that are nothing short of legalized extortion. Perhaps most of all, as weâve discussed, innovation is being held back by a regulatory code that has become a tool for established status quo industries to shut down new and innovative competitors.
When a group representing the nationâs largest financial firms asked businesspeople why America isnât producing as many start-ups as it did a decade ago, the businessmen and -womenâs second most frequently cited reason (after a lack of qualified workers, which I address in Chapter Four) was government regulation.
The regulations explosion is a bipartisan creation. Both parties and most presidents have done their share to balloon the federal register from 71,224 pages in 1975 to 174,545 pages in 2012. 3 But the current administration has taken federal rule making to new heights. Between 2009 and 2011, the federal government cranked out 106 new regulations, each with an expected cost of at least $100 million a year. 4 In 2010 alone, more such âmajor rulesâ were enacted than in any year since at least 1997. One study put the costs of regulation during the first five years of the Obama administration at an astounding $500 billion, more than the entire economic output of Sweden or Ireland. 5
Regulations cost us in economic growth and job creation because they are expensive to comply with. It is especially costly for small and new businesses that cannot afford the costs of hiring lawyers to help them comply with complicated regulations. These regulations, and the new ones that keep showing up, also create uncertainty. Potential employers are afraid to grow and even start, because they canât predict what the rules will be or how much business is going to cost. And so this uncertainty keeps would-be entrepreneurs on the sidelines and existing businesses from expanding.
For this reason and more, Obamacare has been the single largest impediment to job creation in the United States for the past several years. It is the perfect storm of ever changing federal mandates, costly regulations and aggressive marketplace intrusions. It is difficult to imagine a law more perfectly designed to stifle job creation.
Not all regulations are bad, of course. Some are necessary. We want to know that the water weâre drinking is clean and the car weâre riding in is safe. But when regulations become too onerous, they function as a hidden tax, making everything we buy more expensive.
Think Iâm exaggerating? The Small Business Administration calculated that the total cost of federal regulation in 2010 was $1.75 trillion. Compare that with the $1.09 trillion the government collected in individual and corporate income taxes that year. In other words, the hidden tax of regulation is about 61 percent higher than the taxes that are out in the open. 6
One of the best ways I know to ease this burden on the American peopleânot to mention cut down on the crony capitalist habit of using regulations to stifle competitionâis to establish a National Regulatory Budget. This would be an absolute dollar limit on what federal regulations could cost the economy in any given year. My plan would create an independent board that would be
These exciting predictions come with a big caveat, however: This second industrial revolution and the bigger economic âpieâ it will create wonât necessarily benefit everyone, unless we change the way we prepare Americans for the workforce. Brynjolfsson and McAfee correctly argue that we need to transform our education system to meet the employment needs of this new, innovation-driven economy. Progress will also depend on government getting out of the way and allowing entrepreneurs to keep inventing new ways to combine technology and human labor to create new industries and jobs.
Today innovation is being stifled by an anti-innovation tax code and by patent trolls who target innovators with actions that are nothing short of legalized extortion. Perhaps most of all, as weâve discussed, innovation is being held back by a regulatory code that has become a tool for established status quo industries to shut down new and innovative competitors.
When a group representing the nationâs largest financial firms asked businesspeople why America isnât producing as many start-ups as it did a decade ago, the businessmen and -womenâs second most frequently cited reason (after a lack of qualified workers, which I address in Chapter Four) was government regulation.
The regulations explosion is a bipartisan creation. Both parties and most presidents have done their share to balloon the federal register from 71,224 pages in 1975 to 174,545 pages in 2012. 3 But the current administration has taken federal rule making to new heights. Between 2009 and 2011, the federal government cranked out 106 new regulations, each with an expected cost of at least $100 million a year. 4 In 2010 alone, more such âmajor rulesâ were enacted than in any year since at least 1997. One study put the costs of regulation during the first five years of the Obama administration at an astounding $500 billion, more than the entire economic output of Sweden or Ireland. 5
Regulations cost us in economic growth and job creation because they are expensive to comply with. It is especially costly for small and new businesses that cannot afford the costs of hiring lawyers to help them comply with complicated regulations. These regulations, and the new ones that keep showing up, also create uncertainty. Potential employers are afraid to grow and even start, because they canât predict what the rules will be or how much business is going to cost. And so this uncertainty keeps would-be entrepreneurs on the sidelines and existing businesses from expanding.
For this reason and more, Obamacare has been the single largest impediment to job creation in the United States for the past several years. It is the perfect storm of ever changing federal mandates, costly regulations and aggressive marketplace intrusions. It is difficult to imagine a law more perfectly designed to stifle job creation.
Not all regulations are bad, of course. Some are necessary. We want to know that the water weâre drinking is clean and the car weâre riding in is safe. But when regulations become too onerous, they function as a hidden tax, making everything we buy more expensive.
Think Iâm exaggerating? The Small Business Administration calculated that the total cost of federal regulation in 2010 was $1.75 trillion. Compare that with the $1.09 trillion the government collected in individual and corporate income taxes that year. In other words, the hidden tax of regulation is about 61 percent higher than the taxes that are out in the open. 6
One of the best ways I know to ease this burden on the American peopleânot to mention cut down on the crony capitalist habit of using regulations to stifle competitionâis to establish a National Regulatory Budget. This would be an absolute dollar limit on what federal regulations could cost the economy in any given year. My plan would create an independent board that would be
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