A Few Facts on Regulation

There has been a lot of erroneous chatter about how the free market has failed us during the financial crisis of 2008. Market opponents, usually of the liberal stripe, say that deregulation is the cause of all of our ills. 

But is this really true? Consider the following facts, and then tell me if a lack of regulation is really the problem with our markets.

The Federal Register, the official daily publication for rules, proposed rules, notices of federal agencies and organizations, as well as executive orders and other presidential documents, averaged 72,844 pages annually during the Carter administration. That average annual number fell to 54,335 during the Reagan administration, but rose again to 59,527 pages under George H.W. Bush.

The annual number of pages soared to 71,590 during the Clinton years. But the undisputed champion of the Federal Register is our current president, who set an all-time record with annual average of 75,526 pages. Well, so much for the notion that the Republican Party is the party of deregulation and smaller government..

Here are few more facts for those who think a lack of regulations is the culprit:

• The number of full-time U.S. government employees in regulatory agencies increased 63% between 1980 and 2007 — jumping from 146,139 to 238,351.
• Government spending on regulating the market tripled from $13.5 billion in 1980 to $40.8 billion in 2008 (using year-2000 dollars for the comparison).
• Spending on regulation increased from 0.26% of GDP in 1980 to 0.35% of GDP in 2007, an increase of 35%.
• The second-largest rate of growth in regulation was in finance and banking, where regulatory spending increased from $725 million to $2.07 billion from 1980 to 2007 (in year-2000 dollars). That’s nearly a 300% increase in regulatory spending!

I’d like to think that the above facts would dispel any notions that a lack of government regulation is the problem. But I know that for some intransigent types out there, facts are never allowed to intrude on their agenda.

Here’s a tip of the hat to Dr. Michael Shermer and his SkepticBlog.org for posting much of the data above.