The 2 Scariest Words in the English Language
A lot of the excitement around the Department of Government Efficiency—DOGE—focuses on the dollars saved. But more important are all of the things the federal government destroys with those dollars.Specifically, the millions of jobs destroyed by the two scariest words in the English language: federal regulators.
A few weeks ago, I mentioned how DOGE under Elon Musk and Vivek Ramaswamy is taking aim at the regulatory mothership that strangles the U.S. economy and fuels the totalitarian administrative state—you may remember it from COVID-19.
It is a mothership that is oddly enough unconstitutional according to a pair of recent Supreme Court decisions—Loper Bright Enterprises v. Raimondo and West Virginia v. EPA.
I asserted that this could unleash the economy like nothing we’ve seen in the past century.
Every Regulator Destroys 138 Jobs
One 2017 study by the Phoenix Center and Auburn University found that every single full-time regulator destroys 138 jobs.GDP-adjusted to today, that translates to $16.5 million of economic output. For a $100,000 bureaucrat.
This lost output is made of jobs and businesses that were never started. Or were stunted by strangling regulations—which are generally bought by big corporations specifically to strangle small competitors.
That is along with mom-and-pops chased into bankruptcy as collateral damage to new regulations—say, a diner forced to spend $30,000 on a low-energy exhaust fan.
So it’s not the bureaucrat’s $100,000 salary that matters. It’s the 138 jobs that he takes out every single year you keep him around.
In fact, you could fire him, keep paying him for life, and still put 100 families in the middle class.
In recent videos, I’ve mentioned research saying that $1 in taxes destroys $3 in GDP. A regulator blows that out of the water—each dollar in regulator salary destroys $112 in output.
Given that there are roughly 288,000 full-time federal employees involved in regulatory activities, that implies an annual cost of regulation of about $5 trillion—one-fifth of our entire economy.
The Top 3 Regulatory Offenders
The first of the worst three regulatory offenders is the Environmental Protection Agency (EPA), which preys especially on small businesses least able to afford their never-ending mandates.Second is securities mandates—namely the Dodd-Frank and Sarbanes-Oxley acts—that have all but closed public markets to startups and shelter banks and insurers from competition.
And labor regulations—namely the Federal Labor Relations Authority, National Labor Relations Board, and an alphabet soup including Obamacare mandates and occupational licensing. They are brutal for small businesses that might take a gamble on marginal workers but are locked in.
And they raise the cost of hiring to the point that companies downsize or move to China to survive.
Of course, these are just the start. The regulatory code has grown like a monster for 100 years in every domain you can imagine, from braiding hair to collecting rainwater on your property to giving health advice—which is illegal unless you’re a doctor.
What’s Next
Deregulation is central to Trumponomics—low inflation and fast growth.Because the best way to do both is to reduce the federal burden—the spending, sure, but above all the forest of regulations strangling our economy. Even if DOGE doesn’t manage to save a penny, gutting the regulatory state will pay us back 138-fold.
