May 27, 2022

That Other Driver of Inflation: Regulation

Excessive government spending isn’t the only activity that causes costs to skyrocket.

Inflation is out of control, but if you watch the evening news, you’re likely to walk away thinking corporations are the culprits. They’re not.

It’s no wonder, though. The very same Democrats whose policies got us into this awful mess often respond to the situation by decrying free-market capitalism and denouncing corporate greed. Essentially, they’re blaming everyone but themselves.

Their solution? Government regulation. But the reality is that, along with more spending, more regulation tends to make inflation worse. “The role of regulations in the inflation crisis is largely overlooked but shouldn’t be,” says the New York Post. “When Washington wraps the economy in red tape, businesses must spend massive sums on compliance. That cash doesn’t materialize from thin air. Every dollar that goes toward hiring lawyers, filling out paperwork and redesigning products and assembly lines gets passed to consumers through higher prices.”

The Post adds: “So businesses are spending at least 131 million more hours annually complying with Washington’s mandates and dictates. Since time is money, that’s extremely expensive for the consumers who ultimately get stuck with the bill.” And those who get stuck paying more for their everyday needs include the poorest families in America.

A study at the Mercatus Center at George Mason University confirms this plight of the poor: “Regulators and policymakers often claim that regulations are intended to protect the poorest and most vulnerable consumers. However, the effects of regulations are most harmful to the poor because regulations drive up the cost of doing business, resulting in higher prices. Unfortunately, the goods and services to which the poor devote much of their limited budgets, such as energy and food, are also the most heavily regulated.”

So while it sounds good to blame big companies, as Biden and other Democrats have done with the baby formula crisis and for inflation, in reality the government need only look in the mirror to see the real causes of an increasingly worthless dollar.

Maybe the arrogance of self-serving politicians and their lack of interest in the way regulation affects ordinary Americans is why Democrat presidents are quick to push for more regulation when they’re in power. Or maybe increased dependency is simply exactly what they want.

Back in 2012, the Heritage Foundation reported that during the first three years of Barack Obama’s presidency, regulations cost Americans more than $46 billion. In comparison, the Joe Biden administration has already implemented 69 major regulations in his first year compared to 52 during Obama’s and only 22 during Donald Trump’s.

So here we are again, and it’s going to be painful for millions of Americans. What’s equally painful is that the solutions are right in front of us. Political analyst Adam Mill offers some commonsense reforms to turn this around: “Even communist countries have resorted to my suggested reforms when markets smash their utopian plans. But no communist was ever as dedicated to economic suicide as the current class of idiots who rule us.”

Until there’s a power shift on Capitol Hill and in the White House, this will likely get worse. And that’s another reason to be hopeful. If the Democrats are met with a red wave this fall, then maybe — just maybe — a new class of leaders will learn once and for all that government regulation is the problem, not the solution.

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