Aeronautical Repair Station Association

Study Finds Regulations Make America Poorer

Christian A. KleinA recent study will come as no surprise to ARSA members: federal regulations are restricting U.S. economic growth.

The study published last year in the Journal of Economic Growth found that:

“Regulation’s overall effect on output’s growth rate is negative and substantial. Federal regulations added over the past fifty years have reduced real output growth by about two percentage points on average [annually] over the period 1949-2005.  That reduction in the growth rate has led to an accumulated reduction in GDP of about $38.8 trillion as of the end of 2011. That is, GDP at the end of 2011 would have been $53.9 trillion instead of $15.1 trillion if regulation had remained at its 1949 level.”

ARSA doesn’t object to sensible government regulation as long as the rules are well thought out, consistent with current economic realities and good business practice, and consistently applied. Regulation fails the government, industry, and the public when it’s duplicative and/or inconsistent, imposes unnecessary economic costs, and creates an uneven playing field.

The current regulatory state is fiscally unsustainable. The federal government is slashing agency budgets to reduce skyrocketing deficits; regulators have to do with less. That’s not a bad thing. Safety doesn’t begin and end with regulation. Simply put, for the aviation industry, safety is essential to business; it doesn’t depend on a federal bureaucrat looking over your shoulder.

Accelerating economic growth is key to working the nation out of its budget hole. To do that, government can invest in transportation infrastructure that enables goods and people to move more efficiently, reform the tax code to encourage investment, and, as this new study suggests, restructure the regulatory regime to encourage innovative and thriving businesses.

Read more about the new report at http://centerforregulatorysolutions.org/fact-of-the-day-january-24-2014/

 

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January 28th, 2014

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