​Deregulation's effect on the economy – real or imagined?

By Brent D. Gardner, CLU, ChFC

Life Solutions, Inc.


Regulation is most certainly affecting our economy, but I argue that the effect of regulation is now more negative to our productivity than the absence of regulation ever was.

I hear pundits, collectivists, statists and failed planners, repeat the same mantras over and over, and like most lies, if you repeat them often enough, the parrots and audience alike will believe the lie. For example: deregulation.

If you ask a collectivist or statist why our economy is a mess, they will often cite deregulation as one of the primary culprits. Let's examine some facts: The U.S. Code in 1926 was contained in one volume. For reference, it is about the size of a really thick Bible or dictionary. You can see it here.

The U.S. Code in 2006 required 73 inches of shelf space (not including supplements). That's over six feet thick. This does not include the Code of Federal Regulations, which is another 305 inches. That's over 25 feet thick.

Just using this one example, it is clear we have more regulations now than ever before. I don't think one can argue this problem is going to go away either, short of a serious change in our government.

Add to this the laws and regulations of 50 states, the District of Columbia, 3,077 counties and 19,355 incorporated municipalities. We have more regulation than we can imagine.

For those of us who are, or have been, subject to so-called self-regulatory organizations (an SRO is an oxymoron), we have hundreds of pages of rules that have the effect of law, even though no elected body drafted them. I meet with business owners every day. I've yet to meet with one who said we need more regulations, more rules and more laws.

The people in certain media outlets that make those suggestions, I submit, are very bad at math, and singularly lack critical thinking skills. An accurate one word adjective to describe them is this: ignorant.

When I entered the insurance business, a medically underwritten life insurance and disability income insurance application was two pages. Annuity applications were often only one page.

Today, a life insurance application can be upwards of 30 pages, and I've seen annuity applications that were in double digits. Add to the confetti the ever growing sheaf of paper supplements and addendums required for each piece of business. Missing paperwork has become the rule, rather than the exception. Illustrations used to be a few pages, now they approach the length of a magazine.

Insurance applications “not in good order” run as high as 50 percent in some home offices. I blame excessive regulations and laws for a lot of this. The cost for these incomplete applications is not insignificant to the home offices, not insignificant to the margins of marketing organizations and not insignificant to the earned income of the front line agents out in the field.

Regulation is most certainly affecting our economy, but I argue that the effect of regulation is now more negative to our productivity than the absence of regulation ever was. The need for deregulation is now manifest. As you can see here, I am not alone in my thinking.

If one actually thinks about these issues, they cannot conclude that we have this excess of paper that leads to underwhelming paid case ratios because of deregulation. To the contrary, regulation is the cause of many observable problems that have measurable effects on profits.

I argue that our current level of regulation is excessive, bordering on the extreme, even absurd. Can you name specific regulations and how they have hurt your bottom line? Please share in the comments below.

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