Why government regulations cost jobs

Last updated on February 20th, 2018  

Each time a government passes a regulation it increases the “cost of doing business”. This means it costs more to produce a product or more to offer a service.

This also means it that it costs more to do business in countries with many regulations than it does to do the same business in a country with fewer regulations.

So the companies that can move do move to countries with lower regulations.

There are in fact three major pillars that cause jobs to flee the US:

1) lower standard of living (cheaper labor)
2) regulations
3) oppressive governments

That there is someone in the world that is willing to do the same work for less is hard to argue against and does not create a question of unfairness. In other words, that someone may be willing to work for less does not create an unfair situation.

Items 2 and 3, Regulations and oppressive governments, are basically the same thing.

You can think of oppressive government as extreme regulations.

However, people sometimes think of regulations as a good thing such as in safety regulations.

The problem comes about when your government creates regulations for you and your employer while exempting foreign employers from the same regulations.

This behavior is rampant and costs you and your fellow citizens jobs.

Creating regulations that send jobs out of the country is also part of the corruption of our officials. Often our official’s spouses or other family members work for the very foreign entities that are benefiting from the regulations that are forcing jobs abroad.

This particular problem is pretty easy to fix.

To sell into the US foreign companies must be required to meet the same regulations as domestic companies.

This would eliminate the corruption within the government and level the playing field for domestic and foreign workers while making everyone safer. The purported benefit of regulations is invariably to make the workers safer or to improve the environment.

A minimum wage is a regulation and a good example of driving jobs abroad.

If your government mandates a $10/hour living wage and a company could pay $2/hour in some other country for the same labor, where do you think the company will go?

In other words, the $10/hour minimum wage drives jobs to countries with lower wages.

Some will tell you that all this irrelevant as the unemployment rate in
the US is low. The unemployment rate may be low, but does this number have anything to do with the number of unemployed people?

You may be surprised to learn that the unemployment rate does not count all the unemployed people. It only counts those who have been unemployed for the past 52 weeks. After 52 weeks of unemployment you are no longer counted as unemployed. Is this not insane? It is so insane that most people have trouble believing it.

If a government is going to impose regulations it must do so on a level playing field.  That is the regulations must apply to all participants.  If it does not the jobs will leave for other countries.

Now I happen to believe that the level playing field should be created by minimizing regulations rather than expanded them.  However, the key  is that those regulation that are going to be created must apply equally to all.

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