There’s always been a hue and cry from regulated industries that the regulations under which they “labor” are burdensome and “wasteful,” but often that “waste” is only from the point of view of the industry involved. While an electric utility may claim that a regulation that restricts its emissions is expensive and “wasteful,” that regulation is designed to improve the health and environment, which reduces healthcare and environmental remediation costs for large numbers of people, far larger than the number of utility employees and shareholders.
Unhappily, however, there are also the regulations that create costs and burdens without commensurate societal benefits, such as the 2015 regulation by the Department of Energy mandated that dishwashers must use no more than 3.1 gallons of water per load. The problem? So far manufacturers can’t figure out how to get the dishes clean with so little water, but they still have to produce machines that use no more than the sacred 3.1 gallons.
Then there’s another kind of waste – the government rules or regulations that proclaim benefits, but effectively add problems or costs for consumers and/or small businesses, while benefiting only a comparative handful of companies or individuals.
One of the most expensive and with one of the most wide-spread effects is the current regulatory regime at the FDA that allows pharmaceutical firms to make minor changes to drugs whose patent protection is expiring and thus gain more years to gouge the public and also imposes great barriers to those companies who could produce and sell generic drugs less expensively. For example, when chlorofluorocarbons were required to be removed as propellants for asthma inhalers and a new propellant was added, the manufacturers gained more years of selling inhalers at higher prices to the point that a rescue inhaler – one that can literally save an asthma sufferer from dying – doubled in price. Then, when that protection lapsed, interestingly enough, since the U.S. has no maximum price regulations, just this year, the price of the most-widely used asthma medication, albuterol sulfate, jumped from $11 to $434 per inhaler, a 4,000 percent price increase, because getting FDA approval, even for a generic, is so burdensome that most firms won’t try, at least in the U.S., while that very same inhaler, as well as a range of generics, costs less than $30 in Great Britain or Canada.
Buried in the 3,000 plus pages of the Affordable Care Act is a provision that requires, as of December 2016, that all brewers must include a detailed calorie count on every type of beer they produce. Failure to comply with the new regulations means craft brewers will not be able to sell their beer in any restaurant chain with over 20 locations. Because this is a major market for selling beer, it hamstrings smaller craft brewers if they do not comply. The Cato Institute estimates the calorie labeling requirements will cost a business as much as $77,000 to implement. For larger beer companies, this is a drop in the bucket, but for small, local craft brewers it represents a substantial cost that they must pay. As a result, it creates a significant disadvantage compared to larger beer companies who can better absorb the regulatory cost… as if serious beer connoisseurs don’t know the specifications anyway.
Among the regulations that cost U.S. consumers a great deal, for the benefit of a few, are those dealing with sugar, the price of which in the U.S. price is effectively set by a combination of federal requirements that limit domestic production of cane and beet sugar, restrict foreign imports, place a floor under growers’ prices and require the government to buy crop surpluses.
Sugar beet and sugarcane farms account for about one-fifth of 1 percent of U.S. farms. Out of 2.2 million farms in the United States, there are only 3,913 sugar beet farms and 666 sugarcane farms, but these growers account for 33% of crop industries’ total campaign donations, and 40 percent of crop industries’ total lobbying expenditures. Since 2000, Americans have paid an average of 79 percent more for raw sugar and 87 percent more for refined sugar compared to the average world price, a total of more than a billion extra dollars annually for sugar in order to subsidize less than five thousand U.S. sugar growers.
Then there are the successful waste reduction programs that Congress junks, such as the Recovery Audit Contractor Act, first implemented in 2005, which collected more than $3.5 billion in 2013 alone by collecting overpayments to healthcare providers. Interestingly enough, the program was suspended by Congress in 2013 at the insistence of hospitals, with the result that since October 2013, about $1 billion per quarter in erroneous overpayments is not being recovered and collected.
And while no one likes the IRS, Congress has made it impossible for the agency to collect unpaid taxes and to audit high income individuals by continuing to cut the agency’s budget, so that audits are at an all-time low, and tax avoidance continues to rise, while at the same time politicians are attacking the IRS for such shortcomings as its inaccurate death records that show millions of Americans as dead who are still alive and 6.5 million people listed as age 112 and older.
So, when people talk about waste, it’s certainly not all about federal government excesses. Sometimes it is, but many times it’s something else.