According the U.S. Small Business Administration (a government organization), the cost of our current regulatory apparatus in 2008 was an unreal $1.75 trillion dollars! The United States’ GDP is $14.12 trillion, so assuming this somewhat speculative figure is correct, regulatory costs make up 12.4% of the American economy. And 2008 was before Dodd-Frank and all of the other regulations the Obama administration has added. Unreal.

The Executive Summary reads:

The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008. Had every U.S. household paid an equal share of the federal regulatory burden, each would have owed $15,586 in 2008. By comparison, the federal regulatory burden exceeds by 50 percent private spending on health care, which equaled $10,500 per household in 2008. While all citizens and businesses pay some portion of these costs, the distribution of the burden of regulations is quite uneven. The portion of regulatory costs that falls initially on businesses was $8,086 per employee in 2008. Small businesses, defined as firms employing fewer than 20 employees, bear the largest burden of federal regulations. As of 2008, small businesses face an annual regulatory cost of $10,585 per employee, which is 36 percent higher than the regulatory cost facing large firms (defined as firms with 500 or more employees).

Notice how small businesses pay 36% more than big companies to cut through all the red tape. This is called “overhead smash” and has been quite common and pushed for by big business for a long time (see here, here, here and here). Contrary to what you’ve all heard in school, big business likes regulation. Free markets and entrepreneurs don’t.

And by the way, Paul Krugman, I think, just maybe, we have enough regulation.