Let's take three unrelated regulations. Factories can't pollute the environment, vehicles have to undergo crash testing, and buildings above a certain height are not allowed in a particular area.

Now we look at a local newspaper. It has to buy newsprint from a factory, the factory's costs have gone up due to environmental regulations, so the price of newsprint goes up. Then it has to deliver the print edition to readers, the safety standards cause vehicles to be more expensive, which raises its delivery costs. Then its rent is higher because the zoning regulation prevents the construction of more commercial rental properties.

The local newspaper is struggling to survive as it is. It can survive any two of these regulations but the combination of all three puts it out of business. (And having too many newspapers go out of business may put the newsprint factory out of business etc.)

So we need to prioritize. Environmental regulations and vehicle safety are pretty important, so we should have those and not the zoning regulations.

> There are plenty of cases where regulation benefits all of the involved parties.

You're talking about the consequences of the regulation, not the compliance costs. Even if everyone is better off -- even if the regulation is worth having -- it still required everyone to spend some amount of resources on lawyers and safety equipment and so on. You can only do that finitely many times before you exhaust your available resources.

Which means the regulations we have should be only the ones that yield major returns.