The Long Road to Regulatory Reform
The governors of Nebraska, Missouri and Wisconsin recently announced new regulatory reform initiatives, adding three more states to a growing list of governments prioritizing red tape reduction. While these are necessary actions, there is still much more to be done at every level of government.
Perhaps the highest-profile efforts came swiftly after President Donald Trump took office. These federal regulatory reforms – required of executive branch agencies by executive order – include the “one-in, two-out” regulatory reduction plan; the placement of expert committees inside each agency to identify ineffective or overly burdensome rules; and a plan to reconsider whether regulatory programs or even agencies themselves have outlived their usefulness.
Broad regulatory reform could have a significant, positive impact on the economy. Over time, regulations build up and impose significant costs on society. As these regulations accumulate, they slow economic growth, resulting in higher unemployment, higher prices, lower wages and lighter wallets for Americans.
Over time, regulatory agencies have incentives to create more rules. There is no formal culling process to modify or eliminate obsolete, duplicative, ineffective or overly burdensome regulations. In 1950, the Code of Federal Regulations contained 9,745 pages spread over 47 volumes. By 2016, there were 180,000 pages in more than 200 volumes.
The fact that regulators create regulations should surprise no one. It’s like the Geico commercials: “Regulators regulate – it’s what they do.” But the perpetual accumulation of regulation represents a growing but hidden tax that hinders innovation and entrepreneurship, and disproportionately harms low- and middle-income households.