Not All Regulations Are Created Equal

Pundits often credit the Trump administration’s light-handed regulatory approach (along with lower taxes) for the economy’s renewed vitality over the last two years. While there is general agreement that too much regulation can impede economic growth and well-being, how much regulation is too much is subject to more debate. There are at least three reasons for this. First, we don’t have a good measure of regulatory costs, because there’s no cost accounting comparable to the fiscal budget.  Second, regulations impose costs in order to achieve social goals, so the net effects likely matter for economic growth. Third, regulations can take different forms, from command-and-control (e.g., requirements to install particular technologies) to market-based incentives (such as marketable permits), to information disclosure (e.g., food nutrition labeling). Experts have long recognized that the form a regulation takes matters; it can affect outcomes and costs, yet no studies have differentiated the economic effects of different regulatory instruments in a systematic way.

Click here to read more of this Forbes article by Susan Dudley.