The Role of Efficient Regulation in Building Vibrant Economies
State lawmakers and economic-development managers are always looking for opportunities to improve the regulatory climate for businesses. But too often, proposed solutions set up a false choice between growing the economy and adequately protecting public health, the environment and consumers. The result is an unproductive debate between eliminating as many rules as possible or preserving each one at all costs without regard for changing circumstances.
Advocates for less regulation sometimes ignore the many important reasons that rules are put in place. Regulatory systems that function efficiently, with strong management oversight, help to minimize negative impacts while providing fair “rules of the game,” giving businesses less to fear from competitors who might exploit dysfunctional regulatory systems to cut their costs unfairly.
But governments can undermine opportunities for investment and job creation when businesses are forced to spend too much time or money navigating inefficient or unnecessary regulatory processes, or when new projects are delayed or canceled because companies don’t understand how to comply with the rules — or can’t afford to.
As recent research by The Pew Charitable Trusts illustrates, improvements in how regulatory agencies interact with businesses can make launching a company or bringing an innovative product to market quicker and easier. And by administering regulations more effectively and partnering with the private sector, states can lower compliance costs for businesses while still achieving important goals such as protecting the environment and public health.
While states’ attempts to improve how they regulate business are still in the early stages, policymakers now have a wide range of inventive and successful ideas to emulate. In 2017, Colorado agencies reported saving businesses 2.3 million hours, largely by eliminating unnecessary administrative tasks and making the companies’ dealings with the state more user-friendly. For example, the state reached out to large employers of pharmacists and through their insights learned about cumbersome licensing processes that were causing delays in hiring for this vital workforce. Ultimately, the state was able to reduce the time to get a pharmacist license from 114 days to 18. “It’s crazy,” former Colorado Gov. John Hickenlooper said at a Pew-hosted event last November, referring to the hurdles that businesses had faced. “That’s just a lot of time and a lot of efficiency that we didn’t know was being wasted out there.”