A Solution to Regulatory Accumulation

2/25/14
 
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from NCPA,
2/25/14:

The 2012 Code of Federal Regulations, which contains all federal regulations currently in operation, was a whopping 170,000 pages. Regulations only continue to build up over the years, with new rules placed atop new rules as events suggest the need for more regulations. Obsolete and poorly performing regulations should be eliminated, say Patrick A. McLaughlin, a senior research fellow, and Richard Williams, director of policy research, at the Mercatus Center.

All of this accumulation negatively impacts businesses and industry, which are forced to comply with an ever-growing web of regulations that, while they may appear to make sense at the time of enactment, can prove not to be cost-effective.

– One study found that the accumulation of regulations between 1949 and 2005 slowed down economic growth by an average 2 percent per year.
– These regulations also impact investment. When the United States and the United Kingdom liberalized markets in the late 1970s and early 1980s, investment as a share of capital stock grew from 3.7 percent in 1975 to 8.15 percent in 1998. But countries that did not implement deregulatory reforms saw investment rates decrease by 5 percentage points.

Attempts to deal with the issue have largely been done through executive order and have not been able to achieve the type of large-scale reform that could be accomplished by an evidence-based, analytical process. Models do exist, however, that could be used to deal with this issue.

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