I understand that lawmakers want to be perceived as doing something to fix our economic problems. So here is something lawmakers could do now to help the economy grow.
As you know, economists have studied the effects of regulation on economic growth for many years. Their main conclusion is that a heavier regulatory burden — particularly in product and labor markets — reduces growth and promotes informal markets. The implications of their work are clear: Regulatory reforms, especially those that liberalize entry, are very likely to spur investment and growth.
It would be easy to come up with a long list of regulations that need to be eliminated. But a list of individual regulations doesn’t focus attention on the underlying problem. Instead, we need a dramatic reform of the core laws that govern how we produce regulations. This is why we must reform the Administrative Procedure Act of 1946 (don’t fall asleep yet).
The APA focuses regulators on the process of rulemaking rather than the quality of agency decisionmaking. While presidents since Richard Nixon have tried to address this problem through executive orders establishing standards for regulatory analysis, the results have been weak at best. Agency rulemaking too often yields poor analysis and more regulations rather than effective problem-solving. It is visible in the 165,000 pages of rules in the Code of Federal Regulations, rules that are strangling U.S. businesses and making them less competitive. An important reform would be to make sure that before any agency produces a new regulation, the following questions are asked and answered:
1. Is there a large, systemic problem that is unlikely to resolve itself in the near future?
2. Is the federal government in the best position to solve this problem?
3. Does the regulation actually address the identified systemic problem?
4. What other solutions are available?
5. Would the proposed solution give rise to other significant problems?
6. Would the preferred solution solve the problem at a reasonable cost?
7. Will the agencies be able to recognize when the problem is actually solved and eliminate the regulation when it becomes obsolete?
These changes would shift the agencies’ current focus on checking the procedural box in order to push out new regulations, to asking how the identified problem can be solved and whether or not a new regulation is needed to achieve that solution.
What? You concede that there is such a concept as a "needed" regulation???
That said, I don't have a problem with your seven principles. I don't think.
Reply to this commentLinkReport AbuseNRO readers have long known that hyperregulation kills investment and therefore jobs and the economy. But now, it's even killing liberal policies. Hyperregulation made the Keynesian "stimulus" fail (assuming, as I don't, that Keynesian "stimulus" actually stimulates) because, as the President noted, there is no such thing as a shovel ready job (implicit: because of all the regulations that have to be complied with before anybody can actually use a shovel on a federal project). Now hyperregulation is derailing the green agenda (see, e.g., Solyndra). Now we'll get a chance to see who on the left really is "intellectually superior" and who is "stuck on stupid" as we see them come to grips with the fact that their beloved regulation is killing their own political agenda.
Reply to this commentLinkReport Abuseunderstanding the real problem before acting is 180 degrees out of synch with normal government operations ...
Reply to this commentLinkReport AbuseRegulating the regulators? They won't stand for it.
Reply to this commentLinkReport AbuseHow many committees, subcommittees, supercommittes, workgroups, taskforces and whatever group are there in the Congress? Much more than a hundred, as I understand it. Our Congress are working "full-time". So, why not take away the power of the agencies to make "laws," as that is what regulations really are, and requires that every regulation submitted be approved by one of those many tens of committees?
Our US Constitution is quite clear on what the Federal Government can or can't do. For one, it empowered Congress with creations of laws, not to pass it over to the Executive Branch, which is where all regulations ("laws") are coming from.
Finally, The US Constitution is also quite clear on what the Federal Government are barried from. If there is an issue that is beyond states' ability to handle, there is a process to empower the Federal Government, calling amendment! Healthcare a national issue? How about having those US officials submit an amendment and see if the States agree (with 27 states involved in Florida's Obamacare lawsuit and Virginia's case, I don't think so). Space exploration? We have been saying these projects are so expensive that only the national government can fund it. Let's see if these States agree with it! Education? Again, ask these States. In a nutshell, any new program that has been implemented since Wilson Administration (1910s) should be put on the table and see if the States consider them something that they are not capable of handling.
Reply to this commentLinkReport AbuseFirst, please note that I am strongly in favor of drastically reducing the regulatory reach of the federal government.
However, all regulatory agencies are continually confronted with small problems that need to be fixed. To fix them, they must issue small regulations. Consider, for example, if GMU or Google could only formulate new rules or procedures to cover "large, systemic problems."
Or, what if the Republicans sweep the field in 2012, and (contrary to their previous history) want to reduce the regulatory burden, in large ways and small. They could only do so by issuing new regulations. Your solution would forbid them from fixing small problems.
In addition, many regulations are issued to comply with new laws. Congress would have to restrict itself to cosmic laws or any new law would have to be considered a "large, systemic problem."
It is simply not workable to restrict agencies to issuing regulations to fix a "large, systemic problem."
Reply to this commentLinkReport AbuseMs. de Rugy:
Your seven questions appear to me to be a triumph of hope over experience.
To the current batch of zealous Federal idealogues, no cost is too high, no burden too onerous, no consequence too egregious when it comes to solving the "problems" of climate change, unequal distribution of wealth, corporate greed, high-carbon whatever, mortgage foreclosures, big pickup trucks and SUVs, etc., etc., ...
You see, the Federal government's definition of "problem" and my definition are not even in the same universe.
Reply to this commentLinkReport Abuse+1000
I would add that legislators and regulators are unlikely to allocate themselves LESS power over our lives, not when there's a society to be perfected and a "benevolent, moral" mechanism to achieve it. (Their incandescent genius!)
Government naturally attracts busy-bodies, zealots, and other narcissists who are convinced, *ab initio*, that the world can be AND OUGHT TO BE improved through their tender ministrations.
Why on EARTH would they constrain themselves with the guidelines you've suggested? There's absolutely nothing in it for them.
And yes, they'd see the country grind to a complete halt and revert to the stone age before giving up their righteous quests. The only way to stop them is to remove all of the levers of power from their hands and then nuke the levers from orbit, just to be sure.
Reply to this commentLinkReport AbuseNo, Veronique, because your stance still assumes big government. That will continue to stifle the economy and job creation. The right answer is to reform rule-making by forcing Congress to do its job in writing the laws, and to keep those laws solely within the purview of the granted powers and responsibilities of the US Constitution.
Anything else concedes the high ground. I guarantee that if I were a bureaucrat, I could *EASILY* write regulations that cause everyone at NRO to rend their garments and tear out their hair, and still meet every single one of your "principles". Because, if the power to regulate is there, it *will* be used - *and* justified.
To solve the problems? Pass a budget that *only* funds the obvious constitutional responsibilities and powers. Then pass separate legislation funding each of the others in turn - defunding totally those things that are obviously not within the purview of the federal government, and scaling back anything that is in the gray area in-between. Anything that is scaled back can be eliminated in the next budget. And, repeal all regulatory legislation affecting those defunded bureaus.
Reply to this commentLinkReport AbuseThe culture precedes the politics, and I think you've put your finger on the malignant logic that seems to pervade the culture: that everything "bad" needs to be against the law and everything "good" needs to be legally required.
Not only is it unworkable, it's not authorized by the constitution.
Tell me again why the federal government is in any position to know whether a telecom merger will be good/bod for consumers? Tell me again why its opinion on the matter should have any legal impact AT ALL?
Reply to this commentLinkReport AbuseTo even question whether a given regulation is warranted is to prove that you want rivers to burn and air to be full of pollution.
Reply to this commentLinkReport AbuseI'm still waiting for citations to any credible source that the current regulatory regime and proposed regs actually "kill jobs." I heard a report this evening that 80% of economists surveyed say there is no such correlation. So will this emphasis on rolling back regulations be another distraction from job creation as the debt debate was?
Reply to this commentLinkReport Abusehow about the EPA blocking a Wisconsin company from building draglines and coalmine trucks for the govt of India, because the coal, once burned, would contribute to CO2 growth? this killed off 30,000 man-years of good manufacturing jobs.
Reply to this commentLinkReport AbuseTwo more need to be added. Is the the regulation constitutional? and By what authority (Law) does the department have the authority to create the regulation?
Reply to this commentLinkReport AbuseAll regulations need to be review by Congress and only the most absolutely necessary ones upheld. Thousands of pages need to be eliminated. Many were written to favor one group or company over another... This should cease. Every one that cannot be cost/benefit justified needs to be ended, not based on feelings based on absolute benefit msut outweigh significantly the cost/burden of the regulation. It is a start to gettin excessive government interference out of our lives.
Reply to this commentLinkReport AbuseI think I won't take advice from a woman who suggested that not raising the debt ceiling would not cause us to default because the Government could just sell stuff in short order.
I am frankly amused such a person continues to publish articles and not hide in shame.
Reply to this commentLinkReport Abusegbar obviously did not understand that not raising the debt ceiling was not tantamount to default in the first place. We have about $2.2 trillion in annual revenue in the first place and debt service was less than $650 billion.
So, gbar should be hanging his head in shame for not even understanding the issue in the first place. But, he won't.
Reply to this commentLinkReport AbuseRegarding number 6, "solving the problem at a reasonable cost": I agree of course but it is important that the cost not only be considered in monetary terms but in terms of opportunity, as the 'least cost resolution' doctrine might have been a wild card for the FDIC in the past to do just about anything they please as long as the direct visible cost remains small. Other kind of costs are not necessarily easy to compute and might include regulatory uncertainty, arbitrariness, regulatory threat on contracts and property rights, etc.
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