The Regulatory State: A Modest Reform Proposal

The Mercatus Center has just published a troubling snapshot analysis of the accumulation of regulatory mandates and restrictions since the Carter administration. Other analyses confirm the picture of a burgeoning regulatory state. My own favorite is the Competitive Enterprise Institute’s annual, invaluable !0,000 Commandments Report (link no longer available). But it’s the same picture wherever you look:

  • Regardless of the metric, the regulatory state has grown at a breathtaking rate, for decades.
  • The regulatory state has imposed a heavy toll on the economy. CEI estimates the cost of the “hidden (regulatory) tax” at close to $15,000 for every man, woman, and child in America. Yes, you can quarrel with the methodology. And yes, maybe all that money buys something that’s worth having. But the crucial fact is that regulatory impositions aren’t subject to any kind of budget constraint. So long as a regulation looks like a neat idea and an agency can conjure up some net benefit, it’s all systems go. It’s bound to be the case that there’s altogether too much of this.
  • This growth of the regulatory state has been a bipartisan affair. Control of the White House does not seem to matter. Control of Congress matters less and less.

To borrow Vladimir Lenin’s excellent question: What is to be done?

Libertarians, I take it, harbor hopes of reducing the size of this beast. Even some dyed-in-the-wool technocrats share that aspiration, up to a point. Under Professor Cass Sunstein’s capable leadership at the Office of Management and Budget, for example, the Obama administration implemented an executive order for the retrospective review of regulations (link no longer available), with an eye toward reducing unnecessary costs. OMB has claimed a few billion dollars in benefits. But I bet that a retrospective review of the retrospective review exercise would prove it to be largely pointless. Not totally, to be sure: to the extent that bureaucrats are busy reviewing old regulations, they can’t work on new ones. So there’s an opportunity benefit. But the costs are sunk as soon as products and processes have been designed to conform with official mandates. The big gains, if any are to be had, would come from arresting the adoption of new regulations.

What will fail is a technocratic, across-the-board exercise (better cost-benefit analysis, impact statements, incentive-based instead of command-and-control regulation, and the like). We’ve tried all that, and found it wanting. Rather, reducing the harvest of regulatory destruction would have to be program-specific and arrest big regulatory endeavors—big enough to catch public attention and to make a real difference in people’s lives.

The project would have to be explicitly political, even ideological, by connecting the anti-regulatory agenda to rule-of-law values: no more regulatory crusades without clear legislative authority. And it would have to be aggressively forward-looking—not by promising more “cost-effective” regulations but by yanking proposed regulations. In truth, agencies no longer care whether or not their regs will eventually be deemed lawful. Even proposed or merely threatened regulation will usually induce anticipatory compliance (and turn the “early adopters” into pro-regulatory constituencies). The demand is for a set of credible pre-commitments to not regulate.

Herewith a partial list, for any presidential aspirant:

  • On my watch, the FCC will not regulate the Internet under any Title II or any other provision of the Federal Communications Act. It’s a stupid idea, and we don’t have the authority.
  • There will be no “clean power” plan or regulation for greenhouse gas emissions. Stupid idea. No statutory authority. Good night.
  • We will not regulate fracking. There’s no reason to interfere with the only thing that’s gone right with the U.S. economy over the past decade, despite my predecessor’s best efforts. Also, my administration refuses to push our doubtful statutory authority on this point.

All this could and should be done without elaborate rulemaking, let alone legislation. I’m sure there are other No Más edicts that would restore a bit of lawful government and help to lift the regulatory cloud that hangs over the economy.

Any suggestions? Any takers?