Blue Over Red Tape

Quick post.  The Economist cover story this week calls out an important inconvenience in American public policy.

Over-regulated America

The home of laissez-faire is being suffocated by excessive and badly written regulation

…But red tape in America is no laughing matter. The problem is not the rules that are self-evidently absurd. It is the ones that sound reasonable on their own but impose a huge burden collectively. America is meant to be the home of laissez-faire. Unlike Europeans, whose lives have long been circumscribed by meddling governments and diktats from Brussels, Americans are supposed to be free to choose, for better or for worse. Yet for some time America has been straying from this ideal….

Two forces make American laws too complex. One is hubris. Many lawmakers seem to believe that they can lay down rules to govern every eventuality… Far from preventing abuses, complexity creates loopholes that the shrewd can abuse with impunity.

The other force that makes American laws complex is lobbying. The government’s drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors…

America needs a smarter approach to regulation. First, all important rules should be subjected to cost-benefit analysis by an independent watchdog. The results should be made public before the rule is enacted. All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.

More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.

I often wonder why I got myself into public policy.  Most of my friends pursued honest, fulfilling careers in the private sector.  Unfortunately, I felt drawn to tilting at windmills in land use planning and economic development.  I feel passionately about building really great communities.  Yet I also believe passionately that the best government governs lightly—good fences make good neighbors, but we build the fences too rigid and we build ourselves our own private prisons.

It’s a fine line between fencing out and fencing in.

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