Cutting the regulatory deadwood
It was Milton Friedman who told us that nothing is so permanent as a temporary government programme. The same can be said of government regulations. They accumulate as new ones are added and the old ones stay in place. This is often true even if the old ones have been rendered obsolete by technological developments or changes in practices.
Regulation is a cost, even when it is a worthwhile one. It makes production more expensive and often reflects itself in increased prices. In many cases the tight regulations imposed on one country can make its goods unable to compete internationally against those from countries with more sympathetic regulatory regimes.
As the UK government seeks to take full advantage of its new status outside the EU and not having to accept regulations imposed from afar, there are several approaches it might take to hack away at the accumulated deadwood built up over the years that now burdens its businesses.
One involves the use of “sunset” clauses, under which when a new regulation is introduced, a termination date is set upon it so that it will expire on that date unless it is renewed. Even if it is renewed, the process of doing so brings it up into question, and provides the opportunity for evaluating its effects, and for introducing possible modifications that will lighten its load without losing any of its advantages.
A second way to reduce the regulatory overhang is to institute a policy of “one in, two out,” which specifies that a new regulation can only be introduced if two old ones are deleted. This motivates those seeking a new regulation to lobby for the repeal of old ones no longer seen to be as necessary as they once were. In pursuing this strategy, it is important to guard against the possibility of repealing only minor regulations of little consequence to make way for ones that have serious impact.
A third way was pioneered by Dan Quayle, who served as Vice-President under George H Bush from 1989 to 1993. He headed a Council on Competitiveness established by President Bush in 1989 to review regulations issued by Federal agencies, with the aim of ensuring that they did not unduly harm the competitiveness of American business. The Vice-President’s Council attracted the ire of Federal agencies and would-be lawmakers in Congress. It was described as “the roach motel of Congressional bills” after a popular pest control product of the time that lured cockroaches into a cardboard box and poisoned them. It was called a roach motel, and the TV ads featured the voice of Mohammed Ali saying, “they check in but they don’t check out.” It happened to regulations and bills that were deemed anti-competitive by the Council.
All three of these approaches could play a key role in a post-Brexit deregulatory strategy. Certainly a UK version of the Council on Competitiveness could provide a useful tool to explore and debate the anti-competitive aspects not only of proposed new regulations, but of existing ones as well. It might protect us from ill-thought-out new proposals, as well as clearing out the deadwood of past ones.