A Really Bad Legacy, and How to Reverse It

President Obama and his executive agencies set a new record for the number of pages of new regulations in one day: 527 pages (in a single day!).  For the year the number of pages so far is also a record, at 81,640 pages.  It is also worth noting that seven of the the top eight spots for number of pages of new regulations are held by the Obama administration:  2010, 20111, 2012, 2013, 2014, 2015, 2016.  This data comes from the Competitive Enterprise Institute, which collects such supposedly arcane data (see https://cei.org/blog/obamas-2016-federal-register-just-topped-highest-page-count-all-time).  But in this case it is just ominous.  It seems as most have said that the American people as well as businesses are being inundated with regulations that permeate every aspect of their daily individual lives.  But why does all this mountain of regulation harm us?  Some would argue that we need all this to protect us from the “big bad business” (or corporation), or to protect us from each other, or just to protect us from ourselves by reducing risk (seemingly to zero in some visions).  But I would disagree, at least with respect to most regulations now being issued or that have been issued for about the last 20-25 years, though both party administrations.

First, regulations reduce freedom.  Now to be sure, freedom is not our highest value, but neither is political, economic or legal bondage.  If the freedom we lose is offset by a clearly higher value that is of benefit to all society and does not violate a further, higher value, and the costs do not outweigh its benefits (in some cases agencies have admitted there are no benefits), then we might tolerate those regulations, always if they are well-conceived and also allow maximal alternative ways to achieve the desired result.  But all too often regulations cost much more than they are worth and reduce freedom unacceptably.

Second, regulations cost a great deal of money, particularly those that have been issued in recent years.  That cost is, as I said, not offset in too many cases, by real benefits.  That outcome obviously stifles economic activity that could have produced great benefit for millions and raised many from lower incomes to higher or simply reduced the cost of goods and services they demand.

Third, regulations can be immoral when they become nothing more than crony capitalism, designed to keep out competition in the market, and thus raise prices for goods and services.  These kinds of regulations are simply unacceptable under any conditions.  They favor one group over another politically and reduce the real well-being of others.

Fourth, regulations keep a huge “beast,” the Federal bureaucracy, in business unnecessarily.  If, as Public Choice economists have indicated, the incentives of bureaus is to maximize their budgets, creating opportunities for rampant self-interest to make itself manifest—higher salaries, large bonuses, nicer and bigger offices or office buildings, great pensions, no worry about firing, and on we go.  Witness the Veterans Administration scandal which persists despite almost everyone’s criticism—except the VA officials.  Congress can, but often will not, deprive these agencies of their nourishment.

Sixth, and last, regulations discourage inventiveness and creativity because people simply don’t have any certainty as to what is coming next.

The answer is simple as it is difficult.  Go through all Federal regulations aggressively and in minute detail and eliminate all that are not absolutely necessary.  That takes a president willing to take the political risk (which is large indeed), a Congress also willing to cooperate with an aggressive president by cutting funding and specifying clearly what agencies can and cannot do, when enabling legislation is passed, and a Federal court system that understands the rule of law, non-delegation, due process and, above all, the Constitution, properly.  Moreover, the president should hire a separate “corps” of attorneys and economists whose sole task is, night and day, to comb through the Federal Register looking for bad regulations.  These should be isolated and aggressively publicized and then acted on by the president and Congress, as needed.  Once again, I seem to be hopelessly idealistic, but if we do not begin a serious conversation now, things will only get worse.

For some important works, see:

Philip Hanburger, Is Administrative Law Unlawful?  Harvard University Press, 2014.

Randy T. Simmons and Gordon Tullock, Beyond Politics: The Roots of Government Failure.  The Independent Institiute, 2011.

Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth of American Government.  The Independent Institute, 2013.

William Niskanen, Bureaucracy and Public Economics.  Edward Elgar, 1996.

4 thoughts on “A Really Bad Legacy, and How to Reverse It”

  1. I agree with everything that you said regulation can be. Too bad sometimes being rational these days can be idealistic because of how much individuals value themselves more than the public. Laws are meant to be a guideline and to show how evil we are but when there are excessive amounts of law, then they will be broken because we are made sinful.

  2. I did not realize how many regulations president Obama put into place especially in one day that is crazy! I agree that we need to be careful as a nation because the more regulations we put into place we begin to lose our freedom. Regulations do cost a lot of money and we need to be careful in how we are spending money as a nation.

  3. Loved this post! Mankiw would be proud with the strong reference to his 6th principle of economics: Markets are usually a good way to organize economic activity. Also, I appreciate the use of Dr. Haymond’s second rule of economics: Incentives matter.

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