Think tank: Growing US regulations chill business

07 March 2014 10:51 Source:ICIS Chemical Business

The snowballing effect of ever-increasing federal regulations chills new business development, retards the economy by up to 3% each year and makes the US less competitive in the world, according to a new study by the Mercatus Center at George Mason University in Fairfax, Virginia.

 

Can the regulatory Frankenstein be stopped?

Copyright: Rex Features

The study said that the number of restrictive federal regulations has grown by 20% between 1997 and 2010, climbing to more than 1m for an average of 12,000 new prohibitions every year.

“This stock of federal regulations in the US is enormous and growing,” said study authors Patrick McLaughlin and Richard Williams. “In 2012, the Code of Federal Regulations comprised over 170,000 pages of dense legal text.”

In their survey of other regulatory impact studies, they said that between 1949 and 2005, “the accumulation of federal regulations slowed economic growth by an average of 2% per year”.

These regressive, crippling effects of cumulative regulatory overload have been widely recognised, lamented and challenged by successive presidents and busloads of members of Congress – but without real reform, revision or change.

As in the classic tale of mice seeking to warn of the cat’s approach, no one has been able to find a way to put a bell around the feline’s neck.

Almost everyone recognises and denounces the problem and its costs, but the promises of successive White House administrations and the best of congressional initiatives have failed to tame the regulatory tiger.

McLaughlin and Williams are calling for Congress to pass a Regulatory Review Act that would establish an independent Regulatory Review Commission, composed of three commissioners nominated separately by House and Senate leaders with a seventh commissioner and chairman named by the president.

“This independent commission would be tasked with assessing the effectiveness of existing regulations and recommending changes to or repeals of regulations to Congress” which then could either approve or reject the changes as a whole without amendments or other special-interest tinkering.

However, as sincere and scholarly as their study is, it appears to overlook a fatal flaw. Their plan requires that members of Congress step up to rein-in the regulatory monster that they, their predecessors, presidents and legions of interest groups willingly have assembled over decades. It’s like asking Dr Frankenstein to kill his creature. Good luck with that.

By Joe Kamalick