Rethinking Regulation: Sobel and Dove Present New Ideas on Making Regulation Less Costly

Efficiency and government regulation are nearly antonyms.  Even advocates of expanding government admit that bureaucratic rules and guidelines often end in fiasco and confusion.  Strangely enough, until this summer, no scholars ever closely examined regulatory methods in every state to identify problems and to propose solutions.

George Mason University Mercatus Center scholars Russ Sobel (a former West Virginia University economics professor) and John Dove have done just that.

The entire report can be read here. 

Sobel and Dove examine first the origin of regulation.  Government enacts regulations with the idea that they will improve some aspect of society.  These most often interfere with the actions of businesses and individuals attempting to enjoy their property or conduct commerce.  By definition, according to the report, regulations are built-in inefficiencies.  They interfere with the conduct of individuals to promote some perceived common good.

Problems usually can and do pop up, even with those enacted with good intentions.  Every addition to law codes or government regulations causes unintended consequences.  The report cites an incident where the federal government planned to declare a certain species of bird protected.  When landowners in the bird's habitat got wind of it, they cut down all the trees out of fear that they would lose control over their property.  Cities with zoning ordinances that limit property owner rights to prune or remove nuisance trees almost certainly prevent the planting of new ones. 

Some regulations come from less than good intentions.  Although they are often pushed by small businesses who seek to limit the impact of national chains, zoning laws often do the opposite.  Big business can afford to "work the system."  They are also magnets to consumers wherever they build.  Major chains can better absorb the constantly shifting sands of community business patterns.  When market attention geographically shifts, big business can handle it while the zoning laws restrict the movement of small business.

In other words, big business loves regulations because they limit and sometimes kill off the competition.  Sobel and Dove refer to "Baptist and bootlegger" coalitions where apparently opposing special interests unite to promote commerce curbing regulation.

The researchers do not argue against all regulations on these grounds.  Instead, they seek to make them more effective by introducing the element of competition.  All regulations should come with a sunset provision.  Like elected officials themselves, a regulation should have to justify its presence and influence every so often.  Only the best and most reasonable regulations would survive in the long term, while the public could more easily chuck bad ones.  

State legislatures, county commissions, and city governments should study these ideas.  Good regulations do protect the welfare of communities.  Bad regulations, however, unnecessarily stymie commerce.  This leads to a loss of liberty, jobs, innovation, and, eventually, tax revenues.