Regulatory Reset In Idaho
My friend and former student Paul Gerner suggested to me a few years ago that the federal government have a “regulatory reset.” The idea is that the government eliminates all regulations and then brings back the one it decides it wants. Presumably we would end up with substantially fewer regulations.
I loved the idea but it boggled my mind. How would that work? What would happen to certain industries and lots of people who depend on some degree of certainty in making their plans? And, of course, aside from the issue of how it would work, neither Paul nor I thought the federal government would ever do it.
I still think that. But James Broughel, a senior research fellow with the Mercatus Center, points out that that’s exactly what Idaho’s state government has just done. He writes:
Something rather remarkable just happened in Idaho. The state legislature opted to—in essence—repeal the entire state regulatory code. The cause may have been dysfunction across legislative chambers, but the result is serendipitous. A new governor is presented with an unprecedented opportunity to repeal an outdated and burdensome regulatory code and replace it with a more streamlined and sensible set of rules. Other states should be paying close attention.
Instead, the legislature wrapped up an acrimonious session in April without passing a rule-reauthorization bill. As a result, come July 1, some 8,200 pages of regulations containing 736 chapters of state rules will expire. Any rules the governor opts to keep will have to be implemented as emergency regulations, and the legislature will consider them anew when it returns next January.
Get out the popcorn. This will be interesting.
May 12 2019 at 7:09am
Is it weird the first place my mind went is “so many natural experiments! Hopefully the data we get will be good!”
May 12 2019 at 9:02am
Weird? Yes. But in this way: It’s a sure sign that you’ve become an economist.
May 12 2019 at 1:23pm
Aren’t we likely to see an explosion of the Special Interest Effect?
This may be the mother of all make-work-for-lobbyists actions.
And it will likely be aggravated by the sheer volume & range of issues the dis-interested voters should get interested in & active about.
Maybe such “swamping the (rationally ignorant) voters” will reduce the necessity for lobbyists to resort to “suitcases of cash”!
We can hope that, as the scale of the problem becomes apparent, the legislature will pass a rules-reauthorization bill and impose it retroactively. Retroactive law is a really bad idea (and thus generally unconstitutional). So the entertainment may be in betting on which poison Idaho chooses to take.
May 12 2019 at 1:44pm
Could be. That’s one reason it will be interesting to watch.
May 12 2019 at 5:08pm
Why are you assuming a problem?
May 12 2019 at 4:14pm
There’s precedent for this repeal-and-start-from-scratch kind of thing. Examples coming to mind: Hammurabi, Solon, Justinian, Napoleon. Likely if I did a search I could come up with more. A successful counterexample — the young United States of America held on to British common law and existing state/colony ordinances when it started up (and to the Code Napoleon even today in Louisiana if memory serves).
Note that posterity and historians today may have mixed or strongly adverse reactions to other actions by these past rulers, but the legal recodifications seem to be generally praised.
May 12 2019 at 6:23pm
I wonder if this will apply to occupational licensing and zoning.
It’s an interesting experiment but I’d bet a better alternative is to all all regulations on a calendar for revaluation using cost benefit analysis.
May 14 2019 at 8:57pm
Zoning is something City’s do, not States. Good questions on Occupational Licensing, though.
May 13 2019 at 4:43pm
What specifically is meant by regulations and what is the scope? Speed limits, STOP signs, Weights and measures. Food outlets. Signage. Zoning.
Where does it stop?
May 13 2019 at 11:29pm
All good questions. I don’t know.
May 14 2019 at 9:00pm
“Speed limits, STOP signs”
– These are probably criminal or civil code issues, not regulatory code issues.
“Weights and measures Food outlets.”
– Not sure.
Local development ordinance, not state regulatory code.
May 14 2019 at 1:45am
I predict that most of the regulations get restored.
May 14 2019 at 8:52am
I do too. But “most” can mean 60 percent, which would imply a HUGE change. I predict that 90 percent or more will be restored. But even that could be a major change, depending on the content of the 10 percent or less than 10 percent that are dropped.
May 14 2019 at 2:41pm
Maybe. But what assumptions would we need to adopt to support an assumption that this change in law would produce a “major change” in effect? We’d have to assume that a rule was really burdensome, yet not sufficiently burdensome as to marshal sufficient political pressure to modify it, yet also not sufficiently valuable to the agency as to justify restoring it. I could imagine some rules might fall into that narrow zone, but not many.
The Obama Administration adopted CO2 regulations for utilities. The Trump Administration canceled those rules. And as a consequence, utilities have returned to building coal plants–not. To the contrary, utilities now voluntarily announce that they’re going to swear of CO2. I can’t tell that cancelling the Obama regulations has had any effect at all.
So let me offer a bolder prediction: I predict that the legislature or agencies will seek to restore rules wholesale–because this policy will be easier than exercising judgment about which rules to restore, which to reject, and which to modify in some fashion. It’s just the path of least resistance. Only when some constituency organizes to oppose a rule will the agency scrutinize the rule. And I don’t expect that will happen often, because if such an organized constituency existed, the agency would likely hare repealed the rule already.
May 20 2019 at 8:29pm
Thank you to Dr. Henderson for remembering our conversation years ago.
At the start of the Trump administration, I tweeted this concept to Steve Moore hoping it might gain traction. At the time, my context was 70,000 new pages added to the code of federal regulations in the previous year. Much the same number of pages as in each of the 20 previous years. No current or prospective business owner can possibly know this massive regulatory framework, Just as they cannot decipher the tax code.Estimate of the cost of regulation run well over $70 billion per year. Understanding the concept of the seen and the unseen, I believe this estimate to be low.
My belief is that by and large the federal bureaucracy as become a self-serving mechanism. As I suggested to Steve Moore, let each agency keeps its top five or so regulations that it believed to be matters of life and death. With each agency having only say 500 pages of regulations to enforce think of the massive reduction that would be possible in total federal bureaucrats in the system. Talk about a way to cut the federal budget and increase innovation and overall prosperity!
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