With the July 21 anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act now upon us, it’s a good time to reflect on how this type of Byzantine legislation spawns a convoluted network of tangled regulations.
When recently unveiling his Financial CHOICE Act, House Financial Services Committee Chairman Jeb Hensarling highlighted a key principle behind his efforts to combat this overgrowth: “Simplicity must replace complexity.” The chairman’s focus on regulatory complexity is appropriate.
In many ways, regulations are like a computer’s operating system, establishing processes and parameters within which programs must operate. But anyone who has undergone the experience of “upgrading” an operating system only to find her computer sluggish and unresponsive knows that complexity is not always a desirable feature. Steven Teles, a political scientist with Johns Hopkins, made a similar comparison when he famously referred to American policy as a “kludgeocracy,” an ever-expanding series of “inelegant patch(es)” meant to solve short-term problems, but which ultimately hinder system performance.
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