Regulatory cost and burden are killing the American Dream. Federal and state governments can reduce inflation and unleash the American people with one simple shift in policy: they should adopt a presumption of innocence in their regulatory framework. Businesses and individuals could choose to either wait for permission from regulatory bodies, with the risks associated with not having approval, or choose to move forward to benefit their customers, employees, and shareholders. This simple shift would spark innovation and make the American Dream a reality again.
The presumption of innocence serves as a cornerstone of criminal justice, and applying this same principle to regulatory compliance would revolutionize how we approach business and institutional oversight. Currently, the regulatory framework assumes 100% of Americans are guilty until we can fill out enough paperwork to prove otherwise. This regulatory presumption of innocence would fundamentally shift the relationship between regulators and the regulated, creating a more dynamic and cooperative environment while maintaining protections.
In our current regulatory framework, we face a de facto presumption of guilt, required to continuously prove compliance through extensive documentation, pre-approvals, and defensive record-keeping. For example, when I worked in the medical manufacturing industry, we made a product that cost less than a dollar to manufacture, but by the time we complied with regulations, the company had to sell it for $18 to make a profit. If you want to know why healthcare costs are out of control, burdensome regulatory compliance is one of the reasons. The benefits to society, in this instance, are not in balance with the cost of compliance. The current framework also creates adversarial relationships between regulators and businesses. By adopting a presumption of innocence in regulatory matters, we could maintain effective oversight while dramatically reducing these burdens.
The presumption of innocence is a fundamental right in a free society, and it should not be limited to just our criminal justice system. Just as we recognize that the state's power to prosecute must be balanced against individual rights, regulatory power must recognize our freedom to innovate and operate efficiently until we show lack of responsibility with that privilege of freedom.
Consider how this principle would transform regulatory compliance:
First, it would shift the burden of proof. Rather than businesses having to demonstrate compliance preemptively, regulators would need to show evidence of non-compliance before imposing burdens or penalties. This doesn't mean abandoning oversight—just as police still investigate crimes, regulators would still monitor and investigate. However, the starting assumption would be compliance rather than potential violation.
Second, it would promote proportionality in regulation. Just as criminal punishment must fit the crime, regulatory requirements and penalties would need to be proportional to the actual risks and harms they address. This would help prevent the accumulation of excessive precautionary measures that often burden businesses with minimal benefit to public safety or welfare.
Third, it would encourage innovation. Many potentially beneficial innovations are currently stifled by the need to prove compliance before implementation. A presumption of innocence would allow more experimentation while maintaining the ability to halt truly harmful practices once evidence emerges. Companies would still go through the process of compliance but could move ahead under the assumption of approval, instead of wasting time waiting for bureaucracy to approve.
Importantly, this approach wouldn't compromise public safety. Just as the criminal justice system still effectively prosecutes crimes while presuming innocence, regulators could still effectively prevent and punish harmful behavior. The key difference would be in the default stance and the distribution of burdens. Organizations found in multiple and repeated violations could lose the presumption of innocence after certain criteria are met. This would be a significant disadvantage in the marketplace and would serve as an extremely effective deterrent.
Critics might argue that this approach could lead to increased risks or regulatory evasion. However, our collective experience from criminal law shows that presuming innocence doesn't prevent effective enforcement—it simply ensures that enforcement is fair and properly targeted. Moreover, businesses would still have strong incentives to maintain safety and compliance to protect their reputations and avoid liability.
This regulatory presumption of innocence is particularly valuable in emerging technologies and industries, where innovation is crucial but often hampered by regulation. By allowing experimentation while maintaining the ability to intervene based on evidence of harm, we could better balance progress with protection. A framework of principles, similar to the Hippocratic Oath for medicine, could be developed for emerging technologies and innovations.
The implementation should start right away. One industry that would immediately benefit is affordable housing. Housing seems a good place to start—I know many home builders who estimate that more than 25% of the cost of a new house is regulatory compliance. One builder even had an affordable housing program where they would build and sell houses for about $200,000 because they felt it was their duty to society. They had to abandon that effort when regulations were put in place that drove the cost to nearly $300,000, and the houses were no longer affordable for the demographic they were trying to help. We could make housing affordable again overnight.
The presumption of innocence is a fundamental building block of a free society. That fact alone should be motivation enough to reform the regulatory compliance framework. However, the potential benefits—reduced costs, increased innovation, better regulatory relationships, and more effective targeting of truly harmful practices—make this paradigm shift even more crucial today. Just as the presumption of innocence has proven essential to justice, its regulatory counterpart would prove essential to balanced and effective oversight while unleashing the power of the American worker.
Robert Bortins is the CEO of Classical Conversations.
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