Time to Prune the Regulatory Thicket
The American Dream was built on the idea that success follows from hard work and a good idea. But today, success is all too often about figuring out how to navigate a bewildering maze of overlapping and even contradictory regulatory regimes, spread across different levels of government. Unfortunately, solutions are unlikely at the federal level, given the rampant dysfunction in Washington, D.C. But the good news is that there are abundant solutions at the state level that can go a long way in cutting back — or at least managing — this stifling thicket of regulations.
In an unprecedented and comprehensive analysis, the Federalist Society’s Regulatory Transparency Project has produced a groundbreaking report entitled “Managing the Regulatory Thicket,” which examines the daunting tangle of bureaucratic red-tape from the perspective of an aspiring entrepreneur. The “regulatory thicket” refers to the total, combined burden placed on the person looking to start a business from all levels of government. Of course, while each regulation may or may not be defensible on its own, the report demonstrates that the cost of overregulation often outweighs the potential benefits when the regulatory thicket is considered in full.
While fresh lawmakers are eager to pass new laws, they should also be thinking about repealing or scaling back problematic regulation. It’s not as much fun, but it is important. Small businesses are especially vulnerable when faced with layers and layers of red-tape. The typical small business operates without the benefit of in-house attorneys and regulatory compliance officers. And it makes it really challenging when the regulatory landscape is shifting under their feet on top of everything else. The reality is that small business owners end up spending inordinate time, energy, and money in sorting out regulatory issues that they could otherwise be putting to more productive uses — like growing their business and hiring new employees.
We need to proactively think about how to manage the regulatory thicket in order to restore vitality to the American Dream. One immediate option for simplifying regulatory compliance is for state lawmakers to preempt municipal regulation of business issues to ensure uniform rules and to provide a more stable regulatory environment. But aside from outright repeal of regulatory laws at the state-level, there are other constructive ways to prune the thicket.
There is no silver bullet, and the Federalist Society does not endorse any specific policy solution. Instead, the Regulatory Thicket report outlines opportunities for managing the regulatory state. The important thing is that lawmakers should understand what came before them. They need to grasp that any new burdens will grow the thicket further. Therefore, they must question whether it worth piling-on.
Of course, one relatively easy option for lessening the burden of regulation is for government to provide better resources to help businesses with compliance. Proactive assistance — not after-the-fact enforcement — should be the norm. But lawmakers are in a position to cut back the thicket if they choose. They might achieve that goal either by eliminating regulatory requirements, or by simplifying the rules while still addressing public concerns.
One especially interesting proposal that has been tried in Arizona with success is giving people a way to challenge regulations in court when they needlessly burden the right to earn a living. That way lawmakers are not the sole party able to bring about reform.
State governors are also in a position to help trim the regulatory thicket in many cases. Governors might follow Canada’s success in controlling the growth of regulation by requiring government agencies to eliminate regulatory impositions for every new mandate. President Trump’s executive order to eliminate two regulations for every new regulation is another instructive example. Likewise, state legislatures might assign the task of reviewing and eliminating regulation to a special commission. This process may lead to the elimination of outdated, duplicative or unnecessary regulations.
Lawmakers might also help control the thicket in other ways — such as imposing sunset provisions in new laws, or by requiring state agencies to compile aggregate estimates of the economic costs of regulation before finalizing new ones. And perhaps most importantly, lawmakers and government bureaucrats should be seriously considering small business impacts. Stagnation and dysfunction are choices. Indeed, it is up to America’s state lawmakers to lead the way if we are to slow the growth of the regulatory thicket and to restore the American dream for aspiring entrepreneurs.
Braden H. Boucek is the VP of Legal Affairs at the Beacon Center of Tennessee. Luke Wake is a Senior Staff Attorney for the National Federation of Independent Business Small Business Legal Center. Both were co-authors of Managing the Regulatory Thicket: Cumulative Burdens of State and Local Regulation for the Federalist Society.