The Next Economic Battle: Striving for Simplicity
When I taught at Washington and Lee University, they had a rule for the young men: “You are required to be a gentleman.” I loved that. If there was an issue, your fellow classmates decided whether you had violated the code. The Oxford dictionary definition of a gentleman is simply “a chivalrous, courteous, or honourable man,” which encompasses a great deal of daily behavior. Sometimes a simple approach beats one spelled out in too much detail.
Simplicity, or rather a return to simplicity, may be just what we need to bolster an economy that faces a serious challenge from China.
No one would describe the maze of federal and state regulations, laws, and guidance that govern virtually every aspect of American life as “simple.” And while many of these regulations work, what happens when we can barely keep track of them all?
At the George Washington University, the Honorable Susan Dudley’s Regulatory Studies Center tracks regulations. One way is to count the ones that are “economically significant.” These are the really big rules that have a large effect on some aspect of the economy, or which simply cost the economy more than $100 million. In 1981, there was one. By 2001, there were 36. In 2020, there were 134.
Another way to think about regulations large and small is by what’s in them or by looking at how many actual requirements (restrictions) are contained within each. Dr. Patrick McLaughlin and his colleagues at the Mercatus Center at George Mason University have been tracking restrictions in a program called RegData. He finds that for nearly a decade, we’ve been living with over 1 million federal restrictions. One estimate suggests that there may be “as many as seven times that number on the books in the states.”
The Code of Federal Regulations is over 180,000 pages long, and that’s not all that firms have to be concerned about. There are many thousands of federal guidance documents, executive orders, proclamations, memoranda, bulletins, circulars, letters and speeches that demand firms’ attention. Wayne Crews of the Competitive Enterprise Institute calls these “regulatory dark matter” because it’s unclear which ones you have to obey.
If it’s true that simplicity is a virtue, and if the administrators at Washington and Lee had a point, then perhaps that should be the goal for regulating Americans’ behavior.
I did some research on the effect of too many rules and found that not only do they overwhelm businesses and individuals, but they can divert attention away from safety by forcing people to focus only on compliance. Some firms spend so much time figuring out what they have to comply with and how to comply that it discourages them from finding innovative solutions to problems.
What’s more, when people aren’t focused on complying with rules, they commonly spend their time and fortunes trying to influence government agencies to pass rules that favor their company at the expense of their competitors.
What should we do about this? Gillian K. Hadfield in “Rules for a Flat World” suggests that instead of our current model, we need both “hard” and “soft” rules, formed perhaps by private and public groups, which are “smart, connected and rapidly adoptable.”
Another approach comes from Philip K. Howard in “Try Common Sense: Replacing the Failed Ideologies of Right and Left.” He suggests that we set policy goals and principles, and not try to have a rule for every conceivable issue. Using those principles, we hold rule makers accountable for the results.
Finally, I have argued in my forthcoming book “Fixing Food” that in some cases innovators can solve problems that regulators have been unable to solve. Regulators offer complex food labels, simplistic food plates and generalized dietary advice which clearly aren’t fixing the unhealthy relationship between Americans and their diets. Innovators, on the other hand, are creating healthier foods and devices that will track what you eat and use voluntary data and sophisticated analysis to create a personalized diet for you.
I’m not the first to suggest that to fix what ails our economy, we should stop drowning it in red tape and whittle down the vast network of regulations, laws and dark matter. It’s just that the evidence keeps piling up and becoming more compelling. John Maeda, a self-described “humanist technologist,” believes we achieve simplicity “through thoughtful reduction.” By all means, let’s do so.
Otherwise, we may be left behind in an increasingly connected and competitive economic world.
Richard Williams is a senior affiliated scholar with the Mercatus Center at George Mason University, former director for social sciences at the FDA’s Center for Food Safety and Applied Nutrition, and author of the forthcoming book, “Fixing Food: An FDA Insider Unravels the Myths and the Solutions.”