Deregulation has been one of the brighter spots in the current administration. The pace has been too slow, but at least the direction is correct. This is a welcome change from the disastrous regulatory overreach of the Obama years.
One of the problems with the deregulatory efforts of the current administration, however, is that too much of it has come from Executive action. This offsets some of the worst abuses of Executive power of the Obama years, but creates the risk that a future administration will reverse course again. This type of yo-yoing is probably the worst of all possible outcomes since it makes it impossible for businesses to plan. A greater effort must be made to cement deregulation in legislation.
It is also important to change the philosophy of regulation. Not only should the amount of federal regulation be massively reduced, but the form of the remaining regulation must change. We must move away from “command and control” regulations which prescribe how an objective is to be achieved, in favor of regulations which require outcomes and create incentives but which allow the private sector to find the most efficient methods. Not only will this improve efficiency but it will also minimize “regulatory capture” and other forms of cronyism, which thrive on command and control regulations.
We must also realize that the best method for controlling behavior is competition in a free market with clear property rights. Many of the areas commonly thought to require regulation – such as many forms of pollution – can be addressed better through clear property rights and litigation or private negotiating. We should be alert to opportunities to replace inefficient and inflexible government rules with private action.
It is also important to push regulations to the state level to the maximum extent possible. As in other areas, this will promote a healthy competition between the states and will allow them to act as laboratories of experimentation. It will also allow regulations to reflect the wishes and circumstances of the very different parts of our country.
Finally, greater efforts need to be made to institutionalize deregulation. The Office of Information and Regulatory Affairs (OIRA) needs to be given greater resources and power to question regulations. More rigorous, and objective, cost-benefit analyses should be required. Congress should no longer abdicate its rule-making authority to administrative bodies, particularly in the case of rules which have a large economic impact. Regulations, like laws, should be subject to “sunset” provisions which will periodically force their reconsideration.
As of the end of 2016, the Code of Federal Regulations contained over 185,000 pages and comprised over 242 volumes. The Code exploded during the Obama years and the Trump administration has succeeded in slowing its rate of growth. A Libertarian government, however, will not be satisfied until the Code is a shadow of its former self.