President Vows to Reform Regs, in Doing So Shines Light on Major Civil Liberties Problem

by Mike Wendy on January 18, 2011

Today, in a WSJ opinion piece, President Obama began his formal rapprochement of the business community by promising regulatory reform.

The President notes:

“…[T]hroughout our history, one of the reasons the free market has worked is that we have sought the proper balance. We have preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse.

“…Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

“This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades…”

Some industry experts suggest that this couldn’t come at a better time – the new policy should be applied immediately to the FCC’s new Net Neutrality Order, which seemingly fits the President’s requirements for review.  Others believe that while this statement is certainly better than a poke in the eye with a sharp stick, much more regulatory reform needs to be done.

Quite frankly, I think the regulatory state is out of hand.  The ACLU should investigate it for deprivations against our liberties (I say this only half in jest).  But regulations come from people, not automatically from institutions / bureaucracies.  Consequently, we should always be wary.  As CEI’s Ryan Radia notes (transcribed from this video), the problem isn’t so much regulation (which is bad on its own), but rather, the problem lies with the regulators themselves.  They just don’t have the correct incentives to get regulation right:

“…Even though regulators have seemingly acted in a way that reflects a more, a greater humility for the dynamic and non-linear pace of innovation, the fact that they haven’t realized that it’s not bad regulation that is the problem, it’s the regulators themselves that are the problem, is frustrating…

“…Yet regulations are sticky.  They tend to persist. Of course, the common refrain by advocates of regulation is that the solution to bad regulation is better regulation.  That if we become more transparent and more accountable and more flexible, we can solve those problems.  But that’s not the root of the problem.  It’s not that we can create a better bureaucrat.  It’s that bureaucrats will always be bad by definition because they don’t have the right incentives.  They’ll never have the right incentives because it’s not their money.  It’s other people’s money.  And that’s just a fundamental problem that we’re never going to solve until we take power away from these agencies…”

I do not advocate a regulation-less society.  That would likely lead to anarchy.  And, that kind of sucks.  But, I think we must recognize that the default – i.e., “Don’t we have regulations for this stuff?” – should not be so reflexively applied.  I have long argued that there are many tools that allow regulation to be effectively “open sourced” beyond automatic government control.  We should try these first.  They promote individual liberties, while also protecting the public interest.  If these fail and harm ensues, then maybe, just maybe, we should consider regulation.  But not until then.

Though the President’s statement still places great reliance on the regulatory state to balance competing interests, it also shines a light on a favorite tool of those who want to make government ever less limited.  The proliferation of regulations from nameless, unelected bureaucrats and agencies greatly affects our economic freedoms, prosperity and liberties.  They deserve far closer inspection than we have devoted these past 75 years.

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