Without addressing the massive problem of federal overregulation, many of the other solutions proposed on these issues pages would be meaningless. We must have a saner and less burdensome regulatory environment in which to operate in order more quickly and permanently to restore a sound economy.
To solve the problem, we first need to know where we went wrong.
For years, federal legislators have abandoned their responsibilities by shunting the work of regulatory creation and oversight to an ever-burgeoning array of federal agencies.
Our Constitution says that the legislative branch of government has sole prerogative to create law. However, the agencies, housed in the executive branch, have become the ultimate arbiters of how policy will be developed and interpreted beyond the language voted upon by Congress. Unelected bureaucrats, then, have in many senses become the true legislators of our nation. It is they who determine the actual rules by which we will all live and operate.
Agencies now oversee the particulars of our lives and work with frightening and increasing authority. Commerce, industry, property, health care, nutrition, transportation, recreation, political and religious speech, and on and on and on. Name one area of life in which constitutional and economic freedoms are not currently being infringed in some manner.
It’s not easy to do.
Sadly, some of the most profound expansions of federal regulation have occurred under Republican leadership. Instead of standing up to say no, conservatives have fully participated in creating what now amounts to an almost impassable mountain range of overregulation.
This freedom- and job-killing trend must be reversed if we are to navigate away from constitutional and economic shipwreck.
BOLD SOLUTION A: Restore Congressional Oversight and Approval of Federal Regulation
Again, only Congress actually has the authority to create law. It is time they stopped allowing others to do their job for them.
Ideally, legislators should aim to put all pertinent language in a bill prior to passage so that only those elected by the people are, in fact, making law. However, we need a way to move in that direction.
I favor requiring federal regulatory agencies to submit proposed regulations for congressional review and a vote before expecting adherence from any American citizen.
There has been resistance to this idea in Washington in the past because of the overwhelming amount of work entailed in reviewing what currently amounts to thousands and thousands of pages of regulatory language annually. However, insisting on such review would result in Congress:
- Having greater insight into what the federal agencies are planning before damage is done
- Grasping more frequently how proposed regulations would affect the real lives and livelihoods of their constituents
- Regaining the ability to block regulations that harm our economic and/or constitutional freedoms
- Making a stronger effort to write legislation that leaves the federal agencies little if any room to maneuver in writing extra-legislative policy, if for no other reason because it would cut down on legislative workload
- Beginning to see the wisdom in defunding and eliminating federal agencies that regularly attempt to usurp rightful legislative authority, infringe on constitutional rights, and inflict unnecessary financial burdens
BOLD SOLUTION B: Apply Supplementary Standards to the Evaluation of Proposed Federal Legislation
If we are to avoid overregulation in the future, we must reintroduce principles that will provide a proper and standard gauge.
The Cato Institute has wisely noted that while economic and scientific standards are important, they are not enough. Numbers can be manipulated, and at times agencies have, in fact, used such standards to mislead legislators and the public. The Cato Institute has suggested a supplementary set of questions that should be applied when regulation of any activity is being considered. This recommended list, along with the reasoning behind them, is supplied below.
- Does the activity by some individual or firm impose significant (nonpecuniary) adverse effects on other parties?
If not, no regulation of any type is appropriate. This standard alone would rule out all regulation of activities for which people bear the full cost of their own choices, all regulation of activities that have only pecuniary effects on other parties, and all regulations that require people to provide benefits to other people.
- Would regulation of activities with these adverse effects be more efficient than reliance on contract and tort law?
If not, the proposed regulation should be rejected in favor of the common law. This is an important question to ask, because of the frequently too casual assumption that regulation is the only instrument for reducing adverse interpersonal effects. At the same time, one should recognize that the transactions costs of the tort law are now very high, especially when there are numerous tort feasors and tort victims.
- Does the conduct of this activity impose significant adverse effects on people in other states?
If not, state governments have sufficient incentive and authority to control those effects, by either regulation or the common law, and no federal regulation is appropriate. The fact that activities with adverse effects may be nationwide is not a sufficient basis for federal regulation; potential multistate effects, not the multistate source of those effects, should be the focus of this standard. Not all nationwide problems require a federal response.
- Does federal statutory law provide authority for the proposed regulation?
If not, the proposed regulation should not be approved even if potentially desirable. The Constitution vests all legislative powers in Congress, and regulatory agencies should not be allowed to define their own powers. If an agency contends that some new regulatory power is desirable, they should make their case to Congress.
- Does the Constitution provide authority for the proposed regulation?
If not, of course, the proposed regulation should be rejected; the federal government does not have the authority to define its own powers. This is an awkward issue, however, because the federal government has effectively defined its own economic powers for over 60 years. The problem is that there is no effective procedure for challenging the authority of the federal government, given the Supreme Court’s generally elastic interpretation of the Constitution.
- Does the proposed regulation generate the highest positive expected net benefit of any mutually exclusive alternative?
If not, the proposed regulation should be rejected. It is most important to recognize that this net benefit standard is relevant only if the proposed regulation clears each of the prior five hurdles.
Regulatory agencies should be required to answer these questions briefly but formally in relationship to all proposed regulation so that legislators can evaluate and test agency reasoning against constitutional and free market principles. It would thereby be easier to make course corrections before the implementation of dangerous regulation instead of afterwards.
For further reasoned principles that apply to regulation, I invite you to watch, below, the brief video interview of Milton Friedman, one of the greatest free market advocates of our time.