August 13, 2017

New Tech Will Delete Outdated Regulations in Missouri

Patrick McLaughlin

Director of the Program for Economic Research on Regulation
Summary

Missouri can’t do much about the over 1 million federal regulatory restrictions on the books, but it’s clear that policymakers did their homework to design a careful strategy to reduce the state’s own red tape.

Recently Gov. Eric Greitens revealed plans to reduce Missouri ’s regulatory burden, adding to the momentum among state governments to tackle red tape — old regulations that create an economic burden with little to no public benefit.

Red tape is creating increasing concern among economists, but simply figuring out how much regulation exists is surprisingly difficult.

Missouri has opted to rely on the RegData Project, which I co-developed. Its smart computer programs read regulatory text and track specific, objective measures of regulation, like the number of regulatory restrictions on the books or the industries most affected.

Quantifying regulation like this can teach us a lot. Mounting evidence shows that when red tape piles up, it can significantly slow economic growth. One study estimates that the buildup of federal regulations alone has slowed America’s annual economic growth by nearly one percentage point for decades, leading to an economy 25 percent smaller than it could have been.

Missouri can’t do much about the over 1 million federal regulatory restrictions on the books, but it’s clear that policymakers did their homework to design a careful strategy to reduce the state’s own red tape.

Many state regulations are necessary, but many others are plain baffling. For example, why does it take 350 days of training to become a cosmetologist or barber in Missouri compared to only 23 to become an EMT? Why require a small business owner to have a landline in the age of cellphones, as one business owner recently told the governor? It’s hard enough to make a living.

The new reforms draw on examples from other states and British Columbia, which cut two-thirds of its regulatory requirements while maintaining superior outcomes in public health and safety.

Greitens set an ambitious target of reducing regulations by 33 percent by May 2018. First, his office is reaching out to citizens for feedback on which Missouri regulations are working and which are simply clogging the gears of the economy without providing much benefit. To streamline the feedback process, his team unveiled a website, nomoredtape.com, which collects and organizes public comments.

Citizen input proved extraordinarily useful in British Columbia, where the public helped identify over 500 potential improvements to existing regulations. Public participation also boosted credibility and support for the effort.

But Missouri will need to do more than simply gather information. The state will also need to update the process that allowed unnecessary red tape to accumulate in the first place.

Regulatory accumulation occurs because regulatory agencies understandably see it as their job to make new rules. To change that, Greitens appointed “red tape cutters” in every executive branch department. Though this blunt title may raise eyebrows, the direct approach makes sense.

The governor’s combined approach of collecting information on where to cut red tape and appointing someone to actually do it is a smart first step. Now it is especially important to track the initiative’s progress from start to finish.

That’s where RegData comes in. Think of it like a scale. Whether in kilograms, pounds or ounces, what matters is that it’s a reliable measure of progress. The scale never lies, and neither does RegData when it comes to tracking regulation.

Only time will tell if Missouri will shed its excess regulation, but its unique approach is worth watching. To skeptics like us, an approach that’s objective, transparent and relatively free of political posturing is about as good as it gets.