March 18, 2014

Regulatory Reform in Florida: An Opportunity for Greater Competitiveness and Economic Efficiency

  • Patrick McLaughlin

    Director of Policy Analytics
  • Jerry Ellig

    Research Professor, George Washington University Regulatory Studies Center
  • Dima Yazji Shamoun

    Associate Director of Research, University of Texas Center for Politics & Governance
Key materials

Regulation often seems like the neglected stepchild of government. Yet, while politicians and pundits focus on headline-making topics like taxes and entitlements, the regulatory bureaucracies keep adding more and more pages of regulatory code. Regulations already affect every business and every individual in so many ways that the quantification of regulation alone poses a daunting task for economists.1 And as the quantity and scope of regulations grow, so does the degree to which they affect the economy. In such circumstances, a little reform to the process of creating regulations can go a long way toward crafting an environment that fosters competitiveness and economic efficiency without sacrificing the outcomes that regulations are intended to achieve.

This paper proposes two simple yet effective regulatory reforms that Florida could adopt to make new regulations more economically efficient. First, prior to designing a regulation, regulators should make every effort to understand the problem the regulation is supposed to address. This effort should include determining whether a widespread and systemic problem exists and, if one does, identifying its causes. The second reform reflects a basic tenet of problem-solving: once a problem has been identified, regulators should consider a wide range of alternatives before selecting a course of action. Both suggested reforms are general in scope, meaning that they could be usefully applied to all regulatory actions. That is, whenever a change to the regulatory code is made, Florida could benefit from first assessing the nature of the problem and then considering alternatives.

To show how these broad proposals could be applied in a specific regulatory context, this paper uses examples of a type of regulation that is very relevant to Florida: occupational licensing. Occupational licensing regulations have been hotly debated in the state since at least 1991, when the Florida legislature passed the Sunrise Act.2

The Sunrise Act attempted to reform the procedure for adopting occupational licensing regulations for professions not expressly subject to state regulation. The act includes elements that are similar to our proposals, including a requirement that “in determining whether to regulate a profession or occupation, the Legislature shall consider . . . whether the unregulated practice of the profession or occupation will substantially harm or endanger the public health, safety, or welfare, and whether the potential for harm is recognizable and not remote.” 3 This requirement is similar, but not identical, to our proposal that, prior to regulating, regulators should determine whether a widespread and systemic problem exists, and if one does, identify its causes. A similar provision of the Sunrise Act requires that “proponents of legislation that provides for the regulation of a profession or occupation . . . provide, upon request . . .

Documentation of the nature and extent of the harm to the public caused by the unregulated practice of the profession or occupation . . . and an explanation of the reasons why other types of less restrictive regulation would not effectively protect the public.” 4 Other provisions of the statute direct the legislature to consider cost-effectiveness and economic impact and direct proponents of the legislation to provide cost estimates upon request. Finally, the Sunrise Act requires the agency that would implement the regulation to provide the legislature with “any alternatives to the proposed regulation which may result in a less restrictive or more cost effective regulatory scheme.” 5

Continue reading