Trump’s “One in, Two out” Regulatory Reform Could Help Economic Growth

 

President Trump is employing what you might call the “Mad Max: Beyond Thunderdome approach” — “Two men enter, one man leaves!” — to regulatory reform, except sort of in reverse. If a new regulation is to enter the regulatory code, two must leave. Following through on a campaign pledge, Trump today signed an executive order requiring, as Reuters puts it, “that for every new federal regulation proposed, two must be revoked.”

A bit of typical Trump color on this:

This will be the biggest such act that our country has ever seen. There will be regulation, there will be control, but it will be a normalized control where you can open your business and expand your business very easily. And that’s what our country has been all about.… If you have a regulation you want, number one, we’re not gonna approve it because it’s already been approved probably in 17 different forms. But if we do, the only way you have a chance is we have to knock out two regulations for every new regulation. So if there’s a new regulation, they have to knock out two.

Of course, it’s not quite that straightforward. The actual executive order makes it clear we’re as much talking about regulatory costs as the individual regulations themselves. One objective is to cap regulatory costs. So the costs from a new regulation must be “offset by the elimination of existing costs associated with at least two prior regulations.” Some other countries employ a similar approach, including the UK and Canada. (I recall, however, that one or more exempt health and safety regulations for the directive. Not sure the US version will.)

One key thing to figure out is what is meant by “costs.” This from regulation expert Susan Dudley in Forbes:

Nevertheless, deciding what “costs” to include in determining offsets will necessarily require judgment.Canada’s “One-for-One Rule,” for example, focuses on direct administrative-burden costs on businesses, while the UK’s “One-in, Two-out” program attempts to include all net costs on businesses. Understanding the full social costs of regulation is difficult, if not impossible, and some regulatory impacts will be harder to estimate than others. What are the costs associated with homeland security measures that reduce airline travelers’ privacy? What are the costs of regulations that prevent a promising, but yet unknown, product from reaching consumers? How should the credibility of agencies’ estimates that their regulations will have negative costs be evaluated? … Despite analytical and operational difficulties, the President-elect’s two-for-one proposal has the potential to impose some needed discipline on regulatory agencies, generate a constructive debate on the real impacts of regulations, and ultimately lead to more cost-effective achievement of public priorities.

Another regulation expert, Obama White House regulation boss Cass Sunstein, also recently addressed the idea in a Bloomberg column worth reading in full. He declared “one in, two out” to be “silly, and in practice it’s likely to be a bit of a mess…. But with a little flexibility, and a lot of determination, executive branch officials might be able to make it work.”

Here also is a longish analysis of the idea.

And this OECD report look at the innovation and entrepreneurial upside to regulatory reform:

Regulations place a heavy administrative burden on companies, particularly new or small firms, and the time spent on administration is often lost to innovation. In this era of technical change, speed is becoming a key determinant of the success of business activities. Duplicative and inefficient regulations can no longer be tolerated. The regulatory review process should include comprehensive accounting of all regulations on particular sectors or products, benefit-cost or costeffectiveness analysis of major regulations, sunsetting or automatic expiration clauses in the absence of assessment, and centralised information and administrative centres to provide assistance to firms.

Published in Economics, Law
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  1. Knotwise the Poet Member
    Knotwise the Poet
    @KnotwisethePoet

    Wait, the 2 regs abolished for every new one created-rule is actually happening!?  Dagnammit, Donald Trump is doing his best to make me like him.  STOP THIS MADNESS!

    • #1
  2. I Walton Member
    I Walton
    @IWalton

    We must begin with a fundamental rethink of regulation.  The current regime is  complex as in a chaotic system that is unknowable.  Unknowable system means it is beyond understanding by any one man or group of men.   We ask regulators  to do things that can’t be done.  Think Hayek.  The information regulators need for most things not only does not exist, it cannot exist.  Most regulation was put in place because  we got the incentives and basic structure wrong so have to craft fixes.  The fixes are drafted by those that are supposed to be regulated because they are the only ones who understand whats going on.   We can do away with almost all of them if we just craft basic laws with care.    We need to go about this from zero just as we should approach the budget and the tax code.

    • #2
  3. Z in MT Member
    Z in MT
    @ZinMT

    I Walton (View Comment):
    We must begin with a fundamental rethink of regulation. The current regime is complex as in a chaotic system that is unknowable. Unknowable system means it is beyond understanding by any one man or group of men. We ask regulators to do things that can’t be done. Think Hayek. The information regulators need for most things not only does not exist, it cannot exist. Most regulation was put in place because we got the incentives and basic structure wrong so have to craft fixes. The fixes are drafted by those that are supposed to be regulated because they are the only ones who understand whats going on. We can do away with almost all of them if we just craft basic laws with care. We need to go about this from zero just as we should approach the budget and the tax code.

    I agree here. In too many cases regulatory enforcement has replaced the market and the tort system.

    • #3
  4. Hypatia Inactive
    Hypatia
    @Hypatia

    I’m telling you, we need to do something to counter these very visible protests.  Trump is doing great, doing just what he was elected to do!!

    California should secede, and Hillary can be its dictator.  Save the rest of us from having to pay disaster relief when The Big One hits.

    To your point about regulation, CTFO!  The EPA has been out of control under ex-prez Omega, with a majority of the states suing to enjoin their encroachments like the WOTUS rule.

    I’m developing a version of “Trump Derangement syndrome”  of my own–I’m ecstatic about everything he does and says.

    It all just

    MAKES.  SO. MUCH. SENSE!!!!!!!

    • #4
  5. Johnny Dubya Inactive
    Johnny Dubya
    @JohnnyDubya

    I apply the one-in, two-out rule in my personal life, from my clothes closet to my Pandora music stations.

    Naysayers will not doubt criticize the approach as overly simplistic, but sometimes seemingly intractable problems have simple solutions.  I am encouraged by this blow against the ratcheting effect of the regulatory state.

    Now, if the president were to radically reform the tax code to make the “postcard” tax return a reality, I would change from a former-NeverTrumper to an AlwaysTrumper.

    There is no more perfect example of the state’s disdain and contempt for its citizens than the absurdly complicated preparation required in order to file one’s income taxes.  If one is not fabulously wealthy but nevertheless needs professional help to file, then something is very, very wrong.  We have become used to this as “normal”, but it is not.

    • #5
  6. Brandon Phelps Member
    Brandon Phelps
    @

    One in ten out.

    • #6
  7. Ralphie Inactive
    Ralphie
    @Ralphie

    Z in MT (View Comment):
    I agree here. In too many cases regulatory enforcement has replaced the market and the tort system

    I agree also, but also wonder if regulatory enforcement encourages the insurance industry.

    • #7
  8. RamblerAmerican Inactive
    RamblerAmerican
    @RamblerAmerican

    Keep in mind that not every set of new regulations creates more burdens for consumers and businesses.  I work with a government agency that often promulgates large rule packages that are meant to reduce burdens to those who must work with that agency.  However, these new rule packages may not actually eliminate large numbers of old rules in order to enact the newer, less burdensome, rules.  It’s the content of the rules that matters, not the number of rules.

    • #8
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