by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
One of the positive outcomes of Florida’s “rules throttle” law, legislative rules ratification, which was passed in 2010, is that it fostered better communication and cooperation between the legislature and the state agencies charged with interpreting and executing their laws.
My research update this week shows an excellent example of this cooperation. The rulemaking subcommittee of the Florida legislature worked with the agencies and also the business community and affected parties in order to improve guidance for agencies in estimating the regulatory costs of proposed rules. These discussions brought for useful and instructive information for policymakers not just in Florida, but elsewhere, including North Carolina.
They made a deep dive into how government red tape can affect private enterprise in so many different ways. They listed 13 separate circumstances of regulatory impact owing to compliance costs, for example.
They also looked into numerous ways red tape affects small businesses:
And here is their list of red tape’s adverse effects on “economic growth, job creation, employment, investment, business competitiveness, productivity, innovation, and small business”:
Understanding these potential impacts is important, I explained:
Government red tape slows down the economy. That is a consistent findingin economic research literature. Federal regulation has been estimated to cost the U.S. economy over $1.9 trillion in 2017. State regulation has been estimated to cost the North Carolina economy as much as $25.5 billion in 2015.
Those are unseen losses. They represent the absence of economic productivity that would be there but for the red tape. Policymakers who understand this aspect of red tape should be interested in cutting red tape and keeping regulatory burdens light and up-to-date.
For anyone interested, there’s a good list of potential reforms at the end of my report on “Regulatory Reform.”