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Snapshots of State Regulations | 2024 Edition
Federal and State Rules and Some of Their Unintended Consequences
Mercatus research indicates that regulatory accumulation worsens economic conditions, inadvertently increasing poverty rates, destroying jobs, and raising prices. The path to reversing these trends is clear: Improve regulations by reducing their number. Our State RegData project has produced "snapshots" of state regulations that can help policymakers engage in that process.
Assessing the Impact of Red Tape Reduction
The Canadian province of British Columbia has been a pioneer in reducing red tape. Its economic growth rate increased by one percentage point because it cut regulations by nearly 40 percent. Several US states have attempted to follow suit, including Idaho, Iowa, Kentucky, Missouri, Montana, Nebraska, Ohio, Oklahoma, and Virginia.
- Mercatus regulatory snapshots allow us to compare regulatory landscapes across states and over time. Our analysis makes it abundantly clear that the states that have proactively tried to cut red tape have begun to see positive results. Interestingly, those same states that have been able to cut red tape have also enjoyed higher average annual economic growth rates.
Top 5 States and Bottom 5 States for Regulation
State RegData ranks US states by the number of their regulatory restrictions. (Full data for Arkansas, West Virginia, and the District of Columbia are not available.)
So What Can Policymakers Do?
Policymakers can reduce the harm of excessive regulation by improving the management of their rulemaking systems, thereby making it more likely that the rules on the books actually solve the problems they were intended to solve. Such improvements can be made through the implementation of regulatory budgets and regulatory sunsets.
Regulatory Budget: Place a cap on the number of regulations the state can have at one time with a target lower than the current stock of regulations. For example, set a goal for percentages to be cut, establishing a "one in, x out" rule. Alternatively, monetize the costs of regulations so that new regulatory costs are offset by eliminating old regulatory costs.
Regulatory Sunset: Set a requirement that all regulations be removed after a time unless explicitly renewed by the legislature. This standard establishes an implicit periodic review of rules. If the regulation is providing the intended benefit, it doesn't need to be cut. If the regulation is ineffective or burdensome, it can be eliminated.
Notes
- Cutting Red Tape To Spur Economic Growth
Explore Patrick A. McLaughlin's full analysis of the impact of regulatory reforms on economic growth in his article for Discourse Magazine. - Methodological Note: Estimating the Effects of Federal Regulation on the States
The note briefly describes the methodology used to estimate the negative impacts of higher federal regulations on poverty rates, employment levels, and consumer prices.
About the Authors
Dr. Patrick A. McLaughlin is the Director of Policy Analytics and a Senior Research Fellow at the Mercatus Center at George Mason University. His research focuses primarily on regulations and the regulatory process.
Dustin Chambers is a Professor of Economics in the Perdue School of Business at Salisbury University and a Senior Affiliated Scholar with the Mercatus Center at George Mason University.
