The word “deregulation” is back, thanks mostly to Tesla CEO Elon Musk’s strong emphasis on this as essential to restoring America’s prosperity. There are too many regulations, too many laws, too many rules. On that there is surely universal agreement. No one approves of the unfathomable, convoluted, expensive, and internally contradictory thicket that has emerged over the decades.
“The truth is, something’s happening in our country,” he writes. “Law is multiplying, and its demands are growing increasingly complex. So much so that ordinary people are often caught by surprise, and even seasoned lawyers, lawmakers, and (yes) judges sometimes struggle to make sense of it all.
“At the most basic level, law in our country has simply exploded. Think Congress is wracked by an inability to pass legislation? Less than a hundred years ago, all of the federal government’s statutes fit into a single volume. By 2018, the U.S. Code encompassed 54 volumes and approximately 60,000 pages.
“Over the last decade, Congress has adopted an average of 344 new pieces of legislation each session. That amounts to about 2 to 3 million words of new federal law each year. Even the length of bills has grown—from an average of around 2 pages in the 1950s to 18 today.
“Still, these figures from Congress only begin to tell the story. Federal agencies have been busy, too. They write new rules and regulations implementing or interpreting Congress’s laws. Many bear the force of law.”
Years ago, I began to notice that household items were not working anymore. The showerheads are now federally regulated to restrict flow, as are the toilets and garbage disposals. The mandated designs and blueprints make all the products worse.
The new gas cans are awful, while the old ones sell for a premium. Once I was cutting the grass and found that the mower kept getting clogged because of a lack of airflow. Sure enough, the functioning was hobbled by safety regulations that forced the cage ever lower to the grass surface, to the point where the machine could no longer do what it is supposed to do.
Indeed, it is hard to think of a single product you use that is not trapped in some kind of forced design emanating from a federal bureaucracy. This pertains not only to everything in your house, but also to every business, all the way down to the fabric of the aprons in every restaurant. These are just federal laws, but state and local ones also add to the burden.
Ask any real estate developer and he will tell you the reason for the housing shortage. It comes down to extreme controls on every single step in hiring and building. The customer ends up paying in two ways: higher prices and less choice.
“If you’re a budding pasta entrepreneur, take note: by federal decree, macaroni must have a diameter between 1.1 and .27 inches, while vermicelli must not be more than .06 inches in diameter,” Gorsuch writes. “Both may contain egg whites—but those egg whites cannot constitute more than two percent of the weight of the finished product.”
Every product in the grocery store is regulated this way. Ever wondered why the meat stock you buy at the store is mostly water with not much stock? That is heavily regulated. As I’ve pointed out before, the United States is one of the few countries in the world that require eggs to be washed before being sold, which means that they have to be refrigerated. First-time visitors to the United States are amazed at this.
It’s also true with meat: It is simply not possible to raise a cow and sell the meat without jumping through many regulatory hoops and using independent processors. This has benefited agri-business, but has been very harmful for small farmers. Small farmers suffer daily because of this.
Musk himself has told stories about how his Starship launches are routinely delayed by crazy mandates. His recent launch-and-catch had to be delayed for studies on how the landing would impact the sharks, the whales, and the hearing of the seals. And that’s just the start of it. All of Musk’s companies are facing an astonishing blizzard of attacks from agencies.
Truly, there are no words to describe the reach and scope of the regulatory state. It’s a minefield with no map, presenting danger with every step. If you have ever attempted to start a business, you know. Every industry faces huge compliance costs. It’s not just capital you have to spend. You need lawyers. You need consultants. You need, above all, time, and lots of it.
People go into business only to discover that they must spend most of their time not on serving the customer, but on dealing with compliance and administrative red tape..
Just try hiring one employee, for example.The array of bureaucracies who want a piece of you will amaze you. They all charge for everything they do. They will send letters demanding more with no end in sight. And this is just for one employee. Once the staff grows, so do the mandates and the legal risks.
You no doubt have stories of friends who attempted to start a business and gave up. I know of many.
The bureaucracies simply cannot sit still. They make new rules and regulations daily, if only to foil the industry, with not a care about what it costs or the impact on economic growth and job creation. The United States has created whole industries entirely devoted to smoothing compliance.
The word “deregulation” doesn’t quite describe the fullness of what we need. The United States needs to burn its regulatory codes in a raging bonfire, one that should last for months. What is the path to achieving that? As Gorsuch writes, it is not up to the judiciary to make a fundamental difference. That is the job of the legislatures.
In the late 1970s, there was a bipartisan consensus to deregulate three industries: trucking, energy, and telecommunications. All three initiatives were a huge success and the prosperity of the 1980s is owed to these emancipations.
The reason the word “deregulation” fell into disrepute is due to the financial deregulation of 1983, which freed up the banking sector that was then blamed for every crisis that followed, from the savings and loan crisis of the 1980s and 1990s to the 2008 financial crisis. There is a strong reason to believe this assignment of blame was correct. The problem can be traced back to the doctrine of too-big-to-fail, made possible by the Federal Reserve.
There will always be problems with deregulation so long as the government’s printing presses are still in operation. Sadly, these issues partly discredited the whole idea of deregulation.
Another point to remember: You can still have the good kind of regulation in absence of government intervention. Every professional field has an oversight organization that certifies credentials even apart from any government mandate. And consider the role of Underwriters Laboratories (UL), founded in 1894 and still in wide operation today. It has more credibility than any government agency.
Even if dozens of agencies were abolished, there would still be private associations around to do the regulating. But they could do so with a market-based focus, the way UL does today.
Another market-based form of regulation is reputation. When you buy online, do you look at reviews? Of course you do. This is a method by which quality is assured in our times. User ratings have a much larger role in our buying decisions than any administrative edict.
In other words, deregulation does not mean anything goes. It means that society itself is in the position to provide market standards of quality. If the federal Food and Drug Administration were abolished, for example, we might well end up with safer food and more effective drugs. For one thing, all the indemnifications for vaccines would disappear, making companies legally liable for damages.
There is an ongoing controversy to figure out what to do about agency capture, wherein the largest private companies operate a revolving door with the regulators and game the system against startups. The best and most effective answer to agency capture is simple: Eliminate the agency and the laws and legislation that sustain them.
We should all be thrilled about the new push for another round of genuine deregulation. Agency compliance is too expensive, too arduous, and too threatening for free enterprise to thrive. In an ideal world, the government would only do what is mentioned in the Constitution and nothing more. That would mean cutting back the regulatory state by 90 percent or more.
This is not possible in four years, but something has to give. We need a dramatic turn against force and toward freedom in the management of our economic lives.
