Quantifying regulation first step to lower drag on economic growth in 26 states

Mercatus Center at George Mason University has been named a finalist for Atlas Network’s 2018 Templeton Freedom Award.

Ever-growing regulatory codes pose a very tangible and acutely felt burden on the lives of real people. These burdensome regulations — a term that under-communicates just how harmful their impact can be — get in the way of prosperity and opportunity.

Enter the Mercatus Center at George Mason University, where scholars at the Program for Economic Research on Regulation saw an opportunity to change this ongoing problem using its ground-breaking RegData software to paint a clear picture of how reducing state-level regulations can have a measurable improvement on economic growth.

Ever-growing regulatory codes pose a very tangible and acutely felt burden on the lives of real people. The Mercatus Center at George Mason University's ground-breaking RegData project endeavors to be the first step to break down these burdensome regulations.

RegData’s “snapshots” of the regulatory codes of 26 states show the real-world effects of how regulations shape economic growth. These snapshots give states a way forward to reduce their regulatory burdens and make a meaningful difference in their citizens’ lives.

Kentucky, for example, partnered directly with Mercatus for its regulatory reform initiative. As of August 2018, the state had reviewed over 2,300 regulations, repealed 453 of them, amended an additional 424, and identified hundreds more for future action.

So far, Mercatus’ RegData snapshots have reduced red tape in seven states — and more are in progress. These red tape reductions represent an opportunity for economic growth, new job prospects, and overall more prosperity and opportunity for all.

“There are over 1 million directives and restrictions in the federal regulatory code — but perhaps as many as seven times that number on the books in the states,” said Daniel M. Rothschild, executive director of the Mercatus Center at George Mason University. “RegData offers the first opportunity for scholars to explore the economic and social impacts of state regulatory codes — and policymakers are finding opportunities for meaningful reforms that make a real difference in the lives of families.”

The case of Kentucky’s red tape reduction

In July 2016, 40,000 Kentucky state employees received an email that read: “The government needs your help to identify wasteful regulations.” The state launched a new website, redtapereduction.com, to encourage any Kentuckian — but especially state workers — to nominate obsolete, costly, or complicated regulations for revision or elimination. This “Red Tape Reduction” initiative aims to review all of Kentucky’s approximately 4,700 regulations, reduce regulations by 30%, and convert government employees “from regulation makers to regulation managers.”

Kentucky governor Matt Bevin launched the Red Tape Reduction Initiative after meeting with scholars from the Mercatus Center. Inspired by the Mercatus Center’s research detailing how the Canadian province of British Columbia increased economic growth by cutting unnecessary regulations, Bevin chose to adopt a similar approach in the state of Kentucky. Now Kentucky officials are consulting with Mercatus Center scholars on other reform proposals.

The Kentucky example shows a version of what Mercatus has accomplished in seven states to date. Mercatus achieved this by working collaboratively with state-based think tanks, policy organizations and academic centers and by hosting or producing joint events, press conferences, op-eds, and media appearances. The message Mercatus provided was that the accumulation of regulation itself is a drag on economic growth and that, through its research tools, states could adopt a proven practice for reform.

Quantifying regulation is first big step

“Reducing a state’s regulatory burden is critical for driving economic growth,” said Patrick McLaughlin, director of the policy analytics project at Mercatus. “State regulatory codes sit on top of rules created at the federal level, making it impossible for any one person to make sense of this massive system of regulations. Quantifying the amount of regulation in each state is an important first step for eliminating unnecessary rules burdening individuals and small businesses. We’re honored to be a finalist for Atlas Network’s Templeton Freedom Award and look forward to not only continuing to help states across the country create effective regulatory systems but expanding our research to regulatory codes around the world.”

Mercatus’s state “snapshots” rely on RegData, a Mercatus-developed software program that can rapidly analyze immense regulatory codes in ways not previously possible. In 2012, Mercatus scholars first developed RegData to electronically analyze the U.S. Code of Federal Regulations. Over time, the Mercatus Center redefined RedData software through several iterations. In 2015, Mercatus released the first state snapshot for Kentucky, and began its fruitful state-based deregulation efforts in six other states to date. They continue those efforts in additional states and have begun to expand their RegData model to accommodate projects in other countries as well.

“Thanks to the Mercatus Center, more state policy-makers understand how to increase economic opportunity by reining in bloated regulatory codes,” said Brad Lips, CEO of Atlas Network. “This a huge opportunity for states that want to increase their competitiveness, and Mercatus has provided a roadmap for taking effective action.”

About The Mercatus Center at George Mason University:
Arlington, Virginia-based, The Mercatus Center at George Mason University trains students, conducts research of consequence, and persuasively communicates economic ideas to solve society’s most pressing problems and advance knowledge about how markets work to improve people’s lives. Its mission is to generate knowledge and understanding of the institutions that affect the freedom to prosper and to find sustainable solutions that overcome the barriers preventing individuals from living free, prosperous, and peaceful lives.

About Atlas Network’s Templeton Freedom Award and the additional 2018 finalists:
Awarded since 2004, Atlas Network’s Templeton Freedom Award is named for the late investor and philanthropist Sir John Templeton. The award annually honors his legacy by identifying and recognizing the most exceptional and innovative contributions to the understanding of free enterprise, and the public policies that encourage prosperity, innovation, and human fulfillment via free competition. The award is generously supported by Templeton Religion Trust and will be presented during Atlas Network’s Freedom Dinner on Nov. 8 in New York City at the Intrepid Museum Manhattan. The winning organization will receive a $100,000 prize, and five additional finalists will receive $25,000 prizes. The finalists for Atlas Network’s 2018 Templeton Freedom Award are:

• The Buckeye Institute (Columbus, Ohio), “Increasing Safety, Liberty, and Justice: Comprehensive Criminal Justice Reform in Ohio”
• The Commonwealth Foundation (Harrisburg, Pennsylvania), “A Titanic Shift: Pension Reform in Pennsylvania”
• The Egyptian Center for Public Policy Studies (Cairo, Egypt), “A Better Budget for a Better Egypt”
• Libertad y Progreso (Buenos Aires, Argentina), “Downsizing of Argentina’s Government”
• Lipa, Taxpayers Association (Zagreb, Croatia), “Campaign Against the Introduction of the Property Tax in Croatia”
• The Mercatus Center at George Mason University (Arlington, Virginia), “Unleashing Prosperity by Cutting State Regulations”