The American Encore is Happening… in Canada.
The American Encore is Happening… in Canada.
By: Patrick Hedger, Policy Director-American Encore
Earlier this year, our organization American Encore, an organization dedicated to the cause of ensuring that the 21st Century is an American century as well, released an extensive document entitled Blueprint for 2015. The Blueprint contained a series of economic policy recommendations that should now be able to pass in Congress due to conservative majorities in both chambers. An entire chapter of the Blueprint was dedicated to the issue of government regulation. With the economy barely sputtering along in the wake of the Great Recession, Americans and their representatives in Washington are rightfully concerned about the state of economic policy. There’s a lot of good debate going on about taxes, government spending, energy, and healthcare policy. Unfortunately there is not enough talk about the issue of government regulation.
Good reforms in all of those preceding policy areas won’t amount to much if the massive and growing level of regulation is not addressed. Regulation, no matter its form, is simply what you may not do. By definition, the more you regulate the economy, the less it can do. In short, it doesn’t matter how fertile the field is so long as the government forbids you from planting a seed.
The situation has become unprecedented. A study by the economics think tank the Mercatus Center estimates that there are now well over 1 million different rules and restrictions spread out over the some 175,000 pages of the Code of Federal Regulations. As I highlighted in the Blueprint, the government handed down nearly 3,700 new regulations in 2013 alone, each containing potentially dozens of specific rules and restrictions.
This level of regulation is literally suffocating the economy. Business owners are increasingly worried about and devoting resources to compliance with arbitrary and inflexible government standards instead of innovating and growing their businesses. In the Blueprint, I call for a few different policies to begin the reining in of the regulatory state. One of the recommendations I made is a permanent Congressional joint-committee to review the Code of Federal Regulations line-by-line. Each regulation buried in the massive document should receive sunlight and a renewed debate. The good regulations can stay and the needless/outdated/silly can be tossed out.
The good news is that a version of this desperately needed reform is happening! The bad news is where it is happening:
Americans almost instinctively like to make fun of Canada as essentially another European socialist-state in North America. This grows increasingly further from the truth by the day. Despite some residual areas of government dominance, such as healthcare, Canada’s government continues to take the reins off of the nation’s economy. Canada’s top personal and corporate income tax rates are significantly lower than those in the US. The Heritage Foundation actually rates Canada as the sixth most-free economy in the world. The US is ranked 12th.
Canada’s recent regulatory reforms will undoubtedly march the country higher up in all of its economic rankings. What our neighbors to the North did is institute a 1-for-1 regulatory system. What this means is that for every new regulation proposed, an older regulation must be scrapped. This is a brilliant system that has proven extremely successful at the provincial-level in Canada’s British Columbia; so successful that it passed Canada’s national parliament almost unanimously, minus a single vote.
The young law is already bearing fruit. According to an article in The Libertarian Republic:
"So far, nineteen federal regulations have been eliminated, small businesses are estimated to save 98,000 hours per year in time spent dealing with regulatory red tape, and the law has reduced federal administrative burden by almost $20 million."
This is a great model for the US. This is a pragmatic reform that seems to enjoy support from across the political spectrum. It is easy to explain and makes sense both on the surface and at a more substantive level, a rarity these days. A version of the 1-for-1 law in the US would be a solid step in the right direction to restoring economic confidence in America’s businesses. Certainly some government regulations are warranted and have made lives better and safer, but it’s hard to believe that all 1 million+ federal rules and restrictions in the US are completely necessary. It's time to scrap all the old, outdated, and onerous regulations clogging up our economic engine.
Believe it or not America, one of the keys to our furture prosperity might be following Canada's example.