Too Many Regulations, Yes or No?

June 12, 2012

One claim made by many pundits these days is that the United State has too many regulations,  that regulations are stifling to the economy, that regulations are so arcane they are difficult to penetrate.   True or not, let’s look at the situation.  It is a fact that regulations are necessary for the proper administration of government.  A population of 250 million is too large to handle by local and arbitrary means.  Regulations can serve to stave of legal actions of almost every variety.  Second, with too many regulations there are a number of unanticipated consequences.   A couple of definitions:

• Policy: A consistent guide to be followed under a given set of circumstances.
• Procedure: A procedure is a sequence of steps for completing a given activity.
• Regulation:  Statements to explain the technical, operational, and legal details necessary to implement laws.
• Law: A  system of rules and guidelines which are enforced through social institutions to govern behavior.

Policies, procedures, regulations, and laws must be documented in writing for several reasons, including the http://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26.pdf necessity to defend an action, a behavior, or a practice before an arbitration body, e.g. courts.

Herein, regulations, policies, procedures, codes and laws are lumped into the single category of rules.  Naturally, fine points and distinctions can be made, but we are trying to get a measure of magnitudes.  Consider a few examples with all approximate numbers.  

• United States Penal Code:  This is a document which compiles all, or a significant amount of, a particular jurisdiction's criminal law.  In 1911, this code was comprised in about 110 pages.
• In 2011, the regulations for Judiciary and  Judicial procedure: 630 pages
• Current United States copyright law: 367 pages.
• IRS tax code, 3387 pages in twenty volumes
• Schools – PPM’s (policy and procedures manuals)
• Purdue university grad school: 122 pages
• Belle Fourche School Policy and Procedures Manual: 37 pages
• Columbia college of dentistry: 169 pages
• School Board of Manatee County: 536 pages

The big player in all this is

• United States Federal regulations:  currently ~80,000 pages per year.  That's right, per year!

Not judging whether 80k pages/yr are good or bad, there are consequences of this.  Just the generation of this magnitude of regulations requires an army of authors.  Figure that one official can generate about one page/day* of regulations, conservative by any measure, it would require about 400 years for a single individual to compile this amount of material.  This means 400 people are required to generate such a volume of materials in a year's time.  This does not include vetting of the rules by committee and then through the approvals process.  One might question whether the quality of talent is available for these tasks.

Nonetheless, if you will agree to our lumping of regulations, policies, procedures, codes and laws, let’s look at a couple of consequences.  All these regulations can

1. Stop or slow commerce – including other private enterprise.
2. Result in the wide-spread ignoring of regulations.
3. Require the compounding of regulations with more of the same.
4. Promote the creation of a special class of experts adept at exploring and mining these many arcane rules for loopholes – which most certainly are there. For the US Tax code alone there is a large cadre (about 2% if the total 780,000 = 15,000) of attorneys that specialize exclusively on various aspects of taxation.  This is a large number for just 3K pages.  Add another 110,000+ as IRS employees.

As to the last point, it seems absolutely certain that all the regulations will generate a huge infrastructure of “experts” able to read and interpret them.  They become a substructure of government and non-government experts dedicated to a single aim – implementing and interpreting for the client’s needs.  Of course, these “experts,” wishing their livelihood to be sustained will lobby to maintain the extant system.  Note the near impossibility politicians have experienced to reform the (relatively miniscule) tax code.  Finally, if the government is generating this volume of regulations, how large is the staff required to monitor compliance?  Unknown.

Our basic point is there is a serious downside to massive numbers of regulations, policies, procedures, codes and laws.  Serious and prudent consideration should be given to adding new ones.

*Assuming a 200 days/year working model.