I don't know if many of you caught this article in The Economist about a month or so ago, but it does an amazing job explaining how regulations have gotten more numerous, more complex and more poorly written over the past few years. His prime example is Dodd-Frank, and how, even though it was a noble attempt to help prevent future financial crises, it turned into a complete disaster. (see this article that explores Dodd-Frank further) Finally, he arrives at the two main reasons this is occurring:
Two forces make American laws too complex. One is hubris. Many lawmakers seem to believe that they can lay down rules to govern every eventuality. Examples range from the merely annoying (eg, a proposed code for nurseries in Colorado that specifies how many crayons each box must contain) to the delusional (eg, the conceit of Dodd-Frank that you can anticipate and ban every nasty trick financiers will dream up in the future). Far from preventing abuses, complexity creates loopholes that the shrewd can abuse with impunity.The other force that makes American laws complex is lobbying. The government’s drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors. The health-care bill included tons of favours for the pushy. Congress’s last, failed attempt to regulate greenhouse gases was even worse.
In my opinion, although he does a great job identifying what are causing these problems and the effects they are having on the economy, his ideas to fix them seem vague and predictable. Suggestions like "write simpler laws" or "present possible bills to third parties for cost-benefit analyses" seem like great ideas and sound great in theory, but once in practice, they can easily become susceptible to corruption and manipulation, and in time, we're back to square one.
What do you guys think? How would you fix, reduce and simplify all of these regulations?
