Elon Musk is right about government rules and regulations: they don’t die

Elon Musk is worried about the persistence and effects of government regulation. At a CEO summit last week, the Tesla and SpaceX supremo claimed “Rules and regulations are immortal. They don’t die … there’s not really an effective garbage collection system for removing rules and regulations.” Piling rules upon rules instead gradually “hardens the arteries of civilisation, where you are able to do less and less”.

Market-friendly economists have long bemoaned that regulations stifle economic growth and innovation. Read about the debacle of HS2, Heathrow’s third runway, or Britain’s housing crisis and you quickly see how modern regulatory processes can create a “running through treacle” experience for getting stuff done.

Yet remarkably little is said about regulation as a major policy problem. With any individual regulatory change bringing small-fry GDP impacts and deregulation having diffuse benefits, pressure for ridding us of rules is weak. Instead, we see a massive status quo bias and death by a thousand cuts.

When former Downing Street adviser Dominic Cummings recently mentioned opportunities for “deregulation”, prominent trade academic David Henig dismissed the idea as one that “seems to date back to 1980s battles without modern relevance”. This is about the best typical reaction one gets to arguing that regulations should be pruned.

The worst is that any deregulation necessarily means an assault on our wellbeing. Post-Brexit free trade agreements with modest liberalisations of agricultural protections, for example, regularly get dubbed as “weakening standards” with apocalyptic effects. And when politicians suggest revising cumbersome staff-child ratio childcare regulations as a means of reducing prices? Pah, advocates are said to want kids in dangerous, overcrowded baby farms. Most regulations, it seems, are deemed exactly optimal.

This widespread deference to the political status quo means even those who think something amiss with our regulatory state scale back their ambitions. The Coalition government sought process reforms, such as through using a “one-in, two-out” framework to deter new regulations, in lieu of abandoning major reform of the stock. But governments also outsource the hard yards by asking businesses for recommendations to reduce “red tape”, which creates the impression the problem here is the costs of compliance.

Yet the Covid debacle and other recent events surely show that ill-advised government regulations deserve more attention. For it is not just clerical costs of regulation that matter. It’s the cumulative impact of rules that gum up the flow of workers, raise the costs of projects, ban products being trialled in markets or, in this pandemic’s case, hinder our ability to save lives and protect economic activity.

Yes, our Covid vaccines were hugely expedited. But how many more lives could have been saved had governments worldwide discarded ethical rules prohibiting human challenge trials? Projects such as 1Day Sooner showed thousands of volunteers were willing to be exposed to the virus in controlled medical environments to test vaccine efficacy more quickly, potentially greasing the wheels for approval of the first vaccines a month or two earlier.

That might not sound significant, but a faster rollout would have saved tens of thousands of additional lives in the UK alone. That’s a huge impact from one regulation.

But that’s the thing: restrictions that even just delay decisions can have catastrophic consequences during crises such as pandemics.

Centralised Public Health England decisions over diagnostic testing policy last spring meant we didn’t get the early private sector capacity of, say, South Korea that allowed a targeted approach to isolating the infected.

Companies developed rapid lateral flow tests to mitigate risks as early as summer 2020 too, but these were not approved until winter 2020.

Why? Well, regulators across the West treated them as any other medical diagnostic test, instead of seeing them as a better tool than people “seeing how they feel” or taking people’s temperatures to enter communal settings.

Focusing on the pandemic is not cherry-picking about how prescriptive regulations harm our societal resilience. Port hold-ups outside Long Beach, California, that crippled global supply chains earlier this year were worsened by local land use laws. Until authorities eventually relented, a regulation prohibiting companies from stacking off-loaded containers more than two high had compounded the strain of high demand for goods by slowing unloading operations. How many other unnecessary or costly rules like this make life marginally worse daily, or else risk bogging down our economies when circumstances change or new technologies arise?

In the US, recent events have raised awareness of the regulatory state’s failures. Prominent centre-left commentators are even writing of a sclerosis whereby accumulated laws, rules, and regulations, combined with vested interests’ resistance to change, helps slow everything from the building of new infrastructure to the approval of life-saving drugs.

Such enlightenment about regulation’s importance does not seem to have been revived in the UK, at least yet. This is a shame, both because Brexit represented a potential moment to reinvigorate that debate and because Boris’s agenda will achieve little without it.

Yes, the government-commissioned Taskforce on Innovation, Growth and Regulatory Reform has highlighted some opportunities for certain industries post-Brexit. But leaving the EU represented a bigger chance to reassess or sunset large quantities of existing rules, as well as overhaul frameworks for the regulation of sectors such as government procurement, data, and agriculture.

Boris Johnson’s “levelling up” agenda, meanwhile, is nothing without fixing the housing market and delivering the promised new infrastructure. Yet neither of these can be achieved in a successful way without deregulatory planning reform and loosening rules that inflate the costs of major infrastructure projects.

Deregulation might be perceived as an agenda for a bygone era, then, but through his entrepreneurialism Musk often finds himself ahead of the curve. And if the past two years of Covid have proven anything, it’s that politicians aren’t particularly good at chasing it.

Related Posts

The expert revealed the advantages of GM-200 radars, which Ukraine will receive.

According to Zhdanov, the acquisition of these radars will be the next step towards the creation of an integrated system of air defense and anti-missile defense of…

“epidemic” in the Customs Service: the dismissed deputy head and subordinates “got sick” – People’s Deputy

Ruslan Cherkasky is allegedly trying to “come to an agreement” and refused to write a resignation letter. An “epidemic” began in the Customs Service after searches and…

Italy is preparing a new package of aid to Ukraine: it may include air defense

The decision will be made with Paris. Italy is preparing a new aid package for Ukraine / photo Mykhailo Palinchak A new package of military aid to…

Russia hit home in Kramatorsk: there are dead, people are being searched under the rubble

Donetsk OVA reported that the house was completely destroyed as a result of the impact. Russians hit a house in Kramatorsk / photo t.me/pavlokyrylenko_donoda On the evening…

In the east, the situation is getting tougher.

Today, the President held several operational meetings with the military. Zelensky spoke about the situation at the front / facebook.com/GeneralStaff.ua At the front in the east of…

The Prime Minister of Israel is ready to become a mediator between Kyiv and Moscow.

Benjamin Netanyahu has changed his mind and already wants to help establish a dialogue between Ukraine and Russia. Benjamin Netanyahu is ready to become a mediator /…

Leave a Reply

Your email address will not be published. Required fields are marked *