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Protecting the Environment for Innovation: A Regulatory Improvement Commission

By / 2.13.2014

A Regulatory Improvement Commission would solve the issue of regulatory accumulation, the layering on year after year, of new rules atop old ones. The fundamental problem is not that government keeps creating new rules, but that it never rescinds old ones. As a result, U.S. businesses and entrepreneurs are enmeshed in an ever-growing web of complex rules that are sometimes duplicative, sometimes in conflict with each other, and sometimes obsolete. Like barnacles on a ship’s hull, the sheer number and weight of regulations imposes a drag on economic growth. Regulatory accumulation also raises the costs of entry to entrepreneurs, and creates big opportunity costs as the time and attention of business managers is consumed by compliance with rules rather than creating new products or better business processes.

This problem demands an institutional response. It is unrealistic to expect the same agencies that promulgated rules to eliminate or modify them. Some new entity must be created and charged exclusively with pruning old rules that inhibit innovation and entrepreneurship. PPI has proposed creation of a Regulatory Improvement Commission (RIC) to fill this vacuum. It is modeled on the Defense Base Realignment and Closure Commission (BRAC), which Congress created in 1990 to create a politically feasible way to reduce excess military infrastructure.

The RIC would consult experts, business and the public to draw up a list of regulations that should be eliminated or improved, and present it to Congress for an up or down vote. As a small body that convenes occasionally, and relies largely on staff loaned to it by Congressional and Executive Branch offices, its costs would be negligible. The savings — both in terms of retiring costly rules and reducing the drag of regulatory accumulation of economic growth and entrepreneurship — could be enormous.

Like BRAC, the RIC would provide political cover to Members of Congress, who otherwise would have to vote individually on rules often defended by entrenched and politically powerful interests. The process of “getting it done” has already begun: Sens. Angus King and Roy Blount last year introduced bipartisan legislation in the Senate to establish the RIC.

The above remarks were prepared for delivery at the Kauffman Foundation’s 2014 State of Entrepreneurship event on February 12.

For recent PPI work on regulatory reform, see our latest policy memo and op-ed.