While most media and academic attention is devoted to what
happens in legislatures and to the statutes they produce, most
governing is done through the enactment and enforcement of
regulations. Because this workhorse of government is under the
radar for most citizens, it is not surprising that this system is
not well known or understood by the general public. More surprising
is how many academics continue to fundamentally misunderstand the
In this and the next few columns we'll look at some
pervasive regulatory myths.
Myth number 1: the fewer regulations the better.
The most common myth is the notion that the major problem for
innovation and competitiveness is the volume of regulations. None
of the various federally regulated industry sectors with which I
have been involved over the last four decades say that they suffer
from too many regulations. Indeed, to facilitate exports or to
maintain a level playing field they often want more. Their problems
arise from bad regulations or bad enforcement. The main cause of
"regulatory burden" or "red tape" is the
failure of the regulatory system to respond in a timely way to
new science or to changes in the business environment.
Lack of responsiveness can arise from a sclerotic regulatory
change system. Canada's was described once as the slowest in
the Western world. Or delays can arise from the fact that a
proposed change would create winners and losers, and the losers
lobby hard to stall the change. When there is a lack of consensus
within an industry or between industry and the protection of the
public, our political leaders have to make difficult choices (what
governing is all about) and this causes delays.
So the problem is responsiveness, not volume. And yet professor
Cass Sunstein, a leading academic who also led the U.S. Office of
Information and Regulatory Affairs (OIRA), constantly brags that
thanks to OIRA the Obama Administration "issued fewer
regulations in its first four years" than any president back
to and including Reagan. That Sunstein still labours under this
delusion shows how deeply engrained is the flawed assumption that
fewer is always better. Many governments, thinking they are helping
industry by reducing the volume of new regulations, put in place
barriers to their speedy enactment, seemingly unaware that most
regulations are to amend existing out-of-date regulations, and so
the barriers are actually counterproductive. Moreover, to get
around these self-imposed delays in the regulatory process,
bureaucrats resort to using guidelines, often resulting in
regulatory uncertainty, an even bigger problem for
A cursory review of the recent regulations enacted by the
Canadian Food Inspection Agency (CFIA) illustrates that most
regulations are to modernize existing regulations, not to impose
new regulatory burdens. With responsibility for 26 sets of
regulations, the CFIA regulatory regime has a huge impact on the
competitiveness of several major industry sectors including the
food industry, Canada's largest manufacturing sector. In the
past 18 months the CFIA brought forward 27 regulatory initiatives,
all amendments to update existing regulations, none imposing new
regulatory burdens. A good illustrative example is the recently
published amendments to the Food and Drug Regulations to clarify
the definition of beer and what ingredients can be added to beer
because "existing standards no longer reflect marketplace
realities." These regulations to allow the industry to be more
innovative and competitive are far more indicative of the role of
regulatory enactments than the myth of the increasing burden of
unnecessary regulatory volume.
According to Canada's regulatory guru, Doug Blair of RIAS
Inc., "the Government of Canada has recognized that the number
of regulations is not a meaningful measure of regulatory burden,
which is why over the past two years there has been an increased
focus on measuring the burden imposed by the
regulation." This, of course, is easier said than done.
Next month we'll look at the much vaunted value of risk-benefit
analysis. The following month we'll look at Sunstein's
overdone theory of "nudging" and his naive notion
that politics can and should be kept out of science-based
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