A simple theory of regulations, new and old

Great post by Tyler Cowen of "Marginal Revolution."

"Q = min (#laws, #regulators)

The number of laws grows rapidly, yet the number of regulators grows relatively slowly. There are always more laws than there are regulators to enforce them, and thus the number of regulators is the binding constraint.

The regulators face pressure to enforce the most recently issued directives, if only to avoid being fired or to limit bad publicity. On any given day, it is what they are told to do. Issuing new regulations therefore displaces the enforcement of old ones.

If the best or most fundamental regulations are the ones issued first, over time the average quality of regulation will decline.

Critics from both sides will claim, at the same time, that “regulation is too high,” and “regulation is too low.” They will both be describing aspects of the same proverbial elephant.

The ability of a new regulation to pass a (partial equilibrium) cost-benefit test does not mean said regulation is a good idea, at least not without adjusting for the “crowding out” effect.

Hiring more regulators will address the dilemma only temporarily (assuming that the number of regulators cannot keep up with the number of laws). At first more regulations will be enforced, but as time passes the quality gap between the enforced regulations and the most important regulations will again open up.

If you think you just passed some really, especially important regulations, slow down the pace of future regulations.

If you are pro-deregulation, slowing down the pace of forthcoming regulations won’t much help your cause. It will shift back attention and labor to slightly more important regulations, however. It is possible that the net regulatory impact goes up.

Sunset provisions may induce regulators to treat, enforce, and monitor the old regulations more like the new ones, and vice versa. What other institutions might contribute toward this end?"