Regulatory Cost-Benefit Analysis

Ensuring a Regulation’s Benefits Exceed Its Costs

Blame-shifting to avoid accountability is nothing new in American politics. So, it is no surprise when bureaucratic agencies—and those who lead them—blame the private sector, rather than themselves, for financial downturns and bad outcomes.

The truth is that outdated, conflicting, and ineffective government policies stifle economic growth and prosperity with the force of law. Yet, the response to this kind of bad government is to grow government by creating even more regulations—throwing good money after bad.

Worse, sometimes the government creates “solutions” to problems that don’t exist in an effort to win political favor, increase power, or stifle competition.

Regulations are easy to create, and almost impossible to get rid of—adding up to an ever-growing web of regulatory framework that has become impossible for the average American to traverse.

If we are to give the American entrepreneurial spirit a fighting chance to thrive, the regulatory strings tying it down need to be cut.

Requiring every newly proposed regulation to undergo a rigorous cost-benefit analysis (CBA) will reveal whether proposals are fiscally sound and beneficial to those they are meant to serve. The results of CBAs should also be publicly available for free and easy to access online so that anyone can research how government regulations might affect them.

This process can be enhanced by mandating backward-looking analysis on regulations that are at least five years old to assess their true costs and effectiveness.

Finally, businesses and individuals must have the ability to challenge rules when those rules are in violation of their CBA. Culling out bad regulations will shrink heavy-handed bureaucracies and giving the public an opportunity to scrutinize remaining regulations will create opportunities for innovation in the marketplace of ideas.