The Mercatus Center at George Mason University has launched State RegData, “a first-of-its-kind project to quantify the level of regulation across the 50 states.”  It would be impossible to read all those regs so Mercatus is using a text analysis that identifies key words in state codes such as shall, must, may not, prohibited and required.

These are the key words and phrases that give regulations their power, and our state has a lot of them.  “West Virginia has 125,700 regulatory restrictions in its administrative code,” according to the Mercatus study. That’s fewer than Pennsylvania, Virginia and Kentucky, but more than Maryland and North Carolina.  The Tar Heel State has 16,000 fewer restrictions that West Virginia.

Clearly, some (or perhaps many) of the restrictions are important public health and safety measures, but consider the following: The state Code’s rules for acupuncture has 344 restrictions.  Barbers and cosmetologists face a labyrinth of 302 restrictions, while dietitians have 191 do’s and don’t’s. The Division of Water and Waste Management and the Division of Air Quality have a total of 9,087 restrictions!

The Mercatus report says all of these regulations have compliance costs.  Individually they may not be that significant, but “The body of regulations in a state, taken together, has an effect on the economy that is greater than the sum of the effects of each individual regulation.”

Mercatus cites several major studies showing that collectively the profusion of regulations creates a drag on economic growth.  A 2013 study in the Journal of Economic Growth estimated that federal regulation has slowed U.S. growth by an average of two percent a year since 1949.

This is especially relevant in West Virginia, which has been trying to climb out of the economic doldrums for the last decade.

“From 2006 to 2016, West Virginia real GDP growth averaged just 0.7 percent per year,” Mercatus reports. “If this trend continues, it will take 100 years for the state economy to double in size.”  However, if the economy grew at three percent annually, the economy would double in just 24 years.

Last year, the state legislature passed a sunset provision triggering the expiration of all new regulations after five years unless lawmakers reauthorize them. That’s a start, but more needs to be done.

Mercatus suggests a cap limiting regulatory accumulation. It’s working in Canada where a 2015 law requires at least one regulation to be removed for every new one that is adopted. The federal law was modeled after British Columbia’s 2001 measure, which has reduced that province’s regulatory requirements 43 percent.

Our political culture has perpetuated the regulation creation craze by expecting our elected representatives and government agencies to “do something” about every real and potential problem.  The result is a clogged code that inhibits growth and assigns an ever increasing amount of power to the bureaucracy.

The Mercatus report makes clear that a priority for our politicians in West Virginia should be to get rid of regulations before adding new ones.

 

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