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Today’s Note: To Regulate or Not

February 22, 2012

We have a lot of laws. Maybe too many. How do we know? Well, if you are the February 18, 2012 edition of the Economist (, you might note that “A Florida law requires vending-machine labels to urge the public to file a report if the label is not there.”   [all italics are mine, and denote a quote from the original article]

The article, “Over-regulated America,” also notes that “The Federal Railroad Administration insists that all trains must be painted with an “F” at the front, so you can tell which end is which.” Beginning by making light of apparently silly laws, the piece warms up to its topic admirably:

But red tape in America is no laughing matter. The problem is not the rules that are self-evidently absurd. It is the ones that sound reasonable on their own but impose a huge burden collectively. America is meant to be the home of laissez-faire. Unlike Europeans, whose lives have long been circumscribed by meddling governments and diktats from Brussels, Americans are supposed to be free to choose, for better or for worse. Yet for some time America has been straying from this ideal.

The article also takes health care reform to task, extensively,

Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000. There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis.

For the record, several earlier notes discuss the ICD-10 implementation described in the above quote.

In the end, the article calls for a simple change: “America needs a smarter approach to regulation.” It suggest that smarter means:

First, all important rules should be subjected to cost-benefit analysis by an independent watchdog.


More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.

That’s hard to argue with. This is an excellent article, both informative and insightful. I highly recommend it.

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