Less burdensome regulation has led to economic growth in some states, but Pennsylvania trails far behind.
As the commonwealth slips in population and job growth, one report argues that its red-tape-laden system will create more problems in the future.
Nationally, Pennsylvania is the 14th-most regulated state, according to an analysis by the Mercatus Center of George Mason University.
With more than 164,000 regulatory restrictions on the books, the commonwealth focuses more on areas like environmental protection, culture and the arts, and administration than other states — but much less in areas like health services and banking, insurance, and securities.
But Pennsylvania was not the worst of its over-burdened neighbors. New York and New Jersey ranked 2nd and 3rd, respectively, with Ohio at 6th, and Maryland at 21st. West Virginia was not ranked in the study.
“Jurisdictions that allow regulations to consistently pile up over the years experience slower economic growth, but this effect can be reversed when policymakers actively cut red tape,” the Mercatus Center’s Patrick McLaughlin and Dustin Chambers argued. “Policymakers can reduce the harm of excessive regulation by improving the management of their rulemaking systems, thereby making it more likely that the rules on the books actually solve the problems they were intended to solve.”
Though right-wing thinkers and politicians tend to talk more about overregulation and the need to reduce red tape, Mercatus pointed to a left-wing success story: British Columbia in Canada.
There, they credit leaders as being pioneers in getting rid of red tape.
“Its economic growth rate increased by one percentage point because it cut regulations by nearly 40%,” McLaughlin and Chambers argued. “Several US states have attempted to follow suit, including Idaho, Iowa, Kentucky, Missouri, Montana, Nebraska, Ohio, Oklahoma, and Virginia.”
Pennsylvania, too, has had Republicans decry regulatory burdens while Democratic Gov. Josh Shapiro has made strides in permitting reform to clear out red tape and avoid delays.
To improve Pennsylvania’s over-regulated ranking, it may take re-examination.
“The big takeaway for me is, even if you do the best job you possibly can when you’re making regulations, thinking about the unintended consequences, you still shouldn’t leave things on the books unexamined,” McLaughlin said. “Five or 10 years down the road, is there a process in your state for looking back and seeing if something worked? You can’t leave it on autopilot.”
To do so, the report recommended state leaders consider regulatory budgets — which caps how many regulations can be on the books — and regulatory sunsets, which removes a rule unless they’re renewed by the legislature.
Change also comes from regulatory agencies encouraging better work, rather than more regulation.
When McLaughlin worked for the U.S. Department of Transportation, he said he was awarded a plaque in recognition of creating a new regulation. But when his team decided against making a new regulation because they determined it’d create a lot of costs without much benefit, they didn’t get an award.
“There’s no incentive for us to (stop a bad new rule), there’s no reward for doing that,” McLaughlin said. “If you work at that agency, if you want to excel and rise up in the ranks, you respond to incentives and make new regulations.”
Unless leaders reward workers for getting rid of bad existing rules, he argued, few rules will get reviewed.
“States that manage to change that process by re-evaluate old stuff … they’re the ones that can change the way regulations tend to actually accumulate,” McLaughlin said. “Leaving regulations on their own, not worrying about red tape, is going to imply slower economic growth, more poverty, lost jobs.”
