Sometimes, the most important government reforms are the most boring.
A good example is the "Right the Rules" initiative being spearheaded by Rep. Daniel LaMahieu (R-Cascade). Right the Rules is a comprehensive legislative review of Wisconsin's administrative code. If that sounds as exciting as watching paint dry, you're probably overestimating the thrill of seeing wet paint lose its moisture. Right the Rules is less exciting than watching paint dry, or perhaps any activity known to man (I begin to lose consciousness just hearing the words "administrative code"). But the Legislature's investment in tedium should lead to a leaner, meaner Wisconsin that pays off in jobs, income and a more dynamic future.
There are 1,768 chapters in the Wisconsin Administrative Code and nearly 12,000 pages of rules that poke their nose into every nook, cranny and orifice of the state's body politic. Among other things, the administrative code sets standards, mandates and required practices for nearly every Wisconsin business. Some of these rules are no doubt valuable and necessary to protect public safety, environmental quality and employee rights. But just as certainly, others are outdated, duplicative, or needlessly onerous.
Complying with the code's requirements is costly. At the very least, there is an "opportunity cost" as business owners are forced to pay attention to complying with new and existing regulations rather than concentrating on their core business and keeping customers happy. Satisfying administrative mandates can also raise production costs, which will in turn be reflected in some combination of higher prices, lower wages and less reinvested profits. These negative effects obviously reduce economic growth and long-run prosperity in Wisconsin, with small and newer businesses being particularly hard hit. Big companies often have legal staff that stay abreast of changes in the code and ensure that their firms remain in compliance. Staying on top of regulatory changes is more of a challenge for small businesses that lack this specialized expertise.
Right the Rules is examining the administrative code from top to bottom, with an eye toward right-sizing the regulatory framework and paring back rules that raise the cost of business or government services unnecessarily. The review process has been doled out to 36 committees, each chaired (with one exception) by a different Assembly rep. These committees include industries and issues such as education, health, energy, veterans, natural resources, workforce development and corrections. Each committee chair is responsible for examining the chapters of the administrative code that fall under his or her jurisdiction. After their review, the committees prepare summaries of their findings and introduce bills that amend the relevant portions of the code. Two such reform bills have been introduced to date, related to transportation and financial institutions.
What will the Right the Rules examination reveal? If anyone knew that, there would be no need to undertake the initiative. This is the first comprehensive review of the state's regulations, and the first systematic effort to eliminate unnecessary or onerous rules. Administrators' business-as-usual approach is to issue a never-ending stream of new mandates to address (supposedly) new needs and add them to the existing code. This causes regulation to grow like Topsy, with little or no attention to the big picture or the overall regulatory burden being imposed on private and public enterprises.
Right the Rules fundamentally changes this dynamic. It establishes a valuable legislative check on administrative agencies' natural inclination to grow. It creates a more balanced regulatory environment by examining the costs as well as benefits of new rules. Right the Rules also encourages input from individuals and businesses subject to different chapters of the administrative code, and thereby facilitates decentralized, bottom-up, grassroots democracy as opposed to the more top-down, administrative government model.
By potentially streamlining regulation and reducing unnecessary regulatory costs, Right the Rules can play an important role in Gov. Scott Walker's efforts to improve Wisconsin's business climate. Existing firms across the industry spectrum will benefit from a lighter regulatory burden. More importantly, Right the Rules will be a boon to entrepreneurs, since start-up firms are most vulnerable to regulations that raise their costs or hinder their ability to compete. Regulatory restrictions are a silent killer that smother new firms or prevent them from being formed in the first place, and Right the Rules should scale back some of the most damaging barriers to new business formation.
It isn't as sexy as partying in Monte Carlo, or even promising to "fix" health care, but slogging through the administrative code and eliminating unnecessary regulations is exactly the sort of thing our elected officials should do more often. Politicians like to be seen delivering goodies to constituents, but they often do more good by creating the right general environment and letting the future happen on its own. As a non-famous economist once said, what is not seen is often more important than what is seen. Kudos to Rep. LaMahieu and all Assembly members involved in this non-glamorous but important, under-the-radar work.
Larry Kaufmann is an economic consultant based in Madison.