NJ’s Red-Tape Charade
PRESIDENT Trump has made waves for slashing red tape. His administration claims it has ditched 22 regulations for each new significant rule it put in place, and some observers think that has helped the economy. Well, it turns out New Jersey has been cutting tape, too — since even before Trump became president. Alas, it’s progress on that score is questionable. New York and other states can learn from Trenton’s experience.
In 2010, after taking office, thenGov. Chris Christie put a temporary freeze on new rules. Later, his lieutenant governor ordered a comprehensive review of the state’s regulatory environment. His reforms — perhaps overshadowed by his larger-than-life personality and later by his relationship with Trump — were a two-term priority.
As part of the review, red-tape cutters ID’d a number of wacky, out-of-date rules and laws: One prohibited milk producers from offering coupons. Another banned certain farm vehicles from operating on Sundays and holidays.
One even prevented people with a venereal disease from holding some types of jobs — and restricted their movement unless they secured a permit.
These examples offer great anecdotes for politicians seeking to bring attention to the insidious problem of too much red tape. But how successful was New Jersey’s effort, really? Until now, there have been few metrics to assess Christie’s achievements.
Thus, in new research for the Mercatus Center at George Mason University, I used New Jersey Office of Administrative Law data to determine whether the Christie reforms actually made a difference. Here’s what I found: Each year from 2010 to 2015, more new rules were added to the books than were repealed. And the number of rule repeals actually fell relative to previous years. In other words, the regulatory state continued to grow under Christie’s watch.
That said, new rules were being added to the books at a slower rate than they had been in the recent past, which is a form of progress. But like the fable about a frog boiling in a pot, it may just mean the water takes a little longer to reach a boil.
There are a couple of reasons the effort wasn’t more successful. One is that reformers didn’t have a clear metric to guide them. They should’ve been measuring how much regulation was being added versus taken away each year.
Another is that they weren’t necessarily focusing on the most burdensome rules. For example, as archaic as the venereal-disease law sounds, was it enforced?
A Christie executive order mentions cost-benefit analysis as a guiding principle, but there’s no evidence this kind of analysis played much of a role. This is concerning because not all regulations constitute red tape. Some regulations serve a vital public interest, while some are costly and yet result in no meaningful public bene- fit. Distinguishing between these two types is critical.
New York should heed the lessons. According to the Mercatus Center’s State RegData project, New York’s regulatory code contains more than 307,000 “regulatory restrictions” signified by words like “shall,” “must” and “required,” the most of the 24 states we’ve analyzed. (We don’t have a total count for Jersey because a private company hosts its online code and prohibits us from pulling that data.)
Like New Jersey, New York should employ more economic analysis to anticipate the effects of regulation — but it’s moving in the exact opposite direction.
Soon after taking office, Gov. Cuomo, along with the Legislature, discontinued the Governor’s Office of Regulatory Reform, an economic analysis review unit that worked to ensure state regulatory agencies were adequately considering the costs and benefits of their rules.
This should concern all New Yorkers who want their regulations backed by solid evidence.
New Jersey was able to scrap some silly rules as part of its reforms, but lasting institutional changes have been elusive. Meanwhile, New York’s status as a model for advancing evidence-based regulation is eroding. To stay competitive, both states should take regulatory reforms to the next level.