By: Terence Durkin
It was a key theme of the Trump campaign, that overwhelming federal regulations suffocate industry and stifle much needed innovation. Despite historically low levels of unemployment, national wage growth still lags behind past rates and the labor participation rate continues to sit at historic lows. Technological innovation can be a solution to these problems if only the federal government would get out of the way.
Technological advancement and innovation are key drivers of raising compensation for workers, developing new industries, and lowering consumer prices. The logical chain of events goes something like this: innovation leads to increased productivity of workers, which allows workers to produce more, and therefore earn more. The current unemployment numbers indicate that the jobs are indeed there, but technological innovation is needed to grow the wages of those jobs, create new jobs, and entice workers to reenter the labor force.
According to the Competitive Enterprise’s annual “Ten Thousand Commandments,” thirty regulatory rules were issued for every one law enacted in 2015. Clyde Wayne Crews, Ten Thousand Commandments, Competitive Enterprise Institute (May 3, 2016), archived at https://perma.cc/H3G4-DYNN. Unsurprisingly, the costs of complying with these stifling federal regulations hit $1.885 trillion, higher than that year’s individual and corporate income tax burden of $1.82 trillion. While the George W. Bush administration averaged 62 major regulations annually over eight years in office, the Obama administration averaged 81. This trend must be reversed.
Thankfully, the Trump administration has taken steps to reverse these trends and to combat the behemoth that is the federal regulatory state. Shortly after taking office, President Trump signed Executive Order 13771 titled “Reducing Regulation and Controlling Regulatory Costs.” The goal of this executive order is to reduce regulatory burdens and overall regulatory costs by requiring each agency to (1) eliminate two regulations for each regulation proposed and (2) ensure that any incremental costs associated with new regulations are offset by the costs associated with the eliminated regulations. By late February, the President also signed Executive Order 13777, titled “Enforcing the Regulatory Reform Agenda,” which requires each agency to (1) designate a regulatory reform officer to oversee the implementation of regulatory initiatives and policies and (2) designate a regulatory reform task force to evaluate existing regulations and make recommendations regarding the repeal, replacement, or modification of current regulations.
While some steps have been taken by the Securities and Exchange Commission (SEC), the Federal Communications Commission (FCC), the Federal Trade Commission (FTC), and other regulatory agencies, more can be done. Deregulation at the SEC can reduce costs in the financial tech sector where companies are currently forced to navigate through increasingly complicated regulatory regimes such as the CFPB. Deregulation at the FCC can roll back costly regulations such as those on Internet Service Providers (ISPs) brought under the purview of Title II of the 1934 Communications Act by the Obama administration. Lastly, deregulation at the FTC can be accomplished by leveraging new technologies, making enforcement rules more efficient and effective.
The growth of onerous regulation over recent decades has had long-term effects on capital investment, innovation, and growth. As regulations are rolled back by the Trump administration, we can hope that capital investment will shift from often-wasteful regulatory compliance costs to investments in promising technologies. Only then will productivity increase, compensation grow, new industries develop, and consumer prices fall.
Student Bio: Terence Durkin is a 2L at Suffolk University Law School. He is currently a staff member of the Journal of High Technology. Terence holds a B.A. in Economics from Wesleyan University.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.