The Nashville-based Beacon Center of Tennessee unveiled a strategy Tuesday to whittle down the mass of regulations that burden businesses in the Volunteer State.
Beacon cites 2017 data from the National Small Business Association indicating that the total financial burden that regulations place on the average American business in its first year of operation surpasses $83,000. And while national regulations are famously onerous, even the generally free-market state government in Tennessee imposes a weighty regulatory regime.
State regulations now number more than 114,000 and contain more than eight million words. In its report titled “The Jungle of Red Tape and How to Beat It Back,” the center posits one person would need to devote 11 workweeks to peruse all of Tennessee’s regulatory texts.
These rules, Beacon stresses, have demonstrably hindered many entrepreneurs and innovators. The free-market nonprofit cites the example of Adam Jackson, a military veteran who the Tennessee Alarm Systems Contractors Board prevented from launching his company to create facial-recognition software to enhance the effectiveness of security cameras. The board faulted Jackson for not being licensed to install alarms, despite Jackson not aspiring to be an alarm installer.
Regulations like the ones that sank Jackson’s endeavor tend to stay in effect without state agencies giving them much thought, despite the Tennessee code’s requirement that rules get periodically reviewed for potential sunsetting. In its report, Beacon expressed some hope that red tape could get substantially slashed insofar as the general assembly is requiring all departments to submit recommendations by December of next year on all existing regulations to either be repealed, amended, or left alone. Agencies will also need to justify the rules’ compliance with state and federal law as well as relevant court rulings.
But the center believes the state’s upcoming review takes only a “first step” in what should be a comprehensive effort to lessen the regulatory burden on Tennesseans. Other recommended moves to curtail regulatory excess include a requirement that independent analyses — conducted outside of the state agencies writing the rules — be conducted to determine the impact that regulations will have on Tennessee businesses. Beacon also wants the state Government Operations Committee to instruct agencies to review the effects that existing rules have already had on commercial entities.
Another suggestion is a one-in-one-out policy that would force state departments to eliminate one regulation for every new one that is finalized. Beacon also wants Tennessee to introduce a “regulatory sandbox” program whereby entrepreneurs launching novel technologies can bypass outdated regulations that do not serve the public interest in terms of safety or health.
According to Beacon and other research institutions like George Mason University’s Mercatus Center, the Canadian Province of British Columbia has shown deregulation can help a regional economy flourish. The province struggled in terms of job creation and wage growth in the 1990s but its leaders decided thereafter to force regulators to nullify one rule for every new one proposed. Officials originally aimed to kill one third of British Columbia’s regulations within three years but were ultimately more successful, doing away with about half of them in that time.
Since the new policy took effect, the province has experienced a transformation that has inspired free-market advocates to urge its emulation. From the late 1980s until 2001, British Columbia was the worst-performing jurisdiction in Canada in terms of gross domestic product (GDP) growth. After regulatory reform, the region’s GDP quickly exceeded Canada’s overall growth and it rose to the highest among Canadian provinces in 2015.
“If Tennessee lawmakers wish to engage in broad regulatory reform, they will be rewarded,” the think tank’s report states. “The example of British Columbia shows that while regulatory reform is unlikely to grab headlines, it can transform economies in just a few short years.”
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