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Reform Regulation: Make it easy to do the right thing, hard to do the wrong thing

People want regulation because it protects them. But not at any and all cost.

Overview

People want the results of regulation—the value of the protection they receive—to greatly exceed both the costs of creating and enforcing regulations, and the costs of complying with them.

Background

The costs of regulation has been rising each year as governments pile new regulations on top of old—and not just in one agency, but in multiple agencies often affecting the same people and organizations. As they do so they make the web of regulation that a person or business must navigate ever more tangled. And that, in turn, raises the costs of enforcement and compliance, sometimes to the point of hurting the very people the regulations are trying to help.

Key Findings

Every organization produces exactly the results it is designed to produce, and none other. If we want better results, we need a better design. Our design for regulation was developed almost 100 years ago and little has changed since. That design was based on the assumption that people and organizations had to be coerced in complying. It is the design now deeply embedded into the DNA of virtually every regulatory organization.

As a result, many government regulatory organizations rely almost exclusively on the tools of enforcement (i.e., inspection, apprehension, prosecution, adjudication and remediation or incarceration) to achieve compliance. These tools are not only expensive to apply, but they exact terrible costs on those trying to comply by treating all of them as guilty until proven innocent.

The result: Lots of rules that are costly to enforce and hard to comply with, leading to inconsistent results. compliance

Analysis

Most people say they pay their taxes because it’s their duty and because they actually are afraid of getting caught if they don’t. Most people don’t obey the posted speed limit but they do drive at about the same speed as those around them—think of that as obeying a mutually agreed upon speed limit, a social norm that is different than what’s in the law. It is social pressure that enforces that norm. Most people recycle because it too is a social norm—one in which social pressure is applied through the special bins that allow each of us to track the participation of our neighbors.

Recommendations

The NextGen regulatory agency will focus on four main things.

  1. Results: how much difference it makes and at what cost.

  2. Smart enforcement: using data and analytics to target their resources.

  3. Creating a positive experience for those who must comply: responding quickly and efficiently to applications and requests and creating a two-way dialogue on how to improve.

  4. Supporting economic growth: reduce the burden on business by eliminating inefficiencies and streamlining the process of complying.

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