Businesses need room to grow

I write today in praise of state employees who work in North Carolina’s regulatory agencies. Because of their due diligence, our state’s business climate is steadily improving — and North Carolinians are beginning to enjoy the benefits.

Longtime readers need not panic (or celebrate). I haven’t suddenly changed my mind about the costs and benefits of government regulations. While some of the rules imposed on households and businesses are entirely justified — they protect public health and safety, at a cost far lower than their benefits — many other rules inhibit the freedom of North Carolinians for no good reason.

Why do such counterproductive regulations get enacted? Often, the very industries being regulated are responsible. Established companies turn the regulatory process to their benefit. They make it costly for competitors to enter their markets, through such means as occupational licensing and costly permitting systems. They don’t mind jumping through hoops or paying fees if it means that smaller or less-established firms have to do the same, since the latter have a harder time shouldering the burden.

Another reason foolish laws get enacted is that government policymakers don’t do their homework. They don’t run the numbers, ask for alternative points of view, or spend time trying to imagine the unanticipated consequences of what may seem at first to be a common-sense rule.

(You may insert your favorite “bathroom bill” insult at this point. But keep in mind that the door swings both ways, so to speak. I would argue that the original Charlotte ordinance, North Carolina’s response as H.B. 2, and Washington’s response in the form of legal action by the Justice Department were all pursued without adequate consideration of the full consequences.)

So why am I praising North Carolina regulators? Because they appear to be doing a good job to date of implementing a key regulatory reform measure enacted by the legislature in 2013. It requires agencies to review regulations that are currently on the books. Officials must make an affirmation decision to keep a rule, run the rule through a lengthy “re-adoption” process, or eliminate the rule.

Think of it as a mandate to clean out North Carolina’s regulatory underbrush on a regular basis. So far, a good amount of the stuff has either been turned into mulch or piled up next to the shredder for future action.

Of the 6,225 state regulations already reviewed under the 2013 law, 690 have been removed and another 1,929 are being put back through the re-adoption process. A bit over half of the reviewed regulations have stayed in place, in other words. Not bad at all.

Of course, we still have a lot of work to do. The cost of doing business in North Carolina has come down over the past five years, thanks to a series of tax cuts and regulatory reforms that began in 2011. But it is still too expensive to start new enterprises and create jobs. A Pacific Research Institute study released last year ranked North Carolina 31st in the nation in regulatory costs, with #1 Indiana having the lower costs and #50 California having the highest. There are bills or budget provisions this session to reform the state’s permitting system for medical services (called “certificate of need”) and to remove restrictions on venture capital. Next session, lawmakers will consider a bill to modify or eliminate some licensing requirements for occupations that North Carolina heavily regulates even when neighboring states such as South Carolina, Georgia, and Tennessee don’t do the same.

Again, the goal here is not to eliminate all state regulation. Conservatives believe that state and local government should enact rules to protect the lives, health, and property of our residents from infringement by pollution, fraud, or negligence. We simply believe that many current regulations don’t meet such a test. They cost more to implement and comply with than they deliver in real benefits for consumers, workers, or the general public.

Let’s keep clearing the underbrush. That will leave space for new ideas, companies, and jobs to grow.

John Locke Foundation chairman John Hood is the author of Catalyst: Jim Martin and the Rise of North Carolina Republicans.
comments powered by Disqus