Brexit

The Brexit Vote is a Referendum on the European Union's Thousands of Stifling Regulations

Stay or go, however, the UK's own regulatory burdens won't go away.

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brexit—Bettina Strenske-Photoshot-Newscom

How many people does it take to change a lightbulb in England? Depends on what the European Union (EU) says.

A priest in Suffolk, England used to hire a man to climb a ladder to change his lightbulbs.

That was fine until the European Union Working at Heights Directive banned this activity so that now the priest must spend the British equivalent of nearly $2,000 to take two days to erect a scaffold.

Is it any wonder that people in the U.K. are upset with the regulations imposed from Brussels?

Between 1957 and 1997 the EU put out 10,000 regulations. In the next seven years, they added an additional 12,000 regulations (about 1,700 per year). The vast majority of them (only about 1 in 200) have no analysis of the likely impacts. This is problematic as the costs of EU regulations are estimated to be above 70 percent of the costs of all regulation. 

But relative to the pace of regulations put out by the U.S. federal government, the EU could be viewed as highly restrained. In 2015 alone,  the United States put out 3,378 rules (with another 2,234 under consideration).

How do we end up with so many regulations, including the ones that may cause a church to close down?

The standard answer in economics is "concentrated benefits and dispersed costs." What that means is that there are always groups—whether they are industry groups or activists groups—who gain a lot from an individual regulation, meaning they get the concentrated benefits. But the people who bear the costs—consumers, small business owners, and workers—generally pay small costs for each individual rule. As the rules add up, so do the costs. The issue is that while ordinary people bear these costs, the incentive for any individual to object to a single regulation is fairly small. 

The United States has its own share of stupid rules like specifying the number of cherries that must be in fruit cocktail or the 11 different allowed ways to pack pineapple in a can. And we don't do a very good job at looking at the impact of our rules either, for big or small. Between 2004 and 2013 only 116 out of the 37,000 regulations had estimates of benefits and costs. How about impacts on small businesses? The EPA recently certified that a gigantic rule expanding their jurisdiction over waters in the United States (WOTUS) did not significantly impact small businesses. Farmers appear to disagree strongly.

It's easy to understand the sentiment behind a "Brexit" when the EU required farmers in the U.K. to buy £5,000 machines to label every egg as to when it was laid and the identity of the chicken. (Who knew they all had names?) But go or stay, the problem of regulation will remain in the U.K., just as it will in the United States. However, if the U.K. decides to leave the EU, there are some reforms they could undertake to begin to get control over the regulatory state.

First, set up the system to ensure legislators know what problem they are addressing. Make sure alternative ways to solve the problem are considered and that the benefits of the chosen solution exceeds the costs. This is known as a regulatory impact analysis. Make this a legal mandate, meaning that if an agency doesn't do it, anybody can go to court to stop the rule.

Second, don't pass legislation that gives agencies the authority to pass rules into infinity and with deference on their interpretations from the courts.

Third, sunset the legislation, provide for retrospective review and give the agencies a social budget cost to implement the legislation.

Finally, make agencies accountable to legislators. For really big rules, with a high economic impact, they should have legislative approval.

There are many, many bills before the U.S. Congress right now trying to implement some of these recommendations, but they are stalled. One reason they are stalled goes back to why we get so many of these rules in the first place: concentrated benefits and dispersed people bearing the costs in terms of lost businesses, lower wages and higher prices. If the U.K. does leave the EU, it should take this opportunity for a regulatory reset.

Richard Williams is director of the regulatory studies program with theMercatus Center at George Mason University.

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23 responses to “The Brexit Vote is a Referendum on the European Union's Thousands of Stifling Regulations

  1. …there are some reforms they could undertake to begin to get control over the regulatory state.

    …which they won’t undertake regardless of whether they leave or not, because every time a regulation is repealed or relaxed, six billion children die.

    Also, spoiler alert: they won’t leave.

  2. When is this fucking vote? I’m officially sick of this League Play of an issue.

    1. Tomorrow.

      1. But I want to be disappointed now!

        1. Watch CNN for 10 minutes.

        2. Or, just scroll down the H & R main page for your disappointment fix.

  3. Even if Britain withdraws, British companies will still have to comply with EU regulations if they want to sell their stuff on the continent.

    1. Napoleon’s Continental System would have worked if he just focused on overwhelming regulation, instead of outright bans.

    2. Serious question:

      Do American (or Chinese) companies have to comply with each and every EU reg to sell there? Does the entire production process have to meet EU standards, or do only the products themselves have to meet EU standards?

      1. No… just the EU regs covering imports.

        1. Indeed, but much of this regulation is from agreements reached at international bodies such as the WTO so its not that much of a problem.

  4. “It’s easy to understand the sentiment behind a “Brexit” when the EU required farmers in the U.K. to buy ?5,000 machines to label every egg as to when it was laid and the identity of the chicken. (Who knew they all had names?)”

    Watch this. Proof that chickens have names.

  5. Matthew Lesko has aged badly.

    1. he has aged “poorly

  6. Hey, my chickens had names…well 4 of the 50 or so.
    We had:
    Blackie – she was all black
    Hitler – my brother shot her with a bb gun in the knee so she spent the rest of her life goosestepping
    Miss Priss – she was 1000 years old and laid eggs with a leathery shell…and only occasionally
    and Willy – the leghorn rooster who would give a Siberian Tiger second thoughts of attacking

    then we had about 20 layers and 30 feeders of no names.

  7. Do you know who else knows how to label a goat?

    1. Chupacabras?

  8. The reason Brits voted to leave the EU is the same reason that led to the nomination of Donald Trump. They are angry. Look at the electoral map. The Midlands carried the day. Working and middle class.

    In the 70s the wealthiest 10% of Britons controlled 28% of the wealth. Today they control 45%. In America between 1983 and 2009, over 40 percent of all wealth gains flowed to the 1 percent and 82 percent of wealth gains went to the top 5 percent. The bottom 60 percent lost wealth over this same period.

    The same pattern is being replicated in every “advanced” nation in the world. In the last 30 years, the ranks of official lobbyists have exploded. In 1970, there were 5 registered lobbyists for every one of the 535 members of Congress. Today there are 22 lobbyists for every member. Do you think they are flocking to that line of business because it is unremunerative?

    Time to wake up. We either go the way of the Weimar Republic and let populists who tap into the rage but have destructive solutions carry the day or someone, anyone, but someone in the upper reaches of the wealth spectrum begins to realise that this is not merely a problem of the 99%, it is a problem of social survival.

    Oh, well. I guess their solution will be the same as the Donald’s. Build higher walls around the mansion and fly-in fly-out.

    We are still breathtakingly stupid. Hello….. anyone out there?!?!?

    1. Here’s a question: How many EU member countries were NOT collaborators or conquered by Nazis in the 40s?

  9. Could they proofread and fix the 2nd paragraph?

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