The sheer bulk of our regulations is exploding. By any reasonable measure, our regulations are obese; our super-size body of regulations cost more to create, feed and implement -- and they aren't getting their intended job done!
When confronted with the huge bulk of our regulations, some people say we need more regulations, while others claim we need fewer. This is the wrong debate.
The real problem is the kind of regulations we have -- our regulations spell out how we're supposed to do things, when they should be telling us what we need to accomplish.
What is the goal of regulations?
In most cases, regulations are created to assure things that you, I and most sensible people want.
- When corporate officials cook the books or otherwise hide what's really going on, we want them to stop and to be held responsible -- like, go to jail! That's SarBox.
- We want hospitals and doctors to be careful with our medical records, and not pass them out to anyone who asks for them. That's HIPAA.
- We want financial institutions to be careful with our records, and make sure our private account and transaction information are kept safe. That's PCI.
- We want our money to be safe when invested with investment people and the stock market; we don't want people stealing or pulling strings to make themselves richer and us poorer. That's the SEC.
These regulations and many more are sensible. I want them and you probably do too. I want the corporate bad guys to go to jail. I want the medical people to keep my records confidential. I want the banks to keep my finances to themselves. I want my banks to be sound and the financial reports generated by public corporations to not be phony.
How are all those Regulations working out?
Are the regulations and regulators doing their job? How about Bernie Madoff? All sorts of bad things helped create the financial melt-down we're suffering from -- how many of the top execs got in any kind of trouble over it, not to mention went to jail? There are massive losses of credit card data, some of which make the news and most of which don't, causing endless trouble to consumers with identity theft. Who's held accountable?
The one certain thing about regulations is that we pay the price for following them. What is optional is that they do their job. In fact, if you think about it, if your financial records aren't always stolen, it's not because the regulations are effective -- it's because most people are honest, and don't want to steal your financial records!
We're getting more and more regulations, and we're taking more time, trouble and money to create and follow them. But the resulting regulations are doing a poor job of stopping the bad things we want them to stop.
Means vs. Ends
The reason why our ever-growing number of regulations fail to protect us is simple. In the vast majority of cases, they spell out, often in great detail, how to accomplish the goal, instead of plainly and simply defining the goal. The regulators insist on giving us what amounts to detailed, turn-by-turn directions for driving from Lincoln Center in Manhattan to Ridgewood, NJ instead of simply stating that we should drive safely to Ridgewood, NJ, and leave the exact route to us.
I usually like to drive up West End Ave to 72nd Street, turn left, and go up the West Side Highway to the George Washington Bridge, and so on. I wouldn't be surprised if that's the route the regulators would insist that I take.
However, sometimes when there's traffic, I continue north on West End up to 96th St and get on the West Side Highway there. That's not how the regulators or the GPS would tell you to go, but it turns out to be the smart route to take in certain traffic conditions. Given that no one has regulated (at least yet) my route to Ridgewood, I am free to take the route I think best and adapt to changing conditions. I can learn and innovate, so long as I reach the goal safely. Makes sense. But that's not how regulations work!!
If my trip were regulated the way HIPPA, PCI and other things are, I would be slapped with a fine or worse for "violating the regulations" by failing to take the 72nd St entrance to the West Side Highway. Because the regulations give me exact, turn-by-turn directions I have to follow for reaching the goal, rather than simply letting me drive to the goal in the most sensible way.
Are Too Many Regulations a Problem?
No! But it's a BIG problem that we are buried under mountains of micro-managing, often-obsolete, turn-by-turn-directions-type regulations, which are by their very nature bulky. Which wouldn't be so bad if they actually got the job done.
If we had goal-oriented regulations, they would be concise, clear, and not need revision very often. They would be easy to understand and leave room for people to learn, adapt and be creative while still achieving the intended goal of the regulation.
We Need Regulations
We need government to establish and enforce a common set of rules that make our lives better. In that sense, we need regulations. We benefit from having them and we benefit from having them be enforced. But not if they're costly, out-of-date, stifle innovation and on top of it all don't work!
If regulations were written to define the goals they are intended to accomplish, they would be inexpensive, always relevant, enable innovation and have a much better chance of being effective. We should all want regulations that tell us what to do, and leave it to us to determine how to do it. Don't tell us how -- tell us what.
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