The Regulatory Litmus Test

When I think about whether I would personally approve of a law, I try to establish some consistency and rigor in my views of lawmaking and policy. Politicians today seem to make decisions based on the expected happiness of their major campaign donors, but a more rigorous approach could cut down on needless over-regulation and anti-competitive markets such as state markets seen in the healthcare sector.

Source: rosefirerising / Flickr.

A litmus test helps with that but it still involves subjective judgment calls, so this is no substitute for great leaders. When in doubt, politicians could keep people content by erring toward regulatory simplicity and local control.

  1. Is the law expected to have a net positive impact on U.S. citizens over an eternal time horizon? Does it serve the common good? If the answer’s no to either question, don’t pass the law. If yes to both, continue to step 2.
  2. Can consumer choice serve the same function as the law? Are consumers able to make informed decisions in the market being considered? Is the topic of regulation not associated with the tragedy of the commons? If the answer’s no to any of these questions, consider enacting the law.

When the free market can correct a problem, let the invisible hand do its work. When the common good is at stake, let there be laws.