While a bill that would begin a small regulatory reduction appears dead in the Senate, a new report shows Mississippi is the most regulated state in the South. 

This is according to a new brief authored by James Broughel and Kofi Ampaabeng from the Mercatus Center at George Mason University. On a population-adjusted basis, Mississippi has a regulatory rate of 0.039, meaning regulations per person. Louisiana has the second most at 0.035, followed by Kentucky with 0.029. 

Louisiana isn’t that surprising. In terms of the total number of regulations, they have the second most in the South with 163,000. Florida has the most at 171,000, yet adjusted for population, that dips to 0.008. A fraction of Mississippi’s regulatory burden. 

Why is this helpful? It paints a better picture of Mississippi’s regulatory burden (though not actually better). One could argue that in terms of raw number of regulations, we’re middle of the pack nationwide – or not that bad. But as the brief outlines, there are reasons that more populous states might tend to have more regulations than less populous states.

“For example, more populous states might have more industries, so some forms of regulation may not be necessary in less populous states,” the authors note. “It is also possible that more populous states have denser population than less populated states, and when more people are congregated in smaller areas, certain externalities or other market failures could be more prevalent, thereby necessitating more regulation. 

“Finally, some scholars have posited that there are fixed costs associated with regulating and that larger populations will be able to absorb these fixed costs more easily by spreading them across a greater number of people. Therefore, more populous states could be expected to have more regulation because it is relatively cheaper for them to impose regulation than less populous states.”

What does this matter? Regulatory growth has a detrimental effect on economic growth.

Regulatory growth has a detrimental effect on economic growth. We now have a history of empirical data on the relationship between regulations and economic growth. A 2013 study in the Journal of Economic Growth estimates that federal regulations have slowed the U.S. growth rate by 2 percentage points a year, going back to 1949. A recent study by the Mercatus Center estimates that federal regulations have slowed growth by 0.8 percent since 1980. If we had imposed a cap on regulations in 1980, the economy would be $4 trillion larger, or about $13,000 per person. Real numbers, and real money, indeed. 

On the international side, researchers at the World Bank have estimated that countries with a lighter regulatory touch grow 2.3 percentage points faster than countries with the most burdensome regulations. And yet another study, this published by the Quarterly Journal of Economics, found that heavy regulation leads to more corruption, larger unofficial economies, and less competition, with no improvement in public or private goods. 

For those hoping for reform, House Bill 1422, which passed the House, would have created a pilot program for regulatory reduction. The way the bill works is the Mississippi Departments of Health, Transportation, Agriculture and Commerce, and Information Technology Services would have review its existing regulations, accept written comments from the public for 60 days following the review and conduct at least two public hearings for citizens and businesses to identify any rule or regulation that is burdensome.

The review would have to be conducted within 120 days of HB 1422 becoming law. Each of the agencies covered in the pilot program would have to reduce their regulations by:

  • 10 percent by December 31, 2020.
  • 20 percent by December 31, 2021.
  • 30 percent by December 31, 2022.

This bill needs to clear Accountability, Efficiency, Transparency committee in the Senate today or it’s dead.