Since 1989, the volume of regulations that regulate citizen and company behaviour has almost tripled from 7.6 million words in 1989 to 22.7 million words in 2017. On average, the number of words in laws and decrees have increased by 3.9 per cent a year during this period. If this tendency continues, the volume of regulation will increase 23-fold during the average lifetime of a Dane.
Overregulation can involve substantial economic costs. As an example, Coffey et al. (2016) indicate that, since 1980, regulation in the United States has reduced the economic growth, which means that the United States in 2014 could have been 25 per cent wealthier without the regulation. Other studies, published in highly reputable publications, find that there is an even more substantial impact. Welfare loss due to regulation with no direct effect on GNP is not included in the studies (for instance ban on same sex-marriage).
Several analyses also indicate that regulation can hit low-income groups the hardest, given that regulation often eliminates the least expensive alternative from the market. That has been documented by Herby (2018), among others, showing that the state's prohibition of private bus routes competing with public transportation makes public transportation more expensive, affecting low-income groups the most. International studies point to the fact that regulation primarily increases the prices on goods that low-income groups tend to purchase, and that entry barriers, such as authorisation or specific education requirements, increase the inequality measured by the Gini coefficient.
Lastly, regulation is used to protect special interests of companies and organisations by enabling companies to raise their prices or by making it possible for professional groups to raise their salary income – both at the cost of the consumers.
All governments since Poul Schlüter in 1982 have had a deregulation agenda. Still, the volume of regulation has steadily risen. That is why I recommend a regulation-freeze – inspired by the tax-freeze –placing a ceiling on the entire existing legislation in Denmark. Additionally, a commission should be set up to look into the economic consequences of regulation in Denmark.
