Tyler Cowen laid out a very weird theory of regulation:
The number of laws grows rapidly, yet the number of regulators grows relatively slowly. There are always more laws than there are regulators to enforce them, and thus the number of regulators is the binding constraint.
The regulators face pressure to enforce the most recently issued directives, if only to avoid being fired or to limit bad publicity. On any given day, it is what they are told to do. Issuing new regulations therefore displaces the enforcement of old ones.
If the best or most fundamental regulations are the ones issued first, over time the average quality of regulation will decline.
Let’s review what "a regulator" does (sticking to the federal level, since that’s what I’m familiar with).
As we were taught in basic civics (or social studies as it was called when I was in school), government has three functions: executive, legislative and judicial.
The modern regulator in USG performs all three of the roles. (Hint: this is the problem, not the number of regulators or regulations).
"Issuing new regulations" is a legislative function. I know you believe you vote for law-makers, but your notions of how your government works are stuck in the 19th Century.
Modern regulations are written vaguely since the agencies that write the rules are – in many cases – tasked with the judicial function as well. In other words, the guy that writes regulations also interprets them. Nice work if you can get it.
Modern regulators also serve an executive function, but this function is outsourced when possible, since it’s boring by comparison to the other two. For example, much of what happens on an airplane is required by FAA regulations. All procedures are followed even though I’ve never been on a plane with a regulator from the FAA as far as I know. Another example, changes to financial reporting rules are enforced during audit processes. To cut to the point, old regulations generally don’t need to be enforced as aggressively, since they’ve already become part of industry practice. I would be willing to argue that the executive function occupies the smallest portion of the average regulators time (though the line between executive and judicial gets blurred by the current practice).
Finally, Cowen claims that regulators are pressured to enforce recent regulations most strongly. This is wrong for 99% of regulations. Generally, the only people paying attention to a regulation (except in extreme cases) are the people being regulated. They generally want weaker regulations and weaker enforcement.
If you followed my explanation, you’ll see that our regulatory system is retarded. It polices itself according to its own rules, which it then judges. Worse, if policies fail, nothing happens. Failure and success, in fact, have identical pay outs (arguably failure is rewarded more highly). What we see here isn’t just retarded, it’s . You can’t change the number of regulators of the number of regulations in such a way to make such a system work. It’s broken by design.