Find balance between rules, benefits, then call it good

There’s a new agenda for state and federal bureaucrats: Cut the red tape.

Both President Obama and Gov. Hickenlooper have made a comprehensive review and reduction of business regulations a priority for 2011. In the Wall Street Journal on Jan. 18, Obama wrote, “we are making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb.” The governor made essentially the same pledge during his statewide tour earlier this month.

Before we celebrate the return of the unfettered days of the robber barons, however, keep in mind that both say the goal is to find the right balance between entrepreneurial activity and the public good. Hickenlooper uses the example of hefty fines levied against mining companies for environmental damage. While company executives find them “excessive,” the governor points out that they are working diligently to avoid future fines – precisely because they are so large.

It will take cooperation between business and government at all levels to reduce regulatory roadblocks to economic growth. Hickenlooper has asked small businesses to “tell us what we can do to help you, and when we can help you best by getting out of the way.”

The third leg of the regulatory reform stool is accepting that somewhere short of perfection we reach the point of “good enough,” where no more work needs to be done.

Pareto’s Law – 80 percent of output results from 20 percent of input – has a corollary: We spend the other 80 percent of our efforts pursuing that final 20 percent of results. Effective business managers move as many activities as possible out of the 20 percent category – then decide if the benefits of achieving the rest are worth the investment.

Unfortunately, entrenched bureaucracies don’t think that way. One of the reasons business regulations now need a thorough scrubbing is that government agencies inevitably experience mission creep: Once regulations are in place, individuals with enviable job security feel the need to tinker and tweak, sometimes just to look busy, sometimes in a sincere attempt to close that 20 percent perfection gap. With no skin in the game, it is easy for them to lose sight of the real-world cost/benefit equation for the rest of us.

If the president and governor are serious about streamlining regulations, when to declare “Mission Accomplished” and stand down must be on the table.

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