By David Fabri
Over-regulation is not a mere hypothetical or academic concern, but it may be a grim reality. One cannot always tell exactly when a proper degree and quality of regulation slips or strays into over-regulation.
Both over-regulation and deregulation pose risks and dangers. What may be considered over-regulation by some (e.g. industry operators) may be accepted as perfectly sound by others (e.g. consumers), so one should be wary of over-generalizations.
The point of departure has to remain that government regulation is necessary. One cannot simply eliminate government regulation. The question is to what extent should government regulation intrude, at what cost, and with what detail and complexity. At some point, in careless hands, it can become disproportionate, unwieldy and counter-productive.
Over-regulation implies government over-reach and over-kill, too much detail and complexity of rules and regulations, often badly written, intrusive and often petty, involving often useless paperwork, and unduly time-consuming and costly. It hinders growth and innovation and prevents competition.
Local examples that may be studied for possible over-kill and over-regulation include the never-ending and complex regulations and requirements purportedly meant for the prevention of money laundering and the recent rental contracts control law, with their unduly cumbersome procedures and financial penalties, even for minor administrative infractions.
We should therefore not ignore the harmful risks and danger of over-regulation, even locally.The recent massive expansion of regulations and rules of every kind has meant that a whole new industry is being built around compliance.
Regulators and other agencies are often guilty of mistakenly thinking that problems are best resolved by adding more rules, plugging more gaps, and imposing hefty fines for even minor administrative infractions. Regulators reduce their risks by increasing rules and regulations. Over-regulation may at some point provoke and possibly validate steps towards deregulation, with its own challenges and pitfalls.
The dangers posed by over-regulation and the risks involved in trying to resolve it by massive cuts were explored by the reputable UK journal The Economist a few days ago. “Rules and government are essential in any society….. Without rules on food safety, road markings or bank capital, and the bureaucrats to enforce them, life would be shorter and less secure.” However, unfortunately, “rules beget rules, as regulators find new things to regulate.” (The Economist, The revolt against regulation, February 1-7, 2025, cover story).
Giving Deregulation A Bad Name
Indeed, ‘chaos’ and ‘disruption’ are just two words that may help describe the various astonishing legal and administrative changes happening in the United States since Donald Trump, J D Vance and Elon Musk took over its governance.
An objective of these reforms of sorts is the decimation of the federal government and its agencies and the active promotion of large corporate interests. This is being achieved partly by defunding or effectively closing vital US federal public authorities, including those that safeguard consumer and environmental interests.
Many federal employees are having their jobs terminated while the scene is set to reduce the federal government and deleting many public entities which safeguard different citizens’ rights. Elon Musk has promised that many public entities, which he blamed for over-regulation, will be taken down and much regulation will be repealed.
This represents an ideological battle of epic proportions whose negative consequences should not be ignored. What the tandem Trump-Vance-Musk is doing is reversing the progressive development of law and is taking their country back by some 90 years.
The market is being made freer for the rich and powerful to exploit at their leisure. To make American companies more competitive in foreign markets, Trump has imposed a series of tariffs on imported goods. He has also remarkably repealed the landmark law that had prohibited and punished the use of bribery and other forms of corruption in the winning of tenders and concluding deals.
On 11 November 2024, concerning the Federal Environmental Agency, Trump promised that he would: “unleash the power of American businesses” and “ensure fair and swift deregulatory decisions”. Under the agenda slogan of “Drill Baby Drill”, he undertook to “restore US energy dominance”.
So, we can expect to witness a radical dangerous slide into de-regulation and a weakening (or disappearance) of public regulators. This reversal of many landmark progressive legal achievements is very bad news for consumers and the environment.
Worse still, these decisions are being implemented by Mr Trump in the form of executive orders in amazing haste, ignoring Congress. Some of these orders appear illegal or not sufficiently legally founded. The rule of law foundations will become even shakier as judges who do not fall in line are intimidated, insulted and investigated.
At one point during his electoral campaign, Trump also promised to establish ‘Freedom Cities’, communities where government regulation would not apply. He also promised that persons appointed to his cabinet “will not question him”. His electoral slogan “Trump will fix it” might well prove a blueprint, not for repair, but for destruction. As The Economist rightly noted: “Mr Trump is giving deregulation a bad name”.
David Fabri LL.D., Ph.D., has lectured at the University of Malta since 1994. His new book on Maltese Consumer Law should be published shortly.
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