New report calls for awareness of regulations’ adverse effects on Americans

Federal regulations claim they exist to protect the public. But what happens when those regulations achieve the opposite by blocking cheaper, safer, and more innovative products from getting to consumers? A new Competitive Enterprise Institute (CEI) report aims to raise awareness of this problem and provide a framework to scrutinize the outcome of regulations, not their intention.

Regulations often create systems where large companies establish competitive dominance, depriving small businesses of their chance to compete in the marketplace and depriving consumers of access to innovative products. The Occupational Safety and Health Administration (OSHA) and the Securities and Exchange Commission (SEC) are two agencies where this paradoxical condition between regulation and the consumer exists. While OSHA and the SEC claim to promote workplace safety and protect against financial abuse respectively, the outcome of their regulations sometimes fail to achieve their intended outcomes and do the exact opposite.

“Utilizing the Protection Paradox as a framework for evaluating the regulatory system will help identify where our government is burdening consumer choice and business innovation and hopefully eliminate those burdens once and for all,” said CEI Associate Counsel and co-author of the report, Marin Murdock.

The report identifies five core tenants of the Protection Paradox framework which can be used to identify how these regulations fall short of their objectives:

• A legitimate government objective with a genuine public purpose;
• Discretionary authority becomes concentrated;
• Structural barriers to market participation emerge;
• Competition and innovation decline, and;
• The intended beneficiaries of regulation bear the costs of policy implementation.

“Each year, federal agencies finalize approximately 3,000 final rules. Ongoing scrutiny of their outcome is essential to confirm they achieve their statutory objectives, especially those meant to safeguard the public. This is particularly important in light of the Supreme Court’s 2024 decision in Corner Post, which gives newly affected parties the opportunity to challenge long-standing regulations.” said CEI Senior Counsel and co-author of the report, Soriya Chhe. “Staying vigilant helps expand opportunity, preserve competition, and protect individual liberty.”Read “The Protection Paradox: Good Intentions, Bad Market Outcomes” by Soriya Chhe and Marin Murdock on CEI.org.