Milei, Modi, Trump: an anti-red-tape revolution is under way

In one important way Mr Trump is part of a global trend. From Buenos Aires and Delhi to Brussels and London, politicians have pledged to slash the red tape that entangles the economy. Javier Milei has wielded a chainsaw against Argentine regulations. Narendra Modi’s advisers are quietly confronting India’s triplicate-loving babus. Rachel Reeves, Britain’s chancellor, plans to overhaul planning rules and expand London’s Heathrow Airport. Even Vietnam’s Communists have a plan to shrink the bureaucracy.

Done right, the anti-red-tape revolution could usher in greater freedom, faster economic growth, lower prices and new technology. For years excessive rules have choked housebuilding, investment and innovation. The question is how to make reform bold enough to count, but coherent enough to succeed.

Ambition is needed because of the sheer quantity of today’s rules. As the Economist’s Briefing sets out, Americans spend a total of 12bn hours a year complying with federal rules.  The federal code runs to 180,000 pages, up from 20,000 in the 1960s. In the past five years the European Parliament has enacted more than twice as many laws as America. Businesses are required to make painstaking sustainability disclosures, filling in more than a thousand fields on an online form—an undertaking that is estimated to cost a typical firm in Denmark €300,000 ($310,000) every year. In Britain, well-meaning rules protecting bats, newts and rare fungi combine to obstruct, delay and raise the cost of new infrastructure.

This proliferation of red tape reflects how the world is changing. The rise of the internet means that countries need codes to protect people from online scams; the warming planet demands rules to limit carbon emissions. Governments, petitioned by interest groups, often find it convenient to load the cost of compliance onto others. After the global financial crisis dented faith in capitalism, trusting the market to encourage good behaviour has seemed naive. Voters have also sought more regulation. 

The trouble is that, even as particular groups benefit from each rule, society at large bears its costs. In much of the rich world getting anything built has become a daunting task.  Over-regulation most hurts small businesses, which lack compliance departments, deterring innovative newcomers from setting up shop. Incumbents, meanwhile, feel less incentive to invest because they know they are sheltered. And rules beget rules, as regulators find new things to regulate. Lumbered by regulation and ageing populations, economic growth and productivity in the rich world have slowed to a crawl.

That is why deregulation is so important.  Yet the path ahead is strewn with pitfalls. The conundrum is how to be bold without being reckless.  Rules and government are essential in any society. Redistribution makes America fairer, and so more stable. Without rules on food safety, road markings or bank capital, and the bureaucrats to enforce them, life would be shorter and less secure.

One example to follow is Argentina. Mr Milei’s team came into office having spent 18 months working out how to extract the government from areas where it did not belong. Once in power, they wasted no time in using bold strokes to reset expectations about the economy. Europe needs DOGE-type ambition, while America needs Milei-type preparation. The danger is that neither will get this right.