Is More Regulation Always the Answer?

Last week I was listening to the ongoing news about Bernard Madoff and Ponzi schemes and why is it exactly that the government agency that was supposed to keep tabs on things couldn't figure out what this guy was allegedly doing with people's money?

The resulting flurry of commentators on this issue generally fall into one of two camps - those who feel we need to re-focus on better regulation of the free market and those who argue that government regulation ultimately creates more problems than it solves.

I was always pretty skeptical of the whole "free market/invisible hand" thing in college - the idea that millions of individual people and businesses doing what is best for themselves 'automatically' results in what is best for society as a whole. Without anyone (e.g. the government) having to try and make it happen - it just happens 'invisibly'. The theory just didn't seem to make sense. How could that possibly be? What more proof do we need of the necessity of strong government regulation than all of the recent economic troubles we've had - generally blamed on the Bush Administrations' "hands off" approach to regulation of big banks, investment firms, and other pillars of our economy? Or is there an alternative to regulation that still ensures the public interest is achieved?

As land use planners and zoning administrators, we deal with these issues every time we develop ordinances or try to enforce them. Are we better off setting up regulations to keep people from building too close to eachother or from doing things on their land that harm the lake they live on? Or do we loosen up the reigns and trust that people know best what to do with their land? Or do we find ways to achieve our public goals without regulations at all?

It's easy to forget in the world of zoning that addressing problems does not always require creating or amending laws. But is a set of rules and laws and restrictions on individual choice the only tool we have to achieve the goals we have for our communities?

Let me give an example. A significant trend in managing shoreland areas over the past 5-10 years has been to find ways to keep shorelines as natural as possible and to restore already disturbed areas to more natural conditions. Most of these efforts have focused on either education or regulation. We either try to convince people that it is better for the lake to maintain natural shorelines or we tell them they must maintain a natural shoreline.

The problem with these approaches is that both involve a lot of time, effort and money to effectively implement. Education programs are notoriously slow in changing mindsets about things that people now see as normal and good - such as mowing your land down to the lake and landscaping and creating lush lawns.  It is not uncommon for such efforts to take 10-20 years or more with no guarantee of success. On the other hand regulations have the ability to quickly create or maintain vegetative buffers, but often require equally large investments of time, effort and money to consistently enforce the regulations. We all know how little a regulation means if no one follows it and no one enforces it.

Could an "invisible hand" approach help with an issue like this? Is there a way to make people see a natural shoreline as something they want whether anyone is telling them to or not? Do we need to wait until a lake becomes so polluted from the fertilizers and other pollutants running into it before people will choose to make changes in how they manage their lakeshore lawns?

I would suggest the idea is well worth exploring. And it should be explored in almost every land use issue we try to address. Because ultimately, who would argue against spending less money and time and effort to achieve a goal? Who would argue that restoring natural shorelines on our lakes through force is better than through a system that makes people want to restore their shorelines? Who would argue that long, expensive education programs that take decades are better than a system where people voluntarily restore their shorelines in a matter of a few years?

Here are a few new and not-so-new ideas for how we could address some common land use problems by depending on the "invisible hand" concept rather than through direct regulation or long expensive education programs:

1. Natural shorelines - simply offer a cash prize every year to a few landowners who restore or maintain their shoreline in a natural way. Rather than a contest for the best shoreline, make it more of a raffle. Anyone out there who registers their shoreline with the local government is eligible in an annual drawing for a cash prize of $1,000 or 5,000 or $10,000. Whatever would be significant enough to generate interest. Sure, it's gimmicky. And it would need some details to be worked out. But if it achieved the result quicker and with less cost than hiring an inspector and engaging in expensive public education, wouldn't that be preferable?

2. Parking Requirements - Almost every zoning ordinance sets its parking requirements based on the traffic from the Christmas rush (meaning most of the year, half or more of the spaces go unused). Such requirements push businesses out of the downtowns that many small towns desperately want to attract businesses to. Instead, why not solve the issue without ineffective regulations? An approach gaining acceptance in larger cities is to eliminate such parking requirements, charge for street parking, and build public parking garages. In smaller towns, a similar mindset might be to eliminate parking requirements, build public parking lots in key locations, and create a dense, walkable downtown area that makes it easier for people to take care of multiple shopping needs with one stop (think about it - if I need to buy some groceries, get my hair cut, grab some lunch and talk to my insurance agent does it make more sense to park in one spot and be able to walk to all of them or require that each separate business have a parking space for me as I drive from one to the other?)

3. Erosion control - In many lakeshore communities, regulations requiring silt fences, erosion blankets and other erosion control measures (to prevent construction-site soil and pollutants from washing into the lake during a rain storm) have become the norm. But compliance with such requirements is spotty, at best. An approach less dependent on time-consuming enforcement would be to simply require a certain amount of money be escrowed (i.e. collected from the contractor or homeowner and set aside). To have the money returned, the contractor would need to properly install the erosion control measures, call for an inspection, and leave them in place as long as required.

The point is not to prove that every problem has an "invisible hand" solution, but that in asking the question we may find it works more often than we would think. If it does, then we have the freedom to take those previously wasted resources and direct them towards problems that really need it. Or put them back into our wallets.