Policy debates over regulation continue as lawmakers weigh economic growth against new safety rules and oversight. Patrick McLaughlin, a research fellow at the Hoover Institution, says recent deregulation shows promise but warns that new legislation could undermine those gains.
McLaughlin studies the economic effects of regulation, focusing on how rules shape productivity, investment, and long-term growth. He began his career in environmental economics, analyzing the effectiveness of regulatory policies. He says that work led him to a broader focus on the administrative state. “If I’m going to impact the world in some way and have scale effects, it should be by focusing on the whole regulatory process,” he says.
According to McLaughlin, the first year of the current administration’s deregulatory push reflects meaningful progress. He frames the effort as addressing decades of accumulated rules rather than just limiting new ones. “This first year is very promising in the sense that they’re doing a lot,” he says. “There’s a lot of work to do and they’re getting at it.” He notes that cost savings estimates remain uncertain, though he believes the overall direction is clear.
Economic effects from deregulation extend beyond immediate savings, according to McLaughlin. He says regulatory reductions influence how businesses allocate resources. “When regulation builds up, that maybe deters investment or deflects investment from R&D into regulatory compliance,” he says. “Flip it around, deregulation can let businesses invest more… and you see productivity go up.” He adds that those gains compound over time. “It’s not a one-time thing… it builds on itself.”
Artificial intelligence is reshaping how firms interact with regulations. McLaughlin says automation will likely make compliance easier regardless of policy debates. “AI is going to do exactly what you said,” he says. “There are companies already working on delivering that ease of compliance.” He acknowledges concerns that lowering compliance costs could encourage more regulation, though he argues the solution lies elsewhere. “The solution is to have a process in place… that requires that regulations are examined,” he says.
That need for review extends to the broader regulatory framework. McLaughlin says the administrative process has not kept pace with modern realities. “The procedure should change,” he says. “The reexamination of old rules should happen on a regular basis.” He argues that periodic review would prevent outdated rules from lingering indefinitely and reduce reliance on executive action alone.
Judicial changes may also reshape the regulatory landscape. McLaughlin points to recent court decisions limiting agency authority and says a large share of regulations could face scrutiny. He estimates that “37%” of regulatory statutes involve vague delegations of power. He says those rules will likely be challenged over time rather than overturned all at once.
McLaughlin criticizes current efforts to expand regulation through legislation such as the Railway Safety Act. He says the bill responds to high-profile incidents without addressing their actual causes. “The National Transportation Safety Board found that the cause was a mechanical failure,” he says, noting that proposed crew-size mandates would not have prevented the accident. “[This is] politics dressed up as safety.”
McLaughlin says earlier deregulation allowed rail companies to invest more efficiently, which improved safety outcomes. “Safety records got dramatically better,” he says, citing long-term declines in accidents. According to him, new mandates that could raise costs without measurable benefits.
Research on transportation economics reinforces his concerns. McLaughlin says regulatory increases can quickly ripple through the economy. “A 5% increase in rail regulation would cause shipping cost per unit to rise by 2.3%, and volumes to fall by 4.1% in that first year alone,” he says. He adds that those effects persist as productivity growth slows.
Technological progress depends on flexibility, according to McLaughlin. He warns that prescriptive rules may block innovation in logistics and shipping. “Transportation innovation is a necessary complement to innovation in production,” he says. “You can’t disentangle these things.” Limiting innovation in one area can constrain growth across the entire economy.
