Ideas@TheCentre – The CIS newsletter (Sydney), 21 May 2010

I must be a fairly complicated person, at least if Remy de Gourmont is to be believed. The French poet once claimed that ‘very simple ideas lie within the reach only of complex minds.’

Well, I had one very simple idea a few months ago – and I am still trying to figure out whether it actually makes any sense.

It happened at the height of the controversy over the government’s Carbon Pollution Reduction Scheme. The more I heard ministers wax lyrical about cap-and-trade schemes, the more I wondered why they were not extending the same logic to other areas that needed cuts. If an emissions trading scheme allegedly made it possible to cut pollution in the most cost efficient way, then why should we not use something similar for, say, red tape?

If you think about it for a moment, bureaucracy and carbon emissions are not too dissimilar. You can understand them both as unwanted byproducts of something else. Carbon emissions are byproducts of energy use, whereas bureaucracy is a byproduct of regulation. Both can be understood as some kind of pollution.

And this is where my very simple idea comes in. Why should we not introduce an emissions trading scheme for regulatory pollution? You could cap the total amount of bureaucracy costs for the whole economy just as you can cap the total amount of carbon emissions. And instead of issuing carbon certificates to polluters, we would issue red tape certificates to bureaucrats.

Under this Red Tape Trading Scheme, bureaucrats would have a choice. They could reduce the regulatory burdens they impose by cutting red tape. Or they could purchase credits from their colleagues at other departments who managed to do better.

The Red Tape Trading Scheme would make it possible to reduce administrative burdens without a top-down strategy. Instead, it would give incentives to bureaucrats to spot opportunities to still achieve the same goals of regulations but with less bureaucracy.

As I said before, it is an extremely simple idea – so simple, in fact, that when I first had it I thought, ‘Gee, someone must have thought about this before.’ But as far as I could see, this scheme has never been tried anywhere.

This leads me to conclude that maybe it is just an outlandish idea. Perhaps it is completely unworkable and barmy.

Or maybe I am just too complicated?

Dr Oliver Marc Hartwich is a Research Fellow at The Centre for Independent Studies. His paper Towards a Red Tape Trading Scheme: Treating Excessive Bureaucracy as Just Another Kind of Pollution was released this week by the CIS.