In the spring of 2001, the skies on the west coast of Canada were gray as if they were a document that could never be completely filled, dull and oppressive.
In the offices of the Victoria City Council, the newly appointed government officials faced not a fiscal deficit or a diplomatic crisis, but a stranger and more challenging enemy – too many laws. No one knew exactly how many there were. Some said tens of thousands, some said even more. But everyone knew one thing: these rules tangled the entire province like vines.
At that time, the province of British Columbia (BC) was facing a grim situation. Personal taxes were already the highest in the country, with businesses fleeing, capital outflows, and small businesses complaining. Over the past decade, the government had continuously increased regulations, higher taxes, and greater expenditures in hopes of solving the issues, but the result was like adding equipment to a leaking boat – the boat sank even further.
After the new government took office, Deputy Premier and Minister of Finance Kevin Falcon received nearly unanimous messages from various sectors: “We are drowning in high taxes and heavy regulations.” The provincial government had to take shock therapy to bring things back on track.
In fact, the former premier was quoted in the newspaper at the time saying, “Well, we are an old-fashioned interventionist government but we have no more money to spend, so all we have left is regulation.”
What truly shocked the reformers were not the macro data, but the details.
One day, a parent raised a concern to the government: their child wanted to bring a tadpole to school for show and tell, only to be informed that they needed two permits – one related to transportation and the other related to display.
“After we canceled that requirement,” Falcon quipped, “the tadpoles in BC were still doing just fine.”
This story quickly spread within the government. It symbolized a reality: regulations had long lost their purpose and only the form remained.
Laura Jones, an economist at the Canadian Federation of Independent Business (CFIB), recalled her hatred for bureaucracy, which stemmed from her childhood.
Her mother ran a small business. Time that should have been spent with her children after work was instead consumed by complicated sales tax forms. “It wasn’t because she didn’t want to pay taxes,” Jones said, “but because she simply couldn’t understand those forms.”
While her children waited for their mother to finish work and play together, she was trapped by the paperwork, with Jones still remembering her mother cursing softly while fighting with the documents. That was when she first understood: bureaucracy was not just an economic issue, it even had a destructive impact on family life.
The government soon realized that the most controversial aspect was forestry regulation.
The logging industry was the lifeblood of BC, yet it was also a high-risk industry. Over the years, the government had been adding rules to improve safety. At one candid moment, a government minister admitted to the forestry sector that they had added $1 billion in costs.
The result? A manual of regulations stacked over seven feet high. No one had read it all. Accident rates did not improve.
Many believed that even if companies had to hire more lawyers, it was okay, as long as they complied with the regulations. Regulatory policies incurred costs, but it was hoped that they would bring benefits.
Jones said, “Many people made a mistake – they thought more rules would certainly mean more safety, that doubling the rules would double the safety, and if you reduced the risk to zero, then nothing unfortunate would ever happen.”
But excessive regulation did not achieve the desired results. In reality, workers had no idea which rules were the most important. So the new government did something almost considered crazy at the time: they deleted a multitude of detailed regulations. The government no longer told businesses how to build a bridge over a creek, specifying what size of nails and type of wood they should use.
The new government changed its strategy: no longer dictating “how” things should be done, only “what” should be achieved. There were only two core rules: do not harm the environment and do not increase the risk of accidents. Violators would face hefty fines.
The results were staggering. The accident death rate decreased significantly. With fewer regulations, safety actually increased.
Another case was even more absurd, bordering on comedy. BC had a regulation that TV screens in restaurants could not exceed 14 inches. Officials initially believed it was a typo. It wasn’t.
Upon historical review, it was found that this rule originated from a provincial premier in the 1950s who was extremely against alcohol. He restricted alcohol to be served only in hotels. The policy gradually relaxed, but each adjustment left new restrictions: bars could have large screens, but restaurants couldn’t, as it would make them “too much like bars.”
Decades later, no one remembered the reason, yet the rule remained. When a Hollywood-themed restaurant wanted to establish itself in Vancouver, it ran into this legal barrier and eventually gave up on the investment because it couldn’t install large screens. An outdated rule silently obstructed an entire industry opportunity.
The government finally posed the crucial question: “Who exactly is this law protecting?” The answer often turned out to be – neither consumers nor safety, but rather history.
This made the reform team realize: regulations tend to “accumulate,” but rarely “retire.”
Real reform began with a simple, almost brutal commitment: a one-third reduction in regulations within three years.
Not just a vague slogan, but a specific number. The first thing the government did was something unprecedented: count. Because when the reform team began to investigate, they found that no one could clearly state how many regulations the government actually had.
They hired a group of interns to read through laws and administrative regulations one by one, tallying all the provisions containing “must,” “may not,” or “shall.” The result was staggering: around 380,000 regulatory restrictions.
This meant that if someone read full-time, at 250 words per minute, it would still take over three years to go through them all.
For the first time, the government realized that the issue might not be that the rules were wrong, but rather – no one could comply with so many rules. When the rules become too numerous to comprehend, people tend to ignore them all, including the truly important ones.
Thus, each department was tasked with submitting reduction plans. Progress was reported quarterly, and each department had to be accountable; the media and business community could monitor in real-time.
More crucially, they changed the incentive system: new rules wanted to be implemented? Fine, but old rules had to be eliminated first. Initially, it was a one in, two out policy, later evolving into a one in, one out policy.
Regulatory agencies were tasked for the first time to not just “add regulations” but also find rules to be removed. The entire bureaucratic system’s direction was reversed, becoming a team that actively sought out “silly rules.”
However, the reform was not a smooth sail. When the government abolished certain restrictions, previously protected industries began to protest.
Bar owners warned that the reform would ruin the market; the hotel association cautioned against imbalance in competition; different industries simultaneously demanded to keep rules that favored them while cancelling rules that benefited others. Some officials feared that in case of an incident, the government would lose its “shield,” as in bureaucratic cultures, more rules meant less accountability.
Changing this mindset was far more challenging than amending the laws.
The reform team found that sometimes regulations were actually a form of “anti-competitive tool” – existing stakeholders used rules to block newcomers.
Reducing rules essentially meant breaking monopolies. Reform equated to challenging vested interests. The political risk was extremely high.
Yet the reform continued to progress, and three years later, the outcome was revealed. Regulations had decreased by about 40%, and the sky did not fall. There was no environmental collapse, no safety disasters, no social disorder. Instead, a different change emerged: an increase in economic growth rate by about 1%, a return of investments, a boost in small business confidence, and an improvement in employment.
Years later, BC received an AAA credit rating, and budget surpluses were seen. BC went from being a laggard in Canada’s growth to being one of the leaders.
* Chapter Seven: Why Was It Successful?
Researchers later concluded that the miracle of this reform was not accidental but built upon five key elements:
1️⃣ Strong political authorization: the premier and the cabinet openly committed to reform, with the reform being led by top leadership rather than a technical committee.
2️⃣ Clear quantifiable goals: not vague reductions, but specific “reduce by one-third.”
3️⃣ Transparent monitoring mechanisms: quarterly reports prevented the government from backtracking.
4️⃣ Participation of stakeholders: businesses and the public jointly proposed reduction suggestions, making the reform not solely an internal government project.
5️⃣ Institutionalized constraint mechanisms: new rules had to accompany old rule exits. Regulatory bodies were no longer solely responsible for adding rules.
“Simple measures that people can understand are often the key,” Jones said, simplicity enduring.
From another perspective, the impacts caused by hundreds of thousands of regulatory rules and restrictions often were not as tangible as tax burdens but more akin to an “invisible tax.” Consumers paid higher prices, businesses curtailed innovation, and employees lost job opportunities, yet these costs were often hard to see.
The reform in BC essentially made these hidden costs visible. Like a map with too many markings, it no longer pointed the way.
The problem with regulation was never just about cost but also about the allocation of attention.
Over twenty years later, this reform was still being studied worldwide. BC’s experience began to be emulated.
Several US states – Kentucky, Illinois, Missouri, Virginia – successively adopted similar systems.
Policy scholars called it “regulatory budgeting.” The concept was simple: manage the quantity of regulations by the government like managing fiscal deficits. Because regulations were essentially a form of “invisible tax.”
Surprisingly, this policy had almost no ideological color. The left liked it because it lowered the cost of living. The right liked it because it promoted the economy. Small businesses liked it because it saved them time. Consumers liked it because prices dropped.
“This isn’t a left or right policy. This is just good governance,” Jones said.
On December 7, 2023, at the end of a podcast discussing how BC reduced regulations by 40%, the host, Patrick McLaughlin, a researcher at the Hoover Institution and Pacific Legal Foundation, half-jokingly said, “It’s rare to see a group of economists end a discussion optimistically.” Laughter filled the room.
But perhaps what truly made people optimistic was not the economic data, but a simple realization: governments didn’t always have to do more; sometimes, doing less could lead to better outcomes.
And British Columbia was just the first place bold enough to try.
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