As economic pressures mount and global competition intensifies, calls for deregulation in Europe have been amplified. Massimiliano Castelli and Lucy Thomas argue that policymakers should focus on regulatory outcomes, and not expect deregulation to be a panacea.
Business leaders, policymakers and investors argue that Europe’s heavy regulatory environment is stifling growth, dampening innovation and reducing European competitiveness on the world stage.
Adding fuel to the deregulatory flames are many efforts already well underway in many parts of the world. Indeed, the US has outperformed dramatically over recent decades both in terms of innovation and growth; and, barring any geopolitical mishaps (which is admittedly a big caveat in the current climate), it appears to be on a path to continue perform well under the new administration.
The question is therefore not whether Europe should deregulate, but how. After all, less regulation does not always result in a better regulatory environment. Further clouding matters is the muddied meaning of the word itself. Regulation has become synonymous with rules. But its meaning should be more expansive; some rules are essential, while others are cumbersome and no longer needed. And often, thoughtfully crafted incentives and guidelines can be far more effective.
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