April 23, 2020 4:53PM

Top‐​Down Regulations for COVID-19?

Governments often fail because they tend not to learn lessons. They make similar mistakes over and over for reasons described in this study.

The FDA botched its COVID-19 response by using its regulatory powers to monopolize the development of virus tests. I have not heard any apologies for the failure or that any officials have been fired. As a Wall Street Journal investigation of HHS leadership suggests, the gross testing failure has led to lots of finger pointing, but not institutional reforms.

After the testing debacle, one might think that federal leaders would hesitate to impose further one‐​size‐​fits‐​all solutions for COVID-19. But no—the Wall Street Journal reports that House Democrats want to require OSHA “to order all companies to implement comprehensive plans to protect workers who continue in their jobs during the pandemic. The new, emergency standard would have to be issued within seven days after any legislation is signed into law.”

Thus, in seven days federal bureaucrats would apparently write‐​up a Giant Safety Plan to impose on millions of businesses in hundreds of industries across our huge and diverse nation. That makes no sense.

Federal policymakers seem to have little comprehension that their actions often sideline the vast brain power and innovation that lives outside of Washington. At the stroke of a pen, federal regulations nullify the experimentation, dynamism, and speed that America’s private sector can mobilize to solve problems.

As they consider imposing COVID-19 safety regulations, policymakers should ponder the pro‐​active steps that businesses are already taking or actively considering, as discussed in another Wall Street Journal article. Businesses are separating workspaces, taking temperatures and screening health at work entrances, testing employees before they get to work, closing lunch rooms, installing workspace partitions, adjusting shifts, modifying production lines, changing entrances and exits, closing facilities and tracing contacts if workers test positive, placing materials down rather than handing them to others, sanitizing workspaces, having safety experts instruct workers, spacing bathroom urinals, wearing electronic bands to alert workers if others are too close, and providing masks, gloves, and hand sanitizer.

A central plan quickly thrown together in Washington could not impose a “best” way for millions of businesses to install these sorts of changes. Every business is unique. Here are some reasons why allowing businesses to address their own safety challenges is superior to top‐​down federal mandates:

Trial‐​and‐​Error. The Journal story puts a negative spin on diverse business approaches to safety as a “patchwork” and “ad hoc.” But anyone who studies innovation knows that trial‐​and‐​error processes are crucial to economic and societal improvements. Private institutions change direction all the time as they try different things and receive feedback from stakeholders. To discover the best ways to adjust each workplace for COVID-19, businesses need the freedom to experiment and to change course.

Government regulations undermine the steady improvements that are the hallmark of markets and free societies. Imposing COVID-19 safety regulations would reduce business incentives to implement new and better approaches. The question around every workplace would change from “Are we doing this safely and can we do it better?” to “Are we conforming to the OSHA rules?”

Horizontal Learning. Volkswagen is reopening some of its European factories after making 100 workplace changes. VW has been flooded with requests from other businesses about the safety procedures it is using, and so the company has posted its ideas online. American businesses are also studying Chinese businesses that were able to open safely. This sort of horizontal learning is superior to the often‐​ill‐​informed edicts from Washington. Similarly, horizontal sharing of resources during crises is better than vertical intervention, as discussed here.

Costs and Benefits. In theory, federal bureaucrats are supposed to design regulations by comparing the costs and benefits of various possible rules, but the process is a crude way of making decisions in an economy, even after rules have been studied for years. In the current crisis, regulators would have little time to even try and make balanced decisions. Business leaders know their own facilities, employees, and customers, and they can make better reopening decisions based on their local knowledge.

Flexibility. The nature of the COVID-19 threat will change over time. Scientists may learn more about virus transmission on surfaces and in the air. Drugs may be developed to reduce the health risks. New safety approaches and technologies may be developed. As such, businesses need the freedom to adjust their safety procedures over time. Regulations would lock‐​in rules that may be quickly outdated as conditions change.