New Report Measures Impact of Federal Regulations on Hawaii

Grassroot Institute says that state must consider economic impact of regulatory action  

News release from Grassroot Institute, May 16, 2016

HONOLULU, HAWAII--May 16, 2016--According to a new study from the Mercatus Center, Hawaii ranks 39th nationwide in measuring the impact of federal regulations on the state. The Mercatus Federal Regulation and State Enterprise Index (FRASE) weighs industry regulations and the importance of an industry to a particular state relative to the industry's importance to the country overall. By this metric, Hawaii's FRASE Index rating of 0.86 for 2013 means that the impact of federal regulation on Hawaii is 14% lower than its impact on the nation as a whole.

While the overall impact of federal regulations on Hawaii is comparatively low, the increase in regulations affecting Hawaii is not. Calculating the growth of the FRASE Index relative to 1997 demonstrates a 41% growth in what is termed the "constant basis FRASE Index" between 1997 and 2013--a recognition of a spate of new regulatory restrictions that have affected Hawaii in the past two decades.

For policymakers looking to improve state economic conditions, a realistic appraisal of the impact of regulations is critical. According to the study, federal regulations have reduced average U.S. economic growth by approximately 0.8% every year since 1980. According to Dr. Vance Ginn of the Center for Fiscal Policy, that amounts to approximately $4 trillion dollars--an amount that recognizes how economic growth compounds every year, making the seemingly small 0.8% a gap that builds upon itself as time goes by.

"A realistic appraisal of the economic impact of state and federal regulations--as well as legislative action--is sorely needed in Hawaii," stated Keli'i Akina, Ph.D., President of the Grassroot Institute of Hawaii. "The FRASE Index gives us an idea of how federal regulations have continued to proliferate and affect Hawaii's most important industries. But we should be cautious in applauding the finding that our state is affected less than most ... so far."

Dr. Akina continued: "Not only must we be cognizant of the fact that the situation can always change, but we must also question what further damage is done to business and investment in Hawaii by state regulations. The Grassroot Institute has long advocated for a 'price tag' analysis of new state legislation--especially regarding its effect on business and the economy. While that action is long overdue, there is clearly a significant need for similar analysis when it comes to the long-term effect of regulatory action in Hawaii."

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