The left's new tool: deregulation

Reducing the reach of the state to increase the reach of the state.

The meaning of the term “deregulation” used to be very clear: it was a right wing project to grow private enterprise by getting rid of burdensome rules.

It was about Margaret Thatcher, the City of London’s Big Bang, trickle down economics, the PDs, neoliberalism, deregulating planes and trucks, and generally rolling back the state. It was about inserting competitive markets wherever they would fit.

The argument was that deregulating private enterprise would unleash faster economic growth from which we would all benefit. Its first champion was Jimmy Carter and its heyday was the late 1970s to the mid 2000s. Its last hurrah was the loosening of capital requirements for banks in the mid-2000s. After the global financial crisis, there wasn’t much talk of deregulation. Not for a while.

Now, deregulation is back. In many ways it’s the same idea as before: getting rid of burdensome rules, regulations and processes to get things done quicker. But the project has new champions and new goals.

Deregulation is now a left wing project.

The NDP’s reforms

The latest update to the National Development Plan for the period 2026-2035 was announced yesterday. Housing and housing-related areas like transport and water were the biggest beneficiaries.

As well as the extra spending, a package of deregulatory reforms is in the works. Announcing the plan, Tánaiste Simon Harris said: “This plan will be matched by reforms. By cutting red tape. By removing self-imposed barriers.” In the preface to the NDP update, Minister Jack Chambers said: “Delivery of the Plan will be supported by the work being progressed by my Department and the Accelerating Infrastructure Taskforce to identify potential reforms to remove barriers to the delivery of strategic infrastructure, while continuing to ensure value for money for the Exchequer.”

The Irish Times reported yesterday that the Cabinet committee on infrastructure was briefed by officials from the Department of Infrastructure and Reform. The Department presented deregulatory reforms that are underway in other common law countries. There’s a new energy behind deregulation.

How the left learned to stop worrying and love deregulation

For obvious reasons, the left is uncomfortable with deregulation. Deregulation is about increasing private wealth and shrinking the state. This is not the left’s thing.

Left wing parties want to reform and improve society. The state plays the key role in this. The state acts by providing public goods, transferring wealth, building infrastructure, and by regulating the private sector.

The power to regulate is one of the state’s most important tools. Deregulation is seen as rolling back hard-won victories.

Why do I say, then, that deregulation is now a left wing project?

Left wing governments have come to the conclusion that regulation limits other kinds of state power. Left wing parties want to decarbonise the economy, lower housing costs and deliver better public services. But left wing governments, elected with healthy mandates, are finding it hard to follow through. Governments are more constrained by regulations and processes than they used to be.

Governments have tied their own hands with regulation. The specifics vary from country to country but the big picture is that layers of systems and processes have made it much harder for Cabinets to plough on and get things done.

It’s about complexity. Governments have gotten more complex, and complexity is an inherently conservative force. Complex things resist change. It’s hard to reform them without breaking them.

Left wing parties have been faced with a choice. The state exerts control over society through regulation; but regulatory complexity makes it hard for the government to do big things.

Across the English-speaking world, left wing governments have decided they care more about decarbonisation, housing and public services than they care about exerting control through regulation. They have started to deregulate the government itself.

The specific problem is with building homes and infrastructure. Processes and regulations are making it difficult to get anything built. This is where governments are focusing their efforts.

At a certain point, government power is zero sum. It’s either held by the Cabinet, or it’s held by agencies, local governments and the courts. Cabinets gave it away, now they want it back.

The Canadian Labour Party’s new Building Canada Act

Canada’s new infrastructure act, passed this year, gives the Cabinet power at the expense of regional governments and state agencies.

Any project deemed to be of national significance is automatically deemed to have every necessary permit and licence; any permit issued in one jurisdiction is automatically deemed to apply to other jurisdiction; environmental impact laws are rolled back; projects can be deemed exempt from other legislation; and the target approval time for permits is slashed to two years.

California Democratic Party’s CEQA roll back

CEQA is California’s equivalent of an environmental impact assessment. It’s a rule that was originally introduce to introduce a check on development.

This year, California’s Democratic Governor, Gavin Newsom, forced the Californian state legislature to roll back CEQA on the pain of not signing off on the annual budget. The new law gives the Governor power to certify any moderately large project; bars local governments from tightening building regulations; and limits the window for litigation to 270 days.

Australian Labor Party’s “red tape agenda”

“Boosting productivity by cutting red tape, reducing duplicative processes, and working with the states and territories are key areas of focus for the Albanese Government”, according to Finance Minister Katy Gallagher. The Australian Labor party introduced a broad package of reforms including fast track permitting for transmission lines and a promised streamlining of environmental legislation in the next parliament.

The UK Labour Party’s infrastructure bill

The Labour Party’s signature infrastructure bill, currently in the House of Lords, is intended to simplify and speed up infrastructure delivery. It cuts back on the requirement for public consultations and environmental assessments, as well as giving the Cabinet more power over projects are assessed by the planning system.

To promote fairness and sustainability, and build affordable homes, these left wing governments are rolling back the reach of the state.