Billionaire and Department of Government Efficiency (Doge) czar Elon Musk and UK Prime Minister Keir Starmer could not be more different. But they share a stated common goal: cutting red tape and reducing the burden of government on businesses.
To be sure, the two are going about this in very different ways. In the United States, President Donald Trump's push to cut public spending and eliminate entire agencies risks gutting essential functions without a clear plan for technological replacements. The United Kingdom under Mr Starmer has adopted a more measured approach, focusing on curbing regulatory overreach rather than dismantling the government.
Fuelled by frustration in their encounters with government bureaucracies, calls for deregulation and privatisation are gaining traction with voters around the world. Dealing with government bureaucracies is often time-consuming and Kafkaesque. Understaffed agencies fail to answer calls, their websites are outdated and online services are clunky. One possible solution is greater investment in digitising public services, a goal championed by both Doge enthusiasts and the British government. But although there is no shortage of recommendations for how to modernise public services, implementing them remains a challenge. At the same time, successful efforts to streamline government services rarely attract as much attention as failures, reinforcing the familiar narrative of excessive red tape and wasteful spending.
Of course, promises to curb excessive regulation and government waste are nothing new. Over the past 50 years, governments around the world have made similar pledges, only to find that doing so is far more complicated than it seems. In his 2018 book The Fifth Risk, author Michael Lewis highlighted the intricate, often unseen systems that keep modern governments running. Doge's slash-and-burn approach now threatens to bring these vital systems to a screeching halt, with little regard for the potential consequences. This helps explain why attempts to streamline bureaucracy and curb regulatory overreach often fall short. "Regulation" is a broad term that encompasses three distinct types of government intervention.
First, there are regulations that have simply outlived their usefulness or were flawed from the start and now impede economic activity. These include rules requiring agencies to submit reports on paper and protections for species that no longer need them. In the UK, housing developments have been stalled due to protections for jumping spiders, while £100 million was spent on a tunnel for bats as part of the ill-fated HS2 rail project.
Second, just as speed limits prioritise accident prevention over faster travel times, some regulations require tradeoffs, particularly in areas like financial oversight and consumer safety. After the 2008 financial crisis, for example, bank bailouts fuelled demand for stricter financial regulations. But in recent years, intense lobbying by the financial sector has reopened the debate.
The third category consists of regulations that provide businesses and consumers with clear rules, reducing uncertainty and allowing markets to function efficiently. These rules, such as specified weights and measures can be likened to traffic lights: by regulating when drivers can cross intersections, they ensure smooth traffic and keep drivers and pedestrians safe. Examples include food hygiene standards and competition policies. While their specifics can be debated, the need for them is clear: in their absence, innovation stalls and economic growth falters.
The differences between the three types of regulation underscore the need for a more strategic approach to cutting red tape. Despite what Mr Musk may think, meaningful and lasting government reform requires more than just swinging a chainsaw. In today's economic landscape, governments' role in providing the infrastructure and regulatory frameworks that support business growth and job creation is more important than ever. Some of the most vocal advocates of cutting public spending have benefited enormously from government support and favourable policies. Their claims that red tape has stopped them from growing ring hollow; by and large, the regulatory environment has worked in their favour.
Bureaucracies must be reformed to keep pace with the economic realities of the 21st century. Until governments can offer a seamless service experience, many citizens will continue to see the private sector as more efficient. While that may be true in some cases, the risk is that poorly conceived efforts to make government operate like a business will undermine crucial public services, harming both the economy and people's lives. ©2025 Project Syndicate
Diane Coyle, Professor of Public Policy at the University of Cambridge, is the author of the forthcoming book 'The Measure of Progress: Counting What Really Matters' (Princeton University Press, Spring 2025).