To be sure, the two are going about this in very different ways. In the US, 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 Starmer has adopted a more measured approach, focusing on curbing regulatory overreach rather than dismantling the government.
Still, the overarching theme is similar. “The people voted for major government reform and that’s what the people are going to get,” Musk declared. Starmer, for his part, focused on regulation: “If we don’t curb regulator overreach, then we won’t unlock the investment needed for a more prosperous future.”
Businesses understandably welcome such statements. Government oversight, by design, imposes costs and constraints, preventing firms from doing whatever they want. But while companies may oppose certain rules out of self-interest, those regulations are not necessarily bad for consumers or society. The real challenge lies in ensuring that regulations do not impose costs that outweigh their benefits. To this end, the US requires that every new regulation undergo a cost-benefit analysis.
Fuelled by frustration in their encounters with government bureaucracies, calls for deregulation and privatisation are gaining traction with voters around the world. While factors like high inflation certainly play a role, the driving force behind this trend is the stark contrast between the inefficiency of some public services and the streamlined, user-friendly experience offered by private companies.
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 Understaffed agencies fail to answer calls, their websites are outdated, and online services are clunky – if they exist at all. 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. For example, I recently received a thoughtful letter from a retired US naval officer who, though acknowledging the importance of university research, argued that taxpayer dollars were being squandered on ideological and frivolous projects – an all-too-common view among critics of government 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, each requiring a different strategy.
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, for example, housing developments have been stalled due to protections for jumping spiders, while £100mn ($128mn) was spent on a tunnel for bats as part of the ill-fated HS2 rail project. Just as no one benefits from traffic bottlenecks, everyone benefits when such regulatory obstacles are identified and removed.
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. The way governments approach these tradeoffs often changes in times of crisis. 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, some of which date back to ancient times, can be likened to traffic lights: by regulating when drivers can cross intersections, they ensure smooth traffic and keep drivers and pedestrians safe. Modern examples include food hygiene standards, copyright protections, 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 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 – particularly major US tech firms – 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.
That said, government bureaucracies must be reformed to keep pace with the economic realities of the twenty-first century. Until governments can offer a seamless service experience like Amazon or Airbnb, 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. – Project Syndicate
- Diane Coyle, Professor of Public Policy at the University of Cambridge, is the author of Cogs and Monsters: What Economics Is, and What It Should Be (Princeton University Press, 2021) and the forthcoming The Measure of Progress: Counting What Really Matters (Princeton University Press, Spring 2025).
