Red tape
Red tape is excessive or redundant regulation or bureaucratic procedures that create financial or time compliance costs.
It is usually associated with governments, but can apply to other organizations, such as private corporations.
Red tape differs from beneficial rules and safeguards. It is the administrative burden, or cost to the public, over and above the necessary cost of implementing policies and procedures. A distinction is sometimes made between rules that are dysfunctional from inception, and rules that initially served a useful function but evolved into red tape.
Red tape can hamper the ability of firms to compete, grow, and create jobs. Research finds red tape has a cost to public sector workers, and can reduce employee well-being and job satisfaction. In 2005, the UK's Better Regulation Task Force suggested that red tape reforms could lead to an increase in GDP of 16 billion pounds per year, a greater than 1% rise. The Canadian Federation of Independent Business estimated the cost to business of red tape arising from federal, provincial and municipal government regulations was $11 billion in 2020, or about 28% of the total burden of regulation for businesses in Canada.
Many governments have introduced measures to limit or cut red tape, including the European Union, Argentina, the United States, and India.
Experience from British Columbia, Canada suggests a successful red tape reduction initiative requires strong political commitment.
Red tape definition
The term "red tape" is sometimes employed as "an umbrella term covering almost all imagined ills of bureaucracy", both public and private.However, red tape is usually defined more narrowly as government policies, guidelines, and forms that are excessive, duplicative or unnecessary, and that generate a financial or time-based compliance cost. Red tape can be categorized as dysfunctional from inception ; or may evolve into red tape when a rule is inadvertently changed or is no longer needed.
Whereas red tape refers to unnecessary rules, administrative burden recognizes that regulations that are intended for useful purposes may nonetheless entail a compliance cost.
Determining whether a regulation is justified rather than red tape can be difficult. Nevertheless, making the proper distinction is relevant when implementing reforms, and cutting red tape differs from deregulation.
Origins and history
It is generally believed that the term "red tape" originated in the early 16th century with the Spanish administration of Charles V, King of Spain and Holy Roman Emperor, who started to use red tape, balduque, in an effort to modernize the administration that was running his vast empire. The red tape was used to bind the most important administrative dossiers that required immediate discussion by the Council of State, and separate them from files that were treated in an ordinary administrative way, which were bound with ordinary string.The origin of the word balduque is the name of the Dutch city 's-Hertogenbosch Bolduque or Bois-le-Duc, where in those days the red tape was manufactured.
In Britain, Charles Dickens spoke of red tape in David Copperfield : "Britannia, that unfortunate female, is always before me, like a trussed fowl: skewered through and through with office-pens, and bound hand and foot with red tape." The English practice of binding documents and official papers with red tape was popularized in Thomas Carlyle's writings, protesting against official inertia with expressions like "Little other than a red tape Talking-machine, and unhappy Bag of Parliamentary Eloquence". As of the first decade of the 21st century, the British barristers' briefs continued to be bound with pink-coloured ribbon known as red tape.
In the United States, red tape was used to tie personal records of Civil War veterans, reputedly making access to them inconvenient. Early references to red tape in the U.S. include that of President Warren G. Harding's Secretary of the Interior Albert B. Fall who, according to his own annual report for 1921, set himself the goal of removing "red tape and technicalities" from the management of the department's economic resources to combat stagnation. Similarly, the task handed to Scott C. Bone on his appointment as Governor of Alaska on 23 June 1921 was to "unravel government red tape". In 1921, the official explanation for the 3rd U.S. Infantry Regiment's strenuous march of 800 miles from Camp Sherman, Ohio to Fort Snelling was given as "red tape". While the army reportedly had insufficient funds to transport the regiment by rail, the cost to supply the troops on the march exceeded what their train fare might have been.
Red tape has historically often been associated with military procurement. In 1938, the IG Farben chairman Carl Krauch used the argument that red tape was responsible for previous delivery delays on the part of private enterprise in persuading Hermann Göring, the head of the Four Year Plan, to appoint him as plenipotentiary for the chemical industry over an Army Ordnance representative. In his speech at the meeting of SS Major-Generals in occupied Poznań on 4 October 1943, the SS leader Heinrich Himmler made reference to "red tape" as an example of a potential obstacle to "inventions" within Nazi Germany's armaments industry. In 1947, a contractor who had worked during World War II under Vannevar Bush in the Office of Scientific Research and Development remembered Bush's "impatience with Army red tape", apparently referring to the OSRD's executive secretary Irvin Stewart's organisational efforts.
As of the early 21st century, Spanish bureaucracy continued to be notorious for extreme levels of red tape. In 2013, the World Bank ranked Spain 136 out of 185 countries for ease of starting a business, which took on average 10 procedures and 28 days.
Similar issues persist throughout Latin America. In Mexico in 2009, it took six months and a dozen visits to government agencies to obtain a permit to paint a house. To obtain a monthly prescription for gamma globulin for X-linked agammaglobulinemia, a patient had to obtain signatures from two government doctors and stamps from four separate bureaucrats before presenting the prescription to a dispensary.
Mexico was the original home of Syntex, one of the greatest pharmaceutical firms of the 20th century, but in 1959, the company left for the American city of Palo Alto, California, in what is now Silicon Valley, because its scientists were fed up with the Mexican government's bureaucratic delays which repeatedly impeded their research.
Cost of red tape
It is impossible to know exactly how much of the burden of government regulations is red tape — i.e., is excessive and delivers little or no benefit.However, a survey by the Canadian Federation of Independent Business found red tape represented about 28% of the total burden of regulation in Canada in 2020. A European Union survey reported in 2008 that 36% of EU small and medium enterprises felt that red tape had "constrained their business activities".
The total cost of regulation for U.S. business was estimated in 2021 at US$364.3 billion, and for Canadian business in 2020 at US$31.9 billion, or CAN$38.8 billion.
This cost represents 1.5% of GDP for the U.S. and 1.7% for Canada.
The CFIB estimated that the cost of red tape arising from Canadian federal, provincial and municipal government regulations was $11 billion in 2020. The annual cost of red tape per employee was higher for firms with fewer than 5 employees, at $1945, versus $398 for firms with 100 or more employees.
The Better Regulation Task Force suggested in 2005 that red tape reforms could potentially deliver an increase in income of 16 billion pounds per year, an amount greater than one percent of UK GDP. The EU's "Cutting Red Tape in Europe" report, which presented suggestions on how to reduce the administrative burden when member states implement EU legislation, estimated that the administrative burden reduction potential of all recommendations in the report exceeded €41 billion annually.
Such calculations have been questioned, however, given that it can be difficult to ascertain costs of regulation in industries that are composed of diverse firms.
While a regulation may be useful, the cost of imposing it may exceed the benefits. The Canadian federal government applies a cost-benefit analysis to most regulatory proposals, which takes into account the cost of the policy to consumers, businesses, and other sectors of society. Since the 1970s, Australian governments have sought to subject regulation to rigorous cost-benefit analysis so as to constrain both the stock and flow of the regulatory burden.
Red tape reduction initiatives
It can be difficult to distinguish between justified regulatory costs and unneeded regulations. For this reason, the expression "cutting red tape" has been used to refer to both initiatives to reduce unnecessary regulation, and to policies to reduce the overall regulatory burden.Canada
Canada's Red Tape Reduction Act of 2015 implemented a one-for-one rule that requires the removal of a regulation each time regulators impose a new administrative burden on business.Nevertheless, while Regulations decreased from 684 to 605 between 2014 and 2023, regulatory Requirements increased from 129,860 to 149,401.
A more successful reduction in red tape took place in the province of British Columbia, Canada, following a 2001 election promise to reduce the regulatory burden by 33%.
At the time, regulation was heavy, with rules imposed on, for example, the size of televisions in restaurants, the number of par-four holes at golf courses, and the maximum seating capacity of ski hill lounges. After three years, a 37% reduction was achieved. A central element of the program was a strong commitment from the minister responsible and the provincial premier.