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If, however, you think "too bad there are dozens of entrepreneurs that fail at hurdles like these", make sure to remember: for every entrepreneur that encounter

If, however, you think "too bad there are dozens of entrepreneurs that fail at hurdles like these", make sure to remember: for every entrepreneur that encounters such Kafkaesque situations, there are thousands that never run into any problems with bureaucracy that can't be solved with a phone call or a two-page form.

jessriedel 10y ago
The large, economy-wide negative impact of regulation are well established by academics. You can think the benefits are worth the cost, but you can't think the costs are small.
- mejari 10y ago
  >The large, economy-wide negative impact of regulation are well established by academics. That sounds like an easily made, hard to back up claim.
  - mamurphy 10y ago
    "Regulations are very costly (in a large, economy-wide way)," to me, sounded like an almost-self-evident, incredibly easy to back up claim. 15 seconds with Google confirmed that initial assessment. http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=1177&context=yjreg http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic... "The Costs and Benefits of Regulation: Review and Synthesis" RW Hahn, Yale Journal of Regulation, Volume 8, Issue 1, Article 9, 1991 The above link was the first Google result for (economy-wide costs of regulations journal) for me, and Google notes that it is cited by hundreds of other articles. The first 10 results all seemed to similarly explain that regulations are costly.
    - mejari 10y ago
      Having a cost and having a "large, economy-wide negative impact" are very different things.
      - mamurphy 10y ago
        Why did you feel the need to reply with this sentence? How does it advance our conversation whatsoever? You replied saying >Having a cost and having a "large, economy-wide negative impact" are very different things. Is a large cost not a large negative impact? Are regulations by the federal government not economy-wide? Are you making any discernible point that couldn't have been expressed by "NUH UH, I'M STILL RIGHT LALALALA!"? To pick a random example: The article doesn't say it costs shoppers in Des Moines $4,029 per year due to milk-market regulations. It costs US citizens somewhere between $500 million and $2.1 billion per year - in 1991. The journal article I linked is literally about the large, economy-wide costs of regulations. Your response is a non-sequitor.
        anigbrowl 10y ago
        You have not demonstrated a net negative cost. In fact, I wonder if you even read the abstract, which states in pertinent part: [Authors] find that previous estimates of the costs of economic regulation probably overstated the true costs by failing to distinguish between transfer payments and net changes in economic efficiency [...] Overall, they find that the efficiency cost due to economic regulation is large and that the benefit from social regulation is positive but small. Their study also finds a huge variation in estimates of the costs and benefits ofparticular regulatory policies, particularly in the transportation sector and in environmental protection. This variation indicates that most estimates may be merely "guesstimates." Going with your random example plucked from the article... [Milk market regulations] cost US citizens somewhere between $500 million and $2.1 billion per year - in 1991. Besides the wild variation, so what? That number is meaningless without the context of the size of the milk market as a whole which would allow us to assess the scope of the burden, not to mention some estimate of the likely economic cost of an unregulated milk marketplace (eg economic losses due to illness from disease). Why do you think it's impressive to pull out a big number like this without any context? It's ridiculous. If we're going to go with cherry-picking argument of this type, I can't help noticing that Americans love milk and almost every American refrigerator I'e ever seen has an open container of milk. So since we're talking about the US as a whole in your example, and there were ~250m Americans in 1991, it seems like these regulations imposed a cost of between $2 and $8 that year on every American...which doesn't sound like all that much to pay for a year of knowing the milk you enjoy is safe to consume. MY household spends about $7-800 a year on dairy products, so back in 1991, and adjusting very generously for inflation, we might have spent $200 to consume the same amount of milk. Using the worst-case number from your paper, positing an upper regulatory burden for every American of $8 and doubling it to represent the two people in my household, maybe $16 of that $200 consisted of regulatory costs. So the worst-case scenario is that regulation drove up the cost of milk by 8%, which doesn't sound like that bad of a trade. Since I've done all the work here so far perhaps you'd like to estimate the benefits of reliably safe milk in terms of avoided medical costs from dairy-borne pathogens.
    - gertef 10y ago
      regulations are obviously costly, benefits are obviously great. the important hard question is the net.
      - mamurphy 10y ago
        >regulations are obviously costly, benefits are obviously great. the important hard question is the net. Well of course, but the comment I responded to questioned the assertion that there is a large, economy-wide cost. Is the benefit of (cleaner air/safer highways/magnet-free-toys) worth the cost? That's what the debate ought to be about. But first we all have to agree that there is a cost being paid.
        mejari 10y ago
        >Well of course, but the comment I responded to questioned the assertion that there is a large, economy-wide cost. No, I did not. The comment I replied to implied a net-negative cost.
    - anigbrowl 10y ago
      Finding a citation isn't the same as forming an argument. A 25 year old article is also not a very impressive comeback considering that there has been a lot of new research in economics and in computational analytics over that period. Try harder.
    - cbsmith 10y ago
      That paper actually points out that costs have been widely overestimated. It also points out that estimating the costs is very difficult and a lot of estimates out there are pretty hand wavy and/or just made up.
      - jessriedel 10y ago
        It also says "Overall, they find that the efficiency cost due to economic regulation is large and that the benefit from social regulation is positive but small."
        cbsmith 10y ago
        Note the first part is "economic regulation" and the second part is "social regulation".
- gwbas1c 10y ago
  When regulation is used by incumbent businesses to block competition, yes. When regulation is used to protect people from being taken advantage of, then the benefits are well worth the cost.
- anigbrowl 10y ago
  The costs lie on a distribution and most of the time they are small when broken out. It's dishonest to cite huge numbers from aggregated costs or cherry-pick costs from highly-regulated industries like pharma or chemistry where the regulatory burden is high due to substantially elevated risk.
kefka 10y ago
An "some form" means some faceless bureaucrat fuckhead, who's having a lousy day (after reading my comment!) rubber-stamps "NOPE".... or is just lost. These are barriers to trade. And we got to this place with death by a thousand regulation cuts. Can't do this. Can't do that. Cant do this on that day while doing that instead of this, without willing out volumes of forms. And you wonder why compliance costs are stupid high? (Don't get me wrong, I hold to a mixture of communism and capitalism - I think something like GNU can be done for nearly everything, but there's room for making money as well. I just categorically disagree with the volume of regulations. It makes people criminals via incapability of understanding the law.)
- ashark 10y ago
  OTOH too little regulation can easily mean no-one trusting a brand they don't recognize as large and well-established to even reach the standard of not killing them, let alone being any good. Personally I'm already there with lots of stuff. I'm aware that it's letting certain companies collect rents, but it's generally not worth my time and the extra risk to track down another brand that might be acceptably reliable and safe, assuming they haven't decided to burn whatever little reputation they've built up for some short-term profit by swapping their once-decent product for crap while keeping the price and model info the same after all the reviews I read were written. That's also a barrier to entry. Economies are tricky things :-/
- matt4077 10y ago
  Well, considering your username, I'm sure you may end up in those Kafkaesque situations more than usual... But, seriously: This nightmare is one of the stories we tell each other. But, for most companies, it's just not true. I've started four or five companies. Mostly software, one that sells actual (government-certified organic) food, one that mostly worked for governments (including the defense sector). In all that time, I've never felt like regulation prevented me from doing anything. Once or twice, I had to submit some form that I thought was overkill. But in fact I doubt there was ever a year where I spend more than two or three days net on government bureaucracy. I know that the situation may be different for construction or airplane startups (at least I hope it is). But this sort of hyperbole is just a lie that doesn't improve by repetition. If anything, I've been surprised by how little regulation there sometimes is. Look at AirBnB or Uber or drones: Who would've though that you could (for a time) fly a model airplane in Heathrow's final approach corridor and only get a "we're looking into it and engaging in a dialog with all interested parties" as a reply?

jessriedel 10y ago

The large, economy-wide negative impact of regulation are well established by academics. You can think the benefits are worth the cost, but you can't think the costs are small.

mejari 10y ago
>The large, economy-wide negative impact of regulation are well established by academics. That sounds like an easily made, hard to back up claim.
- mamurphy 10y ago
  "Regulations are very costly (in a large, economy-wide way)," to me, sounded like an almost-self-evident, incredibly easy to back up claim. 15 seconds with Google confirmed that initial assessment. http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=1177&context=yjreg http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic... "The Costs and Benefits of Regulation: Review and Synthesis" RW Hahn, Yale Journal of Regulation, Volume 8, Issue 1, Article 9, 1991 The above link was the first Google result for (economy-wide costs of regulations journal) for me, and Google notes that it is cited by hundreds of other articles. The first 10 results all seemed to similarly explain that regulations are costly.
  - mejari 10y ago
    Having a cost and having a "large, economy-wide negative impact" are very different things.
    - mamurphy 10y ago
      Why did you feel the need to reply with this sentence? How does it advance our conversation whatsoever? You replied saying >Having a cost and having a "large, economy-wide negative impact" are very different things. Is a large cost not a large negative impact? Are regulations by the federal government not economy-wide? Are you making any discernible point that couldn't have been expressed by "NUH UH, I'M STILL RIGHT LALALALA!"? To pick a random example: The article doesn't say it costs shoppers in Des Moines $4,029 per year due to milk-market regulations. It costs US citizens somewhere between $500 million and $2.1 billion per year - in 1991. The journal article I linked is literally about the large, economy-wide costs of regulations. Your response is a non-sequitor.
      - anigbrowl 10y ago
        You have not demonstrated a net negative cost. In fact, I wonder if you even read the abstract, which states in pertinent part: [Authors] find that previous estimates of the costs of economic regulation probably overstated the true costs by failing to distinguish between transfer payments and net changes in economic efficiency [...] Overall, they find that the efficiency cost due to economic regulation is large and that the benefit from social regulation is positive but small. Their study also finds a huge variation in estimates of the costs and benefits ofparticular regulatory policies, particularly in the transportation sector and in environmental protection. This variation indicates that most estimates may be merely "guesstimates." Going with your random example plucked from the article... [Milk market regulations] cost US citizens somewhere between $500 million and $2.1 billion per year - in 1991. Besides the wild variation, so what? That number is meaningless without the context of the size of the milk market as a whole which would allow us to assess the scope of the burden, not to mention some estimate of the likely economic cost of an unregulated milk marketplace (eg economic losses due to illness from disease). Why do you think it's impressive to pull out a big number like this without any context? It's ridiculous. If we're going to go with cherry-picking argument of this type, I can't help noticing that Americans love milk and almost every American refrigerator I'e ever seen has an open container of milk. So since we're talking about the US as a whole in your example, and there were ~250m Americans in 1991, it seems like these regulations imposed a cost of between $2 and $8 that year on every American...which doesn't sound like all that much to pay for a year of knowing the milk you enjoy is safe to consume. MY household spends about $7-800 a year on dairy products, so back in 1991, and adjusting very generously for inflation, we might have spent $200 to consume the same amount of milk. Using the worst-case number from your paper, positing an upper regulatory burden for every American of $8 and doubling it to represent the two people in my household, maybe $16 of that $200 consisted of regulatory costs. So the worst-case scenario is that regulation drove up the cost of milk by 8%, which doesn't sound like that bad of a trade. Since I've done all the work here so far perhaps you'd like to estimate the benefits of reliably safe milk in terms of avoided medical costs from dairy-borne pathogens.
  - gertef 10y ago
    regulations are obviously costly, benefits are obviously great. the important hard question is the net.
    - mamurphy 10y ago
      >regulations are obviously costly, benefits are obviously great. the important hard question is the net. Well of course, but the comment I responded to questioned the assertion that there is a large, economy-wide cost. Is the benefit of (cleaner air/safer highways/magnet-free-toys) worth the cost? That's what the debate ought to be about. But first we all have to agree that there is a cost being paid.
      - mejari 10y ago
        >Well of course, but the comment I responded to questioned the assertion that there is a large, economy-wide cost. No, I did not. The comment I replied to implied a net-negative cost.
  - anigbrowl 10y ago
    Finding a citation isn't the same as forming an argument. A 25 year old article is also not a very impressive comeback considering that there has been a lot of new research in economics and in computational analytics over that period. Try harder.
  - cbsmith 10y ago
    That paper actually points out that costs have been widely overestimated. It also points out that estimating the costs is very difficult and a lot of estimates out there are pretty hand wavy and/or just made up.
    - jessriedel 10y ago
      It also says "Overall, they find that the efficiency cost due to economic regulation is large and that the benefit from social regulation is positive but small."
      - cbsmith 10y ago
        Note the first part is "economic regulation" and the second part is "social regulation".
gwbas1c 10y ago
When regulation is used by incumbent businesses to block competition, yes. When regulation is used to protect people from being taken advantage of, then the benefits are well worth the cost.
anigbrowl 10y ago
The costs lie on a distribution and most of the time they are small when broken out. It's dishonest to cite huge numbers from aggregated costs or cherry-pick costs from highly-regulated industries like pharma or chemistry where the regulatory burden is high due to substantially elevated risk.

kefka 10y ago

An "some form" means some faceless bureaucrat fuckhead, who's having a lousy day (after reading my comment!) rubber-stamps "NOPE".... or is just lost. These are barriers to trade. And we got to this place with death by a thousand regulation cuts. Can't do this. Can't do that. Cant do this on that day while doing that instead of this, without willing out volumes of forms. And you wonder why compliance costs are stupid high? (Don't get me wrong, I hold to a mixture of communism and capitalism - I think something like GNU can be done for nearly everything, but there's room for making money as well. I just categorically disagree with the volume of regulations. It makes people criminals via incapability of understanding the law.)

ashark 10y ago
OTOH too little regulation can easily mean no-one trusting a brand they don't recognize as large and well-established to even reach the standard of not killing them, let alone being any good. Personally I'm already there with lots of stuff. I'm aware that it's letting certain companies collect rents, but it's generally not worth my time and the extra risk to track down another brand that might be acceptably reliable and safe, assuming they haven't decided to burn whatever little reputation they've built up for some short-term profit by swapping their once-decent product for crap while keeping the price and model info the same after all the reviews I read were written. That's also a barrier to entry. Economies are tricky things :-/
matt4077 10y ago
Well, considering your username, I'm sure you may end up in those Kafkaesque situations more than usual... But, seriously: This nightmare is one of the stories we tell each other. But, for most companies, it's just not true. I've started four or five companies. Mostly software, one that sells actual (government-certified organic) food, one that mostly worked for governments (including the defense sector). In all that time, I've never felt like regulation prevented me from doing anything. Once or twice, I had to submit some form that I thought was overkill. But in fact I doubt there was ever a year where I spend more than two or three days net on government bureaucracy. I know that the situation may be different for construction or airplane startups (at least I hope it is). But this sort of hyperbole is just a lie that doesn't improve by repetition. If anything, I've been surprised by how little regulation there sometimes is. Look at AirBnB or Uber or drones: Who would've though that you could (for a time) fly a model airplane in Heathrow's final approach corridor and only get a "we're looking into it and engaging in a dialog with all interested parties" as a reply?