5 ms·

Why is it always a choice between poorly-written regulations and no regulations?

by rdiddly 9y ago

corey_moncure 9y ago
Maybe writing regulations is hard. Have you tried it?
djschnei 9y ago
Not sure... just seems to be a reality.
bluGill 9y ago
Because it is so difficult to write good regulations. It is [nearly?] impossible to predict all the consequences of your regulation ahead of time. After the regulation is written there are many more people who have an incentive to figure out how to twist it to their advantage, and they get as long as they need to dream it up. Then they get a as long as they need to try various forms in small areas that you don't notice until they get it "right" and then before you know it they have grown. It doesn't help that the people who are best able to write the regulations are those who are in the industry: they also have incentive to get it wrong. Either you have people who don't understand the industry writing the regulations despite not being competent to do so, and thus not realizing at all what the loopholes are; or you get those who are inside to close the bad loop holes (the ones they know will be abused and they will get in trouble for) while opening up smaller loopholes that benefit slightly them at the expense of someone else not writing the regulations. Either way you lose, though insiders is slightly better. This is also why you see a "revolving door" between industry and regulators: that is the only way regulators can get the skills they need to write something that isn't completely awful.
- frgtpsswrdlame 9y ago
  >It is [nearly?] impossible to predict all the consequences of your regulation ahead of time. Yes but why is the burden asymmetric? It is similarly impossible to predict the consequences of deregulation ahead of time yet proponents of deregulation are never held to the total unpredictability of the outcomes of their position.
  - aeorgnoieang 9y ago
    > It is similarly impossible to predict the consequences of deregulation ahead of time yet proponents of deregulation are never held to the total unpredictability of the outcomes of their position. What's an example of this? The deregulation of airlines? The repeal of Glass-Steagall? I've read a lot of bad takes about the latter's supposed outcomes, but none of them claimed that the outcome was unpredictable.
    - frgtpsswrdlame 9y ago
      >The repeal of Glass-Steagall? I've read a lot of bad takes about the latter's supposed outcomes, but none of them claimed that the outcome was unpredictable. It depends on what you mean by 'outcome.' If by outcome you mean that with GLBA/Glass-Steagall repeal banks began investing in the products they had previously been barred from then sure that was predictable. If we mean second order effects like it's possible contribution to the financial crisis then I'd say that was definitely unpredictable considering economists still can't agree on whether GLBA played a role or not.
  - bluGill 9y ago
    That is a fair point. I will partially counter that a much simpler class of regulations can cover more things in deregulation. For example, if I just make fraud illegal, if you misrepresent what your evil I don't care what it is under deregulation I can get you. If you are honest about your evil it will be harder (but not impossible!) to sell it. Deregulation also allows the "small guy" a better chance because to compete, and so with more choice the customer is likely to be more aware of choice. Again, the above is not complete. There are big holes in this as well. Fundamentally there are always a subset of people who are willing to do evil to get ahead, if they can do their evil while being in the letter of the law they will. Society needs a way to deal with it, and nothing is perfect.

Why is it always a choice between poorly-written regulations and no regulations?

corey_moncure 9y ago

Maybe writing regulations is hard. Have you tried it?

djschnei 9y ago

Not sure... just seems to be a reality.

bluGill 9y ago

Because it is so difficult to write good regulations. It is [nearly?] impossible to predict all the consequences of your regulation ahead of time. After the regulation is written there are many more people who have an incentive to figure out how to twist it to their advantage, and they get as long as they need to dream it up. Then they get a as long as they need to try various forms in small areas that you don't notice until they get it "right" and then before you know it they have grown. It doesn't help that the people who are best able to write the regulations are those who are in the industry: they also have incentive to get it wrong. Either you have people who don't understand the industry writing the regulations despite not being competent to do so, and thus not realizing at all what the loopholes are; or you get those who are inside to close the bad loop holes (the ones they know will be abused and they will get in trouble for) while opening up smaller loopholes that benefit slightly them at the expense of someone else not writing the regulations. Either way you lose, though insiders is slightly better. This is also why you see a "revolving door" between industry and regulators: that is the only way regulators can get the skills they need to write something that isn't completely awful.

frgtpsswrdlame 9y ago
>It is [nearly?] impossible to predict all the consequences of your regulation ahead of time. Yes but why is the burden asymmetric? It is similarly impossible to predict the consequences of deregulation ahead of time yet proponents of deregulation are never held to the total unpredictability of the outcomes of their position.
- aeorgnoieang 9y ago
  > It is similarly impossible to predict the consequences of deregulation ahead of time yet proponents of deregulation are never held to the total unpredictability of the outcomes of their position. What's an example of this? The deregulation of airlines? The repeal of Glass-Steagall? I've read a lot of bad takes about the latter's supposed outcomes, but none of them claimed that the outcome was unpredictable.
  - frgtpsswrdlame 9y ago
    >The repeal of Glass-Steagall? I've read a lot of bad takes about the latter's supposed outcomes, but none of them claimed that the outcome was unpredictable. It depends on what you mean by 'outcome.' If by outcome you mean that with GLBA/Glass-Steagall repeal banks began investing in the products they had previously been barred from then sure that was predictable. If we mean second order effects like it's possible contribution to the financial crisis then I'd say that was definitely unpredictable considering economists still can't agree on whether GLBA played a role or not.
- bluGill 9y ago
  That is a fair point. I will partially counter that a much simpler class of regulations can cover more things in deregulation. For example, if I just make fraud illegal, if you misrepresent what your evil I don't care what it is under deregulation I can get you. If you are honest about your evil it will be harder (but not impossible!) to sell it. Deregulation also allows the "small guy" a better chance because to compete, and so with more choice the customer is likely to be more aware of choice. Again, the above is not complete. There are big holes in this as well. Fundamentally there are always a subset of people who are willing to do evil to get ahead, if they can do their evil while being in the letter of the law they will. Society needs a way to deal with it, and nothing is perfect.