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I'm in the process of reading _Why Nation Fails_. The central thesis is that the rich and poor countries are separated by inclusive vs extractive institutions.

I'm in the process of reading _Why Nation Fails_. The central thesis is that the rich and poor countries are separated by inclusive vs extractive institutions. The extractive institutions are characterised by elites that attempt to defend their own wealth and status by maintaining the status quo and resisting the creative destruction that may threaten that position. It seems to resonate a bit here, when Marc speaks of things like regulatory capture. I heard a few years back that a US health insurance startup had to provide on the order of 6000 pages of documentation to be approved. No wonder that there hadn't been another provider for twenty years or so. It seems like some things are hard to build mostly because some people want it that way. I can't help but think that there's a fundamental flaw in the American regulatory approach. From the European perspective, the US is sometimes viewed as some time of free market haven, but in practice it often turns out that the regulatory burden is much higher. The framework imposed on financial markets by the SEC and related authorities is on a whole different level in the US, and with higher complexity you a also get a larger surface area for special interests to make their mark. Point being, why not write simpler laws and regulations and leave it to the courts to interpret what adheres to the spirit of it? With the barriers of entry gone, I think we'd see a renewed vitality to many ossified sectors.

csallen 6y ago
> why not write simpler laws and regulations and leave it to the courts What incentives do lawmakers have to make laws simpler?
- core-questions 6y ago
  This is why judges cannot be the highest power - the people still need to be able to hold them accountable to ensure that the legal institutions don't become inaccessible to the common man. (Not that they are accessible now... but it could be worse.)
  - casefields 6y ago
    That was Scalia's point in his dissent of the gay marriage decision: Scalia argues in his opinion that the court is increasingly creating policy rather than serving as a neutral arbiter. “Today’s decree says that my Ruler, and the Ruler of 320 million Americans coast-to-coast, is a majority of the nine lawyers on the Supreme Court,” he writes. “This practice of constitutional revision by an unelected committee of nine, always accompanied (as it is today) by extravagant praise of liberty, robs the People of the most important liberty they asserted in the Declaration of Independence and won in the Revolution of 1776: the freedom to govern themselves.” https://thehill.com/blogs/blog-briefing-room/news/246249-scalia-gay-marriage-decision-shows-americas-ruler-is-supreme https://thehill.com/blogs/blog-briefing-room/news/246249-sca... People in one part of the country go to the courts, and force their will/values on the rest of the country. Activists across the political spectrum do it.
    - lotsofpulp 6y ago
      It’s funny since that specific ruling is what stopped a minority of the US population from imposing their will/“values” on the rest of the country. Clearly the electoral college and legislature is not setup properly to reflect the will of the people at this point in time, so we have a better chance of it happening from 9 Supreme Court judges.
      - watwut 6y ago
        Supreme Court judges are not reflecting popular will. They dont align with what the majority of population think.
- BurningFrog 6y ago
  How can we change incentives for lawmakers?
  - paulryanrogers 6y ago
    Campaign finance reform, same day primaries nationwide, vigorously prosecute bribes and conflicts of interest, make corporate lobbying illegal, prevent industry careerists from holding office, prevent outgoing politicians from working in the industry for some cool off period These things aren't hard they're just blocked by years of propaganda by incumbents. Edit: forgot ranked choice voting
  - javajosh 6y ago
    Introduce a rule that any new law should be submitted in the handwriting of its actual authors. And not the handwriting of interns, or staffers of the official authors, the author themselves.
  - CyanLite4 6y ago
    Congress has a 20% approval rating, polled weekly for over the past decade. Yet we vote every two years for the same folks who give us the same results. The problem isn’t them. It’s us.
    - brigandish 6y ago
      I'd say the problem is one of competition. "We" cannot choose better legislators unless better legislators come forward for selection, but the incumbents - and by that I mean parties elected or not - have so much money and machinery behind them that to turf them out would be nigh on impossible.
      - lotsofpulp 6y ago
        The problem is that each “we” is pulling to benefit themselves at all costs. Hence giant military fighter jet contracts that span multiple congressmen’s districts around the country, and while being terrible for the future of the country, is untouchable politically as not a single person will vote against their economic interests.
- m463 6y ago
  I thought the "remove two regulations to add one regulation" was an interesting hack. Don't know if it's political rhetoric or even viable.
tlb 6y ago
Getting an answer from a court (is X legal?) takes a long time: at least a few years and several hundred thousand dollars. Far too long to wait before building a business around X. Asking people to build the business first and then find out if it's legal isn't how a society of laws is supposed to work. Fast courts would be a huge benefit to society.
- MattGaiser 6y ago
  I also don't think you can just ask a court to answer a hypothetical in a binding way. You basically need to get into the legal problem first.
  - freeone3000 6y ago
    This is an American doctrine, that there must be an "actual case or controversy" - Canadian courts can and do issue advisory opinions to interpret regulation.
    - Jommi 6y ago
      Which are still usually advisory and not legally binding advice.
      - TeMPOraL 6y ago
        I would hope they go a long way towards reducing your responsibility if you follow one and then run into a legal problem because of it.
  - loteck 6y ago
    Pre-enforcement lawsuits do exist to answer questions for parties prior to taking actions that would result in liability. One was just recently decided in favor of the ACLU. https://www.techdirt.com/articles/20200402/13055544225/dc-court-says-terms-service-violations-cant-trigger-federal-cfaa-prosecutions.shtml https://www.techdirt.com/articles/20200402/13055544225/dc-co...
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hindsightbias 6y ago
In your expert opinion on US health insurance, what number of pages would represent due diligence for federal and state review?
KirinDave 6y ago
> It seems to resonate a bit here, when Marc speaks of things like regulatory capture. I heard a few years back that a US health insurance startup had to provide on the order of 6000 pages of documentation to be approved. No wonder that there hadn't been another provider for twenty years or so. It seems like some things are hard to build mostly because some people want it that way. Sure, but is this actually a high order blocker? I'd argue that it's not even a first order effect. The problem here is not that we don't have enough insurance capacity; the problem is that we don't have enough ventilators. And it turns out, actually building those things to spec is hard. Intellectual property and regulatory capture are bad things to be reduced, IMO, but they're only part of our current equation. The moneyed classes of America don't like redundancy and they don't like long term investments. Since they hold such a huge chunk of wealth compared to the rest of America, their preferences (which I might note, Marc represents professionally) make these decisions long before patent troll lawsuits or building inspectors can rain on any parade. > Point being, why not write simpler laws and regulations and leave it to the courts to interpret what adheres to the spirit of it? With the barriers of entry gone, I think we'd see a renewed vitality to many ossified sectors. Litigation is the most costly way to settle these things. Your idea would require even more startup capital per small business to overcome the legal obstacles you seemed eager to abolish.
- oxymoron 6y ago
  We’re not necessarily talking about litigation here. Like another commenter pointed out, other legal system allows you to ask the courts for decisions without an opposing party.
- thu2111 6y ago
  We're actually not running out of ventilators anywhere. Existing installed base is sufficient and moreover, it turned out the federal government had a large stockpile anyway, which rather invalidates the central thesis of the article re: lack of preparedness. The claim about ventilators was one of the first dodgy claims I noticed but really the entire first part of the article is a pack of lies. Andreessen says: "We see this today with the things we urgently need but don’t have. We don’t have enough coronavirus tests, or test materials — including, amazingly, cotton swabs and common reagents" This isn't amazing. The amount of testing being performed has scaled exponentially over the space of just a few months, from a standing start. In fact there's a lot of evidence that the supposedly exponential growth of the virus was really due to an exponential growth in testing, when positives are viewed as a proportion of overall tests done. It's not an indictment of "the West" that materials run out after such a vast acceleration - if anything I'm amazed it didn't happen earlier! "We don’t have enough ventilators, negative pressure rooms, and ICU beds" All three are in plentiful supply. Even in localised hotspots like New York problems are limited to a handful of hospitals. I've been reading about the near deserted state of most hospitals for over a week now. I don't understand where Marc is getting his information from if he isn't aware of this. "We also don’t have therapies or a vaccine — despite, again, years of advance warning about bat-borne coronaviruses" Vaccines can't be created for a virus that doesn't exist yet regardless of how many vague warnings there are, so this isn't remarkable: it's inevitable. As for therapies, that's what ventilators and CPAP are. "then we may not have the manufacturing factories required to scale their production" Given the data appearing in a flood of new papers, showing that the virus is not dangerous enough to warrant current policy, no unusual rates of manufacturing scale-up will be required. "it took scientists 5 years to get regulatory testing approval for the new Ebola vaccine after that scourge’s 2014 outbreak, at the cost of many lives" I'm actually on Marc's side on this one, in that I suspect current FDA approval processes are overkill. But this claim is also nonsense. FDA allows fast-track approval bypass for cases where someone is going to die without treatment anyway, and Ebola disappeared after 2014 - according to CDC the next time it was spotted was Zaire in 2018 with a grand total of 8 cases. That's not even close to "many lives". "A government that collects money from all its citizens and businesses each year has never built a system to distribute money to us when it’s needed most." Tax credits, quantitative easing, loan subsidies. The government has many ways to distribute money to people. "At least therapies and vaccines are hard! Making masks and transferring money are not hard" In fact making medical masks is hard. It requires special materials and machines, the supply of which can't be rapidly scaled up. https://www.businessinsider.com/why-factories-cant-keep-up-demand-for-face-masks-coronavirus-2020-4?r=US&IR=T https://www.businessinsider.com/why-factories-cant-keep-up-d... Headline is literally "Factories are scrambling to make 20 times more face masks a day to keep up with demand amid coronavirus outbreak, but the masks are surprisingly difficult and expensive to make" As for money, transferring money is easy. Figuring out the right amounts and the right people to send it to, without creating an explosion of fraud and waste - that's not so easy.
HashThis 6y ago
It is all about our congress selling out the American people, every year for 50 years. It is a supply chain of THEFT of the full citizen base, by corporations and the wealthy. The American people must stand up and force it to stop.
deleted 6y ago
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Barrin92 6y ago
The inclusive vs extractive institutions mentality makes sense but I think in the exact reverse way then you suggest. It's precisely because of the Wests (and like Marc says it really is the West) failure to respond to this crisis. It's the excess of inclusivity that leads to short term, ballot box decision making in response to crises, and it is the short term, market logic that leads to loss of autonomy and neglect of long term goals that Marc talks about in the piece. It's the politication of a healhcare / virological crisis that renders responses ineffective. When the American president gins up armed protesters during a pandemic that is the direct result of the inclusivity praised in the book. It's crisis response turned into a media spectacle and an election campaign. Efffective resopnse to the crisis was visible in East Asian countries in which 'elites' can govern without constant interference, and that's not a glorification of China, but also of democratic countries like Taiwan, or so-so democratic countries like Singapore. What they all have in common is that decisions are made by leadership which can act with the necessary degree of autonomy.
- qplex 6y ago
  All the recent outbreaks of viruses like this have originated from East Asia. I really wouldnt give much praise to the great governing elite that failed to prevent this in the first place, despite scientists telling them about it a long time ago.
  - treis 6y ago
    >All the recent outbreaks of viruses like this have originated from East Asia. That's not true. Swine flu came from Mexico and MERS, as the name implies, started in the Middle East
    - qplex 6y ago
      I do mean SARS which first surfaced in the 2000s in China. Swine flu has been around for much longer, at least for 100 years.
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betocmn 6y ago
"Why Nation Fails" is a phenomenal book. I'm sorry, but I have a hard time to think of US institutions as reasonable examples of how the author portraits creative destruction and extractive institutions. I understand there might be some broken things in your nation's systems. Still, the fact you're able to discuss them here or work towards changing them through legal methods, shows the US is far off on the right track of constitutional rule and pluralism.
- oxymoron 6y ago
  Yeah, I generally agree. The book does highlight how much of it is hinged on contingency, though. The US has strong institutions, but the dynamic of having elites opposing change is still present, obviously. High barriers of entry is a prime example of how it can be done when other options are unavailable.
- justicezyx 6y ago
  Any recent example of a societal issue affecting American lives got fixed in American system?
  - IG_Semmelweiss 6y ago
    I can think of 1 It used to be very expensive to travel between US cities because a govt agency (forget the name, maybe the board of air travel?) set the who what how could fly planes from a to b, and at what price. Think mad men times, panAm, etc. That agency was eliminated circa 1980 by some stroke of luck and perfect alingment of planets. Ticket prices plummeted and this opened flying to the poor. That was also the last time a US regulatory agency was disbanded.
    - aspenmayer 6y ago
      We might soon have another federal regulatory agency disbanded but considering which one it is I’m not sure if that will be a good thing for anyone but banks. https://www.scotusblog.com/2019/10/justices-to-review-constitutionality-of-cfpb-structure/ https://www.scotusblog.com/2019/10/justices-to-review-consti... https://www.nytimes.com/2020/03/03/us/supreme-court-consumer-bureau.html https://www.nytimes.com/2020/03/03/us/supreme-court-consumer...
Spooky23 6y ago
Answer is pretty easy. People are assholes. Those rules and regulatory frameworks exist for a reason, and with something like health insurance you don’t see better outcomes in states with lower regulatory burden. Same with the financial burdens that companies cry about. Enron, GlobalCrossing, etc all demonstrated that corporate governance required the federal stick to behave. Anderseen’s article is pretty lame with respect to why we can’t do things. We can and we have. The difference is now that you have executive leadership that is batshit crazy people have taken over the government. That happened because of the absence of regulation that gives extremists like Alex Jones, who were relegated to public access cable and weird newsletters in the 1980s access to the public at large. Taking off what rails remain isn’t a strategy for success.
- indymike 6y ago
  That reason being capturing the market by means of regulation.
- iandanforth 6y ago
  You're not wrong, but, as an asshole, I clap my hands in glee every time someone promotes regulation as a force for good. Why? Money spent on politics is incredibly cheap. I can literally write the laws that I want and wait for an opportune moment to have a chosen, and paid for, representative, slip it in. Yes, please demand more laws. Please ask Washington to centralize and increase its power. It's not that your motivation is wrong, its just that I own the institution.
- pmarca 6y ago
  The system is working great except there isn't enough censorship?
harryh 6y ago
Point being, why not write simpler laws and regulations and leave it to the courts to interpret what adheres to the spirit of it? With the barriers of entry gone, I think we'd see a renewed vitality to many ossified sectors. I agree with your overall point, but you have the regulatory differences between the US and Europe exactly backwards. Europe (excluding England somewhat) has a statutory legal system. Things are either legal or illegal according to laws that have largely been written down ahead of time that anyone can go read and figure out. In the US we have a common law system where much of our law is written by the courts in response to specific cases where judges interpret the general principles described in the "simpler laws" you speak of. In practice this means that, under many circumstances, things move a lot slower in the US because of the time and expense of litigation (and even the threat of litigation). This is one of the reasons that it's harder to build things in the US. Our public transportation systems (trains, subways, etc) cost on the order of 5-10x more than similar ones in Europe. Our different legal systems is one of the big reasons why.
- oxymoron 6y ago
  I may not have expressed that point very well, but it seems like the common law system would encourage less explicit regulation rather than more, so that seems like a bit of a contradiction. Does the need for more litigation drive a desire to be more explicit in how statues are written?
  - harryh 6y ago
    Correct. Common law = less explicit legislature passed regulation. We have far less regulation of this kind in the US than in Europe BUT we have far more common law regulation.
  - XorNot 6y ago
    It means power is captured by those who can afford lawyers, and lawyers are expensive. There's no way to plan your risks up front in an area with not a lot of case-law, because you don't know them - your business plan now gets to be "hopefully we win this case in our favor in the next 3 years, but if it goes all the way to the supreme court..."
deleted 6y ago
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MR4D 6y ago
Simple - politics is about control. Laws are a form of politics. Why would anyone give up control once they had acquired it?
- deleted 6y ago
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- riazrizvi 6y ago
  100% it’s politics, it’s self-interest. The reason why we don’t have Musk’s Alien Dreadnought factories throughout the US is related to the reason Elizabeth I rejected weaving machines; the people who have power will not gain enough from it and may even lose. Elizabeth I feared the consequences of creative disruption on her constituents, and the knock on effect that might have had to her tenuous grip on power. Today in the US we see silly policies that are pushed to make a few people rich at the expense of society as a whole. The more we are able to dismantle monopolies, and weaken the capability of incumbent industries to skew legislation in their own favor, the more society will move forward.
  - brennanpeterson 6y ago
    Who would gain? Politicians try really hard to pull in facilities. Look at the GLobalFoundries spending debacle in NY. Or the Panasonic/Tesla battery facility in NV at, what 2m in grants per employee. Or Foxxcon in WI. These facilities aren't that economically beneficial. Capital investors aren't, as PMA implies, stupid: they don't build because there isn't much money in it. Politicians bend over backwards all the time. Massive subsidies are the problem, not lack of interest. The reason people go elsewhere is to play regulatory arbitrage. To avoid the inspections, the pollution rules, and the long term environmental costs. The Bay area is filled with Superfund sites. Same for the Puget Sound, Boston Harbor, and the Hudson. No one should eat too many fish...because worlrdwide Mercury levels are high.
deanCommie 6y ago
I feel like all the replies comparing legal system differences between the US and the EU miss a crucial element - the difference in the characters of the people participating in each society. I'm now going to make a couple of broad generalizations. Note, that I'm aware they do not apply to every person, or even state in the US, or member nation of the EU. However having lived in both for a number of years, I do have some personal insight. Europe and Europeans are a cohesive society where the ideal is a flat society without too many outliers. Standing out from the field is not promoted. And career aspirations are about attaining a work life balance and produce meaningful work. The overall societal system works, offers many opportunities for education and entrepreneurship, but within a well lit path. Europe is a fast moving train. As a result, people look for ways to succeed within the system. The US is a "land of opportunity" in all the best, and all the insidious ways that this implies. People are looking to separate themselves from the pack, to be "insanely great" in some way or another, and see society and laws as just impediments to that goal. The US is a rocket powered supercar. As a result, people look for ways to succeed in spite of the system. This is why both the US needs a common law system (because the population would never tolerate a restrictive "write everything down" statutory system because would consider it overly restrictive to their liberty), and also why it fails. Because people and corporations abuse the common law system to violate the spirit of the law as much as possible to succeed and thrive in the short term. So half the country is constantly tries to create more regulations and the other half is trying to tear down existing ones. This is why in the US the most innovative companies and people can succeed on a 5-10 year timeline, and so the biggest public companies in the world are there, but why Europe is much better at building 20-50 year projects and so have better infrastructure. (I'm ignoring China completely here because China is better than both at everything now, but is also an authoritarian dictatorship, so it's even harder to compare that apple to the other oranges). Ultimately my point is that the EU raises a certain type of person and attracts a certain type of immigrant, and the US another. I'm Canadian, so I frankly think both extremes are distasteful. I find the US a post-apocalyptic every-man-for-himself dystopia. And I find the EU a restrictive stifling nanny-state. Canada is just right for me. But I appreciate that the world has both extremes.
- Jommi 6y ago
  I think trying to put all of Europe into one EU in your argument is already where it breaks down. Europeans don't live in a cohesive society. Italians, Germans, Swedes live in a cohesive society in their small california-sized countries.
jbkiv 6y ago
I respectfully disagree about what it takes to be approved as a health insurance COMPANY (as opposed to a broker). In fact I am quite happy that regulators require you to show that 1) you know what you are doing 2) you have a massive balance sheet to protect your customers if they need it. The point 2 is super important in the context of VC-backed companies. There is simply no way to build a massive insurance company that way, the return on equity is too low. Unlike airbnb you just don’t go out and raised $2B in debt because you are running out of money and you can’t pay claims. Regulators would step in way before, and they have done that multiple times. Witness what is happening today: I have not heard from any health insurance company requesting a bailout (unlike most companies). State regulators are a pain in the neck, are conservative but - in your interest - they control how the insurance company uses their capital (you grow too fast = you must add more equity, a bit like working capital), and how you invest your money (they restrict the amount of equity you invest in). All in the interest of the consumers. Think for a second: if the balance sheet of your health insurance company looked like the balance sheet of Softbank’s vision fund? Would you like to hear “we are sorry, we’ll have to stop your cancer treatment, we are out of money”. Health insurance companies are regulated at both the State and Federal level. The goal is to make sure that they are fair and will pay the claims when you need that down the road. Like everything in financial services (your savings, your retirement fund, your health for you and your family) this is not the place for fly by night startups. While it is visually appealing to see a better UI, you hear startups "disrupting this dinosaur industry" but very few of them succeeded. And maybe it would be nice, but smart investors (after say series B or C) realize that the returns are not that great and the company requires a massive amount of equity, in fact locked in low risk investments/stable bonds. Sure, you can target a very young workforce and ignore the sick, the old, the crippled, those overweight or whatever else there is. And you can make money within the startup ecosystem, when everybody works out, eats well, and is super healthy. But it is simply illegal and my advice for you is to buy insurance from an old, stodgy company. Maybe a mutual company? I don't care if wework is out of money, I can always find space somewhere else. When you have cancer, or when you child is disabled, you don’t want to deal with insurance regulators who have seized the assets of your shiny new health insurance company startup. There is no room for mistakes when it comes to your health and your savings. Disclaimer: I have Kaiser, I never use them, but I am sure they will be there when needed.
pmarca 6y ago
Thanks, agree, great book. I think of it as "Why Nations Succeed" instead. Inclusive institutions = economic generativity = non-zero sum. A more philosophical version is https://www.amazon.com/Finite-Infinite-Games-James-Carse-ebook/dp/B004W3FM4A/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=1587262791&sr=8-1 https://www.amazon.com/Finite-Infinite-Games-James-Carse-ebo...
bsanr2 6y ago
Because a law is a machine to compact thousands of hours of ethical thought into an actionable doctrine. It's designed specifically to take the subjectivity and bias out of executing policy, which is introduced by a single (or small group of) human brain(s) working on a problem for a few weeks, at most. Courts are a last-ditch effort to jury-rig a conclusive plan of action to rectify whatever dilemma come before them; as with similar tasks, they're more expensive and time-consuming at-scale than just planning correctly at the outset.
refurb 6y ago
I have no doubt that money drives burdensome regulations, but most regulations are put into place because someone screwed up and hurt people. Yeah, there are a ton of regulations If you want to bring a new drug to market. That makes it super expensive to do. But in exchange we get pharmaceuticals that work, are reasonable safe, and are based solid data.
- camgunz 6y ago
  Totally, spot on. I think a great next step would be democratize the system that performs those tests and works with the regulatory institutions so new pharma companies can focus on innovation. A reasonable analog are the fintech startups that provide APIs and say essentially "were regulated so you don't have to be". That stuff is important and we should DRY it up so we don't have to copy/paste it every time we start a company.
john_minsk 6y ago
And what would it solve? If you can enter the market but later on you are judged in the court for doing something wrong - you are better to be forced to think about it before you even start it. The problem here is growing complexity, which governments doesn't recognize as a problem for some reason. There should be some institution in the government body, which primary goal would be to reduce complexity of governance.
- xchaotic 6y ago
  Funny enough, adding such role/institution adds complexity in itself
dunkelheit 6y ago
I don't get why everybody is raving about "Why Nations Fail". Their definitions of inclusive/extractive institutions seem hopelessly muddled. It is almost as if they've collected all the stuff they liked in prosperous countries and called it "inclusive" and then did the same with all the stuff they disliked in impoverished dictatorships and called it "extractive". If you try to distill a succinct definition of these concepts and then apply it, you run into contradictions such as (borrowing an example from Fukuyama): "The Indian political system is so inclusive that it can’t begin major infrastructure projects because of all the lawsuits and democratic protest, especially when compared to the extractive Chinese one." If the thesis is "institutions are important for prosperity", it is kind of obvious. But the book does little to explain exactly what kind of institutions.
- nswest23 6y ago
  thank you, _Why Nations Fail_ is partisan hackery.
jakub_g 6y ago
> I heard a few years back that a US health insurance startup had to provide on the order of 6000 pages of documentation to be approved. No wonder that there hadn't been another provider for twenty years or so. It seems like some things are hard to build mostly because some people want it that way. Very often regulation starts lean, then inevitably some assholes take advantage of it to their profit, so the regulation becomes more and more specific and complex. Rinse and repeat. It starts at individual level. In France, health insurance providers started reimbursing eyewear, with a rule "one pair of glasses each 2 years". Now everyone buys new glasses every 2 years, sharp, because "I'm paying for it", even if they don't really need new glasses. Stuff like this make insurance price go up for everyone as a result, which incentivizes you even more to be an abuser. The rules are now more strict about the how much is reimbursed, because people obviously go for most expensive Gucci frames allowed.
- silexia 6y ago
  I think the single biggest roadblock to building new things is regulation. How do we eliminate most regulations, and simplify the rest to fight off regulatory capture? What if we had a github for laws and required that anybody who worked on a law use their real name and if they were paid by a company they had to list how much?
  - jakub_g 6y ago
    "Use GitHub for lawmaking" is something I've had in mind for a long time. However, not sure how this could work in practice. I've heard from a friend of mine who used to work for Deloitte (or similar kind of company) that on practical level, lawmaking often happens in those private consulting/lawyer's offices - it's not like a MPs sits down and write stuff down themselves. So the git commit would say "John Smith the lawyer" which tells you nothing. There's probably also so many patches and reverts and rewrites going on that history would be really bloated. Or if you want nice history, you lose all those important nuances you wanted in first place ("who exactly put this comma here which changes the whole meaning?"). It would also probably horrendously slow down the law making process. (which might actually be a good thing in many scenarios!)
  - 6y ago
justin66 6y ago
> I heard a few years back that a US health insurance startup had to provide on the order of 6000 pages of documentation to be approved. No wonder that there hadn't been another provider for twenty years or so. I think the difficulty involved in spinning up an insurance company probably has literally nothing to do with those 6000 pages of documentation, but if I suspected otherwise, it would seem like what is actually on those pages is a lot more relevant than how many of them there are.
dennis_jeeves 6y ago
>Point being, why not write simpler laws and regulations and leave it to the courts to interpret what adheres to the spirit of it? This will _never_ happen. The vast majority of people are too intellectually challenged to see the benefit of simplicity. The earlier someone understand this fundamental fact about the vast majority of people, the earlier they can probably channelize efforts in the right direction ( what ever that might be), rather than hopelessly toil to make laws simpler. Democracy=tyranny of the masses.
Meekro 6y ago
If it was just health insurance and similarly "risky" industries that required the 6000 pages, it wouldn't be so bad. Earlier this year Lambda School (an online school where you watch videos and learn things) got fined $75k by a California regulator for the crime of teaching without a license. One single state license application required "2177 pages and weighed 25 pounds," and they're having to do this for many states. [1] https://news.ycombinator.com/item?id=20555351 https://news.ycombinator.com/item?id=20555351 [2] https://twitter.com/Austen/status/1153450365712388096 https://twitter.com/Austen/status/1153450365712388096
bsder 6y ago
> Point being, why not write simpler laws and regulations and leave it to the courts to interpret what adheres to the spirit of it? With the barriers of entry gone, I think we'd see a renewed vitality to many ossified sectors. Because regulation in the US is rarely the problem. We have a US mask manufacturer sitting outside Dallas who never went 24/7 in production because NOBODY WOULD PAY HIM. Billionaires shouting "Hey, we'll pay for preproduction on vaccines" because they know they won't have to deliver isn't helpful. Handing a small business $10 million so he can go full tilt would be helpful. But then these billionaires would have to cough up actual CASH.
PeterStuer 6y ago
You are confusing regulation that protects the oligarchy, throwing spanners in the wheels of potential independent competitors, with regulation that effectively protects the health and safety of the people. The US might have the former, but when Europeans refer to a lack of regulation in the US they mean the latter.
3xblah 6y ago
"I'm in the process of reading the book _Why Nation Fails_. The central thesis is that rich and poor countries are separated by inclusive vs extractive institutions. It seems to resonate a bit here, when Marc speaks of things like regulatory capture." However if we actually look at the pages of that book from 2012, the authors never use the US, or any present day "Western" country, as an example of one that had or has extractive instutitions. Instead they cite examples such as Mexico, Colombia, Argentina, Venezuela, Uzbekistan, Zimbabwe, Sierra Leone, Angola, Sudan, Chad, Cameroon, Liberia, Egypt, North Korea, Nepal, or Haiti. According to the authors, the US currently has inclusive institutions and uses the example of the software industry as a success story to support this argument. This industry is in fact the blog post author's area of focus as a former programmer turned venture capitalist. To quote from the book: (Note the bit about fraud. The US had serious problems with fraud 100 years ago, and still does. Consider that is why the SEC exists. Many would argue it has very limited powers of enforcement to deal with modern-day fraud.) "Bill Gates, like other legendary figures in the information technology industry (such as Paul Allen, Steve Ballmer, Steve Jobs, Larry Page, Sergey Brin, and Jeff Bezos), had immense talent and ambition. But he ultimately responded to incentives. The schooling system in the United States enabled Gates and others like him to acquire a unique set of skills to complement their talents. The economic institutions in the United States enabled these men to start companies with ease, without facing insurmountable barriers. Those institutions also made the financing of their projects feasible. The U.S. labor markets enabled them to hire qualified personnel, and the relatively competitive market environment enabled them to expand their companies and market their products. These entrepreneurs were confident from the beginning that their dream projects could be implemented: they trusted the institutions and the rule of law that these generated and they did not worry about the security of their property rights. Finally, the political institutions ensured stability and continuity. For one thing, they made sure that there was no risk of a dictator taking power and changing the rules of the game, expropriating their wealth, imprisoning them, or threatening their lives and livelihoods. They also made sure that no particular interest in society could warp the government in an economically disastrous direction, because political power was both limited and distributed sufficiently broadly that a set of economic institutions that created the incentives for prosperity could emerge. Secure property rights, the law, public services, and the freedom to contract and exchange all rely on the state, the institution with the coercive capacity to impose order, prevent theft and fraud, and enforce contracts between private parties. To function well, society also needs other public services: roads and a transport network so that goods can be transported; a public infrastructure so that economic activity can flourish; and some type of basic regulation to prevent fraud and malfeasance. Though many of these public services can be provided by markets and private citizens, the degree of coordination necessary to do so on a large scale often eludes all but a central authority. The state is thus inexorably intertwined with economic institutions, as the enforcer of law and order, private property, and contracts, and often as a key provider of public services. Inclusive economic institutions need and use the state." The US approach to business does have its flaws. However the book "Why Nations Fail" does not address them. To the authors, the US is a nation that "succeeded", and continues to succeed, by having inclusive institutions, not one that "failed" or is failing today. A book like "Why Nations Fail", and there are many others like it, arguably encourages readers to view the US, irrespective of its flaws, as the shining example of what a country could/should aspire to become. There are no present-day comparisons of the US with Western Europe in books of this type. Such books are arguably part of the reason for certain institutional problems that will forever remain unfixed in the US, e.g. regulatory capture and complexity, because books like these have themes that support the idea that America's "solutions" are not just different but better than all the others. This book really has no relation to any criticism of US institutions. If anything, it supports the idea that the US has the best formula for creating a rich country, i.e., a country where "anyone can be rich". They compare how Bill Gates became wealthy versus how Carlos Slim became wealthy. From a presentatation given by the authors: Acemoglu Robinson (Harvard) Why Nations Fail June 6, 2011 8 / 36 Main Concepts Inclusive and Extractive Institutions Towards a Theory of Institutions Extractive economic institutions: Lack of law and order. Insecure property rights; entry barriers and regulations preventing functioning of markets and creating a nonlevel playing field. Extractive political institutions -- in the limit of absolutism: Political institutions concentrating power in the hands of a few, without constraints, checks and balances or rule of law. Inclusive economic institutions: Secure property rights, law and order, markets and state support (public services and regulation) for markets; open to relatively free entry of new businesses; uphold contracts; access to education and opportunity for the great majority of citizens. Inclusive political institutions: Political institutions allowing broad participation pluralism and placing constraints and checks on politicians; rule of law (closely related to pluralism). But also some degree of political centralization for the states to be able to selectively enforce law and order. Acemoglu Robinson (Harvard) Why Nations Fail June 6, 2011 36 / 36 Why Nations have and Do Fail Because they have extractive political and economic institutions. These are difficult to change though they can be successfully challenged and altered during critical junctures. The roots of modern world inequality lie in the emergence of inclusive institutions in Britain and the fruits of this - the industrial revolution - spread to those parts of the world that had similar institutions (settler colonies) or quickly developed them (Western Europe). Other parts of the world languished with extractive institutions which have persisted over time and thus remain poor today.

csallen 6y ago

> why not write simpler laws and regulations and leave it to the courts What incentives do lawmakers have to make laws simpler?

core-questions 6y ago
This is why judges cannot be the highest power - the people still need to be able to hold them accountable to ensure that the legal institutions don't become inaccessible to the common man. (Not that they are accessible now... but it could be worse.)
- casefields 6y ago
  That was Scalia's point in his dissent of the gay marriage decision: Scalia argues in his opinion that the court is increasingly creating policy rather than serving as a neutral arbiter. “Today’s decree says that my Ruler, and the Ruler of 320 million Americans coast-to-coast, is a majority of the nine lawyers on the Supreme Court,” he writes. “This practice of constitutional revision by an unelected committee of nine, always accompanied (as it is today) by extravagant praise of liberty, robs the People of the most important liberty they asserted in the Declaration of Independence and won in the Revolution of 1776: the freedom to govern themselves.” https://thehill.com/blogs/blog-briefing-room/news/246249-scalia-gay-marriage-decision-shows-americas-ruler-is-supreme https://thehill.com/blogs/blog-briefing-room/news/246249-sca... People in one part of the country go to the courts, and force their will/values on the rest of the country. Activists across the political spectrum do it.
  - lotsofpulp 6y ago
    It’s funny since that specific ruling is what stopped a minority of the US population from imposing their will/“values” on the rest of the country. Clearly the electoral college and legislature is not setup properly to reflect the will of the people at this point in time, so we have a better chance of it happening from 9 Supreme Court judges.
    - watwut 6y ago
      Supreme Court judges are not reflecting popular will. They dont align with what the majority of population think.
BurningFrog 6y ago
How can we change incentives for lawmakers?
- paulryanrogers 6y ago
  Campaign finance reform, same day primaries nationwide, vigorously prosecute bribes and conflicts of interest, make corporate lobbying illegal, prevent industry careerists from holding office, prevent outgoing politicians from working in the industry for some cool off period These things aren't hard they're just blocked by years of propaganda by incumbents. Edit: forgot ranked choice voting
- javajosh 6y ago
  Introduce a rule that any new law should be submitted in the handwriting of its actual authors. And not the handwriting of interns, or staffers of the official authors, the author themselves.
- CyanLite4 6y ago
  Congress has a 20% approval rating, polled weekly for over the past decade. Yet we vote every two years for the same folks who give us the same results. The problem isn’t them. It’s us.
  - brigandish 6y ago
    I'd say the problem is one of competition. "We" cannot choose better legislators unless better legislators come forward for selection, but the incumbents - and by that I mean parties elected or not - have so much money and machinery behind them that to turf them out would be nigh on impossible.
    - lotsofpulp 6y ago
      The problem is that each “we” is pulling to benefit themselves at all costs. Hence giant military fighter jet contracts that span multiple congressmen’s districts around the country, and while being terrible for the future of the country, is untouchable politically as not a single person will vote against their economic interests.
m463 6y ago
I thought the "remove two regulations to add one regulation" was an interesting hack. Don't know if it's political rhetoric or even viable.

tlb 6y ago

Getting an answer from a court (is X legal?) takes a long time: at least a few years and several hundred thousand dollars. Far too long to wait before building a business around X. Asking people to build the business first and then find out if it's legal isn't how a society of laws is supposed to work. Fast courts would be a huge benefit to society.

MattGaiser 6y ago
I also don't think you can just ask a court to answer a hypothetical in a binding way. You basically need to get into the legal problem first.
- freeone3000 6y ago
  This is an American doctrine, that there must be an "actual case or controversy" - Canadian courts can and do issue advisory opinions to interpret regulation.
  - Jommi 6y ago
    Which are still usually advisory and not legally binding advice.
    - TeMPOraL 6y ago
      I would hope they go a long way towards reducing your responsibility if you follow one and then run into a legal problem because of it.
- loteck 6y ago
  Pre-enforcement lawsuits do exist to answer questions for parties prior to taking actions that would result in liability. One was just recently decided in favor of the ACLU. https://www.techdirt.com/articles/20200402/13055544225/dc-court-says-terms-service-violations-cant-trigger-federal-cfaa-prosecutions.shtml https://www.techdirt.com/articles/20200402/13055544225/dc-co...
- 6y ago

hindsightbias 6y ago

In your expert opinion on US health insurance, what number of pages would represent due diligence for federal and state review?

KirinDave 6y ago

> It seems to resonate a bit here, when Marc speaks of things like regulatory capture. I heard a few years back that a US health insurance startup had to provide on the order of 6000 pages of documentation to be approved. No wonder that there hadn't been another provider for twenty years or so. It seems like some things are hard to build mostly because some people want it that way. Sure, but is this actually a high order blocker? I'd argue that it's not even a first order effect. The problem here is not that we don't have enough insurance capacity; the problem is that we don't have enough ventilators. And it turns out, actually building those things to spec is hard. Intellectual property and regulatory capture are bad things to be reduced, IMO, but they're only part of our current equation. The moneyed classes of America don't like redundancy and they don't like long term investments. Since they hold such a huge chunk of wealth compared to the rest of America, their preferences (which I might note, Marc represents professionally) make these decisions long before patent troll lawsuits or building inspectors can rain on any parade. > Point being, why not write simpler laws and regulations and leave it to the courts to interpret what adheres to the spirit of it? With the barriers of entry gone, I think we'd see a renewed vitality to many ossified sectors. Litigation is the most costly way to settle these things. Your idea would require even more startup capital per small business to overcome the legal obstacles you seemed eager to abolish.

oxymoron 6y ago
We’re not necessarily talking about litigation here. Like another commenter pointed out, other legal system allows you to ask the courts for decisions without an opposing party.
thu2111 6y ago
We're actually not running out of ventilators anywhere. Existing installed base is sufficient and moreover, it turned out the federal government had a large stockpile anyway, which rather invalidates the central thesis of the article re: lack of preparedness. The claim about ventilators was one of the first dodgy claims I noticed but really the entire first part of the article is a pack of lies. Andreessen says: "We see this today with the things we urgently need but don’t have. We don’t have enough coronavirus tests, or test materials — including, amazingly, cotton swabs and common reagents" This isn't amazing. The amount of testing being performed has scaled exponentially over the space of just a few months, from a standing start. In fact there's a lot of evidence that the supposedly exponential growth of the virus was really due to an exponential growth in testing, when positives are viewed as a proportion of overall tests done. It's not an indictment of "the West" that materials run out after such a vast acceleration - if anything I'm amazed it didn't happen earlier! "We don’t have enough ventilators, negative pressure rooms, and ICU beds" All three are in plentiful supply. Even in localised hotspots like New York problems are limited to a handful of hospitals. I've been reading about the near deserted state of most hospitals for over a week now. I don't understand where Marc is getting his information from if he isn't aware of this. "We also don’t have therapies or a vaccine — despite, again, years of advance warning about bat-borne coronaviruses" Vaccines can't be created for a virus that doesn't exist yet regardless of how many vague warnings there are, so this isn't remarkable: it's inevitable. As for therapies, that's what ventilators and CPAP are. "then we may not have the manufacturing factories required to scale their production" Given the data appearing in a flood of new papers, showing that the virus is not dangerous enough to warrant current policy, no unusual rates of manufacturing scale-up will be required. "it took scientists 5 years to get regulatory testing approval for the new Ebola vaccine after that scourge’s 2014 outbreak, at the cost of many lives" I'm actually on Marc's side on this one, in that I suspect current FDA approval processes are overkill. But this claim is also nonsense. FDA allows fast-track approval bypass for cases where someone is going to die without treatment anyway, and Ebola disappeared after 2014 - according to CDC the next time it was spotted was Zaire in 2018 with a grand total of 8 cases. That's not even close to "many lives". "A government that collects money from all its citizens and businesses each year has never built a system to distribute money to us when it’s needed most." Tax credits, quantitative easing, loan subsidies. The government has many ways to distribute money to people. "At least therapies and vaccines are hard! Making masks and transferring money are not hard" In fact making medical masks is hard. It requires special materials and machines, the supply of which can't be rapidly scaled up. https://www.businessinsider.com/why-factories-cant-keep-up-demand-for-face-masks-coronavirus-2020-4?r=US&IR=T https://www.businessinsider.com/why-factories-cant-keep-up-d... Headline is literally "Factories are scrambling to make 20 times more face masks a day to keep up with demand amid coronavirus outbreak, but the masks are surprisingly difficult and expensive to make" As for money, transferring money is easy. Figuring out the right amounts and the right people to send it to, without creating an explosion of fraud and waste - that's not so easy.

HashThis 6y ago

It is all about our congress selling out the American people, every year for 50 years. It is a supply chain of THEFT of the full citizen base, by corporations and the wealthy. The American people must stand up and force it to stop.

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Barrin92 6y ago

The inclusive vs extractive institutions mentality makes sense but I think in the exact reverse way then you suggest. It's precisely because of the Wests (and like Marc says it really is the West) failure to respond to this crisis. It's the excess of inclusivity that leads to short term, ballot box decision making in response to crises, and it is the short term, market logic that leads to loss of autonomy and neglect of long term goals that Marc talks about in the piece. It's the politication of a healhcare / virological crisis that renders responses ineffective. When the American president gins up armed protesters during a pandemic that is the direct result of the inclusivity praised in the book. It's crisis response turned into a media spectacle and an election campaign. Efffective resopnse to the crisis was visible in East Asian countries in which 'elites' can govern without constant interference, and that's not a glorification of China, but also of democratic countries like Taiwan, or so-so democratic countries like Singapore. What they all have in common is that decisions are made by leadership which can act with the necessary degree of autonomy.

qplex 6y ago
All the recent outbreaks of viruses like this have originated from East Asia. I really wouldnt give much praise to the great governing elite that failed to prevent this in the first place, despite scientists telling them about it a long time ago.
- treis 6y ago
  >All the recent outbreaks of viruses like this have originated from East Asia. That's not true. Swine flu came from Mexico and MERS, as the name implies, started in the Middle East
  - qplex 6y ago
    I do mean SARS which first surfaced in the 2000s in China. Swine flu has been around for much longer, at least for 100 years.
    - 6y ago

betocmn 6y ago

"Why Nation Fails" is a phenomenal book. I'm sorry, but I have a hard time to think of US institutions as reasonable examples of how the author portraits creative destruction and extractive institutions. I understand there might be some broken things in your nation's systems. Still, the fact you're able to discuss them here or work towards changing them through legal methods, shows the US is far off on the right track of constitutional rule and pluralism.

oxymoron 6y ago
Yeah, I generally agree. The book does highlight how much of it is hinged on contingency, though. The US has strong institutions, but the dynamic of having elites opposing change is still present, obviously. High barriers of entry is a prime example of how it can be done when other options are unavailable.
justicezyx 6y ago
Any recent example of a societal issue affecting American lives got fixed in American system?
- IG_Semmelweiss 6y ago
  I can think of 1 It used to be very expensive to travel between US cities because a govt agency (forget the name, maybe the board of air travel?) set the who what how could fly planes from a to b, and at what price. Think mad men times, panAm, etc. That agency was eliminated circa 1980 by some stroke of luck and perfect alingment of planets. Ticket prices plummeted and this opened flying to the poor. That was also the last time a US regulatory agency was disbanded.
  - aspenmayer 6y ago
    We might soon have another federal regulatory agency disbanded but considering which one it is I’m not sure if that will be a good thing for anyone but banks. https://www.scotusblog.com/2019/10/justices-to-review-constitutionality-of-cfpb-structure/ https://www.scotusblog.com/2019/10/justices-to-review-consti... https://www.nytimes.com/2020/03/03/us/supreme-court-consumer-bureau.html https://www.nytimes.com/2020/03/03/us/supreme-court-consumer...

Spooky23 6y ago

Answer is pretty easy. People are assholes. Those rules and regulatory frameworks exist for a reason, and with something like health insurance you don’t see better outcomes in states with lower regulatory burden. Same with the financial burdens that companies cry about. Enron, GlobalCrossing, etc all demonstrated that corporate governance required the federal stick to behave. Anderseen’s article is pretty lame with respect to why we can’t do things. We can and we have. The difference is now that you have executive leadership that is batshit crazy people have taken over the government. That happened because of the absence of regulation that gives extremists like Alex Jones, who were relegated to public access cable and weird newsletters in the 1980s access to the public at large. Taking off what rails remain isn’t a strategy for success.

indymike 6y ago
That reason being capturing the market by means of regulation.
iandanforth 6y ago
You're not wrong, but, as an asshole, I clap my hands in glee every time someone promotes regulation as a force for good. Why? Money spent on politics is incredibly cheap. I can literally write the laws that I want and wait for an opportune moment to have a chosen, and paid for, representative, slip it in. Yes, please demand more laws. Please ask Washington to centralize and increase its power. It's not that your motivation is wrong, its just that I own the institution.
pmarca 6y ago
The system is working great except there isn't enough censorship?

harryh 6y ago

Point being, why not write simpler laws and regulations and leave it to the courts to interpret what adheres to the spirit of it? With the barriers of entry gone, I think we'd see a renewed vitality to many ossified sectors. I agree with your overall point, but you have the regulatory differences between the US and Europe exactly backwards. Europe (excluding England somewhat) has a statutory legal system. Things are either legal or illegal according to laws that have largely been written down ahead of time that anyone can go read and figure out. In the US we have a common law system where much of our law is written by the courts in response to specific cases where judges interpret the general principles described in the "simpler laws" you speak of. In practice this means that, under many circumstances, things move a lot slower in the US because of the time and expense of litigation (and even the threat of litigation). This is one of the reasons that it's harder to build things in the US. Our public transportation systems (trains, subways, etc) cost on the order of 5-10x more than similar ones in Europe. Our different legal systems is one of the big reasons why.

oxymoron 6y ago
I may not have expressed that point very well, but it seems like the common law system would encourage less explicit regulation rather than more, so that seems like a bit of a contradiction. Does the need for more litigation drive a desire to be more explicit in how statues are written?
- harryh 6y ago
  Correct. Common law = less explicit legislature passed regulation. We have far less regulation of this kind in the US than in Europe BUT we have far more common law regulation.
- XorNot 6y ago
  It means power is captured by those who can afford lawyers, and lawyers are expensive. There's no way to plan your risks up front in an area with not a lot of case-law, because you don't know them - your business plan now gets to be "hopefully we win this case in our favor in the next 3 years, but if it goes all the way to the supreme court..."

deleted 6y ago

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MR4D 6y ago

Simple - politics is about control. Laws are a form of politics. Why would anyone give up control once they had acquired it?

deleted 6y ago
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riazrizvi 6y ago
100% it’s politics, it’s self-interest. The reason why we don’t have Musk’s Alien Dreadnought factories throughout the US is related to the reason Elizabeth I rejected weaving machines; the people who have power will not gain enough from it and may even lose. Elizabeth I feared the consequences of creative disruption on her constituents, and the knock on effect that might have had to her tenuous grip on power. Today in the US we see silly policies that are pushed to make a few people rich at the expense of society as a whole. The more we are able to dismantle monopolies, and weaken the capability of incumbent industries to skew legislation in their own favor, the more society will move forward.
- brennanpeterson 6y ago
  Who would gain? Politicians try really hard to pull in facilities. Look at the GLobalFoundries spending debacle in NY. Or the Panasonic/Tesla battery facility in NV at, what 2m in grants per employee. Or Foxxcon in WI. These facilities aren't that economically beneficial. Capital investors aren't, as PMA implies, stupid: they don't build because there isn't much money in it. Politicians bend over backwards all the time. Massive subsidies are the problem, not lack of interest. The reason people go elsewhere is to play regulatory arbitrage. To avoid the inspections, the pollution rules, and the long term environmental costs. The Bay area is filled with Superfund sites. Same for the Puget Sound, Boston Harbor, and the Hudson. No one should eat too many fish...because worlrdwide Mercury levels are high.

deanCommie 6y ago

I feel like all the replies comparing legal system differences between the US and the EU miss a crucial element - the difference in the characters of the people participating in each society. I'm now going to make a couple of broad generalizations. Note, that I'm aware they do not apply to every person, or even state in the US, or member nation of the EU. However having lived in both for a number of years, I do have some personal insight. Europe and Europeans are a cohesive society where the ideal is a flat society without too many outliers. Standing out from the field is not promoted. And career aspirations are about attaining a work life balance and produce meaningful work. The overall societal system works, offers many opportunities for education and entrepreneurship, but within a well lit path. Europe is a fast moving train. As a result, people look for ways to succeed within the system. The US is a "land of opportunity" in all the best, and all the insidious ways that this implies. People are looking to separate themselves from the pack, to be "insanely great" in some way or another, and see society and laws as just impediments to that goal. The US is a rocket powered supercar. As a result, people look for ways to succeed in spite of the system. This is why both the US needs a common law system (because the population would never tolerate a restrictive "write everything down" statutory system because would consider it overly restrictive to their liberty), and also why it fails. Because people and corporations abuse the common law system to violate the spirit of the law as much as possible to succeed and thrive in the short term. So half the country is constantly tries to create more regulations and the other half is trying to tear down existing ones. This is why in the US the most innovative companies and people can succeed on a 5-10 year timeline, and so the biggest public companies in the world are there, but why Europe is much better at building 20-50 year projects and so have better infrastructure. (I'm ignoring China completely here because China is better than both at everything now, but is also an authoritarian dictatorship, so it's even harder to compare that apple to the other oranges). Ultimately my point is that the EU raises a certain type of person and attracts a certain type of immigrant, and the US another. I'm Canadian, so I frankly think both extremes are distasteful. I find the US a post-apocalyptic every-man-for-himself dystopia. And I find the EU a restrictive stifling nanny-state. Canada is just right for me. But I appreciate that the world has both extremes.

Jommi 6y ago
I think trying to put all of Europe into one EU in your argument is already where it breaks down. Europeans don't live in a cohesive society. Italians, Germans, Swedes live in a cohesive society in their small california-sized countries.

jbkiv 6y ago

I respectfully disagree about what it takes to be approved as a health insurance COMPANY (as opposed to a broker). In fact I am quite happy that regulators require you to show that 1) you know what you are doing 2) you have a massive balance sheet to protect your customers if they need it. The point 2 is super important in the context of VC-backed companies. There is simply no way to build a massive insurance company that way, the return on equity is too low. Unlike airbnb you just don’t go out and raised $2B in debt because you are running out of money and you can’t pay claims. Regulators would step in way before, and they have done that multiple times. Witness what is happening today: I have not heard from any health insurance company requesting a bailout (unlike most companies). State regulators are a pain in the neck, are conservative but - in your interest - they control how the insurance company uses their capital (you grow too fast = you must add more equity, a bit like working capital), and how you invest your money (they restrict the amount of equity you invest in). All in the interest of the consumers. Think for a second: if the balance sheet of your health insurance company looked like the balance sheet of Softbank’s vision fund? Would you like to hear “we are sorry, we’ll have to stop your cancer treatment, we are out of money”. Health insurance companies are regulated at both the State and Federal level. The goal is to make sure that they are fair and will pay the claims when you need that down the road. Like everything in financial services (your savings, your retirement fund, your health for you and your family) this is not the place for fly by night startups. While it is visually appealing to see a better UI, you hear startups "disrupting this dinosaur industry" but very few of them succeeded. And maybe it would be nice, but smart investors (after say series B or C) realize that the returns are not that great and the company requires a massive amount of equity, in fact locked in low risk investments/stable bonds. Sure, you can target a very young workforce and ignore the sick, the old, the crippled, those overweight or whatever else there is. And you can make money within the startup ecosystem, when everybody works out, eats well, and is super healthy. But it is simply illegal and my advice for you is to buy insurance from an old, stodgy company. Maybe a mutual company? I don't care if wework is out of money, I can always find space somewhere else. When you have cancer, or when you child is disabled, you don’t want to deal with insurance regulators who have seized the assets of your shiny new health insurance company startup. There is no room for mistakes when it comes to your health and your savings. Disclaimer: I have Kaiser, I never use them, but I am sure they will be there when needed.

pmarca 6y ago

Thanks, agree, great book. I think of it as "Why Nations Succeed" instead. Inclusive institutions = economic generativity = non-zero sum. A more philosophical version is https://www.amazon.com/Finite-Infinite-Games-James-Carse-ebook/dp/B004W3FM4A/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=1587262791&sr=8-1 https://www.amazon.com/Finite-Infinite-Games-James-Carse-ebo...

bsanr2 6y ago

Because a law is a machine to compact thousands of hours of ethical thought into an actionable doctrine. It's designed specifically to take the subjectivity and bias out of executing policy, which is introduced by a single (or small group of) human brain(s) working on a problem for a few weeks, at most. Courts are a last-ditch effort to jury-rig a conclusive plan of action to rectify whatever dilemma come before them; as with similar tasks, they're more expensive and time-consuming at-scale than just planning correctly at the outset.

refurb 6y ago

I have no doubt that money drives burdensome regulations, but most regulations are put into place because someone screwed up and hurt people. Yeah, there are a ton of regulations If you want to bring a new drug to market. That makes it super expensive to do. But in exchange we get pharmaceuticals that work, are reasonable safe, and are based solid data.

camgunz 6y ago
Totally, spot on. I think a great next step would be democratize the system that performs those tests and works with the regulatory institutions so new pharma companies can focus on innovation. A reasonable analog are the fintech startups that provide APIs and say essentially "were regulated so you don't have to be". That stuff is important and we should DRY it up so we don't have to copy/paste it every time we start a company.

john_minsk 6y ago

And what would it solve? If you can enter the market but later on you are judged in the court for doing something wrong - you are better to be forced to think about it before you even start it. The problem here is growing complexity, which governments doesn't recognize as a problem for some reason. There should be some institution in the government body, which primary goal would be to reduce complexity of governance.

xchaotic 6y ago
Funny enough, adding such role/institution adds complexity in itself

dunkelheit 6y ago

I don't get why everybody is raving about "Why Nations Fail". Their definitions of inclusive/extractive institutions seem hopelessly muddled. It is almost as if they've collected all the stuff they liked in prosperous countries and called it "inclusive" and then did the same with all the stuff they disliked in impoverished dictatorships and called it "extractive". If you try to distill a succinct definition of these concepts and then apply it, you run into contradictions such as (borrowing an example from Fukuyama): "The Indian political system is so inclusive that it can’t begin major infrastructure projects because of all the lawsuits and democratic protest, especially when compared to the extractive Chinese one." If the thesis is "institutions are important for prosperity", it is kind of obvious. But the book does little to explain exactly what kind of institutions.

nswest23 6y ago
thank you, _Why Nations Fail_ is partisan hackery.

jakub_g 6y ago

> I heard a few years back that a US health insurance startup had to provide on the order of 6000 pages of documentation to be approved. No wonder that there hadn't been another provider for twenty years or so. It seems like some things are hard to build mostly because some people want it that way. Very often regulation starts lean, then inevitably some assholes take advantage of it to their profit, so the regulation becomes more and more specific and complex. Rinse and repeat. It starts at individual level. In France, health insurance providers started reimbursing eyewear, with a rule "one pair of glasses each 2 years". Now everyone buys new glasses every 2 years, sharp, because "I'm paying for it", even if they don't really need new glasses. Stuff like this make insurance price go up for everyone as a result, which incentivizes you even more to be an abuser. The rules are now more strict about the how much is reimbursed, because people obviously go for most expensive Gucci frames allowed.

silexia 6y ago
I think the single biggest roadblock to building new things is regulation. How do we eliminate most regulations, and simplify the rest to fight off regulatory capture? What if we had a github for laws and required that anybody who worked on a law use their real name and if they were paid by a company they had to list how much?
- jakub_g 6y ago
  "Use GitHub for lawmaking" is something I've had in mind for a long time. However, not sure how this could work in practice. I've heard from a friend of mine who used to work for Deloitte (or similar kind of company) that on practical level, lawmaking often happens in those private consulting/lawyer's offices - it's not like a MPs sits down and write stuff down themselves. So the git commit would say "John Smith the lawyer" which tells you nothing. There's probably also so many patches and reverts and rewrites going on that history would be really bloated. Or if you want nice history, you lose all those important nuances you wanted in first place ("who exactly put this comma here which changes the whole meaning?"). It would also probably horrendously slow down the law making process. (which might actually be a good thing in many scenarios!)
- 6y ago

justin66 6y ago

> I heard a few years back that a US health insurance startup had to provide on the order of 6000 pages of documentation to be approved. No wonder that there hadn't been another provider for twenty years or so. I think the difficulty involved in spinning up an insurance company probably has literally nothing to do with those 6000 pages of documentation, but if I suspected otherwise, it would seem like what is actually on those pages is a lot more relevant than how many of them there are.

dennis_jeeves 6y ago

>Point being, why not write simpler laws and regulations and leave it to the courts to interpret what adheres to the spirit of it? This will _never_ happen. The vast majority of people are too intellectually challenged to see the benefit of simplicity. The earlier someone understand this fundamental fact about the vast majority of people, the earlier they can probably channelize efforts in the right direction ( what ever that might be), rather than hopelessly toil to make laws simpler. Democracy=tyranny of the masses.

Meekro 6y ago

If it was just health insurance and similarly "risky" industries that required the 6000 pages, it wouldn't be so bad. Earlier this year Lambda School (an online school where you watch videos and learn things) got fined $75k by a California regulator for the crime of teaching without a license. One single state license application required "2177 pages and weighed 25 pounds," and they're having to do this for many states. [1] https://news.ycombinator.com/item?id=20555351 https://news.ycombinator.com/item?id=20555351 [2] https://twitter.com/Austen/status/1153450365712388096 https://twitter.com/Austen/status/1153450365712388096

bsder 6y ago

> Point being, why not write simpler laws and regulations and leave it to the courts to interpret what adheres to the spirit of it? With the barriers of entry gone, I think we'd see a renewed vitality to many ossified sectors. Because regulation in the US is rarely the problem. We have a US mask manufacturer sitting outside Dallas who never went 24/7 in production because NOBODY WOULD PAY HIM. Billionaires shouting "Hey, we'll pay for preproduction on vaccines" because they know they won't have to deliver isn't helpful. Handing a small business $10 million so he can go full tilt would be helpful. But then these billionaires would have to cough up actual CASH.

PeterStuer 6y ago

You are confusing regulation that protects the oligarchy, throwing spanners in the wheels of potential independent competitors, with regulation that effectively protects the health and safety of the people. The US might have the former, but when Europeans refer to a lack of regulation in the US they mean the latter.

3xblah 6y ago

"I'm in the process of reading the book _Why Nation Fails_. The central thesis is that rich and poor countries are separated by inclusive vs extractive institutions. It seems to resonate a bit here, when Marc speaks of things like regulatory capture." However if we actually look at the pages of that book from 2012, the authors never use the US, or any present day "Western" country, as an example of one that had or has extractive instutitions. Instead they cite examples such as Mexico, Colombia, Argentina, Venezuela, Uzbekistan, Zimbabwe, Sierra Leone, Angola, Sudan, Chad, Cameroon, Liberia, Egypt, North Korea, Nepal, or Haiti. According to the authors, the US currently has inclusive institutions and uses the example of the software industry as a success story to support this argument. This industry is in fact the blog post author's area of focus as a former programmer turned venture capitalist. To quote from the book: (Note the bit about fraud. The US had serious problems with fraud 100 years ago, and still does. Consider that is why the SEC exists. Many would argue it has very limited powers of enforcement to deal with modern-day fraud.) "Bill Gates, like other legendary figures in the information technology industry (such as Paul Allen, Steve Ballmer, Steve Jobs, Larry Page, Sergey Brin, and Jeff Bezos), had immense talent and ambition. But he ultimately responded to incentives. The schooling system in the United States enabled Gates and others like him to acquire a unique set of skills to complement their talents. The economic institutions in the United States enabled these men to start companies with ease, without facing insurmountable barriers. Those institutions also made the financing of their projects feasible. The U.S. labor markets enabled them to hire qualified personnel, and the relatively competitive market environment enabled them to expand their companies and market their products. These entrepreneurs were confident from the beginning that their dream projects could be implemented: they trusted the institutions and the rule of law that these generated and they did not worry about the security of their property rights. Finally, the political institutions ensured stability and continuity. For one thing, they made sure that there was no risk of a dictator taking power and changing the rules of the game, expropriating their wealth, imprisoning them, or threatening their lives and livelihoods. They also made sure that no particular interest in society could warp the government in an economically disastrous direction, because political power was both limited and distributed sufficiently broadly that a set of economic institutions that created the incentives for prosperity could emerge. Secure property rights, the law, public services, and the freedom to contract and exchange all rely on the state, the institution with the coercive capacity to impose order, prevent theft and fraud, and enforce contracts between private parties. To function well, society also needs other public services: roads and a transport network so that goods can be transported; a public infrastructure so that economic activity can flourish; and some type of basic regulation to prevent fraud and malfeasance. Though many of these public services can be provided by markets and private citizens, the degree of coordination necessary to do so on a large scale often eludes all but a central authority. The state is thus inexorably intertwined with economic institutions, as the enforcer of law and order, private property, and contracts, and often as a key provider of public services. Inclusive economic institutions need and use the state." The US approach to business does have its flaws. However the book "Why Nations Fail" does not address them. To the authors, the US is a nation that "succeeded", and continues to succeed, by having inclusive institutions, not one that "failed" or is failing today. A book like "Why Nations Fail", and there are many others like it, arguably encourages readers to view the US, irrespective of its flaws, as the shining example of what a country could/should aspire to become. There are no present-day comparisons of the US with Western Europe in books of this type. Such books are arguably part of the reason for certain institutional problems that will forever remain unfixed in the US, e.g. regulatory capture and complexity, because books like these have themes that support the idea that America's "solutions" are not just different but better than all the others. This book really has no relation to any criticism of US institutions. If anything, it supports the idea that the US has the best formula for creating a rich country, i.e., a country where "anyone can be rich". They compare how Bill Gates became wealthy versus how Carlos Slim became wealthy. From a presentatation given by the authors: Acemoglu Robinson (Harvard) Why Nations Fail June 6, 2011 8 / 36 Main Concepts Inclusive and Extractive Institutions Towards a Theory of Institutions Extractive economic institutions: Lack of law and order. Insecure property rights; entry barriers and regulations preventing functioning of markets and creating a nonlevel playing field. Extractive political institutions -- in the limit of absolutism: Political institutions concentrating power in the hands of a few, without constraints, checks and balances or rule of law. Inclusive economic institutions: Secure property rights, law and order, markets and state support (public services and regulation) for markets; open to relatively free entry of new businesses; uphold contracts; access to education and opportunity for the great majority of citizens. Inclusive political institutions: Political institutions allowing broad participation pluralism and placing constraints and checks on politicians; rule of law (closely related to pluralism). But also some degree of political centralization for the states to be able to selectively enforce law and order. Acemoglu Robinson (Harvard) Why Nations Fail June 6, 2011 36 / 36 Why Nations have and Do Fail Because they have extractive political and economic institutions. These are difficult to change though they can be successfully challenged and altered during critical junctures. The roots of modern world inequality lie in the emergence of inclusive institutions in Britain and the fruits of this - the industrial revolution - spread to those parts of the world that had similar institutions (settler colonies) or quickly developed them (Western Europe). Other parts of the world languished with extractive institutions which have persisted over time and thus remain poor today.