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Regulatory capture is indeed a major underlying cause of a lot of the issues, but who will actually do the political work to fight against it? Someone spent mon

Regulatory capture is indeed a major underlying cause of a lot of the issues, but who will actually do the political work to fight against it? Someone spent money to capture the regulations in the first place, through lobbying and campaign donations. Who will spend the money to lobby and donate for the cause of undoing that? The "builders"? No, their focus and limited capital is spent on whatever it is they are working on. The most logical choice would be the investor class who supports such work. After all, these regulations create legal risk (from lawsuits/fines/regulators) for the ventures they fund. It also makes employees more expensive (through higher housing/education/medical costs), thus requiring more investment just to get a venture going. Yet, why is there no real, funded, concerted effort against regulatory capture? Just essays and talk? I suspect two potential reasons: (1) Opening regulations would help all current and future ventures, not just an investor's own portfolio, so no single investor has an incentive to do it by them self. (2) Such investors are typically wealthy, and spending money to tear down regulatory capture that other wealthy people already paid for would be... uncomfortable. Such spending could be seen as indirectly attacking friends, relatives, college classmates, etc... No one wants to be labeled a class traitor.

Jommi 6y ago
This is a great comment, and hopefully I could add some real life example around this, esp with 1) and 2). Uber did this in Europe. Uber pushed, fought and introduced gig-economy employment laws in every country it has operated in EU, specifically around taxi and for hire transport regulation. Uber employed a huge amount of legal and PR counsel to achieve this, with massive lobbying funding. And what has happened? It's getting beaten to it's knees by new, mean competitors. Competitors that enjoyed all the same benefits without the millions invested.
- kebman 6y ago
  Nobody want's a new McDonald's destroying their old status quo in their country. People don't want one-world-gov. They want disparate nations, that have charm and local uniqueness. Except that goes directly towards harmonizing international (trade) laws. If you want a lesson, check out how Lidl did in Norway when they challenged local chain stores.
  - Aeolun 6y ago
    > People don’t want one-world-gov Speak for yourself. I would personally love this. We’re long overdue for a one world government.
    - johnsimer 6y ago
      Imagine if a dictator rises to power, but this time s/he has power over the entire world.
      - Dylan16807 6y ago
        They'd have to completely undermine the world government to turn it into a dictatorship, and get the countries underneath it to go along. Is that much easier than getting power over the entire world the old-fashioned way?
        bcrosby95 6y ago
        I mean, sure, if you want a toothless world government with no power that wouldn't be able to keep countries in line. In which case I'm happy to report we already have this: its called the UN. For anything else you would call an actual government, the highest body has the power and physical force to keep those under them inline. Even in the USA, where states rights are a thing, the federal government could easily force them to do basically whatever they want.
        freepor 6y ago
        Huge countries like India, the US, and Russia have come under the thrall of men whose position in the feature space is near words like “deranged” and “terrifying”... there’s no reason to believe that the same thing could not happen to a world government
      - nkozyra 6y ago
        Imagine if there's a revolution, but it's world population - 1 this time.
- adamsea 6y ago
  Isn't Uber kind of the opposite kind of building the OP refers to? Uber externalizes so many costs to its drivers. It relies on someone else's healthcare system to care for its drivers. Someone else to pay to maintain the cars. So far the gig economy is maybe, half building something which has potential social benefit,half building something which clearly does not. Now, if Uber was lobbying hard for universal healthcare, then that'd be a different story :). But IIRC they mainly avoid or flout the law altogether. In summary I don't think Uber is a good example of a company that has tried to 'build' in a prosocial way.
  - atoav 6y ago
    The only thing uber has built really, is a way to extract more money from workers with less overhead while circumventing existing worker protection by acting as if they were just the messenger between customers and drivers. I have the feeling that the real building of the past two decades lies in ever cleverer bussines schemes focused on lock ins, extracting user data, doing as if you are open while there is no practical way anybody could take what you did in any significant way and improve on it. The exiting things always seem to happen outside of that space however.
    - catlifeonmars 6y ago
      Ubër has also built a service that I, for one, strongly prefer to traditional transportation services. Customer experience is far superior.
      - TeMPOraL 6y ago
        They did what's the equivalent of selling $10 bills for $1. No surprise customers like it, they get decent service priced at well below the market rate. For a while, that is, because it's only a way for them to leverage VC money to kill off local competitors. Once that's done, Uber's service tends to degrade, and it eventually will even more so, once their money runs out.
        6y ago
- petra 6y ago
  Uber only did it because their investors really believed they could capture the market. Most situations are not like that.
- tekdude 6y ago
  One could view this as Uber making a novice mistake. Instead of just fighting to get rid of employment laws that slowed Uber's business, they should have fought to replace them with laws that entrenched its position. For example: they could have persuaded legislatures to make gig work legal, but only in the context of "licensed and qualified" platforms. Reaching that status might require submitting forms to government agencies, drafting reports for publication, instituting certain internal policies, having certain credentialed staff on payroll, etc... All tasks that Uber, who would essentially write such a law, would be naturally able to fulfill while newer competitors might not.
buss 6y ago
In San Francisco, at least, YIMBY is the organization that is organized around ending regulatory capture in housing, and The Neoliberal Project (in SF YIMBY Neoliberal) is organized around broader dismantling of regulatory capture. We mobilize people in support of reform-focused politicians and have even started running our own (Sonja Trauss in 2018 and myself in 2020). Happy to talk more about it -- steven.buss@gmail.com Happy to talk more about it
- chriswphoto 6y ago
  Thank you for the work you do! Zoning is the new redlining. This generation has to fight for the right to affordable housing and economic opportunity.
  - fierarul 6y ago
    I find it interesting how affordable housing must be very near high economic opportunity. Seems to me it's a fight for convenience too. They built Las Vegas in the desert to avoid restrictions, what's preventing this generation to build new cities? The whole Covid problem will make quests to increase population density more difficult. But perhaps will also spread opportunities around, or move them online, so this zoning struggle will stop being important.
    - buss 6y ago
      I fight for both market rate and subsidized housing in high-opportunity cities because it's the easiest way to life people out of poverty. Being able to live near high-income jobs is the most direct path to the middle class in America. If we want people to not live in poverty, then it makes sense to subsidize their access to opportunity. That means subsidizing education and housing. I've had fun nights talking with friends about starting a city. It's really fun to think about how we'd design the city to maximize opportunity, but there's no getting away from the value an existing city provides. Fixing a city with already high opportunity is just fundamentally cheaper than starting a city from scratch. All we need to do is win a few elections -- we're talking less than $100MM. A new city that is aiming to compete is a $100B+ project. As engineers we often think the best way to fix something is to build a new version. But this is rarely true in institutions. Think of governments as legacy systems: they've been built up over time and have a ton of hacks keeping it running. Think of Spolsky's generally good advice: "Don't rewrite code" https://www.joelonsoftware.com/2000/04/06/things-you-should-never-do-part-i/ https://www.joelonsoftware.com/2000/04/06/things-you-should-... It is easier to fix an old and broken system than to replace it wholesale. Let's focus on fixing government instead of replacing it.
kebman 6y ago
Oh, so you think you can just turn off state run corruption? Good luck mate! :) Well, I mean, sure, you can always try to keep the door from revolving, I guess. It would be a start, but I doubt it will do much difference.
jahaja 6y ago
> Regulatory capture is indeed a major underlying cause of a lot of the issues How is it even possible to isolate capitalism from regulatory capture? Capital accumulation inherently creates power and influence, so regulatory capture is surely just the perfectly logical second phase?
- epistasis 6y ago
  You separate democratic procedure from capital. This is why the Citizens United ruling was such a disastrous decision for the US. However, capital doesn't necessarily mean election wins or regulatory influence, even now. Bernie Sanders raised immense amounts of money, more than Joe Biden did, but Sanders still was not able to win out in most states. There's more to politics than money, though money can definitely raise the volume of one's voice.
  - jahaja 6y ago
    > You separate democratic procedure from capital Uhm, that's very easy to say, but how is that even possible? Even here in Scandinavia, where money interests isn't as blatantly involved in politics as in the US, most of the media are aligned to corporate interests and vast amount of money are spend by corporations to fund and campaign for right-wing business parties and policies. Why would Biden need money in competition with Sanders when he got the entire establishment on his side?
    - epistasis 6y ago
      When voters in South Carolina go to vote, did they listen to money, to their own hearts, or to "the establishment"? In any case, they did not listen to capital. And this is one way that politics is separated from capital. There can never be perfect separation, all of society is connected to all of its parts in tricky ways, but part of maximizing that separation is to discover and acknowledge where capital has control of democracy and come up with ways to separate. No ideal is achievable, we can only strive to improve.
      - 6y ago
epistasis 6y ago
This is a long asked question, and the recent book Golden Gates by Conor Dougherty spends part of the book exploring the emergence of a new political coalition that fights this: the YIMBY groups and associated groups. They are very young and inexperienced, but their existence is making huge waves. There was an affordable housing builder interviewed on the housing podcast Gimme Shelter recently singing the praises of this movement, because it is such a big change from the past.
svskeptic 6y ago
This is great observation and speculation on what could happen and where would it come from. I've had multiple conversations with top-10 VC firm partners during our unsuccessful pitches where one of the sticking points is 'unfair-advantage'. 'How can you lock $user_group/$partners into this transaction/partnership?' Peter Thiel: "Monopolies are a good thing for society... The opposite of perfect competition is monopoly. Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices." What the world needs is perfect competition. VCs profess that they live in a capitalist system and work within its constraints, but just about all want to capture some part of it, preventing competition from coming in. One way to limit competition? Get the government to do it for you. Regulatory Capture. So, excuse me, if I don't buy this coming from a VC. And I won't buy it from any other VC as well. They are arguing for them to be in control of capture. Meet the new boss, same as the old boss.
- pmarca 6y ago
  Most of the companies we fund are trying to go disrupt someone else's "dominant market position".
  - svskeptic 6y ago
    And none of them try to lock customers, partners or decision makers from going away in any underhanded way, right? Just pure offer-the-best-and-they-will-stick-with-us. And if someone does it better than us and takes them away from us, shame on us!
  - akiselev 6y ago
    So that they can take over the dominant market position, eventually using the exact same tactics to keep entrants out. Anything less would run afoul of shareholder primacy so unless VCs take an active role in promoting ethical behavior from their portfolio, those words are empty as this blog post. Anyone who wasn't born yesterday knows that human beings won't do something that is in direct opposition to their interests (the exceptions to this rule became nurses and doctors and social workers, not VCs) and without an honest to goodness change in laws, reasonable people know that VCs won't change their behavior. Since most portfolio companies are in competition with someone - a fact almost every investor in the industry is cognizant of - anything short of actually spending money on lobbying to change laws and promote their enforcement is an empty gesture.
closeparen 6y ago
Milton Friedman did his thing from a university founded by John D. Rockefeller in a Department of Economics that is now named for Kenneth C. Griffin of Citadel Securities. I think it's safe to say that capital does spend on its policy interests, and quite effectively.
- pmarca 6y ago
  Was he right?
_marlowe_ 6y ago
Jonathan Tepper wrote a great book about this, the Myth of Capitalism
buboard 6y ago
> who will actually do the political work to fight against it? The virus is doing a pretty good work so far

Jommi 6y ago

This is a great comment, and hopefully I could add some real life example around this, esp with 1) and 2). Uber did this in Europe. Uber pushed, fought and introduced gig-economy employment laws in every country it has operated in EU, specifically around taxi and for hire transport regulation. Uber employed a huge amount of legal and PR counsel to achieve this, with massive lobbying funding. And what has happened? It's getting beaten to it's knees by new, mean competitors. Competitors that enjoyed all the same benefits without the millions invested.

kebman 6y ago
Nobody want's a new McDonald's destroying their old status quo in their country. People don't want one-world-gov. They want disparate nations, that have charm and local uniqueness. Except that goes directly towards harmonizing international (trade) laws. If you want a lesson, check out how Lidl did in Norway when they challenged local chain stores.
- Aeolun 6y ago
  > People don’t want one-world-gov Speak for yourself. I would personally love this. We’re long overdue for a one world government.
  - johnsimer 6y ago
    Imagine if a dictator rises to power, but this time s/he has power over the entire world.
    - Dylan16807 6y ago
      They'd have to completely undermine the world government to turn it into a dictatorship, and get the countries underneath it to go along. Is that much easier than getting power over the entire world the old-fashioned way?
      - bcrosby95 6y ago
        I mean, sure, if you want a toothless world government with no power that wouldn't be able to keep countries in line. In which case I'm happy to report we already have this: its called the UN. For anything else you would call an actual government, the highest body has the power and physical force to keep those under them inline. Even in the USA, where states rights are a thing, the federal government could easily force them to do basically whatever they want.
      - freepor 6y ago
        Huge countries like India, the US, and Russia have come under the thrall of men whose position in the feature space is near words like “deranged” and “terrifying”... there’s no reason to believe that the same thing could not happen to a world government
    - nkozyra 6y ago
      Imagine if there's a revolution, but it's world population - 1 this time.
adamsea 6y ago
Isn't Uber kind of the opposite kind of building the OP refers to? Uber externalizes so many costs to its drivers. It relies on someone else's healthcare system to care for its drivers. Someone else to pay to maintain the cars. So far the gig economy is maybe, half building something which has potential social benefit,half building something which clearly does not. Now, if Uber was lobbying hard for universal healthcare, then that'd be a different story :). But IIRC they mainly avoid or flout the law altogether. In summary I don't think Uber is a good example of a company that has tried to 'build' in a prosocial way.
- atoav 6y ago
  The only thing uber has built really, is a way to extract more money from workers with less overhead while circumventing existing worker protection by acting as if they were just the messenger between customers and drivers. I have the feeling that the real building of the past two decades lies in ever cleverer bussines schemes focused on lock ins, extracting user data, doing as if you are open while there is no practical way anybody could take what you did in any significant way and improve on it. The exiting things always seem to happen outside of that space however.
  - catlifeonmars 6y ago
    Ubër has also built a service that I, for one, strongly prefer to traditional transportation services. Customer experience is far superior.
    - TeMPOraL 6y ago
      They did what's the equivalent of selling $10 bills for $1. No surprise customers like it, they get decent service priced at well below the market rate. For a while, that is, because it's only a way for them to leverage VC money to kill off local competitors. Once that's done, Uber's service tends to degrade, and it eventually will even more so, once their money runs out.
      - 6y ago
petra 6y ago
Uber only did it because their investors really believed they could capture the market. Most situations are not like that.
tekdude 6y ago
One could view this as Uber making a novice mistake. Instead of just fighting to get rid of employment laws that slowed Uber's business, they should have fought to replace them with laws that entrenched its position. For example: they could have persuaded legislatures to make gig work legal, but only in the context of "licensed and qualified" platforms. Reaching that status might require submitting forms to government agencies, drafting reports for publication, instituting certain internal policies, having certain credentialed staff on payroll, etc... All tasks that Uber, who would essentially write such a law, would be naturally able to fulfill while newer competitors might not.

buss 6y ago

In San Francisco, at least, YIMBY is the organization that is organized around ending regulatory capture in housing, and The Neoliberal Project (in SF YIMBY Neoliberal) is organized around broader dismantling of regulatory capture. We mobilize people in support of reform-focused politicians and have even started running our own (Sonja Trauss in 2018 and myself in 2020). Happy to talk more about it -- steven.buss@gmail.com Happy to talk more about it

chriswphoto 6y ago
Thank you for the work you do! Zoning is the new redlining. This generation has to fight for the right to affordable housing and economic opportunity.
- fierarul 6y ago
  I find it interesting how affordable housing must be very near high economic opportunity. Seems to me it's a fight for convenience too. They built Las Vegas in the desert to avoid restrictions, what's preventing this generation to build new cities? The whole Covid problem will make quests to increase population density more difficult. But perhaps will also spread opportunities around, or move them online, so this zoning struggle will stop being important.
  - buss 6y ago
    I fight for both market rate and subsidized housing in high-opportunity cities because it's the easiest way to life people out of poverty. Being able to live near high-income jobs is the most direct path to the middle class in America. If we want people to not live in poverty, then it makes sense to subsidize their access to opportunity. That means subsidizing education and housing. I've had fun nights talking with friends about starting a city. It's really fun to think about how we'd design the city to maximize opportunity, but there's no getting away from the value an existing city provides. Fixing a city with already high opportunity is just fundamentally cheaper than starting a city from scratch. All we need to do is win a few elections -- we're talking less than $100MM. A new city that is aiming to compete is a $100B+ project. As engineers we often think the best way to fix something is to build a new version. But this is rarely true in institutions. Think of governments as legacy systems: they've been built up over time and have a ton of hacks keeping it running. Think of Spolsky's generally good advice: "Don't rewrite code" https://www.joelonsoftware.com/2000/04/06/things-you-should-never-do-part-i/ https://www.joelonsoftware.com/2000/04/06/things-you-should-... It is easier to fix an old and broken system than to replace it wholesale. Let's focus on fixing government instead of replacing it.

kebman 6y ago

Oh, so you think you can just turn off state run corruption? Good luck mate! :) Well, I mean, sure, you can always try to keep the door from revolving, I guess. It would be a start, but I doubt it will do much difference.

jahaja 6y ago

> Regulatory capture is indeed a major underlying cause of a lot of the issues How is it even possible to isolate capitalism from regulatory capture? Capital accumulation inherently creates power and influence, so regulatory capture is surely just the perfectly logical second phase?

epistasis 6y ago
You separate democratic procedure from capital. This is why the Citizens United ruling was such a disastrous decision for the US. However, capital doesn't necessarily mean election wins or regulatory influence, even now. Bernie Sanders raised immense amounts of money, more than Joe Biden did, but Sanders still was not able to win out in most states. There's more to politics than money, though money can definitely raise the volume of one's voice.
- jahaja 6y ago
  > You separate democratic procedure from capital Uhm, that's very easy to say, but how is that even possible? Even here in Scandinavia, where money interests isn't as blatantly involved in politics as in the US, most of the media are aligned to corporate interests and vast amount of money are spend by corporations to fund and campaign for right-wing business parties and policies. Why would Biden need money in competition with Sanders when he got the entire establishment on his side?
  - epistasis 6y ago
    When voters in South Carolina go to vote, did they listen to money, to their own hearts, or to "the establishment"? In any case, they did not listen to capital. And this is one way that politics is separated from capital. There can never be perfect separation, all of society is connected to all of its parts in tricky ways, but part of maximizing that separation is to discover and acknowledge where capital has control of democracy and come up with ways to separate. No ideal is achievable, we can only strive to improve.
    - 6y ago

epistasis 6y ago

This is a long asked question, and the recent book Golden Gates by Conor Dougherty spends part of the book exploring the emergence of a new political coalition that fights this: the YIMBY groups and associated groups. They are very young and inexperienced, but their existence is making huge waves. There was an affordable housing builder interviewed on the housing podcast Gimme Shelter recently singing the praises of this movement, because it is such a big change from the past.

svskeptic 6y ago

This is great observation and speculation on what could happen and where would it come from. I've had multiple conversations with top-10 VC firm partners during our unsuccessful pitches where one of the sticking points is 'unfair-advantage'. 'How can you lock $user_group/$partners into this transaction/partnership?' Peter Thiel: "Monopolies are a good thing for society... The opposite of perfect competition is monopoly. Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices." What the world needs is perfect competition. VCs profess that they live in a capitalist system and work within its constraints, but just about all want to capture some part of it, preventing competition from coming in. One way to limit competition? Get the government to do it for you. Regulatory Capture. So, excuse me, if I don't buy this coming from a VC. And I won't buy it from any other VC as well. They are arguing for them to be in control of capture. Meet the new boss, same as the old boss.

pmarca 6y ago
Most of the companies we fund are trying to go disrupt someone else's "dominant market position".
- svskeptic 6y ago
  And none of them try to lock customers, partners or decision makers from going away in any underhanded way, right? Just pure offer-the-best-and-they-will-stick-with-us. And if someone does it better than us and takes them away from us, shame on us!
- akiselev 6y ago
  So that they can take over the dominant market position, eventually using the exact same tactics to keep entrants out. Anything less would run afoul of shareholder primacy so unless VCs take an active role in promoting ethical behavior from their portfolio, those words are empty as this blog post. Anyone who wasn't born yesterday knows that human beings won't do something that is in direct opposition to their interests (the exceptions to this rule became nurses and doctors and social workers, not VCs) and without an honest to goodness change in laws, reasonable people know that VCs won't change their behavior. Since most portfolio companies are in competition with someone - a fact almost every investor in the industry is cognizant of - anything short of actually spending money on lobbying to change laws and promote their enforcement is an empty gesture.

closeparen 6y ago

Milton Friedman did his thing from a university founded by John D. Rockefeller in a Department of Economics that is now named for Kenneth C. Griffin of Citadel Securities. I think it's safe to say that capital does spend on its policy interests, and quite effectively.

pmarca 6y ago
Was he right?

_marlowe_ 6y ago

Jonathan Tepper wrote a great book about this, the Myth of Capitalism

buboard 6y ago

> who will actually do the political work to fight against it? The virus is doing a pretty good work so far