5 ms·

> There are already signs that startups may not spread particularly well. The spread of startups seems to be proceeding slower than the spread of the Industrial

by tjic 18y ago

> There are already signs that startups may not spread particularly well. The spread of startups seems to be proceeding slower than the spread of the Industrial Revolution Government was much smaller at the time of the Industrial Revolution. The theory of "regulatory capture" says that government is responsive to those firms that are affected by government regulation and have the money to buy favorable legislation. Thus, it's much easier for big-dumb-and-slow firms to use government to put roadblocks in the way of startups than it was for inefficient firms to put roadblocks in the way of factory production 200 years ago. Want to sell wine over the Internet? The established players will make sure that it's illegal for you to do so. Want to cut a deal with your early stage employees where they get no pay for 6 months? It's illegal in most places to not pay someone a wage. In MA it's illegal to fire someone for blatant incompetence and they pay them their final paycheck on the regularly scheduled payroll 4 days later - you need to hand them a physical check then and there. Want to buy a bunch of servers? In a lot of locales (MA, again), you have to pay taxes on the assets every year. Want to sell real estate on the Internet? Hope you're a licensed broker! Want to write an expert system that generates legal documents? You'd better have passed the bar exam. Actually, wait, even though that was good enough for Lincoln, these days you need to have actually ATTENDED lay school - a mere demonstration of proficiency is not enough. Etc., etc., etc. If this is how things are in the free-wheeling US, I imagine that it's far worse in Europe. I think that people across the globe have what it takes to launch startups. I just think that the legal culture makes it very hard in most places.

prospero 18y ago
Why is it bad that in order to automatically generate binding legal documents, someone involved needs to be educated in the subtleties of legal language? A walking, talking lawyer should be personally responsible for the quality of the documents being generated. If there's no such person, you're putting the onus of validation on the client, which I think misses the entire point. In most of these cases, it's not the government protecting existing companies, it's the government protecting the naive population. You won't fire someone after six months of unpaid labor, but someone else will. Your expert system might create air-tight contracts, but someone else will cut corners. These laws do not exist solely to frustrate you. Part of being in a uniformly free society is ensuring that naive people are not at the mercy of the better informed or less scrupulous. Things can't work any other way.
- dantheman 18y ago
  >>In most of these cases, it's not the government protecting existing companies, it's the government protecting the naive population. You won't fire someone after six months of unpaid labor, but someone else will. Your expert system might create air-tight contracts, but someone else will cut corners. This untrue, throughout history companies get laws to make upstarts more difficult. There is no reason you need to go to law school or even pass the bar, if the buyers don't think it is a good tool they won't use it. In fact things can work the other way, you are protected the few who may be swindled (they're clearly visible), but ignore all those who are harmed by the lack of new products. It's very hard to look at the other side of the equation, but it is normally quite significant.
  - prospero 18y ago
    Do you want to back up that assertion? I'm not saying regulatory capture doesn't exist, I'm just saying it's not the primary driving force behind legislation. You don't get to just say I'm wrong and make vague references to historical trends. Unless a company already has lawyers on staff, they have no way of determining whether a legal expert system is a good product or not. For that reason, it cannot be a substitute for a living, breathing lawyer. It could certainly be a tool for lawyers, and streamline the hell out of most legal processes, but to treat it as something more is to give up on any lowest common denominator for legal advice. And while this would certainly harm lawyers, it would also harm a great many other people.
    - ellyagg 18y ago
      But, see, you claim it would harm a great many other people. We claim, on balance, it will help many more people than it hurts. Down with guilds!
    - dantheman 18y ago
      Well there are many cases of regulator capture, the AMA, the railroad industry, the airplane industry (pre-deregulation), the telephone industry (pre-deregulation), and the cable industry. The recent mandates on testing toys for lead, has pretty much outlawed small toy producers. You can't prepare food at your house and legally sell it (even if you say this was cooked at my house). The FDA debacle with juice pasteurization vs more modern UV processes. > And while this would certainly harm lawyers, it would also harm a great many other people. Once again you make a statement that claim to be true with no real backing. Say 1 person is harmed by this newer cheaper law advice, and 10,000 are saved due to the reallocation of resources to medicine -- this is of course a hypothetical example, but it has just as much grounding as yours.
mechanical_fish 18y ago
Government was much smaller at the time of the Industrial Revolution. Is this true? Is it really such an open-and-shut case? In some senses it is obviously true: There were a lot fewer people, a lot fewer filing cabinets and a lot fewer regulations. A lot of the tools needed for our big modern system -- hygiene, communications, literacy -- just weren't there yet. There were essentially no worker protections in the early stages of the Industrial Revolution; there were few environmental regulations. And travel and communications were harder, which made it easier to evade certain regulations -- they say that, as late as the 20th century, movie companies relocated to Hollywood in large part because it was the US city farthest from Thomas Edison's patent lawyers. But government-sanctioned monopolies are not a new invention. (That's what the British East India Company was all about.) Enormous tariffs levied on mass-produced goods are not a new invention. Taxes are not a new invention. Gangs of Luddites (not metaphorical Luddites -- the real thing) who break your equipment and sabotage your business model are not a new invention. Wine monopolies? Here's a book that deals, in part, with how the English ban on French wine imports boosted the English brewing industry in the 17th century: http://www.amazon.com/War-Wine-Taxes-Political-Anglo-French/dp/0691129177/reasonmagazineA/ http://www.amazon.com/War-Wine-Taxes-Political-Anglo-French/... And here's a Wikipedia article on mercantilism, the dominant theory of international trade for over 250 years, starting in 1500: http://en.wikipedia.org/wiki/Mercantilism http://en.wikipedia.org/wiki/Mercantilism Mercantilism was all about big-government management of the economy through tariffs and subsidies. But, of course, that was arguably a big improvement over the medieval model: Small-government "management" of the "economy" by private armies who threatened to burn your crops and besiege your house unless you paid tribute.
- davidw 18y ago
  > Is it really such an open-and-shut case? No, but a reasonable percentage of those convinced that "it's all the government's fault" are going to continue to see it that way no matter what (and get offended when that gets pointed out, apparently). Just like other people think that more government/laws/rules is always the answer. For that matter, I'm pretty convinced of my "radically moderate" views which are somewhere around The Economist's. Which is why these sorts of discussions rarely go anywhere, even over a beer, to say nothing of short, sharp answers on internet forums.
javert 18y ago
I agree. To build on this comment, I disagree with pg's statement that startups have and will spread somewhat randomly. The biggest defining factor is having a (more) free market in a given place (inc. lower taxes and a /proper/ legal system). In fact, that's largely why northern Europe had the Industrial Revolution and why most startups are in the US today. Because the US seems to be becoming more statist, that could definitely change.
sharpn 18y ago
From Europe, whilst many elements of our culture are less conducive to entrepreneurs than the US, these examples are not among them (except I don't know about the legal docs thing - I agree with earlier replies that critical information providers need to have rigorously maintained qualifications). My mate set up an internet wine company here without any problems, it's easy to pay directors of a company in equity [but non-directors get minimum wage protection], and the real estate industry is 'self-regulated' here in the UK. Oh, and we have free universal healthcare. All that said, I still believe the next game-changing startups will come mostly from the US - which is still the destination of choice. And I agree with your central argument that 'big government' generally stifles innovation.
- anamax 18y ago
  > it's easy to pay directors of a company in equity [but non-directors get minimum wage protection], Thus missing the point.
pg 18y ago
We've funded lots of startups and we hardly ever see cases where they're crushed by big companies. The biggest exception is music. But though the record labels have certainly captured congress, their lawsuits tend to destroy startups before government regulation does.
- miked 18y ago
  >> But though the record labels have certainly captured congress... And not just Congress: http://pajamasmedia.com/instapundit/76701/ http://pajamasmedia.com/instapundit/76701/ >> their lawsuits tend to destroy startups before government regulation does. In the broad sense, this is government regulation as well, but with the laws being written to transfer the regulatory function from the Executive branch to the Judicial branch.
- cabalamat 18y ago
  Their lawsuits are only able to destroy startups because government regulations (i.e. laws) let them. So this is government regulation at one remove.

by tjic 18y ago

prospero 18y ago

Why is it bad that in order to automatically generate binding legal documents, someone involved needs to be educated in the subtleties of legal language? A walking, talking lawyer should be personally responsible for the quality of the documents being generated. If there's no such person, you're putting the onus of validation on the client, which I think misses the entire point. In most of these cases, it's not the government protecting existing companies, it's the government protecting the naive population. You won't fire someone after six months of unpaid labor, but someone else will. Your expert system might create air-tight contracts, but someone else will cut corners. These laws do not exist solely to frustrate you. Part of being in a uniformly free society is ensuring that naive people are not at the mercy of the better informed or less scrupulous. Things can't work any other way.

dantheman 18y ago
>>In most of these cases, it's not the government protecting existing companies, it's the government protecting the naive population. You won't fire someone after six months of unpaid labor, but someone else will. Your expert system might create air-tight contracts, but someone else will cut corners. This untrue, throughout history companies get laws to make upstarts more difficult. There is no reason you need to go to law school or even pass the bar, if the buyers don't think it is a good tool they won't use it. In fact things can work the other way, you are protected the few who may be swindled (they're clearly visible), but ignore all those who are harmed by the lack of new products. It's very hard to look at the other side of the equation, but it is normally quite significant.
- prospero 18y ago
  Do you want to back up that assertion? I'm not saying regulatory capture doesn't exist, I'm just saying it's not the primary driving force behind legislation. You don't get to just say I'm wrong and make vague references to historical trends. Unless a company already has lawyers on staff, they have no way of determining whether a legal expert system is a good product or not. For that reason, it cannot be a substitute for a living, breathing lawyer. It could certainly be a tool for lawyers, and streamline the hell out of most legal processes, but to treat it as something more is to give up on any lowest common denominator for legal advice. And while this would certainly harm lawyers, it would also harm a great many other people.
  - ellyagg 18y ago
    But, see, you claim it would harm a great many other people. We claim, on balance, it will help many more people than it hurts. Down with guilds!
  - dantheman 18y ago
    Well there are many cases of regulator capture, the AMA, the railroad industry, the airplane industry (pre-deregulation), the telephone industry (pre-deregulation), and the cable industry. The recent mandates on testing toys for lead, has pretty much outlawed small toy producers. You can't prepare food at your house and legally sell it (even if you say this was cooked at my house). The FDA debacle with juice pasteurization vs more modern UV processes. > And while this would certainly harm lawyers, it would also harm a great many other people. Once again you make a statement that claim to be true with no real backing. Say 1 person is harmed by this newer cheaper law advice, and 10,000 are saved due to the reallocation of resources to medicine -- this is of course a hypothetical example, but it has just as much grounding as yours.

mechanical_fish 18y ago

Government was much smaller at the time of the Industrial Revolution. Is this true? Is it really such an open-and-shut case? In some senses it is obviously true: There were a lot fewer people, a lot fewer filing cabinets and a lot fewer regulations. A lot of the tools needed for our big modern system -- hygiene, communications, literacy -- just weren't there yet. There were essentially no worker protections in the early stages of the Industrial Revolution; there were few environmental regulations. And travel and communications were harder, which made it easier to evade certain regulations -- they say that, as late as the 20th century, movie companies relocated to Hollywood in large part because it was the US city farthest from Thomas Edison's patent lawyers. But government-sanctioned monopolies are not a new invention. (That's what the British East India Company was all about.) Enormous tariffs levied on mass-produced goods are not a new invention. Taxes are not a new invention. Gangs of Luddites (not metaphorical Luddites -- the real thing) who break your equipment and sabotage your business model are not a new invention. Wine monopolies? Here's a book that deals, in part, with how the English ban on French wine imports boosted the English brewing industry in the 17th century: http://www.amazon.com/War-Wine-Taxes-Political-Anglo-French/dp/0691129177/reasonmagazineA/ http://www.amazon.com/War-Wine-Taxes-Political-Anglo-French/... And here's a Wikipedia article on mercantilism, the dominant theory of international trade for over 250 years, starting in 1500: http://en.wikipedia.org/wiki/Mercantilism http://en.wikipedia.org/wiki/Mercantilism Mercantilism was all about big-government management of the economy through tariffs and subsidies. But, of course, that was arguably a big improvement over the medieval model: Small-government "management" of the "economy" by private armies who threatened to burn your crops and besiege your house unless you paid tribute.

davidw 18y ago
> Is it really such an open-and-shut case? No, but a reasonable percentage of those convinced that "it's all the government's fault" are going to continue to see it that way no matter what (and get offended when that gets pointed out, apparently). Just like other people think that more government/laws/rules is always the answer. For that matter, I'm pretty convinced of my "radically moderate" views which are somewhere around The Economist's. Which is why these sorts of discussions rarely go anywhere, even over a beer, to say nothing of short, sharp answers on internet forums.

javert 18y ago

I agree. To build on this comment, I disagree with pg's statement that startups have and will spread somewhat randomly. The biggest defining factor is having a (more) free market in a given place (inc. lower taxes and a /proper/ legal system). In fact, that's largely why northern Europe had the Industrial Revolution and why most startups are in the US today. Because the US seems to be becoming more statist, that could definitely change.

sharpn 18y ago

From Europe, whilst many elements of our culture are less conducive to entrepreneurs than the US, these examples are not among them (except I don't know about the legal docs thing - I agree with earlier replies that critical information providers need to have rigorously maintained qualifications). My mate set up an internet wine company here without any problems, it's easy to pay directors of a company in equity [but non-directors get minimum wage protection], and the real estate industry is 'self-regulated' here in the UK. Oh, and we have free universal healthcare. All that said, I still believe the next game-changing startups will come mostly from the US - which is still the destination of choice. And I agree with your central argument that 'big government' generally stifles innovation.

anamax 18y ago
> it's easy to pay directors of a company in equity [but non-directors get minimum wage protection], Thus missing the point.

pg 18y ago

We've funded lots of startups and we hardly ever see cases where they're crushed by big companies. The biggest exception is music. But though the record labels have certainly captured congress, their lawsuits tend to destroy startups before government regulation does.

miked 18y ago
>> But though the record labels have certainly captured congress... And not just Congress: http://pajamasmedia.com/instapundit/76701/ http://pajamasmedia.com/instapundit/76701/ >> their lawsuits tend to destroy startups before government regulation does. In the broad sense, this is government regulation as well, but with the laws being written to transfer the regulatory function from the Executive branch to the Judicial branch.
cabalamat 18y ago
Their lawsuits are only able to destroy startups because government regulations (i.e. laws) let them. So this is government regulation at one remove.