Regulation

[RobinFinderson]

It seems like any honest person on the Left has got to accept the fact that regulation has the potential of becoming onerous and unnecessary.

Likewise, it seems that any honest person on the Right, and this hold for even the most staunch Libertarian, that regulation is one of the perfectly legitimate, and important duties that falls within the purview of state and federal governments.

I seldom argue about regulation, except in the most general terms -- I'd like to breath clean air, drink clean water, and enjoy some unspoiled nature from time to time. I don't get into the specifics about whether or not some new emissions policy is onerous and unnecessary, because I don't care to do the research to figure it out. It seems like that would be a waste of time, since I'm not really in a position to make a difference, and I don't care enough to make it a hobby.

So I understand my ignorance on the matter, and generally stay out of the debate, except in those most general terms. What I don't understand is how so many equally ignorant people on the Right accept the idea that regulation is what is killing business. What regulations are those? How have you determined that a particular regulation has tipped on the scales from being a genuine benefit and protection to being something onerous and unnecessary? How do you know that you aren't simply letting some squeaky wheel whose interests are not aligned with health and life to dictate your policy positions?

[creekster]

How do you know they are wrong?

[byu71]

It seems like any honest person on the Left has got to accept the fact that regulation has the potential of becoming onerous and unnecessary.

Likewise, it seems that any honest person on the Right, and this hold for even the most staunch Libertarian, that regulation is one of the perfectly legitimate, and important duties that falls within the purview of state and federal governments.

I seldom argue about regulation, except in the most general terms -- I'd like to breath clean air, drink clean water, and enjoy some unspoiled nature from time to time. I don't get into the specifics about whether or not some new emissions policy is onerous and unnecessary, because I don't care to do the research to figure it out. It seems like that would be a waste of time, since I'm not really in a position to make a difference, and I don't care enough to make it a hobby.

So I understand my ignorance on the matter, and generally stay out of the debate, except in those most general terms. What I don't understand is how so many equally ignorant people on the Right accept the idea that regulation is what is killing business. What regulations are those? How have you determined that a particular regulation has tipped on the scales from being a genuine benefit and protection to being something onerous and unnecessary? How do you know that you aren't simply letting some squeaky wheel whose interests are not aligned with health and life to dictate your policy positions?

Every once in a while you remind me again how much you lack in knowledge when it comes to business. Don't take that as a knock. I am sure I am a simpleton when it comes to your expertise. That is why I don't talk about it.

[RobinFinderson]

How do you know they are wrong?

They being 'regulation?' I don't. It is like I said, I don't argue in favor or regulation in general, except to say that I would like for there to be effective regulation that ensures a healthful environment. I guess I would also add that it seems sensible to regulate the ability of people to mislead others down roads that are all-but certain to result in financial ruin.

But for the most part, I keep it very general, accepting my ignorance on the subject, and don't come out strongly either for or against any regulatory policy that I don't understand.

What I don't understand is the certainty that seems to come from others, both on the left and the right, who I'm pretty sure are every bit as ignorant on the subject as I am.

[creekster]

They being 'regulation?' I don't.

That was my point.

[Katy Lied]

Intro to Regulation:

1. Every single piece of regulation creates business winners and losers. I am not talking about community goodwill, or increased health for babies, or protection for the spotted owl. I am talking about the cutthroat world of economic congress. The clean water act made winners of companies that manufacture water cleaning equipment, and losers of companies who transported waste via waterways.

2. The business losers in the regulation game complain loudly and longly. The winners keep quiet and make money in secret. This is why it seems like the business world (commercial interests) are against regulation- you only hear from the losers.

3. Businesses are quite eager to call for regulation when it benefits them. One example is the Banking Industry after the Great Depression. Banks had driven away their customers with bank runs and with going insolvent during the depression, and could not scare up any customers, so they introduced the Banking Act. They agreed to be regulated if the Feds would guarantee their deposits. And if they were going to be regulated, they were going to also pay Federally mandated (quite low) interest rates. And there was going to be a separation of Banking from related industries like insurance, and securities. In this one act, the Banking industry got the Feds to lure back clients, pay low rates to use consumer dollars, and bar any competition for deposits from related businesses.

4. Regulation also helps business by keeping away the litigation bugaboo. So while some OSHA regulations raise the cost of having employees, it also protects employers from paying out much higher litigation costs, by establishing a level of care that must be met. Nothing further is expected, and provides protection from lawsuits asking for greater diligence.

5. Some businesses are able to collude using a regulatory framework. Existing members of an industry will agree to a certain level of regulation to ensure their manufacture is clean/healthy. What this really does is cartelize and carve up the industry between the existing members who create the regulation. Huge barriers to entry for new market participants.

6. Regarding consumers: Some feel that regulation is good. These are the naïve saps who now pay higher costs to get what they feel is a healthier environment. Nevermind that they could have skipped the regulation altogether, taken the collective increased price due to regulation and ameliorated the situation much more cheaply. Some feel that regulation is bad. They are pawns to economic interests who swallow their propaganda hook, line and sinker. In the end, it’s all about the money.

7. As I see it, the only bad thing about regulation is the uncertainty before the regulation hammer falls. No one knows yet who the winners and the losers will be. This is where business will sit on its hands, and not invest. This is where we are with health care. As soon as it is made apparent who the winners (and losers) are, capital will flow and companies will form to take advantage of the regulation. Doesnt really matter who the winners and losers are, from a macro sense. (Of course, if your family business is a loser, that is tragic for you.)

[creekster]

Intro to Regulation:

1. Every single piece of regulation creates business winners and losers. I am not talking about community goodwill, or increased health for babies, or protection for the spotted owl. I am talking about the cutthroat world of economic congress. The clean water act made winners of companies that manufacture water cleaning equipment, and losers of companies who transported waste via waterways.

2. The business losers in the regulation game complain loudly and longly. The winners keep quiet and make money in secret. This is why it seems like the business world (commercial interests) are against regulation- you only hear from the losers.

3. Businesses are quite eager to call for regulation when it benefits them. One example is the Banking Industry after the Great Depression. Banks had driven away their customers with bank runs and with going insolvent during the depression, and could not scare up any customers, so they introduced the Banking Act. They agreed to be regulated if the Feds would guarantee their deposits. And if they were going to be regulated, they were going to also pay Federally mandated (quite low) interest rates. And there was going to be a separation of Banking from related industries like insurance, and securities. In this one act, the Banking industry got the Feds to lure back clients, pay low rates to use consumer dollars, and bar any competition for deposits from related businesses.

4. Regulation also helps business by keeping away the litigation bugaboo. So while some OSHA regulations raise the cost of having employees, it also protects employers from paying out much higher litigation costs, by establishing a level of care that must be met. Nothing further is expected, and provides protection from lawsuits asking for greater diligence.

5. Some businesses are able to collude using a regulatory framework. Existing members of an industry will agree to a certain level of regulation to ensure their manufacture is clean/healthy. What this really does is cartelize and carve up the industry between the existing members who create the regulation. Huge barriers to entry for new market participants.

6. Regarding consumers: Some feel that regulation is good. These are the naïve saps who now pay higher costs to get what they feel is a healthier environment. Nevermind that they could have skipped the regulation altogether, taken the collective increased price due to regulation and ameliorated the situation much more cheaply. Some feel that regulation is bad. They are pawns to economic interests who swallow their propaganda hook, line and sinker. In the end, it’s all about the money.

7. As I see it, the only bad thing about regulation is the uncertainty before the regulation hammer falls. No one knows yet who the winners and the losers will be. This is where business will sit on its hands, and not invest. This is where we are with health care. As soon as it is made apparent who the winners (and losers) are, capital will flow and companies will form to take advantage of the regulation. Doesnt really matter who the winners and losers are, from a macro sense. (Of course, if your family business is a loser, that is tragic for you.)

In a theoretical sense this might be true (although I don't agree with all the characterizations), but the problem, from my POV, is it seems to assume that regulations are a zero sum game, and they are not. While it is arguably true that all regulations see winners and losers, the detriment is rarely, if ever, equivalent to the benefit and I think this is the point that others are making about regulations in a down economy. But BYU71 will probably also observe that I don't know much about business either, so I will leave the field to those who do.

[Green Monstah]

It seems like any honest person on the Left has got to accept the fact that regulation has the potential of becoming onerous and unnecessary.

Likewise, it seems that any honest person on the Right, and this hold for even the most staunch Libertarian, that regulation is one of the perfectly legitimate, and important duties that falls within the purview of state and federal governments.

I seldom argue about regulation, except in the most general terms -- I'd like to breath clean air, drink clean water, and enjoy some unspoiled nature from time to time. I don't get into the specifics about whether or not some new emissions policy is onerous and unnecessary, because I don't care to do the research to figure it out. It seems like that would be a waste of time, since I'm not really in a position to make a difference, and I don't care enough to make it a hobby.

So I understand my ignorance on the matter, and generally stay out of the debate, except in those most general terms. What I don't understand is how so many equally ignorant people on the Right accept the idea that regulation is what is killing business. What regulations are those? How have you determined that a particular regulation has tipped on the scales from being a genuine benefit and protection to being something onerous and unnecessary? How do you know that you aren't simply letting some squeaky wheel whose interests are not aligned with health and life to dictate your policy positions?

I was in similar shoes to yours until about a year ago. When Dodd-Frank was passed, I was asked to look into how Title VII (which governs Over-the-counter swaps and derivatives) will affect Energy companies.

I hoped that the Act would be clear and set forth specific processes and rules. The parts of the Act I read did a few things: (a) amended existing statutes; (b) provided new defined terms; (c) punted ever g_&damned rule to the SEC, the CFTC, the Board of Governors of the Fed, and in some instances to the IRS. Thus, the legislation IS the regulation. We've punted Congress' legislative function to the executive branch, which is partisan.

In the end, however, this turned out to be a plus in this instance. Many of the rules and regs have been delayed...for good reason, they would be disastrous for energy companies. Luckily, the Obama Admins have the good sense to hold off on rules that tie up unpredictable and much needed capital during a period of recession.

[jay santos]

Every once in a while you remind me again how much you lack in knowledge when it comes to business. Don't take that as a knock. I am sure I am a simpleton when it comes to your expertise. That is why I don't talk about it.

When Robin suggests we close our borders and buy American, if he's serious, i think he's a simpleton with no business understanding.

This post I didn't think was so bad. I think he has a point.

[creekster]

When Robin suggests we close our borders and buy American, if he's serious, i think he's a simpleton with no business understanding.

This post I didn't think was so bad. I think he has a point.

But what point is it? He professes ignorance on a topic and then simply asks if someone making claims of which he may be susopect is equally ignorant or if they have some basis for their claims. It is really a post abotu the rpocess of decision making more than regulation.

I dont mean this to be critical of RF, as such process is fascinating to study, but ultimately it will not reveal much about regulation. If we wnat to talk about regulation critiques as they align with political ideology it owuold be much more useful to use examples or specfici platforms, IMO.

[wuapinmon]

I dont mean this to be critical of RF, as such process is fascinating to study, but ultimately it will not reveal much about regulation. If we wnat to talk about regulation critiques as they align with political ideology it owuold be much more useful to use examples or specfici platforms, IMO.

And you could've said this several posts ago, or even offered up an example to show us a specific platform. Now it just seems like you wanted to be coy with Robin.

[creekster]

And you could've said this several posts ago, or even offered up an example to show us a specific platform. Now it just seems like you wanted to be coy with Robin.

Coy? I am stung, expecially given that we have so little of that around here and expecvially for Robin, who never does that sort of thing and has shown an utterl lack of ability to stick up for himself.

I heretofore swear I will try not to be coy with Robin. Is that better?

[wuapinmon]

Coy? I am stung, expecially given that we have so little of that around here and expecvially for Robin, who never does that sort of thing and has shown an utterl lack of ability to stick up for himself.

I heretofore swear I will try not to be coy with Robin. Is that better?

Such a binding promise!

[Donuthole]

Personally, i'm a fan of regulation.

[YOUTUBE]1plPyJdXKIY[/YOUTUBE]

[RobinFinderson]

I think Katy Lied offers a nice framework for how to talk about regulation. In addition to the winners and losers that KL writes about, I think it is also important to add that framework that regulation should (but won't always) serve some other public good. So yes, if we create emissions regulation, there will be winners and losers, but there will also be the question of whether or not the regulation results in cleaner air.

A smarter conversation about regulation would look critically at proposals in terms of KL's framework. We might hear questions and their answers like:

What is the goal of regulation?

Is it a needful goal?

How will it be enforced?

Does the enforcement side have the teeth to make it work?

Is the enforcement insulated enough so that it won't become captive to the industry it regulates?

Who will be the winners and losers?

How will the shift in winners and losers affect the broader economy?

I'm sure there are a lot of other 'smart' questions to answer, but these begin to scratch the surface. Public debate that addressed questions raised by KL's framework would be really educational.

But instead we get something like this:

Liberal: The systemic failures evident in the recent financial crisis demonstrate the need for some regulation in finance.

Conservative: No! The mere specter of regulation is enough to scare business away from investing. Liberals discussing new regulation is the cause of the worsening economic crisis. The financial industry is like a very shy woman who needs to be sweet-talked and tenderly touched. Only then will she open up and bare her precious gifts. Talk about regulation is like suggesting filthy lascivious acts. She isn't that kind of girl.