"One often overlooked consequence of regulation is that it adds to the complexity of decision-making. Thus government regulation tends to favour the better informed members of the community, over those who are less well informed. Although I have a PhD in economics, I don’t believe that I am anywhere near well informed enough to deal with government regulation. [Even t]he tax code is too complex for me....
"There are many other areas of life where being well informed [or well connected] helps one to deal with the complexity of regulation. Big companies have an easier time complying with complex regulations than small companies. Occupational licensing laws favour those with more formal education. Our welfare state favours those who understand the complexities involved in applying for benefits. Expertise in taxes favours those who wish to avoid estate taxes, or those who wish to avoid losing wealth to the government after signing up for [a state pension]. Our immigration system is highly complex and difficult to navigate....
"When the government designs its tax laws and regulations, it seems as though almost no weight is put on the way in which the rules favour those who are better informed. I have two problems with complex regulations:1. They favour the cognitive elite (as well as big businesses that can hire people to navigate the regulations.)"The first problem relates to equity, the second to efficiency. ...
2. They incentivise people to become well informed about facts with no social utility.
"Regulation creates a shortage of painkillers. Who gets painkillers in that environment? Those who are smarter and more well connected. Regulation creates a shortage of kidneys for transplant. Who gets kidneys in that environment? Those who are smarter and more well connected. The safety net doesn’t have enough money for everyone who is needy. Who benefits from government programmes? People smart and well connected enough to navigate through all of the paperwork. (i.e., not the homeless.) Who has an easier time navigating the regulatory gauntlet to build new houses? The big builders. There are many more such examples.
"Progressives tend to favour big government, thinking it will help those on the bottom of society. Sometimes it does. But big government also creates a system that favours those who are skilled at navigating its complexity—the economic and cognitive elite."~ Scott Sumner, from his post 'Regulation favours the elites'
Thursday 12 October 2023
Regulation raises elites
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2 comments:
Entirely correct. A large part of how I earn my living is navigating the regulatory environment associated with land development, to allow my large property development client to progress their projects in a timely and cost acceptable way. Without that dedication and focus it becomes very difficult, particularly for smaller developers.
As for people becoming "well informed about facts with no social utility", I just think of most 'planners'. They inhabit this strange alternate universe where the RMA and Council rules determine their reality, in the same way that scientists might regard the laws of physics. The simple reality of what they're actually trying to get permission for often gets lost.
Regulation favours the elites which is why the elites favour regulation. The real problem is the ordinary people who go along with it all by enabling the regulations, by operating the regulations, by consulting about them, by contracting to apply them, by enforcing and by obeying. You could consider these people as whoring themselves but whores are honest.
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