Saturday, November 20, 2010

Laws vs Regulations

What is the difference? Well, I'm not going by a dictionary... but there is a clear difference between:

A) "You must not commit violence."
vs
B) "You must apply for a license, so an official can evaluate whether violence may be committed by your desired action."

I'd categorize laws as part of a justice system, where someone reacts after the fact when the law has been violated. I categorize regulations as the hoops you're forced to jump through... all the paperwork, the licenses, The bureaucrats that review your case for approval.

Which is better? If justice is upheld by law, can a regulatory approach ever add value? Regulations make it harder to engage in illegal activities, but also harder to engage in legal activities. Certain types of people absolutely worship regulation. They fail to see the forest for the trees. In the equation, costs of "red tape" and loss of productivity are large. The bureau-philes would say "The cost of letting crime run uncontrolled are larger", assuming that regulation can actually stop a criminal in the first place. Regulations assume the people are essentially bad, and should be controlled by benevolent bureaucrats. Who's to make sure the bureaucrats aren't bad? Laws must, by nature, be written clearly so they can be fairly interpreted in a court of one's peers... and justice appropriately served.

The error of the regulation advocate is not giving enough credit to the deterrence of a strong justice system. Let's face it, human behavior is not easily controllable. The alcohol prohibition of the 1920's corresponded with increased alcohol use. People will do what they want. To say that most people don't use heroin because it's illegal is simply not true. Like regulations and bureaus, you can build an intricate barbed wire fence around your garden, but then a rabbit will still find a way to dig under it to eat your vegetables. Waskally wabbit!

Are there any good examples for necessary regulation? Let's see... where do we have the most regulation today? Health - see how FDA rules deny drugs to the sick who would willingly try experimental treatments. Terrorism - look how the TSA rules lead to pat down 3-year olds and crowds out airline's ability to protect their own $200 million aircraft. Pollution - one I've dscussed before.  I've talked about local Sacramento regulations as well. The examples go on, but in each case... minus regulation, there would be an opportunity for courts to serve justice in a case of actual fraud or violence. Bureaus crowd out private responsibility.

The fact is, most regulations are excuses for government to reap new revenue and for public unions to expand their payroll. They are means of rent-seeking by special interests. They are beasts conjured loose by politicians upon manufactured crises. De-regulate and privatize, but do not neglect a strong principled, expedient, and accessible justice system in it's place.

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