Regulation = bad = nonsense

If there is one thing that bugs me it is the emotional resonance the anti-regulation loon-bin has with your average punter.  The current media regulation debate is just one example. Regulation = bad. Don’t ask any more question please.

Very few of the loudest voices grasp that the economy is fundamentally built on regulation.  Maybe if I took away the word regulation and simply used the term ‘enforceable common customs’ we might go some way to understanding the nature of coordination and the way regulations are ENABLERS of large scale coordination of production.

What do we think basic property laws are anyway, if not regulation? Private property is a foundation regulation of capitalism. In fact we could easily scrap large amounts of regulation by eliminating private property rights.

In the media debate the freedom of press is itself a product of regulation – for example journalist and media organisation exemptions from the Privacy Act, and State level Acts enforcing journalist privilege.

We can go further. How are contracts enforced? Well we have regulations of contract.  How are companies formed as separate entities from the individuals who run them – well, we have regulation for that.

Money itself is pure regulation. Nothing more than a set of rules to facilitate the exchange of value.

The best way to think about regulation is like rules in sport.  Without rules there would be no sport.  Without regulation there would be no economy.

You might be thinking that the economy came before regulation.  But as I said earlier, regulation is simply the formalised way of expressing enforceable common customs.  No one would say that any human society, from the most primitive tribes to the largest modern metropolises, has functioned without enforceable common customs.  These days we just need to write these customs down and have them approved by parliament if we wish to enforce them.

So how should we debate the merits of new laws and regulations? In the same way we debate the merits of new rules in sport.  What is their purpose? Is their evidence that such rules give the expected results to fulfil their purpose? What are the costs? Can they be enforced?

Take the new rules in rugby league this season.  Referees (a regulatory body) need to tell the video referee (to borrow a term from the media debate, the footy tsar who oversees the regulator) their decision, and the video referee needs to find evidence to overturn the decision. To me this seems like a different, and perhaps more lengthy, regulation was needed to get a better outcome for the game.

And what would the ‘sport economy’ look like if we all were anti-regulation for the sake of it?  Well, no new sport (read: industries) would evolve, because after all, they would need new rules (read: regulations).

If a new sport was created with minimal rules teams would push the boundaries until the sporting community came together to expand the rulebook to control these behaviours.

Without rules, the private sector will compete through means that society finds offensive – mergers and monopoly formation, creating negative externalities.  Think of the coal seam gas boom.  The laws were unclear about rights and responsibilities of miners.  There was plenty of worry in the community that miners would start to push the boundaries of what society deemed acceptable and create externalities for others in the area.  Some form of regulation to clearly enunciate the rights and responsibilities of various parties was required.  One hopes that in the process of drafting such legislation each party affected had some say, and the possibility of mutually beneficial outcomes was addressed.

As sports teams become faster and stronger, new rules might be required to curb the effects of that strength on others – banning spear tackles, shoulder charges and other things in rugby league is one example.  The same kind of regulation to curb powers of business may be required as firms become larger and more dominant in their industries.

Regulations can be good and bad – they are the rules of the game.  Let’s break through the fear and debate the facts.

Please share this article.  Tips, suggestions, comments and requests to [email protected] + follow me on Twitter @rumplestatskin

Comments

  1. You don’t run a business do you Rumples!

    The problem is this….we now have literally tens of of thousands of people whose jobs depend on inventing new regulations and rules. It’s not enough to be just enforcing established rules we have to invent new ones all the time.
    In operation it is no different to the stupid credit/debt creation cycle.

    The stupidity of it all beggars the imagination and defies all financial, economic and social logic. Oh it’s argued about but little rationality is in evidence!

    That’s why some of us are so anti-regulation. We’re sick and tied of the stupidity.

    So you fix the stupidity and we’ll start to take an interest!

    • I think you just helped make Rumples point here flawes. Regulation is of itself is not the problem – we shouldn’t get distracted from the merits of regulation to the simplistic view there should be none.

      There should now be a cap on rules – pollies need to take some away if they want to put more in. There is no incentive to improve the existing regulations/rules.

      But how often to we get the no regulation set trying to tell us that if it wasn’t for these pesky rules then then their got given right to make a quid could be exercised. I have bad news for them – business is just as competitive with the regulations as without them.

      The favourite bugbear of the anti-regulation set is environmental regulations. A few laws stopping the offensive befouling of our environment and protecting amenity get the full whack from this lot – meanwhile they have sat back and let the central banks do more harm to business than a couple of tree-huggers could do in a hundred lifetimes.

      • ” Regulation is of itself is not the problem ”

        Yes it is. flawes point is valid. We are OVER regulated by a beauracracy gone rules mad.

        • No its the merits of the individual regulation. Since you are so passionate GSM i have no doubt you can easily put 3 regulations forward as examples that are pointless and meaningless. Generalising is easy here.

          I’m not arguing with the notion that politicians have nothing better to do than put more and more layers of rules down.

          • aj,

            Look at the proposed new media regulations. There are more than 3 being proposed. Therein is an example.

            The discussed changes to Superannuation is another.

            The Carbon Tax laws, rules and regs.

            The MRRT laws, rules and regs.

            All of them, pointless and meaningless. Others may not agree I know.

          • Then there is the famous “Basle Rules” which rated mortgage backed securities as the safest reserves for banks to hold…….

            One feature of many “bad regulations” is that they are “pro cyclical”.

    • desmodromicMEMBER

      Victoria’s zero-tolerance speeding fines are issued by the Orwellian ‘Office of Civic Compliance’.

      Given the culture I suspect the future is more regulation, not less.

      • yes – selling cars that can do 210km/hr and having no regulation on speeding is a great idea. Regulations are not of themselves bad.

    • Gentlemen (&/or ladies), you all miss the underlying cause for yet another point of argument.

      Have you ever seriously pondered the reasons why/i> people nowadays seem to be even more materialistic than in times past; why the business of doing business seems more cut-throat and profit-driven than ever; why advertising and marketing are seemingly all-pervasive and more aggressive than ever; why the increasing idolisation of (thus, profit-making from) youth, beauty, and celebrity; why there are seemingly so many more, varied, and greater ills in the world than, say, 50 or 100 years ago – poverty, wealth and income inequality, “-ism’s”, dishonesty, disrespect, dishonour, amorality, fraud, corruption, drug and alcohol abuse, pharmaceutical dependency, and increasing physical, mental, and spiritual violence? And hence, why legislators might have reasonable cause to see the “need” for ever more laws to try and “regulate” society’s behaviours?

      The problem is Usury. Structurally embedded in our debt-at-interest based monetary system is an artificial scarcity – every (wo)man forced to do whatever it takes to acquire a fraction of someone else’s loan principal in order to repay the bankers the usury that was never created at the time of creating loans (ie, money). Our society has effectively been rendered a big game of musical chairs, with someone missing out each time the music stops. And as debt-money (thus, interest owed) has risen worldwide, so the number of chairs pulled out of the game.

      Usury is a (if not THE) prime cause of slowly but surely devolving mankind. Of causing us to increasingly behave like … indeed, often much worse than … mere animals.

      That’s why there is more and more regulation. To control the animals.

        • Not necessarily. All that is needed is to revoke the existing legal tender laws.

          The problem here is one of regulation that protects the existing debt-at-usury industry, and thus restricts/excludes the development of alternative (usury-free) currencies.

          • There is always another itch to scratch. Banning usury is not a solution to anything. You might as well campaign to ban human desire. In fact, some of those countries that ban usury do that, too.

          • Trying to equate “human desire” with usury is clearly erroneous, especially as a justification for accepting / ignoring it as a core problem.

            Numerous societies have happily existed and functioned very well with alternatives to government-enforced debt-at-usury “money” systems, throughout recorded human history. Read David Graeber’s “Debt: The First 5,000 years” as a useful primer.

          • Usury is a symptom of an underlying pathology. Its application is inexorably tied to human desire, greed, envy, what have you.

            I am not justifying ignoring anything, but if you think that a ban on usury will occur under anything less than a totalitarian regime with a fundamentalist religious interpretation of moderating human behaviour then I don’t think you’ve fully thought this through. Usury (i.e. human behaviour) needs to be tempered via regulation. Banning it ouright is not a solution.

          • Perhaps I have made a rod for my own back with the Ban Usury. Problem Solved. sign-off, as it appears to have negated your ability to consider this comment –

            “All that is needed is to revoke the existing legal tender laws.”

            Revoke the Legal Tender Law. Problem Solved.

          • Op8. Respectfully, that solves nothing. Because the underlying pathology remains. Realistically, the best we can hope for is to temper the lending of money at interest via regulation.

          • Spleenblatt, you are missing the point that the central banking, licensed banking, credit creation system is a monopoly.

            I can see the point of the “competing legal tender” advocates, that ending the monopoly would reduce usury.

          • I’m aware of its monopoly nature – are you seriously suggesting that over the long-run it will be anything but ?
            Regardless, Op8 is not advocating a reduction in usury, he is advocating the elimination of usury.

    • +1.

      Anybody who thinks we don’t have enough regulation has their head up their arse.

      All we need is property rights, freedom of contract and freedom of association to have a functioning market.

      Most regulations undermine those institutions. Businesses aren’t allowed to set their own prices in fear of ACCC bureaucrats.

      The idea that 2 parties are free to exchange what they please with no 3rd party being able to stop them is totally undermined by taxation, licensing and the 1000 pages of minimum wage legislation they must comply with.

      The list goes on and on.

      • “Businesses aren’t allowed to set their own prices in fear of ACCC bureaucrats.” Really, which ones? And those that might fear the ACC, why is that not sensible?

        You seem to have some kind of bizarre model of how the world works there Jono. You’ve heard of externalities, public goods, and monopolies right?

        • So we should arrange a system to reward the creation of positive externalities too? Be consistent. Why disincentivise negative externalities and end up foregoing positive ones that could have been far greater?

          I vividly remember reading the once-famous econometrist Colin Clark saying that the economics profession in his day did not bother about negative externalities because the positive ones were always greater, and trying to arrange transfers to address it all was impossible.

          • Rumplestatskin

            C’mon Phil. The incentives of private enterprise are not to produce any positive externalities, but push all their costs externally if possible.

            I have no idea why you think I’m being inconsistent. Incentives for positive externalities, disincentives for negative externalities. I just mentioned the word as one of many market failures that don’t seem to enter Jono’s model of the world.

            Governments do often fund the (private or public) production of goods that produce positive externalities, which would not otherwise been produced (since the producer cannot, by definition, charge for a positive externality). Economics textbooks are full of examples of positive and negative externalities, both of which warrant government intervention in markets – particularly in land markets.

      • “All we need is property rights, freedom of contract and freedom of association to have a functioning market.”

        Why do we need those regulations? There are some people who will benefit by deregulating those areas too why why shouldn’t they get the deregulation of those areas since that serves their purposes?

      • All we need is property rights, freedom of contract and freedom of association to have a functioning market.

        You’re OK with fraud then ? Negligence as well, I assume ? I have no doubt discrimination isn’t a problem in your world, either, right ?

    • I think the point he is trying to make is that we shouldn’t automatically assume all regulation is bad but that some is necessary for society to function. We should be working out which ones are needed and not just declaring that regulations are bad. For example, since you have declared yourself anti-regulation, would you like to remove the regulation that makes murder illegal?

  2. Note: The real danger here is the extremism that accompanies the regulation. Power is given to an otherwise reasonably ordinary member of society. They tend to wield it without thought or consideration and use the excuse”oh I know it’s not right but I don’t make the laws” That is just plain BS!

    It’s growing and spreading extremism that is the real problem. Few care as to the actual results of their actions and certainly don’t take responsibility for their own actions.

    Some of us ‘loons’ as you call us do actually care about individual responsibility for one’s own actions and, yes even those really stupid ideas, ‘individual liberty’ and ‘private property rights’

    • +1

      Regulation which advances and entrenches the power and influence of rent seeking bureaucracies is bad period.

      I would argue that there is a case for taking the lessons learned from Buchanan et al and placing some hard constitutional limits on what the state can do through the political and permanent govt, to limit the detrimental effects of self interested public choice decisions inflected upon the population at large.

      • Absolutely, Flawse and JoeBlow.

        The connection between advocacy of regulations and rent seeking is massive; I would expect someone as clever as Rumplestatskin to cover this point.

        But of course he has trouble seeing the single most egregious example; urban planning. “Big finance” as well as “big property” is up to its crooked eyeballs in this.

        I would like to see Rumplestatskin debate Ian Abley of AudaCity in the UK on this.

        http://www.audacity.org/250-New-Towns-index.htm

        “….We are variously of the view that the British planning system (peculiarly based since 1947 on the national government’s denial of the freedom of freehold land owners to build on their land without permission from the state for ANY CHANGE OF USE) has worked to stop the housing market collapsing in Britain as it has in other countries, like Southern Ireland or the US. In short, that the British government were able to intervene to rescue the finance, insurance and real estate sector (FIRE) in The City, and particularly the members of the Council of Mortgage Lending, BECAUSE the supply of developable land in Britain is contained by the planning law as a denial of freeholder development rights……”

    • Well said flawse. Yes more slander and namecalling. One thing you can be absolutely certain of; when you have a horde of beuracrats trying to make themself look useful you will never be short of new rules and regulations being produced. All for our benefit of course.

      Business wants to be busy doing business. Not spending time debating about and complying with the plethora of rules and regulations present and coming.

      The same can be said of Govt. “Reform” and “progressive” are the catch cry for what can be viewed as Control through introduction of a whole swathe of new rules and regs.

      As a loon, I believe I am a responsible person and should be accountable for my actions. I strongly object to more and more rules governing my life introduced by an incompetent Govt.

      • The problem is, how are people to be held accountable for their actions without some regulation?

        At the moment, it seems that regulation is pretty much the only way whereby some people are held accountable.

        Or do we wait till malefactors are dead and God punishes them?

    • This does not pan out to what we see in practice. Normally there is an ineffectual regulator that is easily manipulated by the big end of town.

      It’s probably at the enforcement point that most of the harm by regulations is done.

      • “Normally there is an ineffectual regulator that is easily manipulated by the big end of town.”

        So, as an example, this then becomes a pointless and meaningless exercise?

        • I can’t argue with you on this – much regulation is actually pointless because it is poorly enforced.

          Pollies do the easy job of making rules and then just head to a nice salmon lunch.

          • There was more funding of regulators and more regulators of “the finance sector” in the USA than at any other time in history, 2000 – 2007; yet so far I have only read of one single person within the regulatory agencies who sounded alarms about systemic risk (and was sacked for it).

            In contrast, any investor doing due diligence could have taken notice of any of THESE people:

            http://investorhome.com/predicted.htm

            http://www.economicgrowth.org.nz/artman/publish/printer_1336.shtml

            There is, unfortunately, such a thing as “capture of regulatory agencies”, and also “moral hazard” from private sector operators assuming that responsibility for due diligence on their part has been removed onto regulators.

  3. “The best way to think about regulation is like rules in sport. Without rules there would be no sport.”

    If you did not go on to talk about the NRL i would have sworn you were a Rugby Union 5 nations ref.

    Yes regs are important – which ones is another issue.

    • Yes PF. There is a whole industry of leaches who make their living out of compliance to “change”. Adding zero value.

        • Spoken like a true sycophant whose living is largely determined by the rule making bodies being spruicked.

        • Oh come on, Peter, you don’t think GSM’s point is worth a +100?

          Decent people should be sickened by the industry of leeches GSM refers to. Trouble is, people who are targeted by them are only a minority of voters at any one time. It is like no-one cares – until the day “they came for ME…..”

          • Phil – I’ve seen too many people lose the shirts off their backs because they resisted the inevitable change.

            If people understood the changes instead of fighting them they would not need an industry of advisers called in at the last moment to rescue them.

            That doesn’t mean that I’m pro-change or pro-regulations, but every man woman and child in every society exists within rules and regulations, so the regulations are real and from time to time they change.

            My post was a comment on the comments rather than a comment on the subject.

  4. Lack of regulation is a decision about regulation – to leave things to the most powerful without asking about how they become powerful.

    Campaigning for reduced regulation, industry self regulation, etc is generally pandering to the interests that control things already.

    • My experience is that more regulation panders to the big monopolies – they actually like it and encourage it. They can afford to deal with it and it acts as a barrier to entry to other competitors.

      • My experience is that that is the fall back position of the powerful vested interest in whatever industry we are talking about

        First deny all need for regulation

        Then capture whatever regulation comes about (assuming some does)

        But generally all powerful interests will bust a gut to ensure that there is not effective regulation which will potentially identify or curtail their interests.

        • Not really not a fallback – part of the regulation management process. Arc up like all hell and then capture the regulation process.

  5. Rockefeller, JP Morgan and Carnegie are probably responsible for what I believe the largest growth period that has been experienced in human history. It took place in a time where little regulation existed.

    There was a cost but without them we would still be riding horses around our farms.

    I know the circumstances and rules won’t exist like it did in the late 1800’s but look at the potential entrepreneurs can achieve in an environment that is not heavily regulated.

    • Hmmm…

      There was a cost but without them we would still be riding horses around our farms

      Well let’s see..

      Rockefeller,

      Oil

      JP Morgan

      Banking

      and Carnegie

      Steel.

      All these were invented prior to these guys existing, and the replcement foe the horse was developed in the highly regulated Bismarckian Germany, practising Rhinish capitalism.

      are probably responsible for what I believe the largest growth period that has been experienced in human history.

      That aclaim belongs tot he keynesian era of 1945 – 1970

      It took place in a time where little regulation existed.

      And because of things like countless deaths, Andrew Carnegie setting Pinkerton’s to massacre his striking workers at Homestead, and the like… that regulation came about.

      Carnegie thus changed dramatically after Homestead, and the real growth, andpart of that made him the 2nd richest person of all time, was when he engaged in philanthropy, when he empowered individuals through knowledge.

      His steel making after that point became world beating when his workers contributed to the reform of his product, as well as having an outstanding Charlie Schwabb guide this.

      He threw out the psychopathic manager/chattel worker model.

      Many competitors, disempowered managers… i.e. competition. Thi is what creates growth, and for this to take place… you need regulation.. the proper regulation.

      Business, by its very defintion is sociopathic. It will always aim for monopoly unless prevented.

      Prevention is regulation.

      • I disagree, looking at history it is best to allow monopolies to be created (which can only happen without regulation) and once the innovation and hard work has gone into creating these monopolies you break them apart like Roosevelt did.

        Removing the chance for companies to become monopolies removes the dream from entrepreneurs to innovate; hence regulation stifles growth, innovation and progress.

        Ask any start-up why they are going into business? Its because they believe their product is superior and can theoretically monpolise the market through their better quality, better way of doing business or offer a better price point.

        • I disagree, looking at history it is best to allow monopolies to be created

          Can you point to any of these monopolies? Which weren’t government owned, that produced world leading product for a sustained period of time?

          The closest I can think of was IBM and possibly General Electric and Microsoft, however the latter two fail on the ‘sustained’ criteria. I am genuinely at a loss for others.

          As far as breaking them up, well all business has learned since Roosevelt, they will capture the executive to prevent that from occuring again.

          As far as ‘aspirational monopoly’… hmm the greatest innovations of the century were produced from totalitarian governments in Germany, or the Soviet Union, or the counter response such as Bletchley park and the Manhattan project.

          Neither had profit motives or a private capture of product hegemony.

          Ask any start-up why they are going into business?

          Well the ones that I know do it because they are really passionate about the product as it probably blurs into hobby, or no longer want to work in a cubicle taking orders.

          Its because they believe their product is superior and can theoretically monpolise the market through their better quality,

          Well I wouldn’t assert that. Most, and it includes my personal aspirations, are due to offering a niche product that most regard as not obtaining monopoly.

          better way of doing business or offer a better price point.

          No one can capture monopoly on price point alone.

          • Rusty, I am of the opinion that “the Robber Barons” have had a raw deal from history. They were each financially successful by bringing products within the price reach of vastly greater numbers of people than before.

            Henry Ford did this with cars. I doubt regulations were needed to prevent him from maintaining a “monopoly”.

            Bill Gates has been somewhat of a modern equivalent. I say “so what”, to people who tell me Gates has “acted anti competitively” – I see no reason as a consumer of Gates’ products myself to do anything other than thank him. I do not give a stuff if he is charging me $300 instead of $200 for something for which he is responsible for bringing the price down from $10,000.

            Same applies to Ford, Rockefeller, Morgan, and Carnegie.

          • Rusty, I am of the opinion that “the Robber Barons” have had a raw deal from history. They were each financially successful by bringing products within the price reach of vastly greater numbers of people than before.

            There is no doubting they reduced costs. I have some respect for Carnegie, and to a lesser extent Rockefeller.. not so much Carnegie.

            But what they were, were front runners of the intense carbon industrial age… what Zuckerberg is today with the internet.

            Whilst serving the product, it harmed a lot of people.

            It’s a rational iteration of human development, and its observable consequences probably helped paved the more humane and prosperous keynesian era.

            Henry Ford did this with cars. I doubt regulations were needed to prevent him from maintaining a “monopoly”.

            Well protctionism did the job. Remmeber. Ford has been losing market share since 1922.

            Bill Gates has been somewhat of a modern equivalent. I say “so what”, to people who tell me Gates has “acted anti competitively” – I see no reason as a consumer of Gates’ products myself to do anything other than thank him. I do not give a stuff if he is charging me $300 instead of $200 for something for which he is responsible for bringing the price down from $10,000.

            I’m not either, but he didn’t endear himself to capture any process to then strip him of power.

            It may be that I.T types are more benign that retailing types, banking types or mining types.

            Same applies to Ford, Rockefeller, Morgan, and Carnegie.

            Well it doesn’t apply because the development of Gates’ product won’t likely se people die, as they did in Pittsburg steel refineries.

            Public sensibilities won’t see Pinkerton’s massacre striking Microsoft employees as they did at homestead.

            Perhaps Windows Vista would have come to market if 5.56mm bullets rained out the front of a Seattle campus if Microsoft employees dare dissent against potnetially harsher working conditions.

            Softer working conditions perhaps exist due to our regulatory response to Homestead.

  6. Warning- I grew up in the USA, and studied government at uni there, so pre-existing bias.
    Regulation and the rule of law is fundamental to the operation of our society/economy. People’s trust in the power of law is why we are not Russia (or China). We rely on the invisible framework so much, and yet do not really recognise the benefits.

    Regulation of the industries and people that run our world is equally important, we have spent the last 5 years watching a demonstration of why strict regs of the financial investment industry are important.

    I think what most people object to is what we see as needlessly complex/invasive regulation. Eg- pool fences. I don’t have kids. If i buy a house with a pool I still have to pay a large chunk of money to certify that the pool fence is childsafe. why? because someone with kids didn’t, and we all now have to do it because the knee jerk reaction to that is to require everyone to have this. Which is slightly counter productive, because some parents then don’t actually concern themselves with the safety of it, because the government has required that it be safe. and a child drowns and kicks off a new round.

    As a society we need to have the discussion about whether the regulation of our personal lives is worht the cost. but we don’t- the new regs are pushed by certain interest groups.

    • Great comment. It’s the rule of law that is most valuable and that we need to guard.

      Tax is another great example – the laws have become so byzantine and complex that there is now no certainty before the law, there is only the power of the actor that is dealing with the regulatory body. New laws and regulations here are detracting from the rule of law.

  7. From my perspective Australian business needs more regulations because there is less and less value generated by the operation of the business and more and more value generated by the regulatory lock in.

    With the baby boomer generation moving on towards retirement we need Aussie companies that are capable of solid returns even in the face of adverse operation conditions, and thats where regulation comes in handy.

    Completely Free markets are brutal places to do business, but IMHO it is not regulation the keeps the bazaar functioning rather it is the desire to continue in business. So in business transactions, in most cases, I dont burn the counter-party, out of self interest, rather than for regulatory compliance reasons. unfortunately no regulation, regardless of how well formulated or intended, can ever cope with the speed of transactions in any well functioning market place.

    I’ve spent a lot of time doing business in Hong Kong, and I’d suggest you can only really understand free markets when you embrace what HK offers.

    • From my perspective Australian business needs more regulations because there is less and less value generated by the operation of the business and more and more value generated by the regulatory lock in.

      As always.. a stellar contribution Bob.

      The regulation we’re after is to enhance tranparency.

      That is why we have proeprty rights, it is why we want prudential regulation, all to boost confidence.

      Eliminate risk to capital, thus freeing up exertion onproduct.

      Australian management is too pathetic to add any value, too many GPS old boys looking to re-engage in 19th class warfare, to treat workers like chattel.

      Our value comes from the ground, locking the transparency in with the right regulation is the best we can manage.

    • If you destroy a free market, you create a black market. If you have 10,000 regulations, you destroy respect for the law.

      Winston Churchill, 3 February 1949.

      • No one is endorsing regulation such as ‘use ONLY black ink to fill out this form’.

        What is being said is when bodies such as financial institutes cry ‘we work best when no one is policing ur behaviour’, or low skill enterprises assert ‘we will always look after our workers’, we should instead pay attentin to history is how and why we have regulated much of this in the first place.

        • No argument from me on that score, RP. Good regulation is good, bad regulation is bad. I happen to think we have a bit too much of the latter at the moment. Tends to clog the arteries of commerce.

  8. I am interested in a debate about it too. Although I have little confidence Labor’s implementation would see it do any good where 99% of us here would agree it’s needed, ie in the reporting of the housing market.

    It’s also needed in all reporting imo, for instance I was watching Q&A last night, and Joyce says 10k businesses have folded since the carbon tax happened, and then the Labor guy says 170k businesses have started, how many of those were just people registering business names with some harebrained idea? How many of the 10k businesses that folded were just crappy businesses or were there because of the ponzi?

    Not that Q&A is journalism, but obviously it would be nice if regulation could enforce proper journalism in general and not allow the cherry picking of “facts”.

  9. Good theme to write about.

    The “free market” is a nonsensical concept. A competitive market makes sense, where private property is defined and enforced by government and all behaviour becomes PRICE REGULATED.

    That’s right folks, a market IS itself a form of regulation.

    Even Peter Schiff and Ron Paul acknowledge that basic laws and enforcement are essential.

    Of course 90% of our laws could be removed with little harm.

    • Rumplestatskin

      It’s nice to agree with you once in a while Claw.

      The only disagreement is that 90% is rather exaggerated. I would say that many regulations/laws could be radically improved, and there would be some that are outdated an ineffective and could be revoked without detriment. But the process of law-making continues, and that process does involve repealing legislation as well an enacting it.

      What puzzles me most is how eager Australians are in general for regulation of personal behaviour/safety, but how much they oppose regulation of business.

      • “What puzzles me most is how eager Australians are in general for regulation of personal behaviour/safety,”

        Rumple, any evidence for this?

        • Rumplestatskin

          Bicycle helmets, drinking in public places, smoking, nudity, pool fences and so on. Not sure if I can find any research about public support for laws surrounding behaviour of this type, but you would probably agree they have strong public support.

          I am not saying all laws in this realm are bad. Just that we seem eager to embrace ANY new regulation that is “doing something” about a safety issue, regardless of the evidence of its effectiveness. As I say, we should debate new regulations on the evidence of their purpose (do we want them), effectiveness (will these rules achieve the stated purpose), their costs (if so, do the expected benefits outweigh costs), enforceability etc.

          This some process of assessment should apply in the business realm. Are they burdensome laws that won’t achieve their desired effect, or are they reasonable straightforward laws that would greatly improve some outcome, with benefits far outweighing the costs.

          Some more examples in this post

          http://www.macrobusiness.com.au/2011/04/i-want-my-nanny-state/

          • That’s right Alex. It just didn’t all fit in a nice headline. When a regulation is proposed that the media embraces without question I will write the opposite headline to make the same point once again – judge new laws on their merits, and on any evidence of their effectiveness.

          • Thanks Rumple.

            “Bicycle helmets, drinking in public places, smoking, nudity, pool fences and so on. Not sure if I can find any research about public support for laws surrounding behaviour of this type, but you would probably agree they have strong public support. ”

            Yes I do agree they do tend to have strong public support. That comes at a cost of course and the items mentioned tend to be more of a “user pays” nature ie if you have no pool then no on cost for the pool fence is incurred. Ditto for bike helmets.

          • Seatbelts!

            A simple regulation with virtually zero cost and zero inconvenience that has saved countless thousands of lives and many millions of dollars in healthcare. And yet, libertarian nut bars still complain about having to wear seatbelts.

          • Rumples, fully in agreement with your principles for regulation. I think another worthwhile endeavour would be for legislation to have periodic review according to those principles built in. All laws to be subject to review every (say) 10 years to assess whether they still meet the original objectives, whether those objectives are still valid and whether the benefits outweigh the costs.

          • Alex I think there has been a number of taskforces created to address that very issue. Unfortunately most got bogged down in paperwork.

          • “Unfortunately most got bogged down in paperwork.”

            Good. If they are bogged down in paperwork reviewing old legislation, they are prevented from introducing as much new legislation.

            Every parliamentary committee should have a remit to cull unnecessary legislation in its area of responsibility.

      • What puzzles me most is how eager Australians are in general for regulation of personal behaviour/safety, but how much they oppose regulation of business.
        We’re getting on towards two decades of socially conservative neo-liberal Governments. Shouldn’t be that puzzling.

        • Maybe Australians perceive the level of regulation of business as “enough already”?

          It is not like we have child sweatshops or anything. Most small business owners would tend to tell you they spend far too much time trying to comply and far too little creating wealth.

          • We have increasing profit share vs diminshing wage share.

            We have the highest rate of unpaid overtime in the world.

            There is cause for workers to say ‘we need oversight to protect us’.

            SME’s biggest problem is the BCA spends more time attacking wages and conditions than endorsing greater punishment for unsavoury businesses, or reducing barriers to entry that big business lobbies to have installed.

  10. If there is one thing that bugs me it is the emotional resonance the anti-regulation loon-bin has with your average punter.

    I blame Clarkson for banging on about the “Nanny State” all the time. I’m pretty sure Top Gear introduced this term to the masses.

    • Mining BoganMEMBER

      Well that’s just great.

      Australian opinion is being guided by a giant English knob.

      • Clarkson is a gift to humanity……. Vive la diversity of opinion and entertainment. We need people who can point out loud and often, in mass-media forums, the latest and absurdest over-reaches of the Nanny State.

  11. People complain about the Nanny state but they are the first one to sue the council when they trip on the pavement.

    Personally i miss crackernight and my mispent youth blowing the beejeezus out of other kids via throwing fireworks at each other.

    • ..and the first to sue the gummint for the flood damage to their uninsured house that is built on a flood plain.

      • There is an interesting angle to this. The regulatory agencies seldom wish to be the “insurer of last resort” as local governments so often are.

        The advocates of regulations seldom consider that the insurance industry would handle “regulation” far better as an adjunct to its insurance operations, than local government handles “insurance” as an adjunct to its regulatory operations.

  12. Rumples I think you’ve cooked the goose with this one.

    Very few people apart from Hard Libertarians and Anarchists advocate No Regulation. Most accept and many even welcome prudent sensible regulation that ensures safety for the consumer and regulation that provides the framework for society to function economically, to protect property rights, provide certainty to invest.

    The real problem is discerning good regulation from bad; minimal regulation to achieve desired aim rather over regulation.

    Bad regulation has many unintended consequences. Regulations required mortgages be written for the poor in the US, intention good – home ownership opportunity for all, outcome bad – Fannie Mae and Freddie Mac, the rest we all know. In Australia bad regulation plays a role in the barriers to new and appropriate housing stock, that inhibit companies from employing more staff. The CEO of Cochlear complains of the regulatory burden a company like his faces. He gives and example of a product that secured all relevant approvals in the US in a matter of months, but some two years later had not secured similar approvals here!

    When the business community complains about regulations it is a furphy to intimate that business wants no regulation. Business wants efficient, non-duplicated (State/Federal), cost effective regulation. Seems a fair call to me.

    http://www.macrobusiness.com.au/2011/11/bad-regulation/

    • I actually think we mostly agree. But once you accept that some regulation is necessary you now have to justify where to draw the line, and why.

      You say –

      “When the business community complains about regulations it is a furphy to intimate that business wants no regulation. Business wants efficient, non-duplicated (State/Federal), cost effective regulation. Seems a fair call to me”

      I would say business want whatever regulations make them the most money, even if they are costly, since they may be more costly to competitors. As others have noted, regulatory capture is very real.

      And now to my point, exactly what is efficient, non-duplicated regulation? In my sport analogy I mentioned video referees (or umpires). Is that duplication? Inefficient? Are the benefits worth the costs?

      This is how we should have the debate. All I have seen from the media about the new regulations is “he said she said” nonsense. No facts. No descriptions of the types of media regulations in other countries and their costs and benefits.

      • “This is how we should have the debate. All I have seen from the media about the new regulations is “he said she said” nonsense. No facts. No descriptions of the types of media regulations in other countries and their costs and benefits.”

        There is a deficit of trust and credibility in this debate. Our Govt has some problems in those areas.

      • On the media issue the haste with which Conroy has foisted this on Parliament limits debate on the points you raise. Indeed, Conroy has been salivating at the bit for years now with the prospect of media control legislation, at the very least the data you seek should have been provided as background to the proposal.

        Peter Van Onselen’s Sky programme did a pretty good effort on the weekend highlighting the many flaws with the proposal, one or two reasonable points and a robust discussion from variety of perspectives.

        Frankly there are more than likely a lot of costs and very few benefits. Even Oakeshott has warned that should the legislation be passed one of the three newspapers in his electorate would fold the next day. Similar difficulties exist for a range of regional news services and particularly for the Western Australian news environment. One thing you can guarantee from that is a reduction in diversity!!

        • Cui bono? In the case of Conroy’s media legislation, the primary beneficiary seems to be the government of the day. I see no hint of the emphasis on protecting individuals from the abuse of press power that is the focus of the UK legislation.

          This was always about punishing the Murdoch press, which Conroy views as the enemy. He has a short memory – most of the Murdoch papers backed Labor in 2007.

      • “In my sport analogy I mentioned video referees (or umpires). Is that duplication? Inefficient? Are the benefits worth the costs?”

        If big money is depending on the outcome, yes. If it’s the under 11’s, no.

        I guess you could apply similar principles in other areas of regulation.

      • “I would say business want whatever regulations make them the most money, even if they are costly, since they may be more costly to competitors.”

        I wonder why the basest of motivations is continuously applied to ALL businesses in here? Everyone in here is an expert on business motivation yet I’m betting you can count on one hand anyone who owns and runs a business in here.
        What makes everyone who has never run a business an instant expert on it all?

        BTW Rousseau’s “The Social Contract” was part of the reading of my youthful idealistic search for whatever it was. The essential Social contract a difficult proposition to argue with. However most regulation now does not have the idealised motivations you fellows give it. It’s simply dressed up in those clothes.

        I think some of the generalised labels being thrown about in here need to be seriously examined by those using them.

        • “….I wonder why the basest of motivations is continuously applied to ALL businesses in here?….”

          I am constantly protesting that the wealthy men who fund activism for libertarianism are possibly the LEAST self-interested, not the MOST, as they are so often portrayed to be. Especially if they arrived in the USA as penniless immigrants, “made it big”, and genuinely want to preserve the same conditions of freedom for others to do the same.

          It IS possible that this can be someone’s motivation.

          • Harry Triguboff and Frank Lowy appears to be such migrants, yet are quite keen on restricting competitive development.

        • You don’t have to run a business to be a stakeholder in the civilisation that upholds and protects the environment a business operates in.

          Your stance is akin to asking a reigning monarch what the best form of government is.

    • Hi 3d1k,
      I’m not sure if I should include myself in the “Hard Libertarians or Anarchists” camps, But I dont really see much need for regulation in the Business to Business environment.

      Protecting the end-consumer from fly-by-night businesses is a different matter because of the inherent asymmetry in the business/end-consumer relationship. On this point I’d argue for simple but enforceable fraud laws with teeth and reach beyond the company limited liability curtain in cases of proven fraud.

      • China-Bob – in the Australian landscape any question of freeing regulation business to business is a non-starter. And as you’ve set up shop in the US I guess you know this only too well.

  13. The Householder

    Very interesting post, Rumple.

    In a previous existence I worked for a government department that dealt with a lot of regulation. In theory, all regulations must be created to solve a clearly-defined problem, go through a consideration of benefits vs cost of regulation, and non-regulatory options must be considered. In practice, this often doesn’t happen. Ministers get a bee in their bonnet about something and annouce regulation on the fly, leaving their long-suffering public servants to come up with some documentation to support it after the fact; or an analysis of proposed regulation shows that it’s a waste of time and effort, and it goes through anyway.

    Another problem that aj referred to is quite prevalent: some problems that governments try to solve with new regulation could be easily solved with better enforcement of existing regulation.

    • It is a rare day indeed when any article from The Conversation opposes Gillard Government action, and a rarer day still when journalism academics don’t hanker after more media legislation.

      If the Bill is as benign as Hirst asserts, then obviously no need for it in the first place.

      • Rumplestatskin

        That’s what he said

        “Given the limited changes that these bills give effect to, it is valid to wonder why they have even been drafted in the first place.”

        Given my preference for simplicity, and the expert view that the Bill creates little practical change, one can then start thinking of the cost/benefit trade-off, where the benefit side is near zero. We also then have to consider what the motivations really are. Is it simply a benign updating and merging of a legislation? Or an a incremental strategy for providing more power to regulate media content?

        But did I hear the media say that the Bill is mostly bit of fluff? Not at all. It is a threat to freedom of speech!

        The absolutely bizarre media coverage of this legislation has provided evidence that perhaps some stronger regulatory oversight is needed!

        • I disagree with your final paragraph.

          News Corp and Fairfax, along with smaller operators, united in opposition – tells you something.

          It is because we have a free press that a vigorous campaign against proposals which those with skin in the game view as detrimental to their interests are able to voice their opposition.

          Your commendation for stronger regulatory oversight carries ominous portent and is not be entertained. That is the first step on the proverbial slippery slope to government control of free speech in the media. Where might this slippery slope lead…the Public Interest Advocate determines on political grounds the suitability or otherwise of media ownership; on the presentation of opinion not favourable to government; on the extension of control into the digital realm, including the myriad economic and political blogs; the use of unflattering photographic images outlawed; any transgression pursued through all legal avenues…comment unsupportive of the government of the day prohibited.

          Don’t think it can’t happen – media oppression and/or control by the State at various times throughout twentieth century confirms it can.

          And the first moves in that direction passed by unnoticed.

          It is because the Bill is not a piece of fluff that has been most fiercely opposed. As an operator in the media sphere Macrobusiness would do well to consider same.

          • I recall a conservative in the USA suggesting once that conservatives should merely turn the power of the “watchdog” agencies created by leftwing “progressives” back in the other direction when they get back in government, to make the leftwing progressives see the advantage of leaving good enough alone.

            If a Democratic Administration shut down Rush Limbaugh and Glen Beck, the next Republican one could shut down Rachel Maddow and Bill Maher, for example.

        • “The absolutely bizarre media coverage of this legislation has provided evidence that perhaps some stronger regulatory oversight is needed!”

          Not at all. This is exactly the strategy that Conroy himself is endorsing.

          For God’s sake, if you don’t like or agree with it then DON’T BLOODY WELL READ IT!

          • DrBob127MEMBER

            But to find out if you like it (or agree with it), don’t you have to read it first?