When regulations add value
Note : This article is the 4th in a series on over-legislating a a path that more and more nation-states are taking in an attempt to emasculate the disruptions that threaten them.
Here is the first 3 articles in the series :
Of course, I'm not claiming in this series that no regulation ever brings value to humanity.
For example:
The addition of fluoride to tap water in the United States, then in 25 countries, led to a significant drop in caries in the population of these countries1 .
Mandatory seatbelt use has saved millions of lives, as the risk of death or serious injury is halved in the event of an accident2 .
The ban on smoking in public places reduced acute myocardial infarctions by 17%3 , the incidence of other cardiovascular diseases and mortality from smoking-related diseases4 .
The worldwide regulation on the elimination of CFCs (chlorofluorocarbons) from aerosols and refrigerants introduced in 1987 has halted the destruction of the ozone layer5 , essential for protecting the Earth from harmful ultraviolet radiation, and is also repairing it: it is expected to return to its pre-1980 state by the middle of this century.
But it's not as simple as that:
Added fluoride can cause dental fluorosis in children6 , a benign but unsightly discoloration of the teeth.
And Americans had already decided to stop buying CFC-containing aerosols en masse, leading to a 50% reduction in sales of products containing them before the regulation banning them was in place7.
When you dig deeper, you sometimes find that even beneficial regulations aren't all that "magical". However, it's certain that the market doesn't take all externalities into account, and that some excellent regulations are needed.
"A little" and "excellent": that's the key. In this respect, regulations are similar to cholesterol: our body needs it, of the best possible quality and in reasonable doses, while too much bad cholesterol makes the body sick and can lead to death.
However, in an attempt to resist Internet disruptions, nation-states will be precisely tempted to over-regulate, fulfilling the 4th principle, perhaps not as much as banning technologies, but stifling them so much that it will slow down innovation and the economy, to the advantage of countries that don't.
Coming soon
In the next article, we'll be looking at how states can try to organize themselves into cartels to combat the disruptions they suffer at the hands of Internet.
Stay tuned ! In the meantime, feel free to follow Disruptive Horizons on Twitter, and join the tribe of Intelligent Rebels by subscribing to the newsletter :
And here are the first 4 articles of this series :
"Water fluoridation for the prevention of dental caries", Cochrane, 2015
Seat Belts: Get the Facts, Centers for Disease Control and Prevention
David G. Meyers, "Cardiovascular Effect of Bans on Smoking in Public Places: A Systematic Review and Meta-Analysis", Journal of the American College of Cardiology, 2009
Kate Frazer, "Legislative smoking bans for reducing harms from secondhand smoke exposure, smoking prevalence and tobacco consumption," Cochrane, 2016
P. A. Newman, "What would have happened to the ozone layer if chlorofluorocarbons (CFCs) had not been regulated?", European Geosciences Union, 2009
May CM Wong, "Topical fluoride as a cause of dental fluorosis in children", Cochrane, 2010
Sheldon Ungar, "Knowledge, Ignorance and the Popular Culture: Climate Change Versus the Ozone Hole", University of Toronto, 2000
Even seatbelt mandates may not work, see the famed Peltzman Effect: https://thedecisionlab.com/reference-guide/psychology/the-peltzman-effect
The story shouldn't be misunderstood to say we know seatbelt mandates are on net bad, but to notice there are "offsetting effects" against the benefit of the regulation, e.g people drive more recklessly, at greater harm to themselves AND others.
The problem isn't the good or bad of any individual regulation (even though most individual regulations are bad), it's the incentives that create 1) more bad than good regulations, 2) bad regulations don't get updated in light of insights on cost-benefit. You're stuck with bad ones.
Government/legislators have poor incentives to be good regulators - there can be good regulation delivered by through market incentives, for the same reasons that market incentives perform better in any other area like cars, food, entertainment etc.