Comment by salawat | Hacker News Reader

Comment by salawat | Hacker News Reader

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The solution is clear.

Regulatory bodies need to take into consideration size, age, and frequency of violation by the regulated in terms of exacting punishment on new entrants.

For instance; BigFin fintech company gets caught violating Anti-Money Laundering regulations. Big fine.

SmallFin fintech gets caught: slap on the wrist, thou shalt make a remediation plan, and here are the milestones you have to meet.

SmallFin continues doing business, but is on the regulators radar.

SmallFin caught again? Fine.

Now. Let's say SmallFin dissolves, but the key players move and incorporate as YetAnotherSmallFin (different Corp, mostly same people). Get caught? Regulators should look at the people who have been dinged before, and should know better, and regulation should be less forgiving based on that.

The fact is, a great deal gets hidden under "the Corporate Veil" that probably shouldn't be so easily divested from by those looking to abuse the system.

A regulator should by and large be a constructive guiding hand; not just ssmern as something to be worked around in the process of finding new and interesting ways to do shady things.

The catch here is you need to be able to attract high quality people to run the regulator, and I really have no solution for that.

In reality:

Little company Uber flaunt the law until it becomes big company Uber that can afford its own lobbiests.

Hate to nitpick (that's a lie), but the word is flout.

I think Uber is interesting in that they actually did offer a superior technological solution to a social problem (driver and rider safety and trust), which is usually doesn't work since social problems are messy. I think this is why their "ask for forgiveness, not permission" strategy paid off in most markets - the people wanted them to win.

The solution to excessive regulation is less regulation, not more. These things tend to backfire.

That may be true (I tend to agree) but it is just as hard to implement. It's not a magic bullet.

The fix for bad regulation to poor effect is good regulation to beneficial effect.

"Excessive" and "less" are not synonyms for "bad" and "good".

This isn't about quantity, it's about quality.

Yes, but also no.

One of the big problems is that regulations are immortal. They get passed and never repealed. This causes two problems. First, they don't go away even if they're bad. Second, they accumulate. That's especially problematic for bad regulations, but it's even a problem for good regulations. If you have a boat with five tons of idle carrying capacity and you decree that it carry four tons of the king's freight, all is well and there is a net benefit produced. But if you decree that it carry eight tons of the king's freight, it sinks.

So if you want to add new rules, you need to find some old ones to take back out. And you should be uniquely careful what you add to begin with, because every one has an opportunity cost, and even bad rules are sticky.

We rarely net delete/discard shitty software either. But we could. There's no fundamental reason.

Shitty software can be ignored without being deleted. Hard to ignore shitty laws.

There is such a thing as sunset provisions, though they are not applied as regularly as one might hope. Laws are not of necessity eternal.

https://en.wikipedia.org/wiki/Sunset_provision

Though yes, that is a legitimate issue.

That might actually help if it was the default, e.g. you need a large supermajority or unanimity to pass a law that lasts more than five years.

Right. An alternative might be retroactive reviews or jubilees.

Other forms of legislative garbage collection carry high costs and side effects.

I think everyone understands that regulations are written by the highest bidder. If not at first, then over time.

Some people think that can be fixed, get money out of politics and then good regulation can exist in the long run. Others do not think that's possible, so it's better to remove the power from government altogether, because over time it will always be bought.

I don't think you're describing a solution.

Saying that if something is bad, you should try to make it good is just restating the problem.

My goal wasn't to point out a specific regulatory solution.

My goal was to highlight an exceedingly tired and bogus argument.

Thank you for that, I have said exactly the same thing many times.

The sharp dividing line here is between those (A) who think "we just need to get the regulations right the next time", and those (B) who think that is inherently impossible, based on Public Choice theory, experience and/or general cynicism.

To us from school (B), the school (A) thoughts are hopelessly naive, but it's impossible to convince anyone of our wisdom who hasn't found it on their own, and it just comes across as infuriating "you'll understand when you're older" condescension.

And so life goes on :)

The solution to (toothless, deliberately ineffective) regulation (built by lobbying and incumbents) is not less regulation, it's regulation not constructed by vested interests.

Deregulation of the financial sector has caused several major financial crashes.

That's not a solution, it's just a contrapostive.

The solution is to change/improve the system that is creating the regulations. There will almost definitely be new regulations involved in doing this.

I don't see how a system that creates excessive regulation can be expected to constructively par down that regulation without significant changes to that system.

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