There could be a technological fix for this. We could have house designs that leave the construction details exposed so that anyone who knew how could see them. If a house is so badly built that no one wants to buy it, then the owner can fix it up or burn it down, his choice. But we have not developed that construction technology.

Similarly with traffic regulations. In my observation the traffic rules mostly don’t work because traffic police aren’t willing to use much judgement about reckless driving. If they see you doing something debatable they let it go. They go after specific broken rules—speeding, drunk driving, running red lights, etc. Things they can easily measure. And then the result is punitive and not educational. They collect money, and they try to get drivers to be afraid of losing money. They don’t help train new habits.

A technological fix might involve letting traffic police (or anyone else) take videos of the traffic on the road, and publish examples of bad driving. People who get caught driving badly could go into training centers and get their videos analyzed and explained, and look at videos of bad accidents that happened when other people did the same things, and drive simulations where they’d get the chance to face dangerous situations and respond well. We could release the simulations so that kids could practice safe driving before they actually get onto the streets. But we haven’t started on that.

The natural approach for americans when we see people do things we don’t like, is to tell them they have to quit and then try to make them quit. Sometimes there might be alternatives that would work better. But often regulation works pretty well. If you figure a patrol car costs $100,000 a year including maintenance etc, and policemen to drive the thing cost $80,000 a year each, they definitely save the economy money if they prevent five serious accidents a year. Really they save money at three serious accidents. They don’t have to do all that well before they do more good than harm.

I also note that a danger of regulations is that many business people are aware that a regulation is a good way of creating a monopoly, or some other version of the “Send Tracy W chocolate” intervention, but more expensive and with the self-interest slightly more disguised.

Arthur: It is more precise to summarise my views as that if we don’t have a decent reason to think that a regulation will have benefits that exceed the costs, it is better to have no regulation at all.
I think on the whole you underestimate the advantages of not knowing things – I never could figure out what advantages private-public partnerships, or PPPs, were meant to offer over the government just building it directly, and judging by recent news in the UK, that was because they don’t. After that experience, I’m not going to be dazzled by financial regulations that, as you point out, are not even specified.
Thank you for the suggestion about US monetary history, I will have a look for one of those books.

And don’t hold everyone else accountable for your ignorance. Stop asking for people to spoonfeed you evidence of successful regulation when it is all over the bloody place, if only you bothered to find out. Read any book on US monetary history and you’ll realise that currency crises occurred much less frequently after the right to print money was regulated. And ditto for that bullshit talking point about there being no evidence that financial regulation will work. The specifics aren’t even out yet, of course there will be no evidence! Evidence of what? Evidence for regulation sub specie aeternitatis?

You know nothing, get out.

Seriously, though, I think the world will be a better place if people stopped treating themselves like public policy experts just because they’ve read Reason Magazine for 6 months. What happened to analysing the facts of the case, looking at the mechanisms at work, and then checking whether there are any specific areas where information asymmetries can be resolved and incentives realigned?

Or do these self styled experts prefer to make their decisions according to irrelevant semi-detached anecdotes about traffic signs?

Sure. And sometimes businessmen, despite their careful best efforts, lose money.

In each case the proper response is to look for a better approach, and look for ways to try it out without major risk, and then maybe attempt a smooth transition.

It can take a year or more to make a significant change in a product line. But unless there are long-term contracts the customers can change their minds in a day. They are inside your OODA loop. You have to hope you can predict them, because you can’t possibly react as fast as they can.

Similarly, regulators have to react slower than the regulated. If regulations change faster than the regulated can keep up they have a valid complaint. So the regulations have to be designed so that the regulated have evolutionarily stable responses that are acceptable, because if there are loopholes that let them get something for nothing some of them will exploit those strategies.

There’s nothing special about that. Any time human beings do things they might make mistakes. (This is the fundamental argument for nuclear disarmament. We have gone 60 years with nukes in the hands of governments, without a single major mistake so far! How long do we want to depend on that lucky streak to last?) We know that the result of free enterprise is inevitably monopoly whenever entry barriers can be constructed, so that gives us a baseline. When the likely cost due to possibly-mistaken regulation is less than the cost of rampant monopoly, we are better off with regulation.

The surprising evidence that accidents can be reduced by removing traffic signs and signals is one example.

Why not bring up the Laffer curve, which is analogous? Just as there is some amount of taxation which is too much, there will be some amount of traffic signs which will be too much. You might find examples of too much.

Also, since one out of every twenty published studies with p<0.05 is actually completely bogus and got that result by sheer chance, your traffic signal study may be one of the bogus ones. No telling how many similar studies failed to get a statistically significant result and were declared unpublishable.

I am rather surprised that you regard finding an alternative source of data, in response to criticism of the original source, a continuation of defending the original source of data.

I am not sure what you mean by “percentage of US economic growth dedicated to institutions that lower transaction costs” – did you mean to write “percentage of US economic growth caused by institutions that lower transaction costs?” Anyway, much though I admire some aspects of the USA, I do not think that one data point is enough to establish whether advanced countries are heavily regulated in comparison to ones in the Global South. For a start, wouldn’t it be useful to include a country in the Global South as a data point? Beyond this I thought fairly obvious point, variation between countries is vast, eg I would guess that the USA is probably more regulated than Somalia and less regulated than Zimbabwae or North Korea, and I would guess that a city state like Singapore is different again to the USA. (I say guess because I don’t have any comprehensive data apart from what I have presented before). Before I can conclude that advanced countries are more regulated than less-advanced countries I am afraid that I need to see something that covers either nearly all countries in both categories, or some sub-sets that don’t exclude countries on some basis that is likely to bias the conclusion. You are welcome to attribute my skepticism here to my standards of argument.

And if your only substantial point is that ‘too much’ regulation is a bad thing, then you’re battling a straw man.
Luckily for me, I do have another substantial point – that sometimes regulators, even well-funded regulators, make ineffective rules. The surprising evidence that accidents can be reduced by removing traffic signs and signals is one example. And regulation of traffic strikes me as an easier job than regulating financial markets – for a start you can do experiments, either in simulations, or in small parts of real life. Then sadly traffic accidents come along more frequently than fianancial crises (I say sadly because of the associated road fatalities), so the feedback loop is shorter. Your original post struck me as omitting the important question of whether the listed regulations and bodies would actually avoid or even reduce the frequency of future financial crises.

No. Zero out of pocket is not the global standard either.

If the US government makes it too expensive for US companies to produce, then of course new entrants will adopt a different model.

But the U.S. government and the U.S. health system have clearly not made it too expensive to produce in the U.S. as all the Asian and European auto plants here demonstrate clearly. And these companies haven’t adopted a ‘new model’. They provide health insurance to employees along the same lines as the vast majority of companies here do.

I don’t see why you should blame the UAW for this when the UAW is just protecting its workers from the harsh conditions of the US healthcare industry.

When it comes down it it, having richer benefits and lower (or no) deductibles and co-pays is just another form of compensation. In the end, its about money and the form doesn’t really matter. What I do blame the UAW for is this:

1) Monopoly rent seeking. The UAW monopolized auto production labor and demanded (and received) monopoly rents. This did NOT, in general, harm the profits of the Detroit automakers for many decades. Who it DID harm were the millions of Americans who overpaid for their cars.

2) Short-sightedness. Once the non-union plants were in place and it was obvious UAW organizing was not going to succeed, the UAW should have tempered its demands to allow Detroit to match the costs of Toyota, Honda, et al in the U.S. Yes, it would have been tough to do, but the alternative was…well, what we’re seeing now—a decline in UAW membership that has reached ~70% (and still dropping), and the companies that employ the UAW possibly headed for bankruptcy.

Freedom from speech.

Perhaps a total word count would be fairer though perhaps harder to manage on this board.