Subverting the urge to regulate

Two golf clubs on the Costa Geriatrica north of London play by different rules. Club A pours out regulations and spreads little instructional notices around the course. The new health and safety leaflet is only picked up because it looks like a score card. No one ever reads it. The club even specifies the socks gentlemen are allowed to wear. Club B has none of that. If their Captain suggests a new rule, he is quietly taken to one side and urged to lie down in a dark room until the urge passes. No prizes for guessing which club is the more harmonious.

Brussels and Whitehall both trumpet the need for deregulation and then do the opposite. Last week’s Research Note “EUtopian Regulation” discusses whether total regulation could be reduced by competition between the three factories, global, EU, and member states, and concludes that competition might decrease or increase total regulation. It is not the mechanism that matters, i.e. who regulates, but the will to deregulate. We need to take a hard look at the fundamental causes of the urge to regulate and then consider how the vice can be cured.

Yes, it is a vice. For example, complaints about the NHS have grown proportionately to the increase in its “management”, while malpractice in the City has grown in proportion to the number of regulators. I’m not suggesting that correlation is causality, merely that rule-making has improved satisfaction neither in the NHS nor in the banks, nor in golf clubs.

The drivers of regulation are at least threefold:

Cause One is the rise of the lobby group. Unions, NGOs and save-the-worlders all claim to represent ordinary people in pressing for additional regulations. Alongside all those telling government how to spend other people’s money, are those telling government to stop us doing whatever we happen to be doing. In a democracy, we should be free to express our opinions but that is not the same as getting the law changed to remove our freedoms. We should be governed by those we elect, not by those who think they know better. They should be taxed, for a start, on their gross income in order to compensate society for the amount of governmental time they waste.

Cause Two is the excessive number of levels of law-making and law-makers at each level. Every single one of them, like the Captain of a golf club, wants to leave his or her mark on society, to be famous for some Anti-X Act. We even hand out CBEs to these controllistas. Much better would be to reserve medals and pensions for those civil servants who can show that they have simplified and improved our lives. Performance should be measured by outcomes, not activity, i.e. the net reduction of regulation they have achieved.

Cause Three is the excessive number of supposedly independent regulators who have become arms of government. Margaret Thatcher introduced regulators to provide proxy-markets where competition did not exist, e.g. telecoms. The idea was to benefit consumers. Some still push prices down from time to time but too many are now working against consumers, e.g. imposing “compliance” costs, in order to carry out the wishes of government. As government in other colours, we should insist that regulators are funded not by levies on the private sector, but transparently by the government they represent. The squeeze on public expenditure to balance the books would then help bring sanity to regulation.

How can we subvert the urge to regulate? These three solutions should help but we need a much bigger change in the establishment mindset than that. It happened when nationalisation was found to fail and it will happen one day when we recognise the dangers to innovation, entrepreneurship and competition created by these factories of regulation. Bring it on.

Five reasons to hate Sunday trading laws

  1. They’re inconsistent and arbitrary. If you’re a waiter, factory worker, nurse, construction worker, taxi driver, bus driver, security guard, journalist or even a retail worker at a small shop you can and often do work at any time on Sundays. The places that have to close at 6pm are ‘big’ shops. Bizarrely, ‘big’ is defined as being 281 square metres or bigger. That doesn’t make much sense and any argument that retail workers are ‘protected’ by Sunday trading laws would also imply that all those other workers are being exploited.
  2. Life isn’t nine-to-five, Monday-to-Friday, any more. Not that it ever was, really. Sunday trading laws inconvenience people who haven’t had time to buy their groceries during the rest of the week, and force them to rely on expensive local shops instead of cheaper supermarkets with more choice. For example, I like to do my shopping at my local Lidl. If I spend Sunday afternoon in the park with my friends instead of doing my shopping, and I need to buy something for that evening’s dinner, I have to pay twice the price for a smaller range of inferior products at the Tesco Express down the road instead. That’s annoying. If I had a family to feed, it would be expensive.
  3. The high street – and probably even small shops – will be better off. When Sunday trading laws were suspended during the Olympics, sales outside of London increased by 6.2%. They only increased by 2.8% inside London, probably because people were warned off the crowds. That’s good for smaller retailers too – no self-respecting retailer wants to exist just because her competitors are banned from trading, and more people out shopping means more customers to go round for everyone. They don’t seem to have suffered during the Olympics suspension. If you’re worried about online retailers destroying the high street, this is one way to level the playing field.
  4. Workers will have more hours available. It’s easy to talk about ‘protecting’ workers by stopping them from working on Sundays. But what about the ones that want to work then? Employers often end up having to pay workers more to work on Sundays – if you don’t think Sundays are sacred and want to earn a little more cash, the end of Sunday trading restrictions is good news for you. (Back when I was a teenage McDonald’s crew member, Sunday hours were a godsend.)
  5. Lots of people actually like shopping. It’s very common to enjoy trips to the high street or the shopping centre with some friends. If you are interested in food, big grocery stores like Waitrose, Asda and Whole Foods can be interesting places to explore. Browsing clothes shops and buying new things can be really fun. I’ve seen lots of people sneer at this on Twitter, and no doubt it’s terribly gauche, but government shouldn’t be in the business of forcing snobs’ tastes on the rest of us. Some of us actually like consumerism.

There’re times to obey the rules and there are times to strangle the last politician with the intestines of the last bureaucrat

Presented without any further comment than that headline:

Charles Murray is quick to add that he is perfectly fine with a wide range of sensible regulations, and that only a narrow subset of regulations ought to be disobeyed, offering this rule of thumb: if the matter in question were to become a news story in the mass media, the vast majority of Americans would side with the rule-breaker. He offered the example of a bartender with whom he corresponded––she was fined $3,000 for failing to card a customer, and while he granted the legitimacy of requiring alcohol sellers to check the ages of customers, he felt it was unfair to fine the bartender in this particular situation as the customer was her father.

But why is private property not allowed to leave the country, even if it is a Cezanne?

We find this all most odd:

An important Cézanne landscape view of the Mediterranean, which has been on public view in Cambridge for nearly 30 years, is in danger of leaving the UK unless more than £13.5m can be raised.

The British government on Monday placed a temporary export bar on Cézanne’s Vue sur L’Estaque et le Château d’If.

Purchased by the industrialist Samuel Courtauld in 1936 and passed down through his family, it was on long-term loan to the Fitzwilliam Museum from 1985 until last year when a decision was taken to sell it.

What justification is there for whoever owns this painting now not being allowed to take their private property where they wish?

After all, consider the peregrinations of the painting so far:

Provenance
Ambroise Vollard, Paris, by whom acquired directly from the artist.
Baron Denys Cochin, Paris, by 1904.
Galerie Durand-Ruel, Paris, by whom acquired on 12 May 1905.
Paul Cassirer, Berlin, by whom acquired on 21 September 1905.
Galerie Bernheim-Jeune, Paris, and Jos Hessel, Paris, by whom acquired on 2 April 1909.
Jos Hessel, Paris, by whom acquired on 12 July 1910.
Galerie Bernheim-Jeune, Paris, by whom acquired on 12 October 1912.
Walther Halvorsen, Oslo, by whom acquired on 21 April 1915.
Erich Goeritz, Luxembourg, by 1936.
Galerie Thannhauser, Lucerne, by whom acquired from the above on 9 July 1936.
Wildenstein Galleries, Paris & London, by whom acquired from the above on 11 July 1936.
Samuel Courtauld, London, by whom acquired from the above in November 1936, and thence by succession to the current owners.

What is there in all that which justifies the full majesty of the law being applied to keeping it in the UK?

Our general reading of such export bans is that they are a scam perpetrated upon the general public. Some small number of influential people rather like looking at the occasional French painting. But they’d prefer not to have to pay for their pleasures. Thus they manipulate the law so as to insist that their desires are catered to.

It’s time for us to change this system: ban export bans now!

Sensible regulation

Regulation involves compliance costs that large businesses can afford more readily than can small firms.  Indeed, big business sometimes colludes with government and bureaucracy to have regulations that make market entry difficult for start-up and small competitors.

Regulation should be cost-effective, doing as little economic damage as possible, limiting competition or increasing prices as little as it can while achieving its objectives.  Above every regulator’s desk should be inscribed the words: “Competition is the best regulator,” for it is the ability of the customer to go elsewhere that compels firms to keep their quality high and their prices low.

Above all, regulation should be sensible.  Those who have no experience of business are unlikely to produce sensible regulations unless they consult with those who have.  Part of the problem is that things change.  New products and processes render old regulations irrelevant or inappropriate, and legislators struggle to add extra pages of detail to keep up with events.  The pile of regulatory requirements grows higher.

One possible solution might be to draw on the tradition of English Common Law, relying on precedent rather than on closely-written requirements.  For example, many pages of detail set out what toilet facilities employers have to provide for employees.  A general requirement that employers should have to provide ‘decent toilet facilities’ immediately begs the question of “What counts as decent?”  It could be determined by a series of decisions by juries and tribunals, so that an understanding of what was expected would soon emerge.

The advantage of this method is that it would incorporate the common sense of those sitting in judgement, and could adapt in response to changing times, just as Common Law does. 

This is not the Continental tradition of statute law.  Law there tends to be made by legislators and bureaucrats rather than by juries.  The rules are written down in advance and in detail, rather than emerging from a series of decisions dealing with circumstances.  EU regulations are made in this way, and there is little prospect of them changing.  

Mr Cameron might make part of his EU negotiating stance that the 95% of UK firms which do not export to the EU should not be subject to EU regulations.  A common law system of regulation could then be applied to them, making regulation more sympathetic and more flexible, lowering compliance costs and making it easier for new firms to start up.  It would give a significant boost to the economy.