Why do rich parents give birth to rich kids?

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The kids and grandkids of the wealthy tend to be wealthy. Well: that's not quite true. Kids of American football players and lottery winners and those who get wealthy through luck often squander their inheritance. And while giving your kids money makes them richer, it doesn't tend to make their kids (i.e. your grandkids) richer.

This little paradox has driven researchers to wonder why wealth is persistent, if it's not purely handing down the cash. Traditionally, scholars have divided into two camps: nature and nurture.

Families stay rich because they have prudent genes that stop their ancestors from squandering their fortunes, and because they have genes that make them good at earning more money. Or families stay rich because they give their kids skills through schooling, speaking lots of words at home, having books around for them to read, pushing them into high prestige careers, and linking them up with connections.

Lots of research points in the direction of genetics, finding that genetics explains about 50% of every important human trait, while the other 50% is largely down to 'nonshared environment'—rather than 'shared environment' (i.e. family upbringing).

For example, the gold standard meta-analysis, recently published in Nature Genetics, looked at 17,804 traits over 2,784 publications studying 14,558,903 twin pairs, and found that the average genetic contribution to a trait was 49%.

This extends to complex facts about a person, like lifetime income and wealth. For example, among Swedish twins wealth was found to be about 20-40% heritable (i.e. down to genetic factors), while 20-year average income in men was about 60% heritable.

But comparing identical and non-identical twins isn't the only valid study design for dissecting the differing impacts of nurture and nature (though it is valid). You can also look at twins reared apart and you can look what happens when a child is adopted into another family—do they end up looking like their biological or adoptive parents?

We know that adoption can temporarily boost IQ but other evidence suggests this may be driven by non-randomness in the study design or peter out once the child leaves the family environment. What's more the gains might boost measured IQ but not intelligence.

But a new study suggests that adoptive parents are the main drivers of children's wealth, with biological parents unimportant by comparison. However, this new study finds that the result is not through transmitting human capital down the line or even through children earning higher income, but simply through transferring cash or learned prudence—i.e. kids investing better.

The paper (pdf), from Sandra E. Black, Paul J. Devereux, Petter Lundborg, Kaveh Majlesi, looks at a sample of 2,519 Swedish adoptees born between 1950 and 1970, and finds that the rank of a child's wealth is correlated 0.23 with their adoptive parents' wealth (and 0.65 when bequests are taken into account). By contrast it correlates only 0.12 with the rank of their biological parents. The results for levels of wealth, rather than ranks in the wealth distribution, are very similar.

So does this tell us that the rich buy private school, tutor their kids, make them learn violin, and help them with connections and so on? No! The authors rule out this possibility, and suggest only two possible options: financial gifts (which they cannot track) and learned prudence (which they provide evidence for in another paper).

(Note, the authors tell us that income is more biological than adoptive. Human capital is not being driven by upbringing. We might reasonably guess that a couple of generations down the line nature is driving wealth more than nurture.)

I work for a think tank so I think about policy conclusions and I think this fits pretty nicely with Adam Smith Institute ideas. What can you do to raise people's wealth? None of the things that pushy parents do seem to help their kids be rich except two: give them cash, and teach them to save more and save better.

The latter seems a bit more politically practicable, but the problem is that most financial education schemes seem to have no impact. Maybe the only way you can teach this stuff is something as long-lasting and comprehensive as being adopted. (I'm open to being wrong here—it would be great if there were doable financial literacy interventions that had lasting impacts.)

But we can give people cash. And funnily enough that is ASI house policy.

A certain disconnect from reality here

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The idea that prisoners should be banned from smoking in their cells has reared its ugly head again. The true reason that such a ban is not in place is that, for the time of their sentence, their cell is their home. We do not ban people smoking in their own homes: we therefore do not ban prisoners smoking in their cells. We also do not want to give the government, any government, the power to ban people doing something entirely legal in their own homes: thus we do not want to grant this power to ban prisoners smoking in their cells. However, even given all of that, this does show a certain disconnect from reality, doesn't it?

Deborah Arnott, chief executive of charity Action on Smoking and Health, said there was no evidence to support claims that depriving prisoners of tobacco could lead to riots.

“Prisons all around the world have gone smoke-free with few problems and, in the UK, all high-security psychiatric facilities have already gone smoke-free, as have prisons in the Isle of Man and Guernsey, without any trouble,” she said.

Not paying much attention to the news, is she?

On Tuesday, hundreds of prisoners lit fires, broke walls and smashed windows in a 15-hour riot at a Melbourne prison in what authorities believe may have been a reaction to a smoking ban at the remand facility. It was one of the worst prison riots in recent memory and authorities and commentators moved quickly to either condemn or support the state-wide prison smoking ban.

No, she's not:

Police armed with tear gas and water cannons were on Tuesday evening still attempting to contain a riot that broke out at a maximum security prison in Victoria earlier in the day, after prisoners became angered by the introduction of a smoking ban.

All staff were evacuated from the prison in Ravenhall, Victoria, after several hundred prisoners rioted.

This happened only a few weeks ago.....at the end of June.

This will put the cat among the pigeons

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Disturbing findings for a central tenet of the prevailing left wing educational ideology:

Teenagers facing the ire of parents over their exam results may have found the perfect excuse after a new study concluded that exam success is largely inherited. Scientists at King’s College London discovered that up to 65 per cent of the difference in pupil’s GCSEs grades was down to genetics. Previous research found that genetics could influence core subjects like English, mathematics and science but it now appears that they also play the same role in humanities, languages and art. It suggests that if parents have struggled to draw, learn a second language or understand algebra, their children are also likely to find those subjects difficult.

For that prevailing ideology is that it is entirely the environment and education itself which determine such things. Danny Dorling once put it as anyone could grow up to be professor of social geography at Sheffield University: something which prompted us to comment that obviously anyone had. The implications of this blank slate idea being that differences in outcome must be due to differences in access to resources. Thus poor people do badly because they are poor, deprived even simply be inequality.

That 65% of academic success (to the point that passing exams is that success) blows rather a hole in this idea.

We should not, of course, immediately lurch over into the errors of social darwinism though. For this is just a restatement of what should be blindingly obvious about a mammalian species. There are indeed mutations, there's a shuffling of the genes in every generation. We should therefore be assuming that there will be variance other than simple and direct inheritance of intelligence, just as with any other genetically determined characteristic. Thus all should have access to the same opportunities but we just shouldn't be surprised when outcomes are not equal.

Let's call a thing what it is shall we, a spade is a spade after all

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It's not so much the pettifogging that annoys, although there is a tinge of that, it's the hijacking of an honourable description that really irks:

A typical household has 40 plastic carrier bags stashed away at home, ministers have claimed, as new figures showed the number of bags used by shoppers rose for the fifth year running. British shoppers took home more than 8.5 billion single-use carrier bags from supermarkets in 2014, 200 million more than in the previous year, figures from charity WRAP show.

Charity: the giving of money to aid mariners in peril on the seas perhaps. Or alms to house the destitute. But the most important part of the description is voluntary.

Following the review we worked closely with Defra to develop a programme of work, in line with sharpening our strategic focus, that will make a significant contribution to helping the UK achieve its environmental objectives and obligations, such as achieving the 50% household recycling rates by 2020, but at less cost. As a result grant funding from Defra for 2014/15 has been confirmed at £17.6m (2013/14: £25.7m), expected to reduce to £15.5m in 2015/16.

Financial Results for 2013/14

WRAP‟s total income for 2013/14 was £65.4m (2012/13: £63.2m) of which the majority (98.9%) was grant funding from government and EU sources. Although the underlying grant funding from Defra reduced compared to the previous year, the addition of the Resource Efficient Scotland programme and the timing of activity in EU funded grant schemes, notably the ARID capital grant scheme in Wales, resulted in a marginal increase in total income.

This is not a charity. This is a tax funded arm of the central bureaucracy. As such it most certainly isn't voluntary.

It has to be said that a caring society would indeed have a place in it for those who get their kicks counting plastic bag hoarding by household. But it's not entirely obvious that those working hard on the minimum wage should be charged tax to pay for it. Perhaps it should be paid for, voluntarily, in a charitable manner, by those who share this minority taste?

At which point we are going to revert to calling a spade a spade. WRAP is not a charity, it is a collection of tax leeches.

The euro is driving Finland to depression

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The Finnish economy has been hit by three shocks over the past decade:

  1. Nokia has more or less disappeared;
  2. The paper industry is in crisis;
  3. And recently the Russian crisis has hurt Finland's economy too.

These have all caused a very significant change in Finland's current account balance, which over the past 15 years has gone from a sizeable surplus (around 9% of GDP in 2001) to a small deficit (around -1% of GDP in past four years).

This would under normal circumstances require a (real) exchange rate depreciation to restore competitiveness. However, as Finland is a member of the euro such adjustment has not been possible through a nominal depreciation of the currency and instead Finland has had to rely on an internal devaluation through lower price and wage growth.

However, Finland's labour market is excessively regulated and non-wage costs are high, which means that the internal devaluation has been very sluggish. As a result growth has suffered significantly.

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In fact, Finland's real GDP level today is around 5% lower than at the onset of the crisis in 2008. This makes the present recession – or rather depression – deeper and longer than the Great Depression in 1930 and the large Finnish banking crisis of the 1990s. Rightly we should call the present crisis Finland's Greater Depression.

European Central Bank policy obviously has not helped. First of all, the 2011 rate hikes from the ECB had a significantly negative impact on Finnish growth. Second, the shocks that have hit the economy are decisively asymmetrical in nature. This means that Finnish growth increasingly has come out of sync with the core Eurozone countries - such as Germany, Belgium and France.

Hence, Finland is a very good example that the eurozone is not an "Optimal Currency Area", where one monetary policy fits all countries.

Concluding, the crisis would likely have been a lot shorter and less deep had Finland had its own currency. This would not have protected Finland from the shocks – Nokia would still have done badly, and exports to Russia would still have been hit by the crisis in the Russian economy, but a currency depreciation would have done a lot to offset these shocks.

To illustrate this, compare the pegged economies (in red in the graph below) of Finland and Denmark with the free-floating economies of Sweden, Iceland and Norway (in green).

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Should Finland leave the euro now? It's hard to say, but it seems clear that Finland shouldn't have joined in the first place.

Are there other options? Yes. Significant labour market reforms that weaken the power of labour unions and reduce non-wage costs would make internal devaluation easier. But such reforms are notoriously hard to implement politically and the discussion and the response from the Finnish government to the Greek crisis has shown the Finnish governing coalition is extremely fragile. This is hardly a government, which should be expected to be able to push through the needed reforms.

See also my three earlier blog posts on Finland:

http://marketmonetarist.com/2014/04/07/currency-union-and-asymmetrical-supply-shocks-the-case-of-finland/

http://marketmonetarist.com/2014/11/16/great-greater-greatest-three-finnish-depressions/

http://marketmonetarist.com/2015/07/23/peggers-and-floaters-the-story-of-five-nordic-countries/

Lars Christensen is a Senior Fellow of the Adam Smith Institute and blogs as the Market Monetarist.

Opposing environment-friendly rice with higher yields

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The MIT Technology Review reports that scientists have produced a genetically modified rice strain that emits far less methane than traditional varieties.  It emits one thirtieth as much in summer and half as much in winter.  It does this because a single gene from barley has been inserted to make the plant yield 43% more grain per plant, so less carbon goes into the roots and the soil to be converted by microbes into methane.

Despite its enhanced yield and lower greenhouse gas emission, it is estimated that it could be 10-20 years before it becomes available to farmers.  This is because scientists will have to use traditional breeding methods to produce a rice that is scientifically the same, including the same gene.  As Chuanxin Sun, the report's senior author, puts it: 

“Right now of course it’s a GMO issue, and we cannot deliver this variety directly to farmers. We have to use traditional breeding methods and breed the new, society-acceptable variety for farmers.”

It is thanks to completely unwarranted scare stories from environmental groups that progress in genetic modification has been held back.  Millions of children have suffered blindness or death because of opposition to 'golden rice' modified to biosynthesize beta-carotene, a precursor of vitamin A, to combat a shortage of dietary vitamin A in some areas.

Millions more live at precarious subsistence levels because they are denied access to GM crops with enhanced yield or greater saline or drought resistance.  Innumerable field tests have failed to show adverse effects on humans, yet many in the environmental lobby campaign for all GMOs to be rejected.  They do not hesitate to trample down experimental crops planted with the support of democratically elected governments.

Many of the NGOs will undoubtedly oppose the new rice, despite its hugely increased yield and smaller environmental footprint.  Scare stories are what they do, and they keep the subscriptions and donations rolling in.

Perhaps it's time to abolish statutory holiday pay

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We can imagine some getting a little outraged at this suggestion but perhaps it's time to remove one of the great distortions in the labour market: it's time to abolish statutory holiday pay. Currently:

Almost all workers are legally entitled to 5.6 weeks’ paid holiday per year (known as statutory leave entitlement or annual leave). An employer can include bank holidays as part of statutory annual leave.

Self-employed workers aren’t entitled to annual leave.

From the US we hear that these sorts of rules are killing parts of that gig economy:

This is one of the first startup casualties as a result of the worker classification issue that has gripped the tech industry. Many companies in the gig economy, such as Uber, Postmates, Luxe and Sprig, classify their workers as contractors instead of employees. As a result they don’t have to foot payroll taxes, social security benefits, vacation time or other fees. But workers have filed lawsuits over the issue, and it’s now become a heavily debated talking point among the presidential candidates.

Loading the employment of labour with all of these things (and we could add maternity and paternity leave and so on) makes labour cost more to employ. Well, obviously. but insisting that people take a defined bundle of benefits reduces the value of selling our labour. For if we receive instead just the cash we can decide ourselves, according to our own personal utility maximisation calculations, how we are going to allocate the rewards of our labour over children, retirement, leisure and other forms of consumption. what this problem in the gig economy is doing is making those costs plain to all: some people are willing to do things in exactly that all cash manner and do the allocations themselves. Insisting that they take the defined bundle destroys those jobs they're quite happy doing.

Of course, some will say that everyone must therefore be forced into that standard bundle. But we think there's a liberty argument to be made for instead destroying the very idea of that standard bundle being imposed. Let wages be paid in cash, only cash and purely cash and everyone then gets to decide how they're going to structure their leisure, retirement, child rearing and everything else.

Why should the State insist on either a minimum or maximum amount of leisure for us?

Nudging people to do what they want to do

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Not all of us in the Adam Smith Institute agree on everything all the time.  Life would be duller if we did.  One topic that divides some of us is the notion of 'nudge.'  Thaler and Sunstein wrote a book under that name in 2008, describing ways of "changing the choice architecture" so that people find it easier to do what they want to do, but fail, perhaps because of inertia, to follow through upon.

Two thirds approve in polls of organ donation after death, but less than 30% were completing the form.  The US driver's licence application gave applicants the choice, and they had to choose yes or no.  The number volunteering as organ donors shot up to the two-thirds who approved of it.  The choice to volunteer had been made easier.  Other countries have followed suit with similar results.  Some add a third option: "I do not wish to make a choice at this time."

The BBC news magazine's Home Editor, Mark Easton, has described some successes by the No. 10 Behavioural Insights team, colloquially known as the Nudge Unit.  They boosted job applications by unemployed people by personalizing the invitation.  A simple request to turn up for potential jobs at a supermarket saw 11% come forward.  When the person's name was added to the request ("Hi, Sam…"), it rose to 15%.  When the JobCentre adviser signed it at the bottom ("Good luck, Michael.") the proportion turning up rose to 27%.

The team managed to boost black and ethnic minority (BME) applications to become police officers by adding the words "Congratulations! " and telling applicants they had been "selected to participate in the next stage of the assessment process."  It added "What is it about being a police officer that means the most to you and your community?"

Whereas previously the situational judgement test had been successfully completed by 60% of white applicants but only 40% of BME candidates, the revised wording saw the BME percentage rise to more than match the success rate of white applicants.

Some in the ASI are suspicious of this approach, partly because it involves a decision about what should be nudged, meaning about behaviour that should be encouraged, and partly from a fear that the technique could easily be abused to promote behaviour that people don't want to do.  These should certainly be watched, but if the technique uses polling to ascertain what people would like to do but find difficult, then it can be helpful.

The technique has been used to help people pay their tax arrears more promptly, and to encourage people to put more aside into their pension funds.  Many countries are now adopting these techniques, and the Nudge Unit sells its services to other governments.  Whatever else can be said, to libertarians 'nudge' is better than compulsion.

Perhaps a closer connection with reality might be in order?

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We will admit to being fascinated by the coming car crash that is the Labour leadership competition. While we're intensely political here, we're not party political. But we do think that perhaps a slightly closer connection with reality might be in order. Here's Jeremy Corbyn's latest policy idea:

“Under these plans Labour 2020 will make large reductions in the £93 billion of corporate tax relief and subsidies.

“These funds can be used to establish a National Investment Bank to head a multi-billion pound programme of infrastructure upgrades and support for high-tech and innovative industries.

That £93 billion comes from a paper discussed here. That £93 billion also has no connection to this universe that we inhabit. But despite a certain amount of to and fro between the report's author and your current humble scribe it simply was not possible to convince that report's author that depreciation is not a subsidy to business. He really is under the impression that capital allowances mean that the government buys stuff for companies to use: rather than just not taxes them on the money they use to buy them for the obvious reason that companies are taxed upon their profits. And the cost of buying something to use to make stuff is obviously a cost of business.

Yet only a couple of weeks after the publication of a report of such obvious fatuity we've got it as the cornerstone for a national economic policy after the next election.

All most amusing but we might recommend just a slightly closer connection with reality.

EUtopian Regulation

David Cameron has made the reduction of red tape a cornerstone for EU reform. As we know, there will be no treaty reforms before 2017, the best we can expect is promises albeit firm ones. Brussels may well agree to deregulation as incoming Commission Presidents have done so often enough before: but can we believe such promises?  Whatever is bound can be unbound or, more likely, just overtaken by events. This paper moves on from what is likely to happen and considers the best that could happen.  What is the common ground between necessary commercial regulation and maximising UK competitiveness?  One obvious option is that London and Brussels should stop competing with one another to impose more regulation: one set of unnecessary regulations is bad enough but two are suicidal.

After reviewing what EU and UK politicians are telling us, the paper sets out alternative ways of dividing regulatory responsibility. Should we hand over responsibility to a single global regulator?  Or an EU one?  Or should nation states compete, each reducing regulation to increase competitiveness?  Or some other arrangement?

Finally, what seems to be the least bad solution for the EU – what would be EUtopian regulation?

Can we believe the politicians?

At the beginning Chapter 43 Charles Dickens’s David Copperfield, Copperfield has become a parliamentary journalist for a morning newspaper and writes “Night after night, I record predictions that never come to pass, professions that are never fulfilled, explanations that are only meant to mystify. I wallow in words. Britannia, that unfortunate female, is always before me, like a trussed fowl: skewered through and through with office-pens, and bound hand and foot with red tape.”

Plus ça change…

  1. Precisely the regulations to be removed?
  2. The mechanism to achieve that?
  3. Who, in the future, would regulate what?

Danny Alexander spoke in France on “making the EU fit for the challenges ahead” in January 2015.  All he said about regulation was 

“And it [very practical things that the EU can do] can free businesses from unnecessary regulations.  A 25% reduction in EU administrative burdens on businesses could lead to an increase of 1.4% in EU GDP.”

Hardly specific. 

In both Brussels and London, “deregulation” translates in practice to rewording regulations.  For example, the 2015 UK Deregulation Act has a long list of regulatory amendments including: “Section 11 of the Employment Act 1989 (exemption of Sikhs from requirements as to wearing of safety helmets on construction sites) is amended in accordance with subsections (2) to (10).”  This is not untypical: a few moribund regulations have been removed but to no benefit to competitiveness as they had already fallen from application.

An EU Memo of 18 June 2014 summarised the Brussels position: “The Regulatory Fitness and Performance Programme (REFIT) launched in December 2012 is a programme aimed to make EU law lighter, simpler and less costly so that it benefits citizens and businesses and helps to create the conditions for growth and jobs. It does notput into question the EU’s policy objectives, but seeks for more effective ways to achieve them….

On 2 October 2013, the Commission defined an ambitious agenda with over 100 individual actions including 46 legislative actions to simplify and reduce regulatory burden, 7 initiatives to repeal existing regulation and 9 initiatives to withdraw proposals for new regulation. In addition, the Commission committed to carry-out 47 Fitness Checks and evaluations under REFIT to assess the efficiency and effectiveness of EU regulation and prepare future initiatives for simplification and regulatory burden reduction.”

In other words, of the 40,000[1] or so EU regulations, Brussels found just 16 that could be withdrawn after 18 months study. Furthermore, “A decision by a Commission official in the name of and on behalf of the Commission is just as binding on member states as treaty articles. There is no hierarchy of laws in the EU. The number of more or less binding acts passed 134,500 in 2015 if these different types of acts are counted together.”[2]

Clearly, the UK government is not going to sift through all those by the end of 2015.  What the government probably wants, but has not spelled out, is a return to the Social Chapter opt out secured by John Major and an ability to opt out of finance sector legislation of the grounds that the sector is well regulated by London and it is as critical to the UK economy as agriculture is to France (which has a veto on changes to the CAP). But the reality is that we do not know from what regulations the UK seeks exemption, nor the mechanism for achieving it.

Alternative regulatory regimes for the EU

The neat solution where one authority regulated a single international market has probably never existed and never will.  Some argue that it never should, as such a monopoly would endlessly seek more power and regulatory control for itself without being prevented by countervailing forces. On the other hand, can regulatory authorities compete to attract more business as brands of soap powder do?

Income taxes work that way: to some extent companies and individuals move to lower tax countries but the tax differences have to be big enough to justify what can be a large upheaval. But under international agreements, income is usually only taxed once.  Tax paid in one authority offsets the need to pay it in another.  That does not apply to regulation: conforming to UK regulations does not mean one is exempt from conforming to French ones.

Patents and trademarks have a different arrangement.  Each country registers its own but trademarks can also be registered in all member states simultaneously (Madrid system) or collectively at the European Patent Office as a “Community Trade Mark”. Similarly for patents.

So in principle there are many options for the future of EU regulation. The alternative regulatory regimes include (there may be others):

  1. An untrammelled single EU regulatory authority with divisions for each sector.  This would respond to consumer concerns and complaints but have to justify itself to member states in terms of compliance costs, the effect on internal (EU) and external (global) competition, barriers to entry and innovation.  This is the ultimate “a single market requires only one set of regulations” approach. The justification is that if a consumer needs protection in one member state, she needs it in all of them. Conversely, if she does not need it in one she does not need it in any.
  2. No central EU regulation at all.  National regulation being accepted throughout EU as for Cassis de Dijon. But the income tax principle could be applied to regulation, namely that any firm complying with the regulations of its HQ member state would be deemed to be complying EU-wide. Consumer confidence would affected by country of regulation but the EU would still be a single market.
  3. Regulation tailored by size of business (SMEs to have less regulation not least because they are more subject to competition) and by business sector risk and complexity. As a rule of thumb, the less well the consumer can be expected to understand the products and the bigger the risks from them (e.g. medicines and financial services) the more regulation will be required.
  4. The present situation: EU regulation throughout EU plus member state regulation in each country.  This is not “single market” at all.  It is inconsistent for the UK to press for the single market at the same time as introducing an unceasing flow ofUK regulations. At present both EU and national regulation is out of control with no consideration compliance costs, effect on internal (EU) and external (global) competition, barriers to entry and innovation.  This is the worst option.

Regulatory principles versus precision

Principles-based regulation would be far easier to understand and use far less paper. It would not be difficult to produce a set of regulatory principles for each business sector on one sheet of paper.

The regulators, legislators and larger companies are working against the public interest in putting precision (and complexity) ahead of principle. Competition, costs and innovation all suffer.  By relying on principles only, these regulation factories both at national and supranational levels could be closed down and a commission of interested parties meet once a year to deal with any necessary revision to those principles.

A genuine return to principles may be too radical for the present time but some such drastic approach is needed to reverse the tide of regulatory excess.

Competition between jurisdictions

As noted above, competition between jurisdictions, e.g. the US and EU, could either slow the pace of regulation or enhance it or make no difference. The self-interest of the current regulation factories promotes more regulation and complexity.

Governments do know the cost burden of excessive regulation but do little more than call on business to name the regulations they could do without and then having civil servants consider the suggestions until the long grass covers them over.  So far as I know, only New Zealand has ever taken the radical approach of doing the opposite, namely asking civil servants to identify the regulations they had to keep and then jettisoning the rest. It worked splendidly.[3]

With the rise of emerging economies in Asia and Latin America, maintaining global competitiveness is going to become more and more crucial for the US and EU, the twin regulatory powers. At present their business is more inhibited by regulation than the newcomers and as things stand, this is likely to deteriorate.  We need to campaign for turning regulatory competition around so that it becomes a drive towards less rather than more.

Proposed policies

I began this paper believing that governments would need to agree regulatory reductions and perhaps have just one global rule factory rather than the many we have now.  Others have pointed out the danger of giving such a monopoly such powers, especially given their track record.  A Damascene conversion may be unlikely but that is what is needed for any of the alternatives above.

So which of those first three alternatives is chosen matters little compared to a determination to reverse the flow.  The policies that do are:

  1. Governments to be brought to realise the economic damage from current levels of regulation with the prospect of worse to follow.
  2. A determination to make deregulation real and to use competitive pressures downward either unilaterally or by negotiation..
  3. Principles to take the place of precision.

____

[1] There are now more than 40,000 legal acts in the EU. There are also 15,000 Court verdicts and 62,000 international standards, all of which must be respected by citizens and companies in the EU.” http://en.euabc.com/word/2152

[2] Ibid.

[3] See Tim Ambler and Francis Chittenden, Deregulation or Déjà Vu? UK Deregulation Initiatives 1987/2006, British Chambers of Commerce, January 2007.