Friday, February 13, 2015

The third law of regulatory bureaucracies...

The third law of regulatory bureaucracies...  I wish I could claim credit for this, but I cannot.  I've long since forgotten where I first saw the “third law”.  It was first coined by an observant person, and was something like “Cochran’s third law of regulatory bureaucracies” (but with the correct person's name).  Here's the gist:
Any bureaucracy established to regulate an industry will become, instead, the protector of that industry and its incumbents.
Ever since I first read that, I keep coming across more and more examples of it – and zero exceptions.  It's like a natural law controlling how government screws up.  This morning I read above yet another example: the FDA, instituted to regulate safety and efficacy in the pharmaceuticals industry, has instead become a protector of the industry.

If the protection of the incumbents clause doesn't immediately make sense, here's what that means: these bureaucracies help the large existing (i.e., incumbent) companies they regulate by making it more difficult and expensive for new competitors to enter the business.  The incumbent companies most definitely understand this, leverage it, and encourage it.  We saw this recently with the support of “net neutrality” by large ISPs: they know that the regulatory morass engendered by the 332 page FCC proposal will ensnare new competition in a bureaucratic mess that they simply cannot afford to deal with – while to them, with their large and established business, see it as a small annoyance (even though it requires an army of accountants and lawyers).

So far as I can tell, the growth of bureaucracies are an absolutely inevitable result of the age of any given government – let enough decades go by, and the bureaucracies grow, like mold on old cheese, toenail fungus, or age-related infirmities.  The only cure validated by the historical record seems to be revolution and the formation of a new, bureaucracy-free (for a while!) government.  I've often wondered if the Internet enables a new way to disrupt bureaucracies, but I haven't thought of any realistic ways to do that.

Time for a tea party, I think...

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