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The role of law and regulation

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Well-Known Member
Sep 25, 2012
Portland, OR
Over in the VW thread, I had the following comment:

Originally Posted by jerry33 viewpost-right.png Almost all corporations behave in exactly the same manner. VW just got caught. This is why you need strict regulations on corporate behaviour and not turn corporations into people as the U.S. Supreme Court just did. If you do turn them into people, then they need to have a fixed life-span of maybe thirty years, and they need the ability to be put in jail (limited communications and no gross income for a period of time).

(bolded part my emphasis)

I understand the thinking and reaction that leads to the "need for strict regulations". I disagree though that fundamentally that is a solution - it's a Band-Aid. I come from the school of thought that holds that among people and entities of good will and intent, no amount of laws are needed; among people and entities of ill intent, no amount of laws are adequate. (To be accurate, among people of good will and intent, all you really need is context).

At least in the US, it looks to me like we are turning increasingly to more laws, more regulation, as a mechanism for sustaining society. It may take awhile, but more laws and more regulations are just a good source of income for the legal profession; they don't stop people from behaving badly - they just more specifically define the edges so that people skirting the edges have a clearer mark for what they need to navigate around.

Or in dynamic system terms, we're attempting to apply simple solutions to complex problems.


A few people jumped in with reactions, and so I'm going to try to expand on my comments to be clearer. I realize that what I was thinking was at best incompletely articulated.

First and most importantly, I am in complete agreement with jerry33 (and others) about the need for strict regulations and the importance of law. I do not propose absence of law and regulation as the way forward to fixing our environmental or other problems.

The central point I'm trying to get to is that I see the role of law and regulation in today's world, or at least in the USA, to be changing rapidly and in the direction of increasing complexity. In particular I see us shifting from "simple" articulations of intent of what acceptable behavior is for society, to a culture and view in which everything not specifically forbidden in law or regulation is explicitly legal, moral, and ok. An example of a simple articulation of intent of acceptable behavior - "do unto others as you would have them do unto you" https://en.wikipedia.org/wiki/Golden_Rule.

My thinking on this topic has been strongly influenced by this speech by Andrew Haldane: http://www.bankofengland.co.uk/publications/Documents/speeches/2012/speech596.pdf. There are a whole host of good points here, but if I were to simplify extraordinarily, his point is that in a complex world and in uncertain decision making, simple rules-of-thumb beat complex models in every way (the cost to acquire information and make a decision, the speed of the decision, the quality of the decision, the cost regulate the industry, more).

I hope others will take the time to read the speech in full. I know that I'm glad @brianman posted his comment asking that we continue this conversation - that prompted me to go find the speech and read it again. It's about 25-30 pages and was totally worth my time reading it. Despite the length and him being a central banker and all, I believe you will find him surprisingly readable and understandable.

Back to the original topic of environmental regulation and law. I can better articulate one of my points - that increasingly complex environmental regulations and laws may in fact backfire on us and create the opposite of their intended effect. Much as has happened already in finance, with increasingly complex environmental regulations, we may find individuals and companies consciously managing to the regulations and laws (rather than to simpler metrics like whether we're getting closer or further away from exterminating ourselves). Humans are an amazingly creative and inventive bunch, and a culture in which everything not explicitly outlawed is fair game sounds to me like a strong basis for destroying the environment - we're just not going to be able to write laws and regs fast enough to stop it, and the burden of complying with them all (given that we actually want to comply with them - thanks VW for clearing the air on that point!), will be such that I claim - the laws and regs won't ultimately create the result intended by writing the laws and regulations.

That doesn't mean the alternative is to dispense with all laws and regulations. There is a big gap between writing a law or regulation to cover every activity a human being can ever engage in, and no laws or regulations.

I can't be more specific about what I am proposing because frankly, I don't know what the specific metrics and standards should be. I'm an interested observer who's domain of expertise is elsewhere.

I do know that it's part of what I consider to be Elon Musk's genius. Lots of people have articulated how desirable it is to create products people want that also happen to be good for the environment. He's been getting involved repetitively in identifying and creating actual products that create that dynamic. Products that make it easy to make choices that are good in strictly personal terms, ignoring all other consequences, as well as choices that are good even encompassing all other consequences that we are able to identify. I can have my cake and eat it too. (Or as a Roadster owner, oh the sacrifice I live with daily in my personal quest to lower my carbon footprint and impact on the planet).

The trust violation by VW is that they made that offer (be good for the environment, while being efficient and having a light footprint and low carbon emissions by buying our car) - and then it turns out they were straight out lying. The offer they really made was "have a fun driving car, that is fun driving because it is spewing pollution that makes living beings sick", knowing full well that some of their customers would never say yes to that proposition. In this case, we have laws / regs on the books that regulate the behavior and VW is going to be crucified for their behavior.

We might even benefit in a backwards way (a not uncommon effect in a complex system like this) when regulators take a closer look at the testing protocols, and decide that testing needs to be passed by real cars in real road conditions instead of the highly artificial testing conditions currently used. Changing to real cars in real road conditions might suddenly find the entire gas engine industry to be woefully behind in emissions and efficiency from what they've been reporting (and the regulators have been complicit and supporting). Maybe that's why the other companies haven't exactly been piling on VW and protesting their own innocence :)

The other point I was trying to make, and probably poorly, is something of an ethical or societal point. The problem I see, from a system and society point of view, is that if we've shifted away from the golden rule / morality / religion / good will / whatever you want to call it as the basis for society, and TO "law" as the basis for society, then we're well on the way to destroying society.

For many of the reasons Andrew talks about in his speech - but the particular reasons I see... if anything not prohibited is permissible behavior in society, then a) we can't write enough laws to maintain society, b) the cost to enforce the laws will be too high for them to be enforced, and c) we become increasingly amoral as we remove any sort of "socially acceptable" governors that we all learn as we're growing and replace them with written law - something that is always incomplete / late / etc...

The conclusion I was trying to get to - yes, laws and regulations to establish intent are valuable. However, relying on law or regulation as the source of motivation for people / organizations to do the right thing will always be inadequate. At least to the extent the laws are "thou shalt" types of laws, rather than regulations that match an organization's financial interests with societal interests.

And on a lighter note - seen on a bumper sticker on a Prius on my drive home yesterday - "At least the war on the environment is going well" (http://www.amazon.com/Least-Environment-Going-Bumper-Sticker/dp/B001AZN6O6). I was laughing for 2 or 3 miles afterwards.

- - - Updated - - -

I can add immediately, and as a direct addition to jerry33's comment about corporations as individuals - I am in complete and unreserved agreement. The idea that these legal constructs are indistinguishable from people is just .. I'm speechless just thinking about it.

I'd be hard pressed to think of a choice better designed to separate morality from the law.

Except maybe that the purpose of companies is to "maximize shareholder value". I googled for that and the first hit was from an author I'm enjoying a lot:
http://www.forbes.com/sites/stevede...ds-dumbest-idea-maximizing-shareholder-value/, but there was plenty to choose from.

So there we have two interlocking ideas - corporations are people, and those people exist to maximize shareholder value (with no regard to any other stakeholder in the ecosystem).

And to be clear - I think both ideas are real in the world and that people make real decisions based on these ideas in the world, and they're both incredibly destructive and bad for society in general.
Let me give a practical example of how regulation can have perverse impacts.

I am working on a renewable power project on the West Coast. The underlying technology is extremely benign, basically moored vessels bobbing in the waves miles off-shore; no environmental scientist whom I have briefed has raised any serious objection. But we have to obtain 23 permits/consents from as many different regulatory bodies (federal, state, county, local, tribal), and effort that will cost millions. NONE of these allow us to take any credit for displacing fossil-fired generation with zero-emissions electricity; each focuses on some aspect of local impact, usually requiring extensive, years-long studies of problems that NO ONE thinks are plausible, but the regulations require nonetheless.

I'm a big fan of a well-regulated economy, but there is the very real potential for over-regulation and, in particular, uncoordinated regulation. If no one is looking out for the big picture, an environmental scientist with a narrow focus on green eel spawning can stop a project that has substantial net societal benefits.

Conversely, and the situation we see with VW, there are times when regulation is well-intentioned but focuses very narrowly on a few metrics, thereby allowing actions that meet those metrics to move forward even when they are socially harmful.

When the bureaucracy grows as large and specialized as it has in most first-world countries, who is responsible for assuring that the collective decision is rational?
When the bureaucracy grows as large and specialized as it has in most first-world countries, who is responsible for assuring that the collective decision is rational?

The legislative branch. The executive branch makes the laws official and the judicial branch enforces them. However, we have lost sight of how government is suppose to work with laws now being made at the executive level (because the legislative branch is dysfunctional) and also judicial level, with activist decisions such as Citizens United v. FEC.

Provided the executive and judicial branches stay within their mandate, then we need one other crucial piece to make this system work properly, so that those in the legislative branch make laws that work "for the people" -- not special interests as it is today. And Thomas Jefferson framed it the best:

"The cornerstone of democracy rests on the foundation of an educated electorate." - Thomas Jefferson

Unfortunately, we have lost the cornerstone. We elect politicians who are bought and paid for by special interest groups over and over again -- and Citizens United has now engraved that in a stone that can only be erased with a Constitutional amendment -- and that can't come soon enough.

I come from the school of thought that holds that among people and entities of good will and intent, no amount of laws are needed; among people and entities of ill intent, no amount of laws are adequate. (To be accurate, among people of good will and intent, all you really need is context).

I think that's too black and white and we are complex creatures. To me, the question is: Are people inherently evil but do good things; or inherently good but do evil things? When I was younger I believed the later, as I have gotten older, I am convinced of the former.

As far as I am concerned, we are circling the drain environmentally, culturally, politically and pretty much in every other aspect. Our technology is also rapidly surpassing our humanity. I feel sorry for our kids, and their kids, futures. The worst is coming and it's not good. We won't be around to see it, but we will have been around to have created it and done practically nothing to stop it.
Here is a long, and rather rambling commentary (I never claimed to be a good writer)

My understanding is that the problem with complex laws started around 1850 when lawyers were allowed to hold public office. Before that they were forbidden because as officers of the court it is a conflict of interest to have those enforcing the laws also make the laws. I'm pretty sure that most of our elected officials are, or were, lawyers. I believe this is responsible for the complex laws and lawsuit happy society we have today.

The problem with unrestricted capitalism is that it always turns into a Monopoly game where a few have all the wealth and everyone else is dirt poor.

The problem with unrestricted socialism is that there is no incentive to do better.

The goal that every person has a right to a place to live, decent food, education, medical care, and a dignified retirement without going bankrupt or drowning in debt is a worthwhile one. This is, unfortunately, incompatible with the goal of a sustainable population size. Our best hope here is that Elon's plan to colonize other planets will allow an outspread of humanity. The alternative is likely to be a series of devastating wars over increasingly limited resources.

Today corporations have way too much power. This is easily seen because the top executives make 400 to 500 times what their average reasonably paid worker makes. In the 1950s they made about 10 times what the average reasonably paid worker made (and I never heard of a 1950's CEO not having enough to eat or being homeless). In addition, profits for the corporations have increased to record levels but wages have remained flat. So the top executives' pay and shareholder profits have mostly been made mostly at the expense of the average worker. Where I work, they have pay levels, which basically are a way to prevent wage increases (no one ever gets promoted to a higher pay level, although they certainly get laid off right and left as jobs are shipped overseas). Retirement was gutted except for the higher executives who are the ones that need it the least. (My best hope is that I will be in good enough health to work at a reasonable paying job until I die.) As far as I am aware, most major corporations are similar.

Because corporations have only one goal, which is to make money, once they reach a certain size they become sociopathic. If a person behaved the way corporations do, they would, at the very least, be ostracized by everyone. Every time there is a merger or takeover, jobs are lost and competition goes down which hurts everyone including the corporation itself. When no one can afford to purchase their goods or services, the corporation can't make any money either and eventually go bankrupt themselves. Of course the top executives don't care because they all have golden parachutes which would last them more than the rest of their lives. Unfortunately, the only way to counteract this behaviour is with strict regulations. I wish it were different and everyone would work together for the common good and with empathy towards others, but it's not.

So the question becomes how to prevent the powerful from taking it all and turning the U.S. into a banana republic? (It's about half way there now.) Note that this is not the first time. The railroad barons of the 1800s did the same thing until the labour movement and women suffrage gave some rights to the average worker.

So here's a plan:

Give every citizen, not only the right but the duty to vote. Ideally, I'd like to see people vote from their computers at home (or library computers if they are without one). If we can bank at home, we certainly should be able to vote from home.

Limit the power over legislators that the corporations and very wealthy individuals have. (I'm sure everyone here can think of several ways to do this.)

Provide education for everyone to the extent of their ability. I believe that with an educated populace many of the problems we face today would go away by themselves. However, what I hear is that we should stop teaching algebra because it's too complex and no one uses it--except that everyone does, even if they don't realize it. Give me a break! And no one teaches critical thinking, which should be a required subject at least during high school. We could easily afford to provide education if we didn't keep getting involved in foreign wars. Had we stayed out of WWI, there probably wouldn't have been a WWII, although there would still likely have been a war with Japan because the U.S. and Japan both wanted the same Pacific resources. None of the wars after WWII were necessary, or even advisable, but they cost us our financial future.

Elected officials are mandated to come from all disciplines: healthcare, engineering, science, business, education, agriculture, etc. so that no one group dominates.

Elected officials serve only one term. A big problem now is that the job of any legislator is to get enough money to win the next election. This insures that they are for sale to the highest bidder. Not a good thing for democracy.

Each candidate is given a certain amount of money to run their campaign. $1M for President. $500K for Senators, $200K for Congresspersons. Spend it wisely. PACs would be illegal as would political contributions.

Strict separation of church and state. Religion is no one's business but your own (and you should keep it to yourself). Like Thomas Jefferson, elected officials should be sworn in on the Constitution, which is the foundation of our country.

And one more thing. This business of the President being able to have an undeclared war that runs for years to feed his ego and the defense industry has got to stop. The President can order military action after a direct attack (e.g. Pearl Harbor), but after two weeks there has to be a declaration of war by Congress or it stops. If there is no direct attack, then Congress must declare war to start any military action.
We live in a very complex society... welcome to the 21st century; It's probably not a stretch to say that our complexity and levels of governance have increased more in our lifetime than since words were first chiseled on stone... well... it's only gonna get 'worse.'

We can't be experts in all things... it's necessary to delegate some decisions to people who know their field better than we do. To some people this represents a loss of 'freedom'. Steve Jobs was a smart guy but if he hadn't thought he knew better than his oncologists he would probably still be running Apple. It's actually somewhat remarkable how far we take this idea of personal choice. If an athlete suffers a concussion the team physician (knowing they have symptoms of a concussion) will sometimes ask them if they are ok to keep playing; REALLY?!... you're a physician... asking someone you know to be mentally compromised... to make a medical decision.... WHAT?! At least this seems to be changing.

John Q Public simply does't have the knowledge to make these decisions. Science understanding among the general public is frightening. Improving science standards is obviously needed but that alone cannot solve the problem. Regulations based on science need to be made by people with scientific... not political accountability.

As a society we're a lot closer to Idiocracy than we are to Gatica... in which direction should we go? There will always be shortcomings but the consequences of too little regulation is far worse than too much. As we start to dabble in nanotechnology, genetic engineering and A.I. the consequences of a slip could be catastrophic. These are not simple fields that you can guide with simple regulations. I don't think anyone is under the impression that a regulated industry eliminates bad behavior and accidents... but history has proven that it does reduce them.

There will always be occasions where individual self-interest is at odds with the good of the public. The public needs regulation to ensure that its interests are represented. We need smarter regulation... not less regulation;
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Like when Tesla was fined $275,000 for not having a tailpipe emissions certificate. Someone at Tesla thought since the car had no tailpipe they did not need such a certificate. Tesla Motors pays fine for lacking emissions Certificate of Conformity

That is one government official I would have loved to have seen fired.

If I recall correctly, the required certificate was for emissions from the paint, not "tailpipe emissions." There was no reason Tesla should be exempt, and they just forgot to file in 2009, even though they did the previous year.

adiggs; Would 'We need to change our culture not make new laws' be an accurate summary of your position?

Then with a cultural shift we can lower NOx and CO2 emissions with altruistic behavior?


Edit for clarity: I'm trying to strike a cautionary note against the opposite stance. Namely, thinking that "culture change isn't really relevant - we just need the right laws and that will lead us to lower NOx and CO2 emissions", leaves way too much emphasis on the importance of laws and regulations, and sets us up for failure when those laws and regulations don't create the intended end result.

Your own example, giving your time and energy to help people get solar, is to me an example of the kind of thinking and acting about how to solve the problem with more than just laws, and is a good one.

Better yet is something like - we need culture change AND we need new laws AND we need an awareness that new laws and regulations can easily carry unintended consequences. The article I originally linked from the financial industry is the best articulation I've seen of where the unintended consequences come from.
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OK, so here's my view: the fundamental approach is wrong. Law and regulation is set, and then the government makes the legislated pay for lawyers, and the regulated pay to meet regulations. It's completely backwards, and it results in externalizing the cost of law and regulation, when it should in large part be internalized to general taxation. The externalization of costs means that there's less clarity of the effects and instead a battle across lines.

If I want to know whether something's legal and I'm not sure from reading the law, I need to speak to a lawyer. If I want advice on filing taxes, I hire a tax advisor. Why?! The government sets and applies the laws and regulations. Shouldn't _they_ be the ones who can best advise me?

In environmental terms, when businesses want to do something, the regulatory body shouldn't be saying "here's a list of hoops, jump through them", it should be saying "We have to jump through some hoops, and here's what we'll need to do, and what we'll need, and check out this document here for advice on how best to provide the information we need. Give us a call if you're unsure about anything."