Freedom and Bureaucracy

The Great Confusicator brought to mind, after his speech in Poland, one of the reasons I ended up in Hong Kong.

…on both sides of the Atlantic, our citizens are confronted by yet another danger… . the steady creep of government bureaucracy that drains the vitality and wealth of the people. The West became great not because of paperwork and regulations but because people were allowed to chase their dreams and pursue their destinies.

When I left Scotland, it wasn’t because I had given up in the face of a vast pile of regulations. It was more that I never even tried to get started. The doing of simple things was just too daunting. The company at which I worked, a company of three partners and four employees, had just applied for a some government innovation grant and received a stack of paper a foot tall to complete. The principals decided it wasn’t worth the effort. Add to that the statutory reporting, taxes and the rest, and starting my own business was just too hard.

I was, in short, pretty much on the same side as those Brexiters who hate Brussels, and the Tea Partiers who hate D.C., in part because of their distance and apparent unaccountability, but in part because they don’t like regulations in principle.

I saved up, travelled the world, and a year and a half later wound up in Hong Kong. I had the clothes on my back. I knew nothing of the place. But I soon worked out that starting a business was simple and inexpensive. So I did. And, in my line (IT consulting), Hong Kong remains a great place to do business. I interact with the tax department once a year and get pestered by the occasional government questionnaire, but that’s the limit of the regulatory burden.

I’m lucky. In other areas, Hong Kong has become a nightmare of red tape. An acquaintance represents a global MBA programme that needed a building here. The building they were given had to be inspected by not one, not two, but 17 government departments. It can take months for a restaurant to get a food license, and even longer for a liquor license. Although Hong Kong has a severe shortage of housing, providing bed-sit style accommodation here is economically infeasible if done legally. A bus company tried for years to run electric trolley buses only to give up in the face of bureaucratic obstructionism, and Uber runs only by staying under the radar. Hong Kong, in short, is not the free-wheeling place it once was.

These regulations have come into being in two distinct ways. Both are related to protection, but the protections are of different types.

Take restaurant licensing. I am a great believer in caveat emptor, but that applies to the quality of the food, not the safety of dining. If I cook a friend a meal, I take extra care over the ingredients I purchase, over the hygiene and preparation, and so on. But a chef in a restaurant cooks for strangers, he’s rarely the person who purchases or prepares the ingredients, and he unlikely to wash the dishes or mop the floor. He is certainly not the person who maintains the fire protection.

Having government regulations that enforce hygiene and fire standards therefore leaves me free to concentrate on the thing that matters: the quality of the dining. Yes, the regulations increase the cost of doing business and restrict the freedom of people to enter that business, but those same regulations also increase my freedom because I’m not constrained to spend my time checking stuff that I’m not qualified to check and don’t want to have to check.

So, although Hong Kong’s process needs streamlining, the principle of licensing restaurants is to protect patrons – and I’m in favour of that. Being burnt to death or spending a week in a hospital recovering from dysentery is not the way I want to use my freedom.

The reason Uber fell foul of the Hong Kong authorities was also protection. The law in Hong Kong says that insurance will only apply to fare-paying passengers in licensed vehicles. Uber vehicles don’t have licenses, so the passengers were uninsured.

But that law is a construct. The only conceivable reason behind it is to restrict passengers to using licensed vehicles – taxis – and with a taxi license going for almost USD800,000 (yes, almost a million US dollars, almost half a million pounds sterling), the taxi owners have a strong vested interest in maintaining their monopoly. They, not concerned passengers, were the ones who pushed the government into taking action against Uber.

These two cases seem quite clear cut: the first protects the public from unscrupulous or careless operators; the second protects a vested interest. Not all cases are as easy. I was once told that fire-proof paint used in restaurants had to meet a certain specification, and that paint of that specification was available from one and only one company, which happened to be owned by the fire chief’s brother (or something). Whether or not the story is true, there are cases where the public is being protected, but someone gains. But in general some regulations protect the public and some regulations protect vested interests, and while the former very often make us free to act without fear, the latter restrict the economic freedom of others to compete.

I think we can agree that regulations of the second type should be abolished, or at least modified in such a way that it does not restrict the freedom to compete. But what about the first type, that protects the public from unscrupulous or careless operators?

The alternative is litigation: if I go to your restaurant and you poison me, I sue you.

It seems to me that the acceptability of litigation depends on the type of society. The U.S., with class action cases and contingent legal fees, encourages it, (and some of it is quite frivolous). The British system, in which class actions are difficult and legal fees always up front, discourages litigation. It comes down to a societal choice: risk-averse societies prefer regulation because the cost is predictable; risk-tolerant societies prefer litigation as the upside is higher.

So, you can be free to chose with a certain assurance that minimal standards are enforced, or free to sue if it turns out they weren’t.

But the context of Trump’s remarks suggest that none of this is germane to, or even part of his and the right’s attack on “bureaucracy.” Both Trump and the British Conservatives have committed that for every new regulation introduced, two (or three in the UK) should be removed.

This is so arbitrary that it may as well be random. The scientific way forwards would be to classify regulations into those that increase freedom and those that are monopolistic, clarify and streamline the former and abolish the latter. But without at least a semi-scientific approach – say a random sample of a few hundred – there is no basis for assuming that a half or a third of regulations restrict freedom.

Indeed, Trump’s Executive order has nothing to do with freedom. Not once is the word “freedom” even used. And the criteria by which regulations are to be judged? Here’s the text (Executweet Order 13771, 2(d)):

The Director shall provide the heads of agencies with guidance on the implementation of this section. Such guidance shall address, among other things, processes for standardizing the measurement and estimation of regulatory costs; standards for determining what qualifies as new and offsetting regulations; standards for determining the costs of existing regulations that are considered for elimination; processes for accounting for costs in different fiscal years; methods to oversee the issuance of rules with costs offset by savings at different times or different agencies; and emergencies and other circumstances that might justify individual waivers of the requirements of this section. The Director shall consider phasing in and updating these requirements.

To the extent that this isn’t gibberish, it’s cost, cost, cost. Not a single mention of freedom. But only costs to the federal government rather than the freedom of business or actual people. (And, as to the UK, we don’t know because the link above points to a page here which was withdrawn – although it’s notable that what’s there was a 90-page regulation about removing verbose regulations. Perhaps even its authors realised the self-parody.)

So I can only assume that the real target of the Tea Party and Conservative rhetoric is neither quotidian protection of the public nor the feathering of nests, but a third type of regulation. Here’s an example.

In the early 1970s, scientists spotted a large and growing hole in the Ozone Layer. Unchecked, this was an existential threat not only to humanity, but to life on this planet: the Ozone Layer keeps out ultraviolet radiation that is deadly to many life forms. The cause was a type of chemical known as a CFC and the result was the Montreal Protocol, that banned them. This treaty was successful: the Ozone Layer is on its way to recovery.

The Montreal Protocol was implemented by creating regulations in every signatory country. So what type of regulation resulted? The protocol feathered nobody’s nest, and it was to protect the public, so it would seem to fit into the first of the two categories I proposed. But the fire and hygiene regulations I mentioned above protect the public from identifiable others. In the absence of regulation, victims (or their survivors) can sue identifiable others.

The Protocol protects individuals – all of us in this case – from an identifiable threat. But there is no identifiable other, no one I can sue. And in this respect, it is quite different to dining regulations. There is no alternative, there is no identifiable other to sue.

Regulations such as those in support of the Protocol are, rather, an expression of a common goal – in this case, survival of our species. And this, given the political context, is the type of regulation that’s under attack. And it’s under attack precisely because there exists no legal alternative to regulation. I can sue a power plant for poisoning the ground water and giving me cancer, but I cannot sue an entire industry no matter how egregious their injuries: regulation is the only protection.

This is not freedom, but licence. Licence to act as irresponsibly as you please. And of course, the underlying target is environmental protection in general and climate change in particular. (And to those who argue that climate change has nothing to do with the fact that humanity has dug up 100 million years of sunshine and spewed it into the atmosphere in 0.00002% of that time – well, to put it as politely as I can, the burden of proof falls on you.)

But there is one other type of regulation, and one that lays bare Trump’s own hypocrisy: the Executive Order. Trump’s been in power for less than six months, and has now passed 38 Executive Orders – more than Obama (at 37) did in his entire first year. The Tea Party and the British Conservatives have no problem with regulations as such. Their problem is with protecting the dying and desperate carbon industry to which they’re beholden, and the out-moded economic model that goes with it.

Streamline regulations that protect individuals from the unscrupulous, rescind those that create monopolies. But the primary duty of government is to defend the realm, and the type of regulations under attack, that defend our very existence from the threat of climate change, exist to defend the realm from an existential threat. Those who would abolish such regulations are therefore, by definition, traitors. So the president of the US is a traitor. That’s the depth to which it has sunk.