We often hear big businesses complaining about regulations, but if those regulations are complex enough, they turn into giant opportunities for big business. All you need is a smart team of lawyers in order to drive a big truck through a tiny loophole or exemption, as explained by Kevin Drum of Mother Jones:
[N]o one should take too seriously Republican complaints about burdensome regulations strangling the economy. The truth is that most reformers prefer fairly simple rules. In the tax world, they’d prefer to simply tax all income. In the environmental world, they’d prefer to set firm limits for pollutants. In the financial world, they’d prefer blunt rules that cut off risky activity at its knees.
But businesses don’t like simple rules, because simple rules are hard to evade. So they lobby endlessly for exemptions both big and small. This is why we end up with tax subsidies for bow-and-arrow makers. It’s why we end up with environmental rules that treat a hundred different industries a hundred different ways. It’s why financial regulators don’t enact simple leverage rules or place firm asset caps on firm size. Those would be hard to get around and might genuinely eat into bank profits. Complex rules, conversely, are the meat and drink of $500-per-hour lawyers and whiz kid engineers. If the rules are complicated enough, smart lawyers can always find ways around them. And American corporations employ lots of smart lawyers.
In an earlier post, I had cited this quote: “One can make money only if there is real risk based on actual uncertainty, and without uncertainty there is no risk.’ To the extent that we have simple and understandable rules, it is harder to hide unfair business practices.
There is great value to uncertainty–to unwieldy and vague legislation–to those who have teams of savvy lawyers and accountants whose job it is to navigate and circumvent the purported intent of the legislation. That’s because most of us don’t have the time, attention, energy or political clout to rein in those who create these legislative monstrosities. We’re too busy working 8 or more hours per day at the office, then trying to be good parents, trying to fix the house or car, and maybe relaxing for an hour or two per night. How many of us are interested or able of plowing through 2,000 page legislative packages or regulations in our “free time,” or trying to make sense of complex court decisions that also struggle with these legislative morasses?
As Kevin Drum writes:
We could probably cut the size of agency regulations by 10 times if we wanted to. But business don’t want to. Sure, they’d prefer no regulation at all, but they know that’s not in the cards. So in public they bemoan complexity, but in private they fight endlessly for more of it. To their lawyers, every single extra page is an extra opportunity to make more money.
It makes one think that we need a law to outlaw complex laws. We need a law that all laws should be written in plain English and that they must be understandable by high school graduates. Those who insist that they need something that is not reasonably understandable should be presumed to benefit a special interest and presumed to be opposed to the public good. Complex laws are huge red flags, regardless of the title of the law or the way politicians assure us that these laws will benefit the public.
Indigestibly complex laws almost always signal that ordinary Americans are getting screwed.
In Philip K. Howard’s 1994 book The Death of Common Sense: How Law Is Suffocating America he points out how, in the 20th century the regulatory goal was to write such a complete set of rules that there was no chance of arbitrary, unequal, or unfair enforcement on the part of agents such as inspectors or police.
The result was a set of laws and regulations so cumbersome, complex, and often self-contradictory that inspectors and other executives pretty much have a free hand as to choosing when and what to enforce.
It is up to hired experts to decide what rules may or must be followed and which can be evaded (much like as in the law or tax codes). Therefore, those with the most money not only hire those who make the rules, they can choose which existing rules have to be observed.
How many people in the entire world who are not paid to do so, have actually completely A) read or B) understood either A) the Health Care Reform Act or B) the Wall Street Reform? I’d bet it would be an extremely small number, which is odd considering that this is supposed to be a country run by the People.
The 2012 National Defense Authorization Act (NDAA) illustrates the power of drafting complex/vague legislation. This new law will enable the government to illegally and indefinitely detain people who will then be required to hire expensive lawyers to assert their constitutional rights. Of course, most people cannot afford to pay lawyers huge amounts of money to take on complex constitutional issues.
Instead of drafting a bill that clearly excludes Americans from this abhorrent process, Congress enacted the a vague/complex bill that allows the U.S. military to do the opposite of what the President’s apologists are now proclaiming. http://www.salon.com/2011/12/16/three_myths_about_the_detention_bill/
A perfect example of unnecessary complexity as a malicious tactic:
And check out Kuttner’s follow-up:
http://www.huffingtonpost.com/robert-kuttner/volcker-rule_b_1303005.html
“The inner workings of the 401(k) system are shrouded in secrecy and mired in complexity, which is exactly the way the securities industry wants to keep it. There has been little scrutiny of how investment options are actually selected for inclusion in the plan.”
Dan Solin, at Huffpo. http://www.huffingtonpost.com/dan-solin/the-401k-ripoff_b_1425444.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications