Wednesday, December 5, 2012

The costs and benefits of over-regulation

I didn’t like the idea at all, but I knew he was right.  The law is something to weigh when doing your cost-benefit analysis.  DSCI0743Whether or not to break the law is simply part of a business decision.

To me, this exemplifies everything that’s bad about our over-regulated society.  Law is no longer a dictate of what is right or wrong.  It’s far beyond keeping some semblance of order in society.  Law is just another weight to be put on your scale when making decisions.   And we all do it, whether we realize it or not.

When was the last time you drove above the speed limit, or crossed the street when the red hand was lit?  The last time you didn’t bother to pay a parking meter or posted a picture you found somewhere online to one of your social networking sites?  And when do you do these things?  When the cost is lower than the benefit, when the risk of getting caught or the risk of being punished if caught is minimal.

As plain-old-Joe’s, most of the laws we break are what we would consider minor.  The laws are often there to protect us; the punishments are relatively small fines and there’s no risk of ‘a record’ that might hurt us later.  (Note: my last example above does not fall into this category.)  But for businesses, these are real, heavily thought about decisions.

Perhaps nowhere is this more true than when dealing with intellectual property.  The law is so grey that it’s often difficult to know when something is against the law.  People spend hours and lots and lots of money trying to answer this question.  Then they spend more hours and lots and lots more money trying to decide, if it is against the law, what are the risks to the business.  They buy insurance to protect themselves from this risk.  The law is like a fire or flood, a quasi-predictable occurrence of which you can only estimate the chance of its harm to you.

Of all the laws out there,  I can only think of two groups that truly regulate right and wrong, and they have the cost benefit analysis built in; society has decided when the benefits outweigh the cost:  causing harm to someone else or causing death.  If you’re defending yourself, there’s an excuse; the benefit of protecting you outweighs the cost of the loss of the other person.  If you’re completely enraged because you found your partner in bed with someone else, society understands.

Does it have to be this way?   Can we expect people to respect the law when disobeying the law is only a question of how it will affect you?

Photo: Statue of Lady Justice at Nasarawa Law School in Nigeria

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