Comment by quotemstr

So what distinguishes the good regulation from the bad? Good regulations either

1) solve collective action problems (i.e. situations in which we're all better off if we all do X but it's in nobody's immediate personal interest to do X), or

2) short circuit short term corporate hill-climbing and let us "jump" from one local economic maximum to a higher one elsewhere in configuration space without having to traverse the valley between (which corporations won't do on their own).

I think even the most hardcore objectivist types would appreciate that these classes of problem exist. Even if you delegate their solutions to some ostensibly private actor (e.g. let insurance companies make the building codes) you end up with an inescapable system of rules that's de facto state control anyway. Doesn't help.

The problem with the cookie law is that it doesn't solve a real problem. Look, I'm probably going to get downvoted to hell for saying this, but the people who make "tracking" a cause celebre are a tiny, noisy minority and most real world people don't actually care. They're more annoyed by cookie dialogs than the cookies.

Policymakers overestimated the size of the privacy advocate constituency and so enacted regulations that solve a problem that exists only in the minds of diehard privacy advocates. Now, policymakers are reversing this policy. They're doing is slowly and tentatively (because they're still spooked by how loud the cookie banner people are), but they're doing it. Credit where it's due for finding their gonads.

The cookie affair isn't unique though. It's just one example of a regulation that went wrong because it came out of non-market decision making. Money is an honest, clean signal.

You know what a market is? It's a policy diffusion engine that uses profit as its loss signal. Works remarkably well almost all the time!

In those few situations in which we depart from the market as a decision making mechanism, we have to be careful not to allow ourselves to be corrupted by the usual suite of bugs in human reasoning: availability bias, recency bias, social desirability bias, and so on. The market, because money is an honest signal, resists these corruptions. Regulatory bodies? Much more vulnerable.

The cookie law is a central example of a time when a non-market regulatory apparatus was corrupted by a cognitive bias: social desirability bias in particular.

Of course we need some regulations. But when we make them, we need to be aware that we're likely getting them wrong in some way. All regulations should have

- automatic sunsets,

- public comment periods,

- judicial and legislative review mechanisms,

- variance and exception mechanisms, and

- the lightest possible touch.

Just as in software, each additional line of (legal) code is a liability, not a feature. Keep it simple.