Why we need more regulation, not less

Everybody complains about regulation. Regulation is criticised as a restriction of one’s freedom, of one’s capacity to innovate and exploit new opportunities. This discourse is frequent among ordinary citizens. It is a leitmotiv of businesses of all sizes. The last avatar of this regulation-bashing trend is the REFIT programme of the European Union, based on the work of the “High Level Group on Administrative Burdens” chaired by former conservative (CSU) Bavarian Minister-President Edmund Stoiber (final report “Cutting red tape in Europe”, July 2014, available here).

The discourse is the following: (1) the European Union (or any government) produces “too many laws”, which place a “burden” on businesses (and specifically on the SMEs), (2) this burden has reached an “unbearable” level and threatens the very survival of the said businesses, (3) thus, the overall volume of legislation must be maintained at the same level, or even reduced. This last ambition is summarised in the recommendation N°2, p.8 of the Stoiber report: “offset new burdens on businesses stemming from EU legislation by removing existing burdens from elsewhere within the acquis [i.e. the existing body of EU laws]”. This statement has been upgraded into a political slogan “one [law] in, one out” (or two, or three, depending on the level of demagoguery or of libertarian dogmatism of the speaker), and is now widely used in Europe, in the REFIT programme of the EU as I mentioned above, but also in the United Kingdom (where it has become a Conservative mantra), Germany, France (centring on the Labour Code), …

This level of nonsense makes me furious, for two reasons.

First reason: By definition and by essence, a law restricts freedom and is costly. It imposes obligations to perform actions that some people or organisations would rather not do, or forbids actions that some people or organisations would like to do. No law exists that forces people or organisations to do things that everyone would do anyway (e.g. to breathe), or forbids them from doing things that nobody would do anyway because they are technically not feasible (e.g. pick-nicking over the week-end on Jupiter) or suicidal. A law is also costly, by definition. Obligations mobilise time and resources to fulfill, and prohibitions prevent some lucrative opportunities from being taken. Arguing against law because it is costly is just not understanding what law is – or pretending not to: instead of attacking the legitimacy of the law itself, engaging a sidewards attack against its “costs”, as if a law could exist without.

Second reason: Three major global trends of our societies – technology, science, globalisation – generate the need for more regulation, not less:

  • with technology (and energy), we are able to perform more actions than before, that have more transformational impact on the social, physical or economic worlds (e.g. encrypted messaging, low-cost air transport, crowd-working platforms),
  • with science, we are more aware of the consequences of these actions, even if they are distant in time or space (e.g. on climate change),
  • with globalisation, geographically distant consequences of our actions impact us more than before (e.g. the civil war in Syria generating a flow of refugees towards the European Union).

The convergent consequences of these three global trends of our societies lead to: we are able to perform more actions, whose consequences we know more and matter to us more. If law is there to prevent such actions from being undertaken – and I would argue that this is a fully legitimate role for law – then we need more regulation than ever, and not less.