[barrkel]

Many regulations cannot be local because of basic game theory. Beggar-thy-neighbour policies, for example; if one region allows a little more pollution and attracts industry because of that, then other regions are forced to do the same or lose out. As a result industry socializes the cost of its pollution and takes a private profit. Similar effects occur for safety standards, consumer standards, employment standards, tax, and so on.

[pdonis]

> industry socializes the cost of its pollution and takes a private profit

Um, isn't this what is happening now, with centralized regulation?

[Qwertious]

No, proper regulation either forces companies to curb their emissions or taxes it. In other words, to internalize it.

[pdonis]

> proper regulation either forces companies to curb their emissions or taxes it. In other words, to internalize it.

No, in other words, to pass on the costs to society, because the cost of whatever they are providing goes up. Plus, since the companies are a concentrated interest, it's easy for them to buy regulations from the central authority that are favorable to them and unfavorable to potential competitors.

A proper regulation would look more like this: a company cannot even build a factory to begin with until it can convince all the parties who could potentially be impacted by their operations to agree. No centralized authority (like, say, a government) can agree on behalf of those parties, because no centralized authority can possibly properly represent all of their interests. So either every single party agrees, or nothing happens.

The usual objection to this is that no factories would ever get built, because there will always be some party that is simply unwilling to agree. But that objection ignores basic economics. If the factory really is a profitable venture, even with all of the potential impacts taken into account, the factory owners will be able to bargain with the other parties to some kind of mutual agreement. In some cases, they might just offer to buy land outright from parties that are unwilling to agree to having the factory built next to them. Or they might offer shares in the enterprise to neighboring landowners in exchange for permission to build. There are plenty of possibilities; the key point is that the economics of the situation forces the people who want to undertake the enterprise to show good evidence that the benefits really do outweigh the costs. Whereas under the centralized regulatory regime we have now, the burden to be met is much lighter and does not really do anything to ensure that the benefits outweigh the costs.

[Lionga]

No true scottsman