I think this is a fun historical example. Ships passing through Denmark needed to pay a tax of 1-2% of the value of their cargo. They self-assessed that value.
The twist that makes it interesting was that the King could choose to purchase any cargo immediately at the reported value. If a ship underreported, they might save on tax, but they risked taking a hefty loss.
I have no idea how effective this was, but it's compelling. I wonder whether great self-regulation might need clever design like that example.
Not quite the opposite, it still outsourced the administrative burden. They avoided the hassle of boarding every ship and inspecting the cargo with a random threat. One could even call it "properly incentivized self-regulation".
I'm genuinely curious how you imagine this system working without a government bureaucracy keeping track of the values of all cargos and regularly inspecting ships to verify the accuracy of their manifests.
What stops ships from reporting something like "Wheat - 25 guilders per ton" when they're actually carrying diamonds?
It doesn't even solve the "It's hard for the bureaucracy to know how much stuff is worth" problem- The government still needs to know enough to decide whether or not to call BS on "Caribbean Grey Ambergris- 300 guilders per pound"
This system does have the advantage that it allows the government to make small fines without the legal burden of establishing that the merchant was lying, but that's in no way the same as self-regulation.
The story is from the 15-1600s. I imagine it working like things generally worked in that time period which is with quite a lot less bureaucracy than today.
The cleverness of the idea is it leverages fear to prevent ships from declaring "wheat" for their ship full of diamonds. You can make some sporadic, random inspections, just enough to keep the fear up, instead of having to inspect every single ship.
The idea of "Wait, we can just make sporadic random customs inspections" is way older than this law. I suspect it was invented by the first ever customs inspector. (At a minimum, Plutarch at one point described it happening at a checkpoint between Roman provinces)
Amateur motorsports has a similar concept - often called a "claim rule" or similar - in an attempt to control costs.
Basically, for $x amount, a competitor can buy the winning car (or its engine, or similar). Where $x is the amount the group decides should be a reasonable amount to spend on building a car.
A racer is free to spend more, but if they win too much, somebody will write a check and buy the car.
In theory. In reality, plenty of people have the money to spend $x^2 and risk the loss.
I think this is a fun historical example. Ships passing through Denmark needed to pay a tax of 1-2% of the value of their cargo. They self-assessed that value.
The twist that makes it interesting was that the King could choose to purchase any cargo immediately at the reported value. If a ship underreported, they might save on tax, but they risked taking a hefty loss.
I have no idea how effective this was, but it's compelling. I wonder whether great self-regulation might need clever design like that example.