Applying the Legal Principle

Some regulation is essential

• Regulations make doing business more challenging, but can be essential in helping a free and peaceful society avoid substantial risks that would otherwise breach the Legal Principle. Substantial risks generally exist on a continuum and are therefore subjective, requiring local communities to define them through a reasonable interpretation of the Legal Principle.
  • Example: a truck hauling hazardous chemicals through town must comply with the local community’s regulations that define which type and quantity of chemicals create a substantial risk, and their tolerable proximity to residents.

Many regulations are coercive.

• Many regulations today restrict activities that do not harm or create substantial risks to others, and are therefore coercive. Regulations that restrict businesses in unnecessary ways, harming effective customer service, impairing innovation, and limiting employment opportunities, are breaches of the Legal Principle.
  • Examples include: regulations aimed at achieving moral goals, controlling competition, or favoring some groups or companies over others. Coercion, even when seeking to accomplish worthy goals, breaches the Legal Principle.

Regulations are unknowably complex.

“The more laws and commands there are, the more thieves and robbers there will be.” Lao Tzu, Tao Te Ching

• No single person can be familiar with all the countless compulsory regulations that apply to our daily lives. Such restrictive regulations create unknowing criminals out of most of us.

Private rules can still be applied.

• As owners of their property, private companies, individual homeowners, or Homeowners Associations (HOA) that have complied with their rules of operation can issue any rules and regulations they prefer concerning all people who enter their property. This conclusion remains true even if their rules have no connection with the Legal Principle (so long as any risk posed is limited to those who’ve voluntarily agreed to these rules).
• These rules only apply to individuals who voluntarily consent to enter these properties, where additional rules have been established. Due notice of the rules (via a clear physical sign or verbal information) must therefore be given by the owners.

Rules on private property reduce the relevance of regulations

• As we move toward a world where we privatize more and more property, the entire issue of mandatory regulations becomes less critical.
  • Returning to our example of the truck hauling hazardous chemicals through town, if we imagine the road to be privately owned, as with all other private property, the road owner will determine under what conditions such a truck could use the road. So long as any risk posed to people is limited to activity only on that road, and the risks are consented to by people using the road, there is no cause to mandate any regulation. Competent adults are entitled to consent to any hazards for any reason.
• Some mandatory regulations will always remain, where risks to others are substantial and potentially far-reaching. Recklessly storing dangerous chemicals or powerful explosive devices would always be prohibited, for example, unless people specifically consent to the specific risks.

The problems with current regulatory systems

Regulatory capture

• Regulations create an unfair competitive advantage for bigger companies.
• It is common for people to leave regulatory jobs to join the corporations they previously regulated. This revolving door, being supposedly ‘too big to fail’, and buying political influence, are all features of Crony-Capitalism, whereby typically larger businesses can use their resources to influence regulations to stifle competition.