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Comment by maxglute | Hacker News Reader

> in terms of raw productivity

In terms of dubious financialized metrics of productivity, i.e. debt + fx driven growth. Which is valid indicator, but also the same inflated indicator that suggests 2025 tertiary that cost 200% 1980 tertiary (income/inflation adjusted) is somehow more productive and not parasitic. The entire problem is spreadsheet doing gangbusters is dependenant on increasingly inequitable CoL extraction to prop up GDP flows. US economy would appear much less powerhouse if not for all the disproportionate financiailization/rent extraction from inelastic sectors (rent/education/health etc) aggregated over past 40 years over functionally comparable value goods/services.

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Exactly. In <pick random developing nation that isn't too poor> a man who wants to construct a septic for a house pays a man with backhoe who understands the nuances to make it happen. Concrete and diesel are bought, etc, etc, etc. Let's say $5k USD added to GDP.

In US same thing happens. But the man is compelled by threat of law to pay for engineering studies, permits, as are the man with the backhoe and the man making the concrete, etc, etc. $10k is added to GDP.

Has anymore wealth actually been created tho?

You can argue there's a difference because the latter septic is superior because on average they fail less and there's some amortized cost to that but if you're arguing about marginal differences in the face of an integer multiple you've kind of already lost.

This generalizes to just about all products and services. No more value is being created. There's just a bunch of hands in the pot that look like value if you squint and apply motivated spreadsheet magic.

> In <pick random developing nation that isn't too poor> a man who wants to construct a septic for a house pays a man with backhoe who understands the nuances to make it happen. Concrete and diesel are bought, etc, etc, etc. Let's say $5k USD added to GDP.

The piece you're missing is that the man has to pick between 10 indistinguishable men with backhoes, of which some unknown percentage are charlatans who will dig a hole, put some pipes in it, then disappear with the money. The original man will now have a puddle of human waste next to his house, no septic system, and be $20k poorer ($10k+ in cleanup, then $10k to someone to build an actual system).

Regulation ensures that the charlatans can't operate and that everyone who pays $10k for a septic system actually gets one that works for decades. This also protects the original man's neighbors who also suffer when his property develops a cesspool. Regulation also protects against well-meaning but incompetent operators, who are also common when regulation is weak or non-existent.

There is still $5K more _economic_ value created, in that +$5K went to people who might otherwise be jobless. They'll in turn spend that money at businesses in the private sector, reaching more people, and so on. If the man with the septic tank runs a coffee shop, he will see extra value from more coffee sales.

The extra taxes paid by all will (theoretically) improve the schools, roads, military, and services. The regulations will (theoretically) decrease the risk of poisoning ground water and injuring someone, which adds even more value to the local community.

The distinction is just that the septic tank is twice as expensive in the developed country. But that money can lift people out of poverty. The exception is when the company owner is hoarding the majority of the money tax-free instead of paying it to people who will spend it.

>There is still $5K more _economic_ value created, in that +$5K went to people who might otherwise be jobless. They'll in turn spend that money at businesses in the private sector, reaching more people, and so on. If the man with the septic tank runs a coffee shop, he will see extra value from more coffee sales.

That's the grade school analysis and in reality we are all poorer for it.

If ten people pay $5k to avoid getting a substandard service that has a 1/10 chance of happening and will cost $20k to remediate if it does that is a massive loss to the overall economy because that money otherwise would've been spent elsewhere else.

This isn't just septics, it's every widget and service. And it's not just a government and tax problem (though those cases are frequently most flagrant). Private industry requirements cause the same problems.

Ahh the bad high school maths take, which doesn't account for the risk.

People don't just build 1 thing for a house nor can they afford a $20k failure.

If you take Fred who saves up $10k for a major purchase for his house each year.

If there is a 10% chance of a failure, then Fred will have a 53% chance of bankruptcy in 7 years.

You can't run an economy where everyone is bankrupt.

Calling out people for “bad high school math” when you can’t even write a coherent sentence is pathetic.

A man saving 10K per year goes bankrupt if he doesn’t spend it productively? That’s what you’re trying to say?

And in some areas it's even worse than that - construction quality for housing can be very poor. You basically need an independent building inspection to not get scammed by poor quality construction.

So instead of a man with a backhoe we should instead hire 10 men with spoons?

The person who wanted the septic tank almost certainly would spend that $5k somewhere else if he had it. Except in that circumstance he would spend it on something that he thought provided him value, instead of overbearing regulation.

As someone with a septic tank, I'd rather spend more on a system that won't fail and won't kill anyone. I'd grumble while paying so much but I'd still do it. Just like I'd rather pay more for a car from the over-regulated EU than one for half the price from a country with no safety or quality regulations.

I realize I don't speak for the more cash strapped population, and I agree that overbearing regulation can be a problem. The problem is not regulations themselves, which save lives, but the perverse execution of new regulations in countries like the US (often written by market leaders to cement their moat, with the power of lobbying.)

This is a wild take imo. Yes, I am sure there there are definite cases of overreach and I generally sit squarely in the libertarian camp but most permits, studies, etc are there for a reason. Maybe you have lived in a developing nation but I have and I can say you are at much higher risk of death because of the lack of oversight. The number of commercial building fires, risky electric installations, lack of common code is highly dangerous.

I haven't been in a car accident for 15 years, not even fender benders, that doesn't mean I shouldn't take insurance.

As someone from a random developing nation car accidents deliver crippling debt and destroy lives there frequently because insurance is not mandatory.

The developing nation blindly ignore the externalities of not having insurance (instead of spreading the cost throughout society, only a few people bear the brunt of it, usually the ones least equipped to handle it), so your example is great only if you assume its fine to continue to beat down the poor. There's a reason developed nations have developed such "red tape" and the anti-vaccine movement here in the US is finding out what happens when the red tape is removed.

It comes down to the amortized cost of insurance vs amortized cost of not. Say nothing about how incentives get fucked all to hell by breaking things across many parties (principal agent problem) and the money distorts things.

And this isn't just insurance. Just because someone who work is being made for by law or by rule says that their work output reduces the failure rate from X to Y doesn't mean that the cost of their work when applied to everything isn't a massive loss compared to just not paying for that and cleaning up the mess X times instead of Y times.

You can appeal to emotion all you want but it's a very simple calculation. Heck, health insurance (in the US) serves a pretty obvious counterpoint.

Costs to clean up a mess from an underregulated industry can be bigger then the whole industry causing it. This is not even untypical.

Examples: Leaded gas, tobacco, CO2 emissions, dam breaks, reactor meltdowns, air pollution (really pollution in general; river/groundwater contamination for your septic tank example)...

If you underregulate, you end up with frequent cases where not even imprisoning and dispossessing everyone remotely involved/culpable is gonna get you sufficient compensation; this is extremely undesirable.

Companies are frequently gonna steer towards such scenarios, too, because they can allow them to externalize costs.

Compare against the typical OCED nation, US spending ~18% gdp on health, about ~8% higher than OECD average, i.e. 2T+ rent extraction per year for net lifespan that is statistically worse than OECD average. 6 months of US excess health spending buys you entire HSR system in China that's frequently being panned as overbuilt and wasteful. Meanwhile look at recently built Brightline Florida, with ~120 deaths per billion passenger km, normalize that to EU, JP, PRC HSR billion passenger km, you'd get 15k, 50k, 310k fatalities per year. Imagine PRC losing Cincinnati every year due to rail deaths. Now Brightline extra dumpfire execution but just to highlight at some point there's too much red tape, and red tape doesn't always buy you value. Sometimes the system is so broken and you end up the worst of both world quadrants: high cost rent extraction & less than first world outcomes because the accumulation of redtape itself is leading to substandard outcomes. AKA premium medicore. Extra worse in some sectors when it's not simply opportunity cost inefficiencies, i.e. you lose on something else. A sclerosic money flow recycling maximizer can also makes the thing it's pumping money into worse than expected.

You can build as many electric cars as you want, it's not going to resolve 8 hour workday or the cost of living crisis or the housing crisis. All of that is a social coordination problem, and the tools to resolve that will emerge from the humanities and the finance industry, not hard engineering.

Furthermore, people want those white-collar jobs you detest, and not everyone is inclined to R&D as this forum might think. The real problem is how technological progress has not been properly applied to improving white-collar productivity as opposed to just filtering, funnily enough of which this very thread is about regarding university.

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