How Government is Like Bacteria

I've been getting links and comments from The Silicon Graybeard for a while now, but I'll admit that I haven't spent much time over there.

That's going to change. One excellent example of why is this recent post, On Germs, Weeds, Companies, Governments and Skunks. Excerpt:

(Lockheed Martin CEO Norman Augustine's) most memorable law, and where I'm going with this, was "Systems of Regulations created as a management surrogate take on a life of their own and exhibit a growth history which closely parallels other living entities observed in nature". He went on to show the number of pages in armed forces procurement regulation vs. time along with a curve of weed growth (from the journal "Weed Science"), and produced a graph any biology student will instantly recognize as the sigmoid growth curve of populations, also called the logistic function.

A usual example is the common bacteria E. coli. This species can divide and produce a new generation every 20 minutes; if conditions could remain optimum it would undergo geometric growth and produce a colony the size of the planet in 24 hours. Because conditions can't remain optimum, it has a logistic growth curve, producing much smaller colonies.

In regulations, there is a price for this. Although the legislators and regulators never consider this, every regulation consumes some amount of time and money to comply with. The new Finance Reform bill has been estimated to required the development of 250-300 new regulations. Every regulation slows down, hinders and costs every honest business real money. Despite the widespread talk of corrupt CEOs and general lack of corporate ethics, I've been working in the manufacturing industry since the mid 1970s, and every company has had an active, if not aggressive, ethics compliance program with requirements for training and seminars every year. There are exceptions but most companies do their best to be honest and law-abiding. Government seems to think it's mere coincidence that countries with lower tax rates and lower regulation attract business, and they demonize companies for moving to countries where the environment is better.

A simple way of determining if someone you talk to has any economic sense is to ask them about corporate taxes. The economically ignorant (I'll be polite) will scream to tax the corporations. Those with sense will tell you corporations are fictitious and can't pay tax. Tax is part of the cost of doing business and therefore passed on to the buyer (the people calling for them to be taxed). Corporations can collect taxes for the government (for which they are punished with more costs, not paid) but cannot generate them. Every penny a company has comes from its customers. In a global market where they compete with companies in cheaper environments, they are at a disadvantage.

I quoted that so I could quote this:

This is where we find ourselves as a nation.

We are strangling in a bureaucracy with a Code of Federal Regulations that has grown like a bacterial culture. A nation that was founded by a constitution that fills about 14 printed pages in today's technologies, passes financial reform bills that go over 2000 pages, health care bills that go almost 3000 pages, and more. Each bill creates hundreds of new regulations, which are so poorly written they have to be refined by hundreds of court cases. The court cases effectively create new law and new regulations. Since congress is in session every year and passes at least one new law every year, the total number of laws and regulations increases without limit and everything eventually becomes illegal.

What can we do? We can't form a "skunkworks country" that can get around our laws and create a more mobile, productive society. We only have one option: we have to create a national process, like industries do, to become more "lean, mean and low to the ground". Get rid of superfluous laws. We simply must reduce the size of the CFR and reduce the destruction caused by the regulation and litigation in our society. To me, Tort Reform is absolutely essential. A big part of the industrial lean activities is to study what policies need to be gotten rid of because "we've always done it that way". The same should be done with the CFR.

In other words: "deregulation."

There's a lot more there. Please, go read.

And Graybeard? You're on the blogroll.