Doesn't all regulation stifle innovation? If I wanted to sell a homes in a skyscraper made of papier-mâché, building codes would prevent me from doing that. But that's not necessarily a bad thing: the first time someone leaves their soldering iron on while they're not using it, the building burns down and we have five hundred dead families on our hands. "Innovators" tend to think about the good aspects of their ideas rather than potential downsides, so the government has stepped in to prevent the downsides from being too bad.
In this case, the government is saying, "make any new innovative money transmission system you want, but keep $100,000 in an account so when you fuck up someone's paycheck, they can sue you and you can pay the damages you owe." Not too unreasonable.
Regulation is bad for businesses individually, but it's good for society in aggregate. Progress may be slowed, but it's still happening and happening with fewer horror stories along the way.
I wouldn't go as far as to say all regulation stifles innovation. A completely unregulated market may very well stifle innovation also - i.e., when consumer trust of that market is so low as to discourage economic activity. That is a rather extreme case, though.
I think the more relevant point is that all regulations have overhead - even ones that don't charge a $500K bond. This is something governments sometimes seem to forget. No matter how innocuous your regulation, every single one simply adds to the pile of overhead businesses must deal with, and every single regulation contributes towards preventing more businesses from competing in the market.
The balance of regulation is a tough line to walk, to be sure.
An unregulated market will spawn entities that provide the services it needs. This includes security and trust. Insurance companies, for example, are entities that people trust to protect them against loss. Rating agencies are entities that people trust to provide risk assessment.
The difference between non-coercive (private) entities and government is that non-coercive entities adapt better. So, for example, if you're planning to transfer billions over many years with one bank, you'd want the bank to have all kinds of security. But if you just want a quick, cheap way to transfer 25 cents in a micro payment over the web, you probably don't care if the startup "bank" you use has a $500K bond.
The mortgage crisis says hi. The problem with free-market ideologies isn't that the market won't adjust to consumer need, it's that it causes considerable pain in doing so and will only provide a counterbalance if there's a monetary incentive.
Free market capitalism is, at it's core, evolution. It leads to amazing responsiveness, complexity, and, arguably, beauty. It also has made 99.99% of all species that have ever existed extinct. There are homeostatic forces that keep the aggregate more or less balanced, but evolution isn't good for the species involved, it simply is true.
There's no mechanism in non-random selection with random mutation to prevent Asian Carp from taking over the Great Lakes, Pine Beetles from destroying forests in BC, invasive kelp in the Mediterranean, etc. Similarly, the free market has no mechanism to prevent credit fraud, market collapse, rampant speculation, or any of the other mechanisms of economic calamity we've seen. Your "coercive" government regulation plays the same role that we play in attempting to prevent environmental disasters through the spread of invasive species. Would a global ecosystem entirely managed by direct human intervention be desirable? No. Would be be well-advised to ignore threats to ecosystems and "let nature take its course"? Of course not.
Free market supremacists seem to fail to see the forest for the trees when arguing against regulations. The Free Market isn't an end unto itself, it's an effective means to the ultimate end, which is the improvement of the human condition. It isn't the only means, and it isn't the most effective means in all cases. The role of effective, well-considered government regulation is to harness the benefits of the free market while mitigating its risks. This can only be described as a Good Thing.
Rather than rail against all regulation, we should be trying to ensure that the regulations that are created are wise and impartial. Our energies would be much better spent ensuring that legislative bodies are free from undue influence than by trying to remove their power to regulate in the first case.
The Community Reinvestment Act seems to be a pretty likely stimulus for the mortgage crisis - incentivizing "anti-racist" behavior rather than good lending practices. Worse yet, the "considerable pain" you're trying to avoid gets worse over time -- as central bankers reduce interest rates (read: print money) to jack up growth until it gets too fast then pull money from the market (read: increase interest rates) to slow down a "bubble", the yo-yo effect amplifies until pop.
Pine beetles in BC are an interesting point, as it seems like it is precisely the lack of ownership over valuable forest land that is preventing the type of extensive research we would need to protect that resource. While research outcomes are entirely uncertain, it seems that ownership and the forecast loss of value is a pretty solid motivator for solving problems.
"The difference between non-coercive (private) entities and government is that non-coercive entities adapt better."
it's not clear if you are equating non-coercive with private entities. If so you are very much wrong.
Private companies have killed, enslaved, tortured, kidnapped, etc. There are a tremendous amount of examples of private companies being coercive.
As to ratings agencies, some spectacularly demonstrated 3 years ago that they can fail and be captured (akin to regulatory capture) by other private entities.
In the short run private entities may do horrible things, it takes time for information to travel through the system. But if we're comparing private to government - government definitely takes the cake on environmental destruction and causing human misery.
> Private companies have killed, enslaved, tortured, kidnapped, etc. There are a tremendous amount of examples of private companies being coercive.
These are instances of private companies acting like governments. What characterizes private companies is that they do not use coercion (except of course when it's justified as in enforcing voluntary agreements and protecting property.)
So for example, the original post was about banking regulation. Private bank regulators could not force banks to operate according to their standards. Instead, they would rely on banks' cooperation. If a bank did not cooperate it would run the risk of being rated badly and shunned by customers relying on regulator's rating. In no case would a non-cooperating, non-conforming bank be subject to being "killed, enslaved, tortured, kidnapped, etc" by a private regulator. On the other hand, a bank which does not conform to government regulation is in danger of killed (dissolved) and its officers "enslaved, tortured, kidnapped, etc." (arrested and imprisoned.)
I like the argument that says that when things are good, they are acting like private companies, but when they're bad, they're acting like governments; ergo, private companies good, governments bad.
Can we officially acknowledge that this part of the thread --- which is notionally about bonding requirements for money transfer companies, but is now discussing torture --- has officially gone off the rails?
dpatru might be using definitions you don't agree with but he/she is still positively contributing to the discussion. Seems on topic to me, just highly abstracted: what are possible systemic solutions to the article's issue? So I've upvoted dpatru's comments that were in the negative.
How are ideologically-pure statements -- extracted from a fantasyland where abstruse notions matter and all lines are perfectly straight -- considered a positive contribution? Particularly when they are made in willful defiance of all facts.
The whole point of this thread is about whether bonding should be required by threat of force (or torture) by government. Advocates of government regulation claim yes. Opponents claim that there are better, non-violent ways in which consumers are protected. The issue is precisely the use of force. Nobody is saying that bonding is bad or that private rating agencies could not require bonding as a condition of endorsement.
An unregulated market will spawn entities that provide the services it needs.
Information and resource asymmetry are not easily overcome; how is your argument any different than a naive assessment of economics that fails to take into account the impact of information asymmetry on the decisions of otherwise rational actors?
> Information and resource asymmetry are not easily overcome;
The best way to "overcome" information and resource asymmetry is through a free market. In particular prices and word-of-mouth/"the Internet" do this work as well as possible. If a company does a good job for a good price, its fame will quickly spread. If it rips off customers, its infamy will quickly spread. No need for government to get involved a priori, although government can get involved in fraud prosecutions and to help defrauded victims get their money back.
> how is your argument any different than a naive assessment of economics that fails to take into account the impact of information asymmetry on the decisions of otherwise rational actors?
Not sure what you mean by this, but free market competition and innovation through new/better services is a way rich societies increase wealth. Government regulation just slows down the process.
If a company does a good job for a good price, its fame will quickly spread.
So what happens when that company is bought out by new owners, starts skimping on product safety, and 1,000 people die before the market notices?
If 1,000 people die, is the company held liable by the government?
If people band together to enforce preventative measures in the community (even through private means), such that such a thing doesn't happen again, have they created a regulatory government?
> If 1,000 people die, is the company held liable by the government?
Intentional or negligent killing is prosecutable. I doubt, though, that not requiring bonding for a money-transfer startup will cause the deaths of 1000 people. As to businesses generally, tort lawyers as a class make a pretty good living holding businesses accountable. The Ford/Firestone controversy comes to mind. (http://en.wikipedia.org/wiki/Firestone_and_Ford_tire_controv...) In that controversy plaintiffs suing Firestone and Ford alleged that people died because tire failure caused rollover accidents in Ford Explorer SUVs. As a result, both Ford (maker of the vehicle with the defective tires) and Firestone (maker of the tires) had to pay a lot money and their stock price suffered. Also, one of Firestone's tire manufacturing plants was closed and Ford and Firestone no longer do business together. So there are consequences when private companies screw up.
On the other hand, when government screws up and thousands of lives are lost, like when it holds up the sale of a new drug, fails to defend the airspace against terrorist attacks, or goes to war on bad intelligence, there don't seem to be consequences.
I can always tell when a site has gone past the point of no return when comments like this are simply downvoted to oblivion. If you disagree state why.
but whatever, I always call these things. Internet communities refuse to be elitist about quality because they 1. believe in democracy and 2. are made up people who like to be inclusive because they were excluded as kids.
You're right. Governments have gained the power they have because they offered people a better alternative. I read somewhere that Napoleon was welcomed as a conquerer into parts of Italy because his government was a lot better than the local government. The problem with governments, though, is that they are fairly easy to establish, but, because they claim a monopoly on coercion, they are hard to replace when a better alternative appears.
For example, all of a city's private garbage collectors may do a poor job, so a very capable mayor may convince residents to allow the city to do the collecting. Years later, when situation is reversed and the city is doing a poor job in comparison with private collectors, it will be a lot harder to replace the government collectors with private ones. The correct response to poor private-sector service is not to bring in the government, but to bring in more private competition.
The ratings were issued by companies that had been given a monopoly by govt. Securitized mortgages were a creation of govt.
The idea that you're missing is regulatory capture combined with govt encouraging transactions that didn't make economic sense otherwise. (One of the underappreciated consequences of RC is that it amplifies "private" bad behavior and shuts out good behavior.)
That's not fair. The major ratings agencies were unregulated, all were founded privately, and were only designated NRSRO's after they had captured the market. Meanwhile, companies can apply to be designated NRSRO's, and many companies have been so designated.
The government didn't corrupt Moody's. Commerce did. The government supplied no oversight, and Moody's sold its ratings to the highest bidder.
"govt encouraging transactions that didn't make economic sense otherwise"
More like the companies selling mortgages were desperate to get the loans off their balance sheets so that they could release the capital for new mortgages. As they didn't keep the mortgages for very long the level of risk they were accepting was low so they didn't do much checking on whether people could actually pay or not - they really didn't care.
I remember comparing my experiences of first getting a mortgage 20+ years ago where it was a difficult thing to do with how younger colleagues described things immediately before 2008 and things were totally different - they were giving mortgages to pretty much anyone who asked not because the government made them (I'm not in the US) but because it made them a lot of money!
> More like the companies selling mortgages were desperate to get the loans off their balance sheets so that they could release the capital for new mortgages.
Selling them to GSEs. You do know what the "G" stands for, right?
And speaking of the GSEs, they lied about how many of the loans in their portfolio were subprime. As a result, no one knew that those loans were as common as they were, which threw off everyone's risk calculation.
"An unregulated market will spawn entities that provide the services it needs. This includes security and trust. Insurance companies, for example, are entities that people trust to protect them against loss. Rating agencies are entities that people trust to provide risk assessment."
Do you have any examples from reality where this has happened? Are insurance companies and ratings agencies really trusted agencies that would function even better in an unregulated market?
I posit that with no regulation, these entities would become even more unscrupulous than they are now.
Furthermore, magazines, blogs and retail store all act as rating agencies in some ways. Magazines have a strong incentive to only recommend quality products since their reputation is at stake. The same goes with retail store. They make sure they sell quality product because their reputation is at stake and they don't want to lose business.
Of course, the incentive for building those kind of companies is very low given the uncertainty that the government might decide to assume your role, putting you out of business.
> CAs suck and are unaccountable. Any of them can (and many of them have) issue a certificate for a site to an attacker.
> eBay feedbacks can be gamed and I generally don't trust them.
Do you think the government would do a better job at providing CAs or rating eBay sellers? Do you think the government is somehow immune to fraud?
> Your retail store example is laughable. I'm sure Walmart really cares about the quality of its products.
"I'm sure Walmart customers really care about the quality of products they buy at Walmart."
Walmart offers what customers want: cheap prices at the cost of lesser quality. Luckily we are still free to buy low quality products, because the government might "fix that" someday.
The question was not whether unregulated markets spawn "trusted rating services". It's whether society could function with private rating services in lieu of regulation.
Actually, he is not moving goal-posts, he is just asking for the second half of his originally stated question to be answered. I know it is silly, and probably sounds like nitpicking to you, but please, don't make false claims, particularly when they are just veiled ad-hominem.
Why? The regulations erect great barriers to entry for would-be competitors, solidifying profits of the current market players and allowing them great latitude for slacking off and sub-par performance.
We're seeing the same thing now with the money transmitters.
This is true -- the hardcore capitalist would argue that the plaster industry has been hamstrung by the quaint requirements from building code to use wood, steel and concrete in construction.
There's a give an take here... the government has a perceived duty to protect the citizenry against bad actors, that that introduces a bias against sudden change aka "innovation". "Innovation" isn't always good -- just like to some people, certain "freedom fighters" are "insurgents".
On the other hand, there are entrenched business interests like Western Union (and payday lenders in "red" states) who use their influence to keep the status quo around, even if it hurts consumers. (ie. the poor and ignorant who spend $10 to send $100 to someone)
Government regulation is in just about every case either not needed at all or better provided through non-coercive institutions. Since government innovates more slowly than private industries, government regulation tends to become outdated, going from common-sense prudence to arbitrary burden on innovation. For example, right now the Mississippi River in the US is flooding, destroying many homes. This is a huge loss partly because homes are very expensive. Maybe it would make sense to have some housing constructed of paper-mâché, not try so hard to resist disaster, but instead concentrate on making it cheap to rebuild. Government building codes prevent this kind of innovation.
Regulation reflects a lack of creativity. It says, "There is no other way to do this." But maybe there is another way and the politicians just can't think of it. They shouldn't be allowed to limit other, more enlightened people.
The above assumes that regulations are honestly designed to promote the public good, a dubious assumption. Often I suspect that regulation is designed to protect influential but inefficient businesses against competition.
"Since government innovates more slowly than private industries, government regulation tends to become outdated, going from common-sense prudence to arbitrary burden on innovation. "
The space program spawned a tremendous amount of innovation. Public research universities throughout the nation innovate on a grand scale. The internet is an example of government innovation.
Regulation does not reflect a lack of creativity. It reflects an acknowledgment of a problem and steps to address the problem. Sometimes side effects occur and are bad and the regulation needs to be reanalyzed. Sometimes there is regulatory capture (by private entities).
Government had to mandate the use of seatbelts. This led to airbags because after the government made safety an issue innovations were made in this area. They probably would have been made without government intervention but government got the ball rolling and the innovations occurred sooner as a result of government.
Regulations can be good, bad, or neutral. But talking about "non-coercive institutions" makes your view look extreme.
The air force actually developed seat belts from scratch. http://en.wikipedia.org/wiki/John_Stapp demonstrated that the human body could withstand vary high G's for short periods, and because more pilots where dieing in car accidents than airplane accidents the air-force was willing to do some vary important basic research.
Which brings up the basic issue, the incentives of car makers / home builders / bankers to create safe products does not line up with society's benefit from safe products without some external input.
That's an interesting thesis, but can you name one good building material that you can't actually use to build a house? People talk about regulation in the US like it's hindering any form of innovation, but there is surprisingly little terrible regulation that's actually enforced. Which is not to say you can't point to regulation that harms individuals but rather it's much harder to find things that harm society over the long term.
PS: Not to side track to situation; we are talking about building materials and you can use a wide range of things including straw and dirt in the US so what's missing?
> can you name one good building material that you can't actually use to build a house?
http://www.youtube.com/watch?v=PKH0qoaXR88 Discusses how building codes hinder new and "natural" building methods. In particular, the speaker mentions that older codes have failed to keep up with better techniques for strawbale building.
The deeper issue is not whether new materials can be used to meet code requirements, but whether new ideas of what constitutes a safe dwelling are allowed. Building codes are based on assumptions about what a dwelling should be like. For example, the floor should be relatively stiff. If a floor is too bouncy, it won't meet code even if it's strong enough to support the weight. Walls can't be too flimsy. The idea of a house that just safely collapses in a windstorm or floats away in a flood is, I suspect, outside of most building codes' conception of a safe building. The code focuses on the idea of a strong, permanent structure that will resist nature's forces. If houses were plants, the code would only recognize big trees. However, there are also grasses, which much cheaper to produce and also resistant to nature's forces in their own way (they bend). Yet building codes don't recognize structures that are inspired by grasses, only big immovable trees.
I don't know if grass-like houses are a good idea or not, but I'm sure that if we expand our thinking we can come up with better shelters. The problem is that it's hard to innovate and government regulation only tends to make it harder.
Houses are not websites when they fail people often die.
In that video he is trying to build long term structures and he complains not about the building codes, but the fact that there is no data to support the safety of new building ideas. The whole point of a building code is you get to avoid running the numbers, if you build a structure using these methods with these materials it's safe. There are rules for temporary structures like tents, but if you want it to last for 50 years you need to demonstrate it's safe. And, if he was capable of demonstrating he could build a safe house out of toothpicks and spit he could have done so because the only limit on his construction was providing number so an engineer could demonstrate the safety of the structure. And, the compromise of "build a load baring structure from well understood materials and fill it however you like" is vary open.
No I don't think most regulations are good for society in aggregate, including building codes. What if we had software codes to make sure we write secure software, would that be a good or a bad thing?
Take this payments law for example. Its intended objectives are admirable but I don't believe it will accomplish them nor benefit consumers in the long run.
By artificially imposing a high barrier to entry (licensing fee), the consequence will be to encourage the formation of monopolies.
Furthermore, payment companies will have a lesser incentive to secure their service or build a reputation of trust since consumers will be led to believe that "all payment companies must be secure since they are all approved by the government". What was once an important competitive advantage will lose a lot of its importance.
There are probably other perverse effects I could think of but my point is that things are much more complex than they might seem.
> No I don't think most regulations are good for society in aggregate, including building codes.
Nearly every large earthquake proves you wrong on building codes. Compare deaths for a given magnitude quake in areas with strong building codes vs. areas with weak or no building codes.
Alcohol has some societal benefits. Some people find it pleasurable, it helps some people overcome anxiety in social situations, and it helps programmers cope with the horrors of programming in Java.
I don't see what societal benefits structurally unsound buildings provide.
You're right but in this case, the detail doesn't really matter. The point is you need a lot of capital to enter the market.
Once you are licensed, nothing prevents you from committing a fraud except for the potential risk of losing your bond. This risk could be insignificant given a large amount of money to defraud.
All this law does is guarantee that from now on, only rich people are allowed to commit fraud.
What I mean is that this law which is intended to prevent fraud does nothing of the sort. All it does is guarantee that the people who commit fraud were able to pay the bond. What's the point? If they do commit a fraud, they'll probably steal much more than the value of the bond anyways. All this regulation really does is stifle competition, I'd eliminate it altogether.
The risk that the bond mitigates is not that your money transfer enterprise is a criminal conspiracy. It is that you are incompetent. The concern is that after the first or second instance in which you lose a 5-figure sum of money for a client, you'll pack up and leave town.
I think we can agree that's a far more likely scenario than premeditated fraud.
Incidentally: $500k is the floor of the bond value needed. It scales up to $7MM with transaction volume. Personally, I think they should uncap it altogether.
His point is that the bond is too large, and that's _just_ for California. In the linked quora post, it was specifically pointed out that there are 43 other states where one has to do the exact_same_thing where the bonds vary from $10k-$1M.
You don't actually have to pay the $500k. A new business with no history (good or bad) might pay $25k to post a licensing bond.
I don't have anything to say about the 43 other states that want bonds to conduct money transfers in them, but some of the coverage here seems a tad breathless.
tptacek: Perhaps it is breathless, but I think many of us find it interesting. States noticeably absent from Paypal's licenses:
New Mexico,
South Carolina,
Georgia (heavy banking industry),
Rhode Island,
New York (heavy banking industry),
and Nevada (heavy gambling).
I might put together a spreadsheet this evening if I have time.
> All this law does is guarantee that from now on, only rich people are allowed to commit fraud.
So you're fighting for the little guy to be able to commit fraud too? FWIW the rich guy is not just risking losing the bond, but also going to jail. That's the threat, the bond is just so customers can get paid.
Why require bonds for anything? Bonds aren't going to keep construction companies from committing fraud. They won't keep movers from making off with people's goods, or folding up shop when they get in traffic accidents. For that matter, why require millions of dollars of insurance coverage to work on infrastructure projects? It won't keep me from committing fraud, if that's my real goal.
I have nothing against private insurance. I have something against laws which make it mandatory. I think people should be free to decide for themselves what risk they are willing to take. For instance, the choice to do business with a relatively unknown payment service which offers low transaction fees or great customer support, at the risk of losing money.
I have a hard time getting too worked up about the prospect of squelching the money transfer company that can't afford 1/10th of 1 FTE to post a bond. That same company can't afford to secure their software (software security for a money transfer application is almost certainly more expensive than the cost of a 500k surety bond).
Meanwhile, if you're against basically all licensing and bonding, you're naturally going to be against this one too. Personally, I think that if we're going to require bonds to move furniture, it seems sane to require a bond to move cash.
I wouldn't do business with a payment company that can't afford a 500k expense. Requiring insurance for moving furniture is also important to me, I wouldn't let a company move my furniture without them offering a solid warranty.
What I question though is whose role it is to impose those requirements, the government or the customer? I believe it should be the customer's role.
> Personally, I think that if we're going to require bonds to move furniture, it seems sane to require a bond to move cash.
It is sane, but why not let companies choose whether or not they want to get licensed and let customers choose whether or not they want to take the risk of doing business with an unlicensed company. Note that I do not object laws that deal with misrepresentation, lying, breach of contract, etc.
Anyways, as you said, it's more a question of principle than anything particular about this specific regulation.
Ok, meanwhile, we're howling at the moon about requirements that are, in the scheme of how the government already regulates mundane businesses, totally business-as-usual.
If you don't believe in regulations at all, you don't believe in this regulation. Fair enough!
But if you're basically happy that we have an FDA and an FDIC and an NTSB and an FAA (as artificial examples; substitute your favorite California regs bodies): how is it unreasonable or surprising that California would want money transfer companies bonded? You can't build back porch decks without bonding. You can't move pianos without bonding. You can't sell cars without a license bond. But we want people to move cash without them?
Reasonable people, I suppose, can disagree about whether the bar for accepting and moving cash from people should be as high as the bar for re-siding a garage. But I don't think reasonable people can call the bar a conspiracy against the public.
Don't mistake me: I do not think there is any sort of conspiracy going on and I actually believe the government's intentions are good. I simply believe they are wrong in how to achieve those intentions.
> But if you're basically happy that we have an FDA and an FDIC and an NTSB and an FAA (as artificial examples; substitute your favorite California regs bodies): how is it unreasonable or surprising that California would want money transfer companies bonded?
I might seem pretty emotional about this, but in fact I'm not even American ;). Among the things you mentioned, I only know about the FDA and I do think Americans would be better off without it, for pretty much the same reasons I outlined previously (as a side note, I believe Health Canada bases its own regulations on the FDA). Milton Friedman explains it better than I can here: http://www.youtube.com/watch?v=OazixMEY9I0
So you're against the requirement to carry car insurance?
What happens when someone runs over you with a car and they have no liability or personal injury protection with which to compensate you for your medical bills and they have no money and therefore are judgment proof? Too bad, so sad? Shouldn't have been walking down the street?
Yes, this happens now, but now it's a criminal act to drive a car without insurance so you're breaking the law by potentially putting other people at risk.
I'm curious why someone thought this was an invalid point (I just modded it up). Aren't the principles involved in staking money for insurance, because you might cause damages that you can't repay personally, pretty much the same as those involved in staking a bond because your business might damage its customers?
>"make any new innovative money transmission system you want, but keep $100,000 in an account so when you fuck up someone's paycheck,
just for example, a reasonable regulation would just limit the per-transaction(or per-month per-person, etc, ...) amount to, lets say, $100 for unlicensed/unbonded companies.
On the other side, the regulation that have the same $500K bond for any company is just very favorable for big established players. The $500K is nothing for AMEX or PayPal, and provides virtually no coverage for the risks these companies presents to consumers. Ie. if any of these companies fucks up the paychecks in their system, the $500K would be just a drop in the bucket.
Even current banking regulation is designed way much better - basically it forces to keep reserves as percentage of the liability amount.
> Regulation is bad for businesses individually, but it's good for society in aggregate. Progress may be slowed, but it's still happening and happening with fewer horror stories along the way.
This is not necessarily the case. Often times, regulation is put in place to address some high-profile case, but ignores the consequences of the regulation.
Currently, infants less than two years of age can fly in an airplane without a separate ticket. Years ago, after some instances where such children were injured/killed in accidents, there was talk of forcing parents to buy separate tickets for infants and require them to use an approved child seat. However, had this regulation gone into effect, the extra cost of flying would have forced many families to drive instead of fly, resulting in a greater amount of injuries/deaths.
Nope. Sometimes regulation spurs innovation, forcing businesses to go from "business as usual" to "how do we deal with this?". Air pollution regulations in California helped drive a lot of innovation around cleaning up car exhausts, for example. Without that restriction, movement in that area would have been very slow.
People should have full information.. I should know if the building I move into is made from plaster of paris. However, if I still want to move into it... I shouldn't be passing on my genes.
In this case, the government is saying, "make any new innovative money transmission system you want, but keep $100,000 in an account so when you fuck up someone's paycheck, they can sue you and you can pay the damages you owe." Not too unreasonable.
Regulation is bad for businesses individually, but it's good for society in aggregate. Progress may be slowed, but it's still happening and happening with fewer horror stories along the way.