Via Tyler Cowen, here's an interesting chart that suggests the amount of regulation in a state depends a lot on its population:
The authors use a metric for regulation that they say is more reliable than ones used in previous studies. They also say that they tried controlling for a whole bunch of different variables and none of them made much of a difference. Population is the only one that does. What's more they get similar results comparing Canadian provinces.
So why do bigger polities have more regulation? I can take a few guesses:
- A bigger population means more interest groups, thus more pressure to pass various regulations.
- A bigger population means more industry, which makes the cost of non-regulation more obvious.
- Likewise, a bigger population means bigger individual industries. It might not be worthwhile for Utah to have extensive regulations on oil drilling, but it definitely is worthwhile in Texas. It's worth noting that the three biggest outliers all have at least one gigantic industry (tech for California, energy for Texas, finance for New York).
- Bigger states are more impersonal. This is a little hard to quantify, but people in smaller states might feel like they "know" their state well and don't need lots of regulation to make people do the right thing.
- The cost-benefit of regulation might depend mostly on absolute numbers. That is, it's only worth regulating an industry if it employs more than, say, a thousand people. Obviously big states have a lot more industries that clear this barrier than small states.
Feel free to add your guesses in comments. I would be interested in a similar study applied to corporation size. Big corporations generally have more red tape in the way of getting things done compared to small corporations, right?
No matter how you slice the data, it always neatly splits into blue and red. Funny that.
Uh, it's _Tyler_ _Cowan_. I'd really wait on this one, given the wackaloon's track record and propensity to troll.
Cowan didn't write the study, he's just reporting on it.
Very interesting result, but maybe not the best example on Utah not needing oil drilling regulations: https://trustlands.utah.gov/business-groups/oil-gas/learn-about-utah-oil-and-gas/.
Maybe corruption is involved. Corporations can basically buy legislatures in small states but large population states have more diverse interests and competing corporations so that outright buying a legislature becomes too expensive. Regulations get written by legislators who respond to where their campaign cash comes from.
including increasing regulations to keep out startups...
Interesting idea. Boeing used to rule the Washington State legislature, killing a lot of good environmental legislation. It was all done in the cloak rooms so there were never any fingerprints. Then they got bought out by McDonnel Douglas and moved to Chicago in a miff over the union have the gall to strike. People say the Boeing brass liked the idea of flying their executive jets out of Meigs field on the Lake Michigan shore, just a few blocks from their high-rise offices. Then Mayor Daily decided to close Meigs Field and turn it into a park. In Seattle Boeing could have squashed this like a bug, but in Chicago they were just another company. So, Boeing went to DC and had the FAA tell Mayor Daily he couldn’t close Meigs Field. Daily replied "watch me” and proceeded to tear up the runway. Today Boeing execs have to hop in their limousines and drive to Indiana to catch their jets.
"I'm the new boss of this company, girl. I want you to fax yourself to China. Do this now".
This presumes that monied interests dislike regulation. That is actually wrong. Regulation is big business's friend 75% of the time.
I would suggest that a larger population means people doing more things. Governments generally will not bother to regulate with respect to things that do not happen in the jurisdiction, and there are just less things happening in smaller population jurisdictions.
Big states can afford to show non-conforming businesses the door, knowing that others are queued up around the block to take their place. That's their superpower. Small states will cave because they know opportunity doesn't knock that often.
Bigger population means more people working in government, and that allows for more fine structure and specialization in the government workforce.
Fewer people. Fewer interactions.
More people. More interactions.
It's not population, it is population density. If you live of a hundred miles from the nearest extractive industry, for example, who cares if it is regulated? Or if you have a 160 acre spread as do your nearest neighbors, you don't really want the state government telling you which toxic chemicals and carcinogens you can use on your land or how much water you can use. Even in California, regulation is a lot less popular in the central valley than it is on the coast, but they can't do much about it as not that many people live there.
If you own 160 acres, and your neighbors do to, chances are you don't have to worry about their barking dogs or loud parties, or excessive vehicles parked in front of their house, not to mention them placing their septic tank drain field next to your well.
You sound like a NIMBY!
I own 20 acres. My neighbor owns more. They decided to put their horse corral on the property line and bulldoze horse manure downhill onto my property.
And somehow, they seem to worry whenever my sons friends go up to the land to shoot trees.
I have an easement through one neighbor's land. Reminding the current owner not to change the lock on the gate without telling me is something I need to do surprisingly often.
I'd like to see a chart of regulation vs. income. I'd be shocked if higher income is not correlated with higher regulation. A more advanced, educated, high tech economy just requires more regulation because big business, having gotten rich, necessarily needs more regulation to prevent it from taking over and ruining everything. As usual, we humans are not good at nuance. We get trapped into thinking regulation=bad for money making and don't see what's really happening.
Hard to know what to make of this study if there is no given definition of what a "regulation" is. Take zoning, for example. Larger states, with numerous and populous cities likely have huge numbers of zoning rules that can be general (citywide) and specific (neighborhood, district-wide). Are the individual rules counted as "regulations"? Regardless, talk about "too much regulation" is a tired conservative talking point. Argue and debate about particular regulations, not the number.
This is comparing political subdivisions within the nation, right? It's not saying that India and China have more regulation than Indonesia?
For medium sized communities with some available competition, local reputation can make a difference. Many times there are less than 7 degrees of separation between customers and managers if not the owners.
One extremely obvious point that I'm surprised no one has brought up already is that the number of interconnections among a group of n members goes up as n^2. Double the population, quadruple the number of possible interactions. At some point, some sort of formal mechanism has to come into play to mediate the sheer amount of traffic.
This is a little hard to quantify, but people in smaller states might feel like they "know" their state well and don't need lots of regulation to make people do the right thing.
I'd guess it's more like they don't want to interfere with employment opportunities or have some disagreement with their friends and neighbors who believe the company line that they'll be fired if the state passes 'burdensome regulations'.
I hazily recall some principle from readings in the sociology of organizational decision-making to the effect that the complexity of systems increases super-linearly with the population involved. And I also recall a more recent post or article or something suggesting that large countries like ours, with their inevitably greater complexity (including more specialization and hence more fractionation), are more "brittle" and thus doomed.
Certainly it's the case that larger organizations require more formal systems (aka red tape) just to maintain control and ensure a reasonable degree of consistency. You can (indeed you must) do a lot of stuff informally in a 10-person organization, but in a 10,000-person one you must have formal sub-organizations and processes.
What state-level regulations are purported to have bee triggered in California thanks to it having a massive tech industry?
Hazardous waste disposal regulations.
If you are making circuit boards or chips or aerospace parts you can't just dump your waste material in the sewer.
Balance of power shifts.
In "small" states, governments have little leverage to enact regulation. Rather, they're usually on the opposite end of wanting to deregulate in order to attract economic activity.
In "big" states, governments tend to have greater leverage because of the inherent economies of agglomeration -- something you would have learned in Econ 101, amirite?
KD is like the coloring book version of serious social analysis. But to quote our alleged president, 'C'mon man'. Right on the picture you can see GOP states like TX and FL below the regression line and NY and IL above it. Ohio is the outlier.
But it does make sense that the more people you have, the more you have to control them.
Or, the more people you have, the more you have to protect them.
As always, "regulation" needs to be defined. Absent that, I get to pick what I think the regulations are. In California, regulations against dumping things in the air are popular. With a smaller population, the environment can sustainably support the pollution.