´ Why Rules and Regulations don't Work -
July 23, 2016

In times of uncertainty our reflex is to demand stricter rules and controls. Here’s why this principle doesn’t work: there are two kinds of people who enforce controls: those who really understand the process and those who don’t. Those with only superficial understanding cannot effectively enforce rules because they are not aware of details and loopholes. Those who deeply understand the process obviously gained their knowledge from the very source they are supposed to audit, meaning their former buddies and peers.

Secondly no law can foresee every loophole. Guess who has the resources to find loopholes and create processes and vehicles to exploit those loopholes? Powerful people. They are not horrible. If someone said to you from now on you have to pay a fee to use Gmail what would you do? You’d switch to another email provider. That’s the same principle that motivates powerful people to find the loopholes while still remaining within the law.

So what can we do? We can keep playing the rule game: we introduce new laws, new vehicles or approaches are created which then leads to a need to create new laws. That would be great for lawyers.

The harder, less clear and more vulnerable way is to try to understand the mechanisms at play: what kind of incentives exist that we don’t talk about? When do our own beliefs and actions clash and create little problem seeds? Do we take responsibility and eat our humble pie when it’s due?

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