The Precautionary Principle Stops Technological Progress

(p. 247) All versions of the Precautionary Principle hold this axiom in common: A technology must be shown to do no harm before it is embraced. It must be proven to be safe before it is disseminated. If it cannot be proven safe, it should be prohibited, curtailed, modified, junked, or ignored. In other words, the first response to a new idea should be inaction until its safety is established. When an innovation appears, we should pause. Only after a new technology has been deemed okay by the certainty of science should we try to live with it.
On the surface, this approach seems reasonable and prudent. Harm must be anticipated and preempted. Better safe than sorry. Unfortunately, the Precautionary Principle works better in theory than in practice. “The precautionary principle is very, very good for one thing–stopping technological progress,” says philosopher and consultant Max More. Cass R. Sunstein, who devoted a book to debunking the principle, says, “We must challenge the Precautionary Principle not because it leads in bad directions, but because read for all it is worth, it leads in no direction at all.”

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

$30 Million First National Bank Regulatory Costs Due to Dodd-Frank Replacing Clear Rules with Regulator “Wild Card” Leeway

(p. 1D) The president of First National of Nebraska, the nation’s largest privately held banking firm, said new federal regulatory and compliance efforts stand to cost the company as much as $30 million this year.
“It is a big uncertainty in the banking world,” said Dan O’Neill, speaking Wednesday at the company’s annual meeting in Omaha. “They are not operating off of concrete rules. A lot of it is their interpretation.”
The federal Consumer Financial Protection Bureau was formed as a result of the federal Dodd-Frank laws passed in 2010 after widespread bank failures and bailouts using taxpayer money. . . .
. . .
The bureau, he said, worries banks because there is not a “clear body of rules” from which the regulator is operating in evaluating the fairness of a bank’s business practices. He said the agency’s regulators have a lot of leeway in deciding what to do af-(p. 2D)ter examining a bank; penalties for running afoul include fines.
“So it is a bit of a wild card,” he said.

For the full story, see:
Russell Hubbard. “First National Chief Says Regulatory Costs Mounting.” Omaha World-Herald (THURSDAY, JUNE 20, 2013): 1D-2D.
(Note: ellipses added.)

The Eccentric History of How Bureaucratic Paper-Pushing Drives Clerks Crazy

TheDemonOfWritingBK2013-05-13.jpg

Source of book image: http://d.gr-assets.com/books/1360928417l/15904345.jpg

(p. C4) If paperwork studies have an unofficial standard-bearer and theoretician, it’s Mr. Kafka. In “The Demon of Writing” he lays out a concise if eccentric intellectual history of people’s relationship with the paperwork that governs (and gums up) so many aspects of modern life. The rise of modern bureaucracy is a well-established topic in sociology and political science, where it is often related as a tale of increasing order and rationality. But the paper’s-eye view championed by Mr. Kafka tells a more chaotic story of things going wrong, or at least getting seriously messy.

It’s an idea that makes perfect sense to any modern cubicle dweller whose overflowing desk stands as a rebuke to the utopian promise of the paperless office. But Mr. Kafka traces the modern age of paperwork to the French Revolution and the Declaration of the Rights of Man, which guaranteed citizens the right to request a full accounting of the government. An explosion of paper followed, along with jokes, gripes and tirades against the indignity of rule by paper-pushing clerks, a fair number of whom, judging from the stories in Mr. Kafka’s book, went mad.

For the full story, see:
JENNIFER SCHUESSLER. “The Paper Trail Through History.” The New York Times (Mon., December 17, 2012): C1 & C4.
(Note: the online version of the story has the date December 16, 2012.)

Kafka’s book, mentioned above, is:
Kafka, Ben. The Demon of Writing: Powers and Failures of Paperwork. Cambridge, Mass.: Zone Books, 2012.

KafkaBenAuthor2013-05-13.jpg “Ben Kafka, author of “The Demon of Writing: Powers and Failures of Paperwork.”” Source of caption and photo: online version of the NYT article quoted and cited above.

Harry Reid Hires GE Employee to Be His Chief Tax Policy Advisor

The “Capture Theory” associated with scholars George Stigler and Gabriel Kolko says that government regulatory bodies tend to be captured by the companies that they are intended to regulate. Stigler and Kolko would not be surprised by the passage quoted below.

(p. B5) . . . on Jan. 25, Mr. Reid’s office announced that he had appointed Cathy Koch as chief adviser to the majority leader for tax and economic policy. The news release lists Ms. Koch’s admirable and formidable experience in the public sector. “Prior to joining Senator Reid’s office,” the release says, “Koch served as tax chief at the Senate Finance Committee.”

It’s funny, though. The notice left something out. Because immediately before joining Mr. Reid’s office, Ms. Koch wasn’t in government. She was working for a large corporation.
Not just any corporation, but quite possibly the most influential company in America, and one that arguably stands to lose the most if there were any serious tax reform that closed corporate loopholes. Ms. Koch arrives at the senator’s office by way of General Electric.
Yes, General Electric, the company that paid almost no taxes in 2010. Just as the tax reform debate is heating up, Mr. Reid has put in place a person who is extraordinarily positioned to torpedo any tax reform that might draw a dollar out of G.E. — and, by extension, any big corporation.
Omitting her last job from the announcement must have merely been an oversight. By the way, no rules prevent Ms. Koch from meeting with G.E. or working on issues that would affect the company.

For the full story, see:
JESSE EISINGER, ProPublica. “A Revolving Door in Washington With Spin, but Less Visibility.” The New York Times (Thurs., February 21, 2013): B5.
(Note: ellipsis added.)
(Note: the online version of the story has the date February 20, 2013.)

Governments Stop Errol Joseph from Repairing His House

JosephErrolNewOrleansHouseFixer2013-05-04.jpg “Errol Joseph and his wife, Esther, at their Forstall Street property in New Orleans. Mr. Joseph, 62, had spent his life fixing houses.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) NEW ORLEANS — Errol Joseph has the doorknobs. He has the doors, too, as well as a bathtub and a couple of sinks, stacks of drywall, a hot water heater, pipes, an air-conditioner compressor, and big pink rolls of insulation. They are sitting in a shed.

A few blocks up the street sits the gaunt frame of a house, the skeleton in which all these insides are supposed to fit. They have sat apart for years. The gap between: permits, procedures, policies, rules and the capricious demands of bureaucracy.
As people in the Northeast set off on the road back from Hurricane Sandy, there are those here, like Mr. Joseph, who are keen to offer warnings that recovery can be far more difficult than they imagine. Mr. Joseph sees his own story as a cautionary tale, though he admits he is unsure what he would have, or should have, done differently.
“Do the right thing and fall further behind,” said Mr. Joseph, a big man with a soft voice.
. . .
(p. A4) But Mr. Joseph, who had spent his life repairing houses, figured he could do it himself, and would be back at home by that summer. He spent most of his rebuilding grant buying materials, including windows, shingles and everything else in the shed. In the spring of 2009, he elevated the frame of the house, leaving it propped on wooden cribbing.
Before he took any further steps, he contacted the state for an inspection, as he had been instructed.
Then the inspectors showed up.
” ‘Do not do anything to this house until you get a letter of continuance,’ ” he recalled one inspector saying. “He said that three times. He said you would lose your money.”
So Mr. Joseph did not do anything to the house. Months went by. No letter arrived. The inspector disappeared. Officials denied that anyone had ever said anything about a letter, said Mr. Joseph, who in his regular visits to state offices would then ask for written permission to move forward anyway.
In 2010, told that he would not be allowed to do the work himself, he drew up a contract with an elevation specialist. But permission from the state to move forward was still elusive. “Your paperwork is in the system,” Mr. Joseph was told.
Though Mr. Joseph did not know it, his paperwork was blocked for months in the federal clearance process, but for reasons that remain a mystery.
The drywall rotted in the shed. The frame sat in the elements. The city, unaware of Mr. Joseph’s travails, warned of demolition.

For the full story, see:
CAMPBELL ROBERTSON. “Katrina Rebuilder Can’t Rise Above Red Tape.” The New York Times (Thurs., February 21, 2012): A1 & A4.
(Note: ellipses added.)
(Note: the online version of the story has the date February 20, 2012, and has the title “Routed by Katrina, Stuck in Quagmire of Rules.”)

JosephErroBlockAfterKatrina2013-05-04.jpg “A photograph of Mr. Joseph’s block taken shortly after Hurricane Katrina. It took years to prove his house was salvageable.” Source of caption and photo: online version of the NYT article quoted and cited above.

IKEA Says Government Bureaucracy Slows Job Creation

OhlssonMikaelCEOofIKEA2013-02-03.jpg “The economy ‘will remain challenging for a long time,’ says IKEA Chief Executive Mikael Ohlsson.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B3) MALMO, Sweden–IKEA is poised to embark on a global spending spree, but its departing chief executive says red tape is slowing how fast the home-furnishings retailer can open its pocket book.

With the company set to report record sales on Wednesday, CEO Mikael Ohlsson said the amount of time it takes to open a store has roughly doubled in recent years.
“What some years ago took two to three years, now takes four to six years. And we also see that there’s a lot of hidden obstacles in different markets and also within the [European Union] that’s holding us back,” he said in an interview recently at an IKEA store on Sweden’s western coast.
. . .
IKEA plans to invest €2 billion in stores, factories and renewable energy this year. But the company fell €1 billion short of its goal of investing €3 billion in new projects last year, largely because of bureaucratic obstacles, he said. For 10 years IKEA has tried unsuccessfully to relocate a store in France, for example. The company also is challenging German policy dictating what can be sold and where, saying the rules are out of sync with EU legislation.
“It’s a pity, because it can help create jobs and investments at a time when unemployment is high in many countries,” Mr. Ohlsson said. A new IKEA store creates construction and store jobs for about 1,000 workers, he said.
. . .
The company’s highest-profile headaches have come in India, an untapped market where IKEA wants to open a first store in at least five years and roll out an additional three soon thereafter.

For the full story, see:
ANNA MOLIN. “IKEA Chief Takes Aim at Red Tape.” The Wall Street Journal (Weds., January 23, 2013): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date January 22, 2013.)

Doctors Seek to Regulate Retail Health Clinic Competitors

NursePractitioner2009-09-26.jpg“A nurse practitioner with a patient at a retail clinic in Wilmington, Del.” Source of caption and photo: online version of the WSJ article quoted and cited below.

Clayton Christensen, in a chapter of Seeing What’s Next, and at greater length in The Innovator’s Prescription, has persuasively advocated the evolution of nurse practitioners and retail health clinics as disruptive innovations that have the potential to improve the quality and reduce the costs of health care.
An obstacle to the realization of Christensen’s vision would be government regulation demanded by health care incumbents who would rather not have to compete with nurse practitioners and retail health clinics. See below for more:

(p. B1) Retail health clinics are adding treatments for chronic diseases such as asthma to their repertoire, hoping to find steadier revenue, but putting the clinics into greater competition with doctors’ groups and hospitals.

Walgreen Co.’s Take Care retail clinic recently started a pilot program in Tampa and Orlando offering injected and infused drugs for asthma and osteoporosis to Medicare patients. At some MinuteClinics run by CVS Caremark Corp., nurse practitioners now counsel teenagers about acne, recommend over-the-counter products and sometimes prescribe antibiotics.
. . .
As part of their efforts to halt losses at the clinics, the chains are lobbying for more insurance coverage, and angling for a place in pending health-care reform legislation, while trying to temper calls for regulations.
. . .
(p. B2) But such moves are raising the ire of physicians’ groups that see the in-store clinics as inappropriate venues for treating complex illnesses. In May, the Massachusetts Medical Society urged its members to press insurance companies on co-payments to eliminate any financial incentive to use retail clinics.
. . .
The clinics are helping alter the practice of medicine. Doctors are expanding office hours to evenings and weekends. Hospitals are opening more urgent-care centers to treat relatively minor health problems.

For the full story, see:
AMY MERRICK. “Retail Health Clinics Move to Treat Complex Illnesses, Rankling Doctors.” The Wall Street Journal (Thurs., SEPTEMBER 10, 2009): B1-B2.
(Note: ellipses added.)

A brief commentary by Christensen (and Hwang) on these issues, can be found at:

CLAYTON CHRISTENSEN and JASON HWANG. “How CEOs Can Help Fix Health Care.” The Wall Street Journal (Tues., July 28, 2009).

For the full account, see:
Christensen, Clayton M., Jerome H. Grossman, and Jason Hwang. The Innovator’s Prescription: A Disruptive Solution for Health Care. New York: NY: McGraw-Hill, 2008.

RetailHealthClinicGraph2009-09-26.gif

Source of graph: online version of the WSJ article quoted and cited above.