From: rah@shipwright.com (Robert Hettinga)
Date: Thu, 9 Jun 94 15:18:21 PDT
To: hughes@ah.com (Eric Hughes)
Subject: Re: Regulatory Arbitrage
Message-ID: <199406092217.SAA29718@zork.tiac.net>
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Excuse me while gush...

As usual, Eric is right.

[great discussion about how regulation only creates markets elsewhere...]

Arguably (only arguably...) some economic regulation is good for us: like a
*few* pharmaceutical and food regulations, maybe.

Eric points out that internet commerce and e-money, e$ for short, reminds
one of something that has been going on for a long time with another E$,
this time Eurodollars. (Kind of like AOL, eh?)  Eurodollars were invented
to get around American tax and currency regulations, and those of other
countries. You had all these American corporations funding themselves
through subsidiaries in Carribbean countries like the Netherlands Antilles.
(Any time you see "Companyname, N.V.", the "NV" is Dutch for "we funded
this with offshore dollars" ;-).

George Soros, who founded Quantum Fund, N.V., is evidently happy with the
results of this knowlege.  He recently made the fastest billion dollars in
history pointing out the folly of the European currency exchange rate
mechanism, much to the chagrin of the Bank of England and other central
banks whose money he pocketed.

I remember a Milton Friedman quote, something to the effect that
regulations only benefit a market's producers, not its consumers.  Current
day Japan, states with barber and bartender "licences", and Smoot/Hawley
America in the 1930's might be good examples of that.  If there's a market
for those goods/services elsewhere, people *will* buy there.

With internet commerce and e$ ,"elsewhere" is everywhere... But we know
that already, don't we?  I can't wait until the rest of the information, or
the software, or the intellectual services buying public figure that out.

The only way to prevent that is to regulate economic commerce on the
internet, which makes me shudder to think about.  Although, if the paradigm
holds, it won't make much difference.  It'll be like stopping capitalism
itself.

Cheers,
Bob Hettinga

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