1994-06-09 - Re: Regulatory Arbitrage

Header Data

From: rah@shipwright.com (Robert Hettinga)
To: hughes@ah.com (Eric Hughes)
Message Hash: 0b16de82ad6835fa33bd5d101157dbb0e2c471a37bf9011e98df0df68c9c8c17
Message ID: <199406092217.SAA29718@zork.tiac.net>
Reply To: N/A
UTC Datetime: 1994-06-09 22:18:21 UTC
Raw Date: Thu, 9 Jun 94 15:18:21 PDT

Raw message

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>
MIME-Version: 1.0
Content-Type: text/plain

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

Bob Hettinga

Robert Hettinga  (rah@shipwright.com) "There is no difference between someone
Shipwright Development Corporation     who eats too little and sees Heaven and
44 Farquhar Street                       someone who drinks too much and sees
Boston, MA 02331 USA                       snakes." -- Bertrand Russell
(617) 323-7923