This one from page 413 of Nassim Taleb’s highly readable 2012 book, Antifragile:
“…the more complicated the regulation, the more prone to arbitrage by insiders. This is another argument in favor of heuristics. Twenty-three hundred pages of regulation–something I can replace with Hammurabi’s Rule–will be a gold mine for former regulators. The incentive of a regulator is to have complex regulation. The insiders are the enemies of the less-is-more rule.
…the difference between the letter and the spirit of regulation is harder to detect in a complex system. The point is technical, but complex environments with nonlinearities are easier to game than linear ones with a small number of variables. The same applies to the gap between the legal and the ethical.
…in African countries, government officials get explicit bribes. In the United States they have the implicit, never mentioned, promise to go to work for a bank at a later date with a sinecure offering, say $5 million a year, if they are seen favorably by the industry. And the “regulations” of such activities are easily skirted.”
Taleb is describing regulatory capture, which is the main argument against government-created “regulation” of any particular industry. The officials staffing each regulatory agency are, in effect, future employees of the industries they’re currently tasked with regulating. If a politician is in need of an off-the-books payoff, he ‘writes’ a “New York Times best seller”, and gets his money, nice and laundered. These are the ones you see in bookstores with a picture of a middle-aged man or woman, crap-eating grin on their face, entitled some variation of “Honor and Duty”.
Taleb’s book is charming, creative, arrogant, and fun to read.
