Could This Be The New Trillion Dollar Product
That Vastly Reduces Bureaucracy?
By David Grace
Rules, Regulations & Bureaucracy
One of the most contentious activities in human societies is the creation of and enforcement of Rules. Call them laws, regulations or whatever, but what they are, how they’re adopted, and how they’re enforced are a foundational aspect of all political and economic systems.
The existence of government regulations dates back to the time of the Roman Empire and beyond.
In spite of their ubiquity few people seem to pay much attention to the mechanics of the rule-making process, a system that in several ways hasn’t fundamentally changed in hundreds of years.
How Regulation Starts
At some level some interest group — consumers, environmentalists, businesses, whatever — convince the government that some problem they’ve identified needs fixing — tainted food, insurance companies that don’t pay claims, banks with insufficient capital, supposedly needed safety equipment, the sale of deadly poisons or explosives, whatever.
The government responds by adopting a law which gives the Department of XYZ the job of writing and enforcing rules and regulations that are supposed to fix the problem.
Unfortunately, this is like asking a brain surgeon to excise a tumor using a Boy Scout hatchet. He’ll eventually remove something but no one will be very pleased with the result.
The Problem Isn’t So Much The Rules, It’s The Bureaucracy
The great mass of people don’t mind clear, understandable, reasonable rules, efficiently and fairly enforced. In fact, most people want clear, understandable, and reasonable rules.
People want to be sure that if they have an insured loss that their claim will be paid on time. They want the food they buy to be free of contaminants. They don’t want their plane to crash because the airline saved money by ignoring maintenance. They want their bank accounts to be secure. They don’t want alcoholics driving school buses.
People don’t hate clear and reasonable rules. But people do hate bureaucracy.
The question is: Can you have one without the other?
So far the answer has been more or less: “Not so much.”
As an aside, I know the libertarians and anarchists out there are jumping up and down saying, “No we don’t need rules. The market will fix everything.”
No, it won’t.
Risk/reward analysis (the foundation principle for believing that people’s self-interest will cause society to automatically fix economic and political problems) not only doesn’t fix things, it instead often generates dangerous, abusive, damaging and just plain bad results. To understand why, see my post:
Of course, that doesn’t mean that everything that is regulated should be regulated, nor does it mean that the regulations need to be as comprehensive as they actually are.
Should The Response To Risk Always Be Rules?
This is a “slippery slope” sort of question.
You can do nothing and wait for damage. If the feared problems occur you can analyze why they occurred and create a narrow law to only counter the cause of those incidents.
Then you can wait some more and if more problems occur, you can create another narrow law solely directed to eliminating the problem that caused that second wave of problems. Repeat, rinse, repeat.
How much time will pass between the first instance of damage and the “fix” to take effect? A year? Two years? Three years?
How much damage/injury/death will occur during that period?
How much time will pass between the first instance of damage and the second fix to take effect?
How much more damage/injury/death will occur during that longer period?
How can you estimate these risks? How can you predict the magnitude of loss?
These are neither easy nor trivial questions.
It’s certain that doing nothing will result in loss, but no one can predict how much loss, and people hate uncertainty.
Human beings excel at imagining loss scenarios and at assigning blame and therefore there is always a bias toward “doing something” before lives and property are lost.
What this means is that there are always going to be rules. They are a fact of human nature.
The intelligent question is:
How can we make the rule-making and rule enforcing process better?
Which itself leads us to: How can we reduce the bureaucracy?
How The Regulatory System Works Today
Today the rule-making process generally goes something like this:
1) Some body, a legislature, a cabinet, a government agency, a dictator, whatever, decides that some activity poses a danger and needs to be regulated.
2) A general law in a more or less goal-oriented outline form is adopted in response to this perceived risk/danger.
3) That law gives an agency/commission/bureaucracy the authority to adopt regulations to implement the generally stated purpose of the law.
4) That agency creates and publishes a set of detailed proposed regulations.
5) At the end of a public comment period the agency formally adopts a final version of the regulations together with additional rules about how the regulations are to be policed and what actions will be taken if someone appears to have violated them.
6) For several years various people who object to the regulations or the manner in which they’re being enforced file lawsuits seeking to have the regulations or the penalties imposed for their violation nullified.
7) While this litigation is going on the political party in power changes, the heads of the various agencies are replaced, changes in technology or other business factors occur, all of which lead to modifications of and the adoption of yet more regulations.
8) And the process starts all over again.
With a system like this is it any wonder that lots of people hate “the government”?
An Example: Regulating Self-Driving Big Rigs
Let’s take an example case.
The Federal Motor Carrier Safety Administration (FMCSA) has jurisdiction over interstate trucking. At some point people are going to want to buy, sell and operate big-rigs that are “self-driving” or “autonomously operated.”
There are lots of things that could go wrong and lots of damage could be done when
- tens of thousands of forty-ton trucks* are whizzing along at seventy miles an hour
- under the control of tens of thousands of different computers
- of varying ages and states of repair
- built by dozens of different manufacturers
- running software created by a dozen different companies
- potentially subject to hundreds of viruses and malicious hacks
- all guided by sensors made by dozens of different suppliers
*The maximum legal weight of a fully loaded commercial vehicle with trailer is 80,000 pounds.
The magnitude of the potential risks to the public from autonomous trucks is huge.
The Automatic Response To Risk Is To Act
Let’s assume that in response to these concerns and obvious risks Congress passes the Autonomous Vehicle Safety Protection Act that authorizes the FMCSA to adopt rules and regulations governing the design, features and operation of autonomous commercial vehicles over the interstate highway system.
The FMCSA will implement that law by writing hundreds of thousands of words of regulations governing:
Performance features
- The system must be able to detect obstacles far enough away such that it can safely stop the vehicle from a speed of at least XX miles per hour before reaching the obstacle.
- The system must meet certain specific operational standards under defined lighting and weather conditions
- The system must automatically slow the vehicle in rain, snow, night and fog sufficient to detect obstacles far enough away so as to be able to still bring it to a complete stop.
- The system must be programmed so as not to exceed the applicable speed limit. Etc. Etc. Etc.
Operational Restrictions
- Whether or not a human driver must be in the cab at all times.
- Can and how often may the driver sleep while the vehicle is in operation?
- What training and licenses must the designated human (DH) have?
- Under what circumstances can the DH’s licence be suspended or revoked? Etc. Etc. Etc.
Seller’s Obligations
- What forms will the system’s sellers have to fill out and file with the FMCSA before their system can be certified as safe for use on trucks traveling on the interstate highway system?
- What tests will the systems have to pass?
- What re-testing will be required if there are any material changes in the software?
- Under what circumstances can a system’s approval be revoked or suspended?
- Can the FMCSA order a recall of a system that it determines is dangerous, similar to the way that the FAA can ground planes it determines are unsafe?
- What fees will the sellers have to pay?
Safety Issues
- What kind of virus and malware protection will the system be required to have?
- What backup systems must it have?
- What “black box” diagnostic information will it be required to create and store? Etc. Etc. Etc.
Buyer’s Obligations
- What forms will the truck’s owner be required to file in connection with the operation of an autonomous vehicle?
- What fees will it need to pay?
- What obligations will the buyer have to maintain and update the system? Etc. Etc. Etc.
Accident Reporting
- What forms will need to be filed in the event of an accident?
- Will the FMCSA send its own inspectors to investigate the cause of an accident in a way similar to how the National Transportation Safety Board (NTSB) investigates airplane crashes?
- What powers will such investigators have?
Objections and Appeals
- Challenges to any fines or penalties imposed by the agency on buyers, sellers or DHs would be covered under a separate set of regulations stating the forms would have to be filed, the time limits, how and where the hearing would be conducted, rights of appeal, Etc. Etc. Etc.
There are many more. Each of the above sections can be broken down into many smaller subsections.
This one regulatory situation is duplicated again and again with regard to all kinds of activities in dozens if not hundreds of governmental agencies on both the federal and state level.
This is a huge, expensive infrastructure.
How Would A Better System Work?
Assuming that human nature, self interest, and other human factors cause us to continue to regulate systems like insurance, banking, transportation, etc. can we do it quicker, cheaper, simpler and more efficiently?
To envision how a better regulatory system might work it might be helpful to ask what we don’t like about the current system and make of list of what the opposite would be.
Problem: The rules are too complicated for people to reasonably understand what they can and cannot do.
Better Way: You call the agency, tell them who you are and ask, “Can I do this?” or “What are the things I need to do to comply with the rules?” and they’d just tell you or email you a simple bullet list of do’s and don’ts.
Problem: For people who expect the regulations to protect them it’s often difficult to get the agency to respond to a complaint and stop the objected-to activity.
Better Way: You call the agency, tell them who you think is violating the rules and within a day or two an inspector would show up at that company’s office, investigate your complaint and, if justified, issue an order halting the violation.
Problem: The paperwork is too complex and expensive.
Better Way: You call the agency and they ask you a series of questions about your business. They add your answers to their database, print off the completed form, and email it to you for signature. You review it then sign it electronically, paying any fee with a credit card.
Problem: The same conduct is regulated by multiple agencies. For example, if you want to open a restaurant you have to deal with the building department, the planning department, the fire department, the health department, the sales tax agency and the environmental agency.
Better Way: There’s just one site for all government agencies. Let’s call it “The Regulatory Bureau.”
You call The Regulatory Bureau, tell them who you are and what you want to do. They ask you questions about the type of business, the address, the business name, etc.
They send you a To-Do list with check boxes.
After you’ve completed the required activities you call them again and they direct you to stream pictures of your new premises while an inspector looks things over. You either pass or are told what additional things you need to do or they send out a human to personally inspect the premises.
Problem: There are too many situations where the regulations don’t fit your particular situation and thus either prohibit needed actions or allow actions that we would want to see stopped.
Better Way: You call the agency, tell them the facts of your situation and they make a special adjustment in the rules just for you.
An Army Of Brilliant Solomons
What I’ve described is like hiring an army of reasonable, helpful, energetic, and practical geniuses to run all government agencies, answer all questions, and create exceptions and modifications to the regulations on the fly as may be reasonable to fit every unique situation.
That sounds impossible.
Could This Be A New Trillion-Dollar Product?
Maybe.
Let’s say that the Autonomous Vehicle Safety Protection Act book of regulations has been written, but the rules haven’t gone into effect yet.
This new set of regulations together with all of the rules and regulations for all other federal, state and local agencies including all state and local building codes, zoning codes and local ordinances are all fed into an IBM Watson-like system. Let’s call that “Government Watson.”
Government Watson
Watson today is capable of digesting all of that data.
Let’s also say that an advanced AI-chatbot front end, Siri to the tenth power, is grafted onto Government Watson and the software system is hosted on a cloud platform that can dynamically add resources to meet increased load demands.
When you contact the Regulation Bureau your call will be immediately answered. You’ll tell Government Watson your zip code which will allow it to customize all its responses based on the laws and regulations of the jurisdiction where you live.
You’ll have a fingerprint scanner either on your phone or your desktop to verify your identity to protect you from malicious people impersonating you.
If Watson needs more information to prepare your forms you can elect to give it permission to access your or your company’s existing government records.
You tell Watson, “My company wants to sell autonomous vehicle software for trucks. What do we have to do to comply with the law?”
Watson will ask you some follow-up questions about the size of the trucks and the computer system your software is designed to use. Upon your request it will send you a bullet-list of the standards your software will need to meet.
You look at the list and you have questions.
You call Watson back and ask, “Your list says XXX. Does that mean YYY or ZZZ?” Watson explains what it means. You say, “But that’s a big problem because of blah, blah, blah.”
Watson generates a problem report and proposes several alternative responses to your concerns, then sends that document to a human being. The human evaluates the alternatives from a policy perspective and picks one which could be “Everyone except the ABC Company must do X. The ABC Company is hereby granted permission to do Xaaa.”
Because the rules and regulations are organized not as a text document but as an hierarchical list, the ABC exception is easily added to the rules and Watson is updated with the new information.
Watson calls you back and tells you how the rules have been changed to fit your needs.
After you’ve asked Watson all your other questions about the all rules you that you need to follow, Watson generates and sends you the appropriate application form with all your information already filled in.
You sign it, authorize payment of the registration fee and you receive your approval together with an updated list of what your software must do to comply with the rules.
Since Watson would know all the building codes, fire codes, health codes, zoning codes and environmental regulations for a business to be operated in your zip code it could centralize all code compliance actions in one place.
Watson could print out lists of the standards your new restaurant would need to meet and it could handle 90% of visual inspections with a streaming video feed from your phone.
It could also fill out all your forms and you could electronically pay all the fees.
A Big Job
This would not be easy. In fact it would be a huge job.
Maybe it’s an impossible job.
You tell me.
If it is possible it would probably take IBM several billion dollars and two or three years to get the first iteration of “Government Watson” running on an experimental basis.
But, given what a Watson system can already do, given what we’ve seen is possible with current AI and chatbot technology, I think much if not most of the tech for what I’ve described is here or on the horizon.
Maybe it will take five years, ten years, but the scope of improvement in the nature of government through a Government Watson kind of system would be almost incalculable.
The cost savings would be in the trillions of dollars. The time savings would be in the range of hundreds of thousands to millions of man-years.
The improvement in the quality of life of everyone who had to interact with any level of government would be beyond huge.
So, IBM, are you looking for a new, trillion-dollar product?
–David Grace
