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Can Georgia Regulate?
11 April, 2013
There is a question about governments, particularly about the new Georigan government. Can it create and enforce rules to make peoples lives better? The former government had somewhat of a philosophical conviction that government regulation was by its nature a bad thing; that governments stood in the way of people living their lives and conducting their business, because of this, Georgia has less regulation than in almost any country in the world.
So the solution is not to fear regulation,
but to be sure that it is necessary. Regulation should protect the weak and those with less power. For many small businesses or individuals they don't have the resources to deal with the bureaucracy that bigger companies and wealthier people have. Whatever the regulation is, it must prove that it serves a real and important need. We need carefully designed regulation, and broad consultation in all directions, and a great deal of transparency and public information about how the system works and what it is doing that is clear. But at the same time, at some point, the government is going to start to have to start trusting the judgement of the officials that deal with the public a little more than it does right now.Because of Georgia's experience with corruption there is a tendency to write very very specific regulations and then hire people to implement exactly those regulations. The idea is that any official who has the ability to make a judgement may or will take money to pass a particular judgement. That's certainly the way it was in the past. And like all post-Soviet countries, Georgia is very low on social trust. Most people think that most other people can't be trusted. That is the case for example in the Halls of Justice. They are staffed with very many young women who have as little leeway as possible in implementation of their duties. An example with the proof of identity say for example with the spelling of names, particularly for expats. Our names can be and are spelled in any number of ways in Georigan but those who work there are not allowed to verify identity without exact alignment of spelling in all alphabets on all documents. The result is often a bureaucratic nightmare of endless time consuming paperwork.


Currently if these people exercise their judgement on a case and the rules are not followed very strictly their job is in jeopardy and yet 99% of the time, the problem is trivial. Countless hours are spent due to anxiety about the 1% of the time when a spelling error illustrates some real problem.Cars and taxis are less regulated in Georgia than anywhere. The fuel is not regulated and has lead and other dangerous chemicals in it, the sale of cars is not regulated, there is no annual inspection. Each price with a taxi must be negotiated which makes Georgia's taxis very inexpensive if you know the prices and very expensive if you don't. Georgia's food is unregulated so that it can't be exported to the EU or more regulated countries and there are major food safety concerns inside Georgia. Anybody who has spent time on Gerogian farms know that some pretty strange pesticides and insecticides can find their way there since nobody is watching.When discussing regulation, it is important to start with the acknowledgment that badly designed regulation can have dangerous unintended consequences. The first job of regulation is similar to being a doctor, "first do no harm" Georgia's new government is less worried about regulation but seem to be having a broad based discussion about the new regulations they are considering. They thankfully aren't moving too fast. The first thing they are working on is employment. Currently in parliament is legislation intended to protect workers. The main worry, and a very reasonable one, is that this will make employers higher fewer people. Other countries, particularly in northern Europe are highly regulated, but the regulation and the state in general tend to be more effective and the population is generally in line with them. Southern Europe has weaker states, worse regulations and the population tends to be more cynical about them but they still function and generally keep the quality of life high.There are also countries where regulation is not popular but there is plenty of regulation. The US is in this group. The US is very decentralized and there are many state regulations, there are some industries and sectors that are very regulated and others much less so. And culturally Americans tend to hate regulation. Japan is highly regulated, but very centralized, and has a massive not very efficient or popular bureaucracy to implement those regulations, but the Japanese tend to pull in one direction admits adversity, unlike Americans who complain more. India is like Japan but more corrupt.Places can be put in different groups. There are still a few people in a few countries largely unaffected by regulation, all are people with very little income in very low income countries. There are others that have lots of regulations, but those regulations are largely a way for government officials to get money from the population via bribes as it was in Shevardnadze's time. For example the Anti-Monopoly Agency. Its role was to solicit bribes in order to not investigate monopolies.

It was quickly abolished after Shevardnadze resigned. But then the economy picked up and the state actually had the ability to function, and the state became intertwined with big business, and anti-competitive behavior became a real problem. But there was little interest in addressing that problem.Anybody who spent time in the Soviet Union, amidst the wars of the early nineties, or under the corruption of Shevardnadze can be excused for being pessimistic about even the possibility of successful or well meaning government regulation. Among these people, there may be criticism of Europe as over regulated and respect for the US as unregulated. But reality is as always more complicated.

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