Key to Markets is Key to Regulation

Dr. John Bartlit
New Mexico Citizens
for Clean Air & Water

Column of October 9, 2015, Los Alamos Monitor

Stick your nose into a crevice in the bark of a big old ponderosa pine. The smell of vanilla sweetens your senses. Some call it butterscotch, but the best noses say vanilla. How can a ponderosa, a species that taught respect for turpentine, surprise with the fragrance of vanilla? The story is absurd, until you put your nose in the bark.

We leap now to the Digital Age.  

Information is often acclaimed as the sweet driver of market efficiency and the currency of efficient regulation. That is, information is a regulator of markets of its own accord. The more informed the trading, the wider the interests served by markets.

No doubt it costs time, and thus money, to hand over details on the quality of a product, or, say, factory emissions.

Just as surely, the details allow more informed choices in the marketplace, which quicken the blessings of market efficiency. The very meaning of efficient market is one driven by widespread information.

The Information Age spreads data far and fast. Much the way that better data are key to market efficiency, we begin to see that better, faster data at less cost also make regulation more efficient.
     
Looking further, supplying better and faster regulatory tools is itself a new market.

The irony springs on us. From very different angles, similar thoughts come into the marketplace of ideas. And for good reason. Technology’s limits in former days are fading fast. Information is a different medium today than it was before it could be mined and spread in large amounts so far so fast. If desired, technical data can now be more than a stream of numbers.

Software can give meaning to numbers by comparing them with previous numbers or numbers that put things in a fair context. In other words, numbers can be assembled to enlighten more than muddle.

A trusty roommate from my Purdue years recently made me aware of the Mercatus Center at George Mason University. He sent me a link to articles on their web site and added a thought: “The first article in some ways reminds me of some of your articles.”
  
“Mercatus” (mer-KAY-tus) is Latin for “market.” Indeed, the Center dwells on why markets should be less encumbered by regulation.

With equal persistence, I dwell on how regulation should work better, faster and cheaper.

Ideas find their way. The Mercatus Center and I each write about how the capabilities of new information technologies can make markets less encumbered by regulation and make regulation work better, faster and cheaper.

If that’s not the damnedest. What’s this: a mighty pine that leaks turpentine and vanilla? What should we call an approach from opposite sides that gets markets and regulation both working better?

The question is far from trivial. Many a good idea is lost when rival ears catch a hint of rival phrasing in its name. Many ideas are lost this way in current politics.

There is a technical term—a name—that is so new it is not yet armed for party politics. The name is Internet of Things. We have pursued applications of it before.

Indeed we see a bright spot of mutual interest in high-tech sensors coupled with information technologies. With good prospects in hand, the next step is to devise parts that fit together. To start with, interests of many kinds have a common problem. Most folks want to be sure the data gathered are good and are meaningful. A mutual concern makes a good starting place. Where better to risk new efforts to be more efficient?