The Cost of Finding the Law

John Redwood, MP has a confession on his blog today:

As a legislator I have a confession to make. I do not read all the laws that are rammed through Parliament – there are too many of them. I do try to read all the Acts of Parliament brought before us for debate, but these days those Acts of Parliament are just the beginning. Once passed, they allow the government to go off and legislate in detail about that topic, pushing through Statutory Instruments that often are not debated at all in Commons.

He goes on to write:

It is still the case that ignorance of the law is no defence, but I have increasing sympathy with generally law abiding people who simply had not got round to reading the reams of legislative paper being churned out by Brussels and Whitehall which might affect them and their businesses. It is easier for large companies, because they can afford expensive staff and consultants to alert them to relevant changes. It is a nightmare for small businesses, where entrepreneurs have better things to do with their time than become experts on EU directives and UK Statutory instruments.

I think that the honorable member from Workingham is getting at an important set of a paradoxes, here, but only at some of them.

Consider, for example, some of the stock arguments among Walmart haters: Walmart drives out small businesses and treats its employees badly. Walmart lobbyists, on the other hand, will insist that they are groaning under the weight of oppressive regulations. The reality, however, is that Walmart is more likely to be compliant with regulations than are the mom-and-pop outfits that it sends to the dustbin. As Scott Moss, who lived life as a plaintiffs’ side employment lawyer before becoming a law prof, once explained to me, the businesses that are most likely to violate the employment laws are small. This isn’t, I assume, because mom-and-pop are less virtuous than Walmart, but rather because Walmart — having already made a huge investment in legal services — has a lower marginal cost for discovering the law. Indeed, to the extent that employment and other regulations are vigorously enforced, the Walmarts of the world reap advantages from regulation, which will tend to protect them from competition from small businesses.

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