Last week, we argued that political decision makers have a tendency to overregulate a society, as new laws, even useless or harmful ones, create the impression that politicians are addressing problems in a society. Moreover, we outlined the theory of a military historian who claims that the Red Army was an “overregulated army”, explaining the disproportionate death toll of the Red Army in the Second World War. In today’s article, we will first look at the advantages of regulation, and we will then propose a set of tools called “Regulatory Impact Analysis...

Regulations apparently address problems of a society in a quick and uncomplicated way, and the call for regulations therefore is one of the most effective weapons in the arsenal of populists. Whether or not a regulation will help to solve the problem, in any case it creates the impression that politicians are doing something. As regulations are so popular among political decision makers, the US Code of Federal Regulations, not including regulations on state level, in 2009 had 163,333 pages. In this article we discuss the cost of regulations, an aspect th...

In our last week’s article we examined Georgia’s economic growth in the 12 months before the 2012 parliamentary elections.  In particular, we reviewed the popular argument that much of this economic growth was driven by the “political business cycle” effect of public (over)spending prior to the elections. Our analysis showed that the construction sector (the prime suspect for politically motivated spending) did in fact exhibit an atypical growth pattern just before the elections, and that growth rates in construction collapsed right after October 20...

October 27, 2013 heralded a new era in the Georgian politics. The year of power sharing between the two main rival political forces, the so-called “era of cohabitation”, has officially ended, and we can now start to look back and take the stock of how the political developments in the country affected economic growth. In two articles that we publish today and in the next week, we will aim to provide an overview of some specific trends. We will first look at the general economic trends in the year between the parliamentary and the presidential elections (...

Thomas Hobbes (1588-1679) in his Leviathan describes the conditions where “there is no place for Industry; because the fruit thereof is uncertain; and consequently no Culture of the Earth; no Navigation, nor use of the commodities that may be imported by Sea; no commodious Building; no Instruments of moving, and removing such things as require much force; no Knowledge of the face of the Earth; no account of Time; no Arts; no Letters; no Society; and which is worst of all, continual fear, and danger of violent death; And the life of man, solitary, po...

Evacuation is one of the most frequently used words in Georgian TV in the last two weeks, arguably due to an inflation of fibber bomb warnings. Rustavi 2, Imedi, Parliament, airport, bank offices, and schools – all were targeted by these macabre hoaxes. In the Georgian fairy tale of Liar Shepherd, the young boy lied twice that wolfs were coming. When finally wolfs were really coming, no one believed him anymore. This is one of the main risks of bomb hoaxes – they may lead to something one might call “terrorism fatigue”. Recently, I spoke with somebody wh...