マリウス . Bureaucracy is Eating the World

A detailed look at how three and a half centuries of accumulated regulation,<br>compliance, and tax complexity have quietly closed the door on the kind of<br>business formation that built the modern world, and what that means for the<br>generations now trying to walk through it.

Disclaimer: This is an opinion piece. It is also a long one, because the<br>subject is too tangled to compress without losing the thread. I have tried to<br>look at the matter from different perspectives and include the strongest<br>counter-arguments where I saw them. As this write-up had been in the works for a<br>very long time, some of the referenced data isn&rsquo;t the absolute latest data<br>available today, which however does not impact the underlying message.<br>As usual, summary at the end.

A few weeks ago I sat down with a friend who, after twenty years in a steady<br>job, had decided to start a small business in the European Union. Nothing<br>exotic, just a one-person operation, selling a thing they had been making in<br>their spare time for years and that other people kept asking to buy.<br>By the time we were done, we had identified the trade register filing, the tax<br>office registration, a separate VAT registration with its own threshold rules,<br>the obligation to issue invoices in a specific format, the e-invoicing mandate,<br>the beneficial-ownership disclosure under the EU&rsquo;s AML regime, the bank&rsquo;s own<br>KYC questionnaire, the data-protection obligations under<br>GDPR even though the operation collected practically no personal<br>data, the CE marking requirements, the extended-producer-responsibility<br>packaging registration, the WEEE registration, the social-security contributions<br>for self-employed individuals, the mandatory professional liability insurance<br>for the relevant guild, and the local trade-tax filing. None of these are<br>illegitimate and most of them, taken in isolation, sound reasonable. Together,<br>however, they constitute a mountain that my friend, who is a competent adult<br>with a real product, was now expected to climb before they sold the first<br>unit.<br>That is when it occurred to me that the story I had been telling myself for<br>years, that it has always been like this and every generation thinks the<br>system is rigged, might not actually be true, and this post is the result of<br>that thought.<br>I want to walk through roughly three and a half centuries of how easy or hard it<br>has been, in the western world, to simply do something economically. From the<br>period when an Englishman with a ship and a bond could legally attack Spanish<br>merchants for a living, through the early 1900s when an entrepreneur could<br>incorporate a company on four pages, to the present, when the same kind of<br>operation requires a stack of filings most people will never finish reading. I<br>am going to argue that we have drifted, slowly and with the best intentions,<br>into a regulatory state where the friction of doing anything new is high enough<br>that the people best positioned to absorb it are no longer the small operators<br>that once founded the today&rsquo;s behemoth companies.<br>I want to be clear up front that I am not writing a &ldquo;libertarian manifesto&rdquo;.<br>There are regulations I am glad exist, including most of the worker-safety,<br>environmental, and consumer-protection regimes that the post-war west put in<br>place. The argument is narrower than abolish the rules, and it is roughly that<br>the cumulative weight of three centuries of mostly well-intentioned rule-making<br>(almost none of which was ever repealed, btw) has reached a point where it<br>disproportionately punishes the small and rewards the large. That, I think, is a<br>problem regardless of where you sit politically.<br>Let me repeat: This post is not about political ideology and I urge you<br>to read it as apolitical as humanly possible and focus on the real-world<br>implications rather than some abstract political ideas.<br>Also: While I&rsquo;m no historian, I tried my best to investigate and find<br>reliable information, which I linked where necessary.

Anyhow, let me start with one of my favorite periods to dwell on, which is the<br>time &mldr;<br>When you could legally rob the Spanish<br>Wager's Action off Cartagena by Samuel ScottOf course, we&rsquo;re talking about the era historians loosely refer to as the<br>Golden Age of Piracy (roughly 1650 to 1730). Back then, the<br>relationship between private business and the state in the Atlantic world was so<br>different from ours that it can feel almost like science fiction.<br>If you were an English merchant in 1690, and you wanted to make money by<br>attacking Spanish (or French) shipping, you did not have to do it in secret. You<br>could go to the Lord High Admiral, or one of the Commissioners acting on his<br>behalf, and apply for what was called a letter of marque. The<br>application named your vessel, its tonnage, its armaments, the owner, and the<br>intended crew. You posted a bond promising to observe the laws and treaties of<br>England, and you got, in return, a piece of paper that legalised...