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  • Writer's pictureJosh

Regulation as Friction

“Regulation” makes it sound abstract and far away, like someone setting the dial on their thermostat; “Impediment” is much better. To me, impediment connotes a roadblock, barrier, or even solid wall blocking the path of one or another organization, which is sort of the point. I’m imagining the organization as a sort of vehicle, trying to get somewhere (I guess the destination is marked “profit”), and the regulation-as-impediment blocks certain paths and forces them to go another way.

However, I think we can refine the analogy a bit more by thinking of regulation as a kind of friction, rather than a solid barrier. The organization still wants to get to its destination (“profit”), and when it encounters regulation, it can either be diverted or it can rev its engine and drive straight through; I think all of these cases are best captured by regulation-as-friction.

Here’s a simple example: Some tech company produces widgets and wants to sell them to make a bunch of money. The government is concerned that the widgets are not safe, and so they put regulations in place to keep widgets off the market. At that point, the company has a few options: (1) give up, cut their losses, close their doors; (2) do the requisite safety tests to get around the regulation; or (3) break the rules. In the vehicle analogy, (1) means stopping the vehicle, (2) means driving around the impediment, but (3) corresponds to driving straight through. No company wants to do (1), and many are small and poorly insulated from the consequences of (3), so they do follow the rules and do (2); that’s the case for regulation.

Regulation-as-impediment captures very well options (1) and (2). Eliezer says “large corporations… are advantaged by an environment with lots of impediments”, and I agree with that, but it’s not clear that this is fully captured by his suggested terminology. An impediment, thought of as a barrier or blockade, blocks everyone. Such corporations are not literally advantaged by these barriers, but rather by their greater capacity to bypass them. Their advantage here is in the context of case (2), where they have greater longevity and capital (more fuel) to sustain long bouts of limited profits that may arise while they modify practices to adhere to the rules.

Its benefits notwithstanding, I find “impediment” a much more clumsy way to discuss case (3). On the other hand, I think “friction” fits all three cases in a much more straightforward way. This is due to the fact that friction (unlike a barrier) can have a non-damaging, differential effect on one vehicle compared to another. In case (3), big corporations, with lots of money and expensive lawyers (and even friends in high political places), are much more able to do break the rules with minimal harm to the business. That is, knowing they will find friction along the way, these corporations invest in the most powerful engines and all-terrain tires that small corporations can’t afford, such that the inconvenience caused is greatly reduced. They can afford the fines and legal fees associated with breaking the rules, where small businesses get stopped in their tracks. This is different in an important way from a regulation-as-impediment-as-barrier, which either stops someone or it doesn’t.

Of course… strictly speaking, friction is a sort of impediment, making this post somewhat pedantic… but because I’m very committed to finding good metaphors, and the distinction between (2) and (3) are pretty important, I wanted to expound on this anyway. So while I agree with Eliezer that “regulation” isn’t a great way of talking about government imposition into the private sector, I think “friction” best captures the situation. And the language fits how many of us already speak about these things; I’d be very happy to hear people having more discussions of the form, “Haircuts kill very few people; do we really want to add friction to that system?”


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