In Fifty Days, Payments Innovation Will Stop In Silicon Valley

Post by Retric » Wed, May 11, 2011, 1:36 PM UTC

dpatru wrote: post #67

jrockway wrote: post #48

Doesn't all regulation stifle innovation? If I wanted to sell a homes in a skyscraper made of papier-mâché, building codes would prevent me from doing that. But that's not necessarily a bad thing: the first time someone leaves their soldering iron on while they're not using it, the building burns down and we have five hundred dead families on our hands. "Innovators" tend to think about the good aspects of their ideas…

Government regulation is in just about every case either not needed at all or better provided through non-coercive institutions. Since government innovates more slowly than private industries, government regulation tends to become outdated, going from common-sense prudence to arbitrary burden on innovation. For example, right now the Mississippi River in the US is flooding, destroying many homes. This is a huge loss…

Post by tptacek » Wed, May 11, 2011, 1:37 PM UTC

18pfsmt wrote: post #97

tptacek wrote: post #90

Earlier quoted context omitted.

Is the bond too small? Is that what you're arguing with that second sentence? I can't follow.

His point is that the bond is too large, and that's _just_ for California. In the linked quora post, it was specifically pointed out that there are 43 other states where one has to do the exact_same_thing where the bonds vary from $10k-$1M. Edit: Check out PayPal's list: https://www.paypal-media.com/licenses

Post by sp332 » Wed, May 11, 2011, 1:41 PM UTC

dpatru wrote: post #70

potatolicious wrote: post #51

Earlier quoted context omitted.

I wouldn't go as far as to say all regulation stifles innovation. A completely unregulated market may very well stifle innovation also - i.e., when consumer trust of that market is so low as to discourage economic activity. That is a rather extreme case, though. I think the more relevant point is that all regulations have overhead - even ones that don't charge a $500K bond. This is something governments sometimes see…

An unregulated market will spawn entities that provide the services it needs. This includes security and trust. Insurance companies, for example, are entities that people trust to protect them against loss. Rating agencies are entities that people trust to provide risk assessment. The difference between non-coercive (private) entities and government is that non-coercive entities adapt better. So, for example, if you'…

Post by tptacek » Wed, May 11, 2011, 1:48 PM UTC

olalonde wrote: post #102

tptacek wrote: post #90

Earlier quoted context omitted.

Is the bond too small? Is that what you're arguing with that second sentence? I can't follow.

What I mean is that this law which is intended to prevent fraud does nothing of the sort. All it does is guarantee that the people who commit fraud were able to pay the bond. What's the point? If they do commit a fraud, they'll probably steal much more than the value of the bond anyways. All this regulation really does is stifle competition, I'd eliminate it altogether.

Post by olalonde » Wed, May 11, 2011, 1:52 PM UTC

jonknee wrote: post #104

olalonde wrote: post #89

Earlier quoted context omitted.

You're right but in this case, the detail doesn't really matter. The point is you need a lot of capital to enter the market. Once you are licensed, nothing prevents you from committing a fraud except for the potential risk of losing your bond. This risk could be insignificant given a large amount of money to defraud. All this law does is guarantee that from now on, only rich people are allowed to commit fraud.

> All this law does is guarantee that from now on, only rich people are allowed to commit fraud. So you're fighting for the little guy to be able to commit fraud too? FWIW the rich guy is not just risking losing the bond, but also going to jail. That's the threat, the bond is just so customers can get paid.