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How Much Regulation Does a Country Need?

From the ISET Economist news (http://www.iset.ge/news/?p=3871)

By Eric Livny

Democracy and Freedom Watch reported October 9, that “Georgia’s controversial new immigration law may be changed”. The law, writes DFW, “has caused a wave of confusion and irritation in the country’s expat community. Prime Minister Irakli Gharibashvili … told journalists that if any defects become apparent after the enactment of the new law, ‘we’ll surely correct it.’”

Just a month earlier, confusion, irritation and public outrage were caused by another piece of Georgian legislation – a law greatly limiting the sales of non-prescription drugs (see Florian Biermann’s post). The outrage was caused by the fact that many of the drugs affected by the new law, e.g. plain painkillers, were in extremely wide use. As a result, less than two weeks after coming into force on September 11, the law was amended by the health minister, Davit Sergeenko, allowing 772 medicines to be sold over the counter, without a prescription.

One could perhaps say, as the Germans do, ende gut, alles gut. But, alles is nicht gut. The fact that such REALLY BIG MISTAKES are allowed to occur in the first place suggests that something is deeply flawed in the Georgian policymaking machine. One obvious concern is the lack of due “public policy” process. Indeed, there was nothing particularly urgent about either piece of legislation; both could have benefited from a proper technical review, “stakeholder consultations” and a public debate.

Second, and very importantly, these grand failures suggest that Georgian lawmakers lack a proper understanding as to the role of regulation in an economy, and how much of it a country like Georgia needs (or can afford).

THE BENEFITS OF PROCRASTINATION AND DEBATE

Any discussion of regulations can easily get politicized, sparking seemingly futile and lengthy political exchanges. Left-wing intellectuals would argue that regulations are there to address market failures (such as drug addiction and overconsumption of antibiotics) or protect the weak and vulnerable (e.g. by securing their jobs and providing income support). The libertarians among us would argue that the market can correct itself, and that, in any case, state paternalism is not a solution to any problem. Rather, it creates unnecessary red tape and leads to unintended consequences such as laziness, corruption, illicit economic activities (“black market”) and smuggling. State failures, according to the enlightened libertarian view, are as much of a problem as market failures.

Such a clash of ideas is quite legitimate, and – if conducted in a civil and constructive manner – should be welcome in any community and polity. For one thing, it would provide legislators with a better understanding of the “problem” they are trying to solve (if there is a problem), such as:

the incidence of antibiotic resistance among Georgians;

immigrants competing with (or creating jobs for) low-skilled Georgian workers;

the extent of land grabbing (as well as investment and job creation) by Punjabi farmers.

Ultimately, whether liberal immigration regime (or free access to medications) is to be recognized as a “problem” is about politics rather than science. Still, having some evidence to consider before rushing with regulatory “solutions” would be a good step forward. It may well be the case that, while generating “killer” headlines, a “problem” is ridiculously small in magnitude or does not even exist.

Secondly, when faced with the need to publicly defend their proposals, proponents of regulations would be forced to analyze alternative solutions while taking into account the cost factor, effectiveness in terms of actually solving the problem at hand, related corruption risks, and other types of collateral damage.

DON’T BITE OFF MORE THAN YOU CAN CHEW!

But perhaps the most ideology-free criterion of evaluating the feasibility of regulations is whether a country has the requisite human capacities and skills. Even a relatively simple regulation, such as traffic lights, may be counterproductive if not properly planned and executed. First, there is the basic question of how to regulate a given intersection (traffic lights are effective only when traffic intensity exceeds a certain threshold level, which is almost never reached at night). Second, traffic lights have to be properly timed to maximize intersection capacity and minimize delays). Poorly planned traffic lights – hello, Tbilisi! – are not only a drag on traffic but also a safety hazard.

What is true about traffic, is equally true for extremely complex regulations such as anti-trust, labor, and food safety, which Georgia has subscribed to as part of the Association Agreement with the EU. For instance, it will take years – maybe even generations – to build the necessary professional capacities within the Georgian parliament and judiciary, the competition watchdog, the economics, legal and management professions in order to implement Swedish-style anti-trust law in the Georgian context. Thankfully, for now Georgia is paying lip service to some its EU-related commitments (e.g. by creating a competition agency and copy-pasting anti-trust legislation without caring to enforce it).

The botched attempts to rewrite immigration and pharmaceuticals laws suggest that professional skills are in extremely scarce supply throughout Georgia’s bureaucracy. After all, the Georgian state is one of the youngest in the world; Georgia’s educated urban elite is a tiny sliver of the population; and even this sliver has been impoverished by many years of brain drain and outmigration. In this situation, the Georgian state should not attempt to bite off more than it can chew. It should avoid complex regulations, even when these are theoretically desirable or required by its international partners. It should certainly avoid thoughtlessly copy-pasting regulations that have been designed for other times and other places.

* * *

A short story by Leo Tolstoy titled “How much land does a man need” describes the fate of a land-hungry Russian peasant, Pakhom, who is promised as much land as he can walk around from sunrise till sunset. One condition is attached: he has to make a full circle and return to the point origin by the end of the day. To maximize his future land holdings, Pakhom sets on a rather ambitious circular route, and is too late to realize that he cannot make it back on time. He runs as fast as he can and, exhausted from the effort, drops dead at the point of origin. His servant buries him in a grave only two meters long, thus ironically answering the question posed in the title.

OTHER NEWS
20/03/2019
Spread of Honey Promotion Video

The ALCP facilitated the Georgian Beekeepers Union (GBU) in development of the honey promotion video, depicting the story of Georgia as a land of the oldest honey discovered and unique biodiversity to support awareness raising and promote export potential of Georgian honey and Jara. The video was shared with different stakeholders and social networks.

The Ministry of Foreign Affairs shared it with their internal networks of embassies in Georgia and foreign countries and it was uploaded in a Georgian production section. The video is on Facebook of the  Embassy of Switzerland in Georgia. The Georgian National Tourism Agency; The Department of Tourism and Resorts of Ajara; the Ministry of Environmental Protection and Agriculture; and The Agency of Protected Areas are sharing it with their network.

It has reached the highest views on the popular Facebook platforms Marketer.ge and Georgian WineTo date the video has 185,000 views and 6,000 shares. The majority of the viewers are emphasizing on interesting story mentioned in the video they did not know before and are sharing it for further promotion.

13/03/2019
'Georgian Milk Mark' now in Supermarkets

The products with 'Georgian Milk Mark' are now available in the supermarkets of Georgia.

The 'Georgian Milk Mark' is officially registered and serves to distinguish dairy products made from natural milk. 

01/03/2019
Jara is now available on Amazon

The documentary Jara is now available for sale on amazon

Jara is a fairy tale journey through one year in the mountains of Ajara. A story of the shifting boundary between human habitat and wild nature, portrays everyday lives in the changing seasons. The wooden jara in the forest and the bees living within it are the fixed point in the story.

The film was named as the best feature film at the Wolves Independent International Film Festival2018 in Lithuania, and won the Golden Green Award 2018 at the Deauville Green Awards International Film Festival in France for the best production in the category of Sustainable Agriculture; the cameramen of the movie received an award from International Festival of TV and Movie Cameramen the Golden Eye 2018 for Best TV Camera Work.

The main backer of Jara is the Swiss Agency for Development and Cooperation (SDC) through the Mercy Corps Georgia implemented Alliances Lesser Caucasus Programme.

                                                   

21/02/2019
First Time: Packaged Jara Honey

Jara honey, collected from the local beekeepers in Ajara, has been officially branded and packaged for the first time. It is now ready to enter the international markets. 

9/02/2019
Breakthrough Legislation for Honey Sector

On 8th of November, 2018, the Government of Georgia adopted regulation #525, which forbids registration of the vet drugs containing prohibited antibiotics, like, chloramphenicol, metronidazole, dimetridazole, ronidazole, nitrofuran (including furazolidonewhich are widely used in beekeeping. The regulation entered into force on 1st of January, 2019 and was nationally covered by the media outlets. The regulation was proposed by the Veterinary Department of the NFA, after this constraint was raised at the first Honey Sector Advisory Committee on 22nd of June, 2018, which brought together honey stakeholders to discuss tackling the high levels of antibiotic residues in honey which are limiting the development of the honey sector. 

                                         

8/02/2019
Veterinary Surveillance Points in OIE publication

An article about Veterinary Surveillance Points (VSP) has been published in a quarterly bulletin of OIE – the World Organization for Animal Health. The article covers topics on the tradition of livestock seasonal movement in Georgia, the necessity of establishing VSPs and the importance of the points in animal health control throughout the country. The author of the publication is the Head of the Veterinary Department of the National Food Agency and the OIE Delegate of Georgia - Lasha Avaliani.

Please follow the link: Oiebulletin/veterinary-surveillance-points

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