There’s been a lot of talk on StartupTwitter about founder mode: a type of management approach that flies in the face of conventional consultant-style wisdom. The antithesis of founder mode, according to Andrew Chen, is bureaucrat mode and it is far too common.
Peter Thiel said that there is a greater shortage of courage than genius.
These are two connected statements.
‘Of course, this is where startups have a huge advantage over over large companies. When you have 2-3 people, there’s no consensus that needs to be reached over weeks of meetings — all the information is already held within peoples’ heads, as they work from the same room. You can move incredibly fast and just focus on output, because there are less social relationships to manage. It’s fine to disagree, because it either takes a moment to sort out, or you can just try stuff out, and undo if it doesn’t work.
‘But all of this bureaucracy is not just driven by good intention. What makes this Bureaucrat mode and not Collaboration mode is that often these mechanisms are hijacked by people who forget why the mechanisms exist in the first place, and instead use the machine to drive their own careers.’
You’ve got to like a celebrity chef named Gruel. He pulls apart the practical impact of the minimum wage hike in California like he’s making a barbeque sandwich.
‘"These aren't even seasonally adjusted numbers, number one. Number two, he's using nine or 10 months. And really, it's only been three months in this data in which the bill actually took effect. So, you can cut those numbers down to like 5 or 6,000, which, in a grand scheme of 750,000 jobs, isn't a huge number," the chef explained, who currently owns five restaurants, one being located in California.
‘Gruel continued to dismantle Newsom's claim, arguing that even if his highly touted data points are accurate, his policy will continue to have "unintended consequences."
‘"Number one, the first thing that these multi-unit restaurants did when they found out about this bill was they took people who were working overtime, so anything over 40 hours, and they cut their hours down to 25 or 30. Those people went and got other jobs. They split positions. So instead of having one person working, say, 55 or 60 hours, they're having two people work 30 hours or 32 hours, making it a full time job," he explained.’
This is glorious.
‘Today’s non-binding guidance[1] to designated contract markets (“DCMs”) regarding listing of voluntary carbon credits (“VCCs”) derivative contracts is a solution in search of a problem. The Commodity Futures Trading Commission[2] has no shortage of topics that warrant our immediate attention. But instead of addressing those, we are issuing guidance on an emerging class of products that have very little open interest and comprise a miniscule percentage of trading activity on CFTC-regulated DCMs.’
The dramatic decline of China’s innovative start-ups
The heart of the regulatory crackdowns in China may be the fundamental tension for control and social influence. Tech companies like Alibaba threaten the dominance of the Chinese Communist Party. Has anyone seen Jack Ma lately? I imagine him as an eccentric villain from a Bond movie who lives in a barometric chamber sitting in a plane that flies continuously around the safe parts of the globe.
Is this one reason tech companies in the West are under regulatory attack?
‘The reasons fall into two broad categories. The first are macroeconomic, such as China’s broader slowdown since the outbreak of the Covid-19 pandemic and the bursting of the property bubble. The second can be laid at the door of Xi himself. Regulatory crackdowns on leading private tech companies, such as Alibaba and Tencent, have hammered their stock market valuations and sown deep uncertainty over Beijing’s ideological attitude towards private enterprise.’
Bureaucrat Who Threatened To Censor X Announces Resignation on X
Of course he did.
‘Since Elon Musk is politically incorrect and supportive of free speech, he’s attracting the ire of governments around the world. Last month a French bureaucrat named Thierry Breton even had the gall to warn Mr. Musk that streaming a live interview with former President Donald Trump could run afoul of a European Union law restricting “harmful content.” Today France’s would-be arbiter of American political debate announced his resignation from the European Commission, and you’ll never guess where Mr. Breton decided to share the news.
‘Fortunately the EU isn’t yet enforcing restrictions on ironic content, so Mr. Breton was free to post on X his resignation letter, which includes griping directed at European Commission President Ursula von der Leyen.’
The US Has Low Prices for Most Prescription Drugs
Here’s something counterintuitive. We’ve been told for years that price of drugs are far too high. It turns out that branded drugs are expensive. Generic drugs are not. When you factor in volume, 90% of drugs consumed in the US are generic.
So, when they tell you that they want to dictate the prices branded drugs can charge, what they’re really saying is that they want to pull forward this generic pricing benefit. Of course, they fail to mention that there will be fewer branded drugs if the pharma and biotech companies cannot fund the R&D necessary for their development.
‘The US has high prices for branded drugs but it has some of the lowest prices for generic drugs in the world and generic drugs are 90% of prescriptions. I’ve been saying this for years but here is the latest study:
‘U.S. prices for brand-name originator drugs were 422 percent of prices in comparison countries, while U.S. unbranded generics, which we found account for 90 percent of U.S. prescription volume, were on average cheaper at 67 percent of prices in comparison countries, where on average only 41 percent of prescription volume is for unbranded generics. U.S. prices for brand-name drugs remained 308 percent of prices in other countries even after adjustments to account for rebates paid by drug companies to U.S. payers and their pharmacy benefit managers.
‘Branded drugs are expensive but that is why we have insurance which works reasonably well, albeit far from perfectly. For example, insurance and the low price of generics is one reason that out-of-pocket costs for medical are low in the United States.’
Americans prefer more, not less, regulation of dozens of major industries
People may want increased regulation. It will be interesting to see if they want the impact of increased regulation.
‘Support for increased regulation is high for many industries, including AI, pharmaceuticals, social media, firearms, and health insurance. For each of the 40 industries asked about, more Americans say they support increasing regulation than say they support decreasing it. Cannabis is the only sector where regulation is even a close call: 38% want cannabis to be more regulated and 32% want it less regulated.’
Congress urged to preempt state AI regulations
The federal government can pre-empt California’s attempt at national AI regulation, even without implementing their own national AI regulation.
‘Not only is federal preemption both constitutional and good policy, but it also has precedent from the Internet Tax Freedom Act. Signed into law by President Bill Clinton in 1998 as part of the omnibus package that year, the bill imposed a three-year moratorium on any state or federal agency imposing taxes or fees on internet service, and it has since been made permanent. Congress recognized the possibility of rent-seeking of state, local, and federal jurisdictions off the growing internet economy and acted decisively to keep internet access and online commerce cheap and available to most Americans.
‘Like the Internet Tax Freedom Act, a federal AI preemption bill would stop bad state laws without requiring Congress to impose its own regulations. Congress can preempt states by claiming exclusive jurisdiction over interstate commerce and then choosing not to regulate it.’
Congress must roll back a key anti-innovation Biden-Harris policy
It is a miracle when a new healthcare treatment manages to make it to market.
‘Life science innovation is one of the most challenging and costly endeavors in the U.S. economy. For example, with an overall success rate of 16 percent and an average of $1 billion in research and development costs, it takes nearly a decade for a drug to achieve FDA approval. The aptly named “valley of death” is the gaping canyon between U.S. Food and Drug Administration approval and coverage of innovative therapies by the Centers for Medicare and Medicaid Services (CMS).’
Short-Term vs. Long-Term Effects
Will Loper have little long-term impact?
‘Peter Van Doren argues in this Special Section that the ruling does not change the fundamental equilibrium of Congress passing ambiguous statutes that, for one reason or another, do not result in concomitant regulation. Kristen Hickman and Nicholas Bednar argued in a 2017 law review article that deference by courts to agency expertise is inevitable regardless of the doctrinal framework.’
There should be a rule of some sort: bureaucracy cannot impose a tax in time or expense that exceeds that required to deliver the regulated good or service.
‘“We continue to be stuck in the reality where it takes longer to do the government paperwork to license a rocket launch than it does to design and build the actual hardware,” Kiley said. “There simply should not be delays related to paperwork or bureaucracy; The FAA and related agencies need to prioritize enabling launches and not standing in their way.”’
HOYT: COVID Showed Americans the Cost of Bureaucratic Incompetence
Was the Pandemic an eye-opening event for private citizens? Will this newfound insight decay over time?
‘The COVID-19 pandemic epitomizes the federal bureaucracy’s callousness toward responsible stewardship and efficient management of government resources during a crisis. The bureaucrats and the government that enables them don’t care.
‘The government spent $4.5 trillion on COVID-19 response efforts targeting economic relief, healthcare, and support for businesses and individuals.
‘Unfortunately, a significant part of these funds was wasted, contrasting sharply with the investments made for preparation and response in the prior decade.’
Kamala Harris Pledges to Support Digital Assets — 'We Will Cut Needless Bureaucracy'
Cutting needless bureaucracy is great. (Also, what is “needless” anyway? This statement is meaningless.)
It would be better to eliminate the conditions that lead to its proliferation, I think.
‘Harris also emphasized her plans to simplify regulations, stating:
‘We will create a safe business environment with consistent and transparent rules of the road. We will invest in semiconductors, clean energy and other industries of the future, and we will cut needless bureaucracy.’
Bureaucracy must embrace AI processes
We’ve often said it; bureaucracy favors the large.
Could AI level the playing field when it comes to dealing with bureaucracy?
‘Professor Brynjolfsson has argued that getting to the better forks for the future of higher productivity, more social equality and less power concentration is good policy, which would include creative policy experiments, a set of positive goals for what society wants from AI, and understanding that technology brings uncertainties as to outcomes, so flexibility in implementation is critical. Herein lies the common pattern to why productivity cannot progress in more complex societies. As business grows more sophisticated, laws and regulations rise in number and complexity, with often patchy enforcement, so that only the large or rich can afford the lawyers to manoeuvre around the bureaucratic swamp. Corruption is encouraged where laws proliferate with little transparency as to enforcement or outcomes.’
I didn’t have the LA Times characterizing Trump as “wonky.” I don’t think many people did.
Methinks they doth protest too much in their complaints about Trump’s threat to re-impose Schedule F. How would people characterize the civil service now? Lopsided? Antagonistic to conservatives? Biased?
‘Underlying most of them is his promise to end civil service protections, a sweeping idea that has escaped public scrutiny because it is so wonky.
‘Trump said last year that he wants the authority to remove at will anyone he considers to be a "rogue bureaucrat." "I will wield that power very aggressively," he added.’
FTC sues major pharmacy benefit managers over insulin prices
The pricing and distribution of medical drugs in the United States is byzantine. This case may be over-simplistic, especially if it relies on list pricing.
‘Pharmaceutical companies pay PBMs to have their medications placed on a favorable tier of the formulary, or list of covered drugs. According to PBM critics, that structure incentivizes the middlemen to prefer drugs with higher list prices, resulting in higher consumer costs.’