Are There Laws You Don’t Understand?

Maybe the better question is “Are there laws you do understand?

  • Does anyone, and I include tax professionals, understand the tax act. Not likely.
  • How about regulations in your business. Not likely.
  • How about limitations on speech? Not likely
  • How about the covid-19 emergency response and its dictates. Not likely.

Are the laws all founded on clear standards and rational thought?

Why the problem?

It is simple. Laws are not written to be understood. They are vague where it matters.

Until the judges at the Supreme Court in the United States took it on themselves to make things work better, whatever that means, vagueness was grounds to strike down a law. Vagueness came in three specific areas.

  1. You could tell who is subject to the law
  2. You could tell what acts would contravene it
  3. You could tell what the sanctions would be if you were subject to the law and you violated it

Vague laws break one or more the requirements. That reduces your ability to predict how the future will unfold. Predictability is vary valuable asset and it is fast becoming unusual. One of the reasons I left the accounting firm was that I grew frustrated telling clients, “I don’t know what you should do, but the balance of probability is you should do this.”

I would be amazed if a law today was challenged on the basis of vaguess and the court ruled it should be tossed.

Why does it matter?

Predictability is a high order value for people and businesses. Vagueness allow you to be punished based on your behaviour when you had reason to expect you were operating within the law. You will see it often in the area of environmental degradation, employee relations, and protection. If something was created subject to the rules in force at the time, disposal of waste, for example, how should a bolt from the court cost you today?

Law should be designed to provide some certainty about what actions are permitted and which are not. If ex post facto assessment is a possibility, no one knows. They perform as you would expect once they know the situation.

  1. They incur costs so they could argue the merit of what they did. The price of something incurred in one aspect of a business is then a resource unavailable for any other purpose.
  2. They don’t do some of the things they would like to do. Sometimes because they spent their resources elsewhere. Other times because the case is too hard to assess and so they avoid it entirely. How many nuclear reactors are being built? Engineering improvement comes from build, run, and assess. Like evolution. Most running today were built with 1975 or earlier ideas and tools. A new one would not be built in any way similar. Yet, who would invest their money in proof of concept.

This kind of law hurts everyone. Caution, and declining opportunities that appear, means we all have less.

It would be interesting to see what new laws are clear and simple. Failing those factors, no one can know what will happen and they will not behave as entrepreneurs.

I help people have more income and larger, more liquid estates.

Call or email in Canada 705-927-4770

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