alt Hacker NewsExactly. In <pick random developing nation that isn't too poor> a man who wants to construct a septic for a house pays a man with backhoe who understands the nuances to make it happen. Concrete and diesel are bought, etc, etc, etc. Let's say $5k USD added to GDP.
In US same thing happens. But the man is compelled by threat of law to pay for engineering studies, permits, as are the man with the backhoe and the man making the concrete, etc, etc. $10k is added to GDP.
Has anymore wealth actually been created tho?
You can argue there's a difference because the latter septic is superior because on average they fail less and there's some amortized cost to that but if you're arguing about marginal differences in the face of an integer multiple you've kind of already lost.
This generalizes to just about all products and services. No more value is being created. There's just a bunch of hands in the pot that look like value if you squint and apply motivated spreadsheet magic.
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I haven't been in a car accident for 15 years, not even fender benders, that doesn't mean I shouldn't take insurance.
As someone from a random developing nation car accidents deliver crippling debt and destroy lives there frequently because insurance is not mandatory.
The developing nation blindly ignore the externalities of not having insurance (instead of spreading the cost throughout society, only a few people bear the brunt of it, usually the ones least equipped to handle it), so your example is great only if you assume its fine to continue to beat down the poor. There's a reason developed nations have developed such "red tape" and the anti-vaccine movement here in the US is finding out what happens when the red tape is removed.