Regulator's Calculation Problem

When government shifts from directly providing a service to setting rules for others to provide it, the public's intuitive skepticism about government competence often evaporates even though the underlying knowledge problem remains; regulators do not magically gain the tacit expertise of operators simply by issuing rules. This gap becomes acute in complex domains (medicine, housing, frontier AI) where second‑order separation hides incompetent governance behind layers of delegation. — Identifying this judgment‑gap explains recurring policy failures and reframes debates about delegation, oversight, and whether regulation or direct provision better serves the public interest.