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Can the introduction of new rules/regulations designed to improve standards, performance etc. have the opposite effect?
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Yes, it's called the Law of Unintended Consequences, and the answer is not to have so many crap laws, although there's nothing actually wrong with regulation per se - you wouldn't want people to be able to sell double glazing that didn't work, presumably, or cars that threw you through the windscreen on heavy braking.
The usual one quoted is the 1980s upgrading of cannabis in the US to the same level as heroin, including stringent penalties for selling it within x hundred yards of a school. The criminal fraternity, figuring the penalty was the same but the profits were higher, switched to dealing heroin. This sort of thinking explains why the War on Drugs is going as well as the War on Terrah.
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Emission related VED rules which now mean it's far cheaper for my neighbour to run an old gas guzzling sports car than it is for me to run a modern, relatively efficient diesel car with far lower CO2 emissions.
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? My old (1994) non-gas-guzzling Seat costs way more to tax (nearly double) than my newer (2001) non-gas-guzzling Skoda, which was registered after the cut-off date. Running costs include insurance and fuel, which should be way more for his than yours unless you drive everywhere with your foot on the floor and pay for it with the consequent insurance risk and police record. Do you do the same mileage?
Old cars aren't cheap to run, in my case it was cheap to buy and I'm driving it until it fails its MOT, not for any other reason. I've got nearly five years out of it for £1150, which is worth the £75 premium on VED.