The Danegeld Problem

In 991, the English king Aethelred the Unready paid Danish Viking raiders 10,000 pounds of silver to stop attacking his kingdom. It worked for one year. Then the Vikings returned and asked for more. The payments became regular. The Vikings, now funded and organized, became more dangerous. What began as a temporary solution became a permanent tax on the kingdom’s productive capacity. The problem had a name: Danegeld, the tribute that only ensured more demands.

Healthcare is caught in its own Danegeld cycle, though few recognize it as such.

When a new regulation arrives—a data protection law, a quality standard, a safety reporting requirement—it solves a real problem. The regulation is often necessary. But it simultaneously creates a constituency that profits from its existence. Compliance consultants emerge. Certification bodies establish themselves. Software vendors launch products to manage reporting. Law firms hire specialists. Training companies build curricula. Within months, dozens of organizations depend economically on that regulation’s survival and expansion.

These are not villains plotting in boardrooms. They are rational actors. A compliance consultant has a mortgage. A certification body has staff. A software vendor has investors. None of them entered their field with malicious intent. But their incentives now align with the regulation’s persistence. If the regulation is simplified or removed, they lose revenue. If the regulation expands, they prosper.

This creates a structural asymmetry. The costs of a regulation are diffuse—they are borne by hospitals, clinics, and manufacturers scattered across a large population. The benefits of a regulation’s expansion are concentrated—they accrue to the consultancies and vendors and bodies that specialize in it. Concentrated benefits are easier to mobilize politically than diffuse costs.

Economist Bruce Yandle famously captured this dynamic in what he called “Bootleggers and Baptists.” Bootleggers—illegal whiskey producers—and Baptists—religious groups opposed to alcohol—both supported Prohibition. They had opposite motives but aligned interests. Prohibition helped Baptists achieve moral ends. It made Bootleggers rich. Both lobbied hard for its preservation. When political coalitions form between people with opposite principles but aligned interests, those coalitions prove remarkably durable.

Healthcare regulation now operates in this mode. Patient safety advocates (the Baptists) genuinely care about reducing harm. Compliance vendors (the Bootleggers) profit from the complexity those safety regimes create. Both lobby to maintain and expand the regulatory architecture. The difference between their motives is irrelevant. Their interests align.

This explains a phenomenon that puzzles most observers: why every major “bonfire of regulations” initiative has failed. The regulatory apparatus seems simultaneously entrenched and impossible to remove. Policymakers propose sweeping simplification. Consultants mobilize. Vendors warn of risk. Certification bodies argue for higher standards. Safety organizations invoke patient harm. The bonfire either never ignites or burns down only regulations with no defending constituency—which means it eliminates the regulations that were already ineffective or obsolete.

The Competitive Enterprise Institute’s annual “Ten Thousand Commandments” reports document the pattern. Federal regulations in the United States number over 180,000 pages. When administrations arrive promising deregulation, the total pages rarely decline. New regulations simply outnumber eliminations. Why? Because elimination faces organized opposition. New regulations face diffuse resistance.

Europe’s GDPR illustrates the mechanism at scale. Adopted in 2018 to protect privacy, it has created an estimated $15 billion annual compliance industry. Consultancies, auditors, security firms, legal practices, software vendors—all now depend on GDPR’s existence. All have economic incentive to expand its scope or intensify its enforcement. The original goal—protecting individual privacy—remains legitimate. The new coalition of actors defending it includes many who profit from complexity itself.

What is often missed in this discussion is a legitimate counterargument. Regulation accumulates because removal is structurally harder than creation, but that is not purely pathological. Regulations often persist because they represent institutional memory. A safety rule that seems arbitrary now often exists because someone died from violating it twenty years ago. The rule is boring because it is successful—it prevents the disaster it was designed to prevent, and the disaster fades from living memory. Future policymakers see only the regulation’s cost, not the catastrophe it prevents.

This is why abolishing regulations wholesale tends to fail. Some regulations are carrying knowledge that cannot be reconstructed quickly if lost. The analyst who proposes eliminating them often lacks exposure to the downstream consequences. They see only cost. They do not see what prevented.

The honest position is this: regulatory accumulation is a feature of complex systems, not a bug to be eliminated. Organizations that manage regulation well do not try to eliminate it. They do three things instead.

First, they make regulatory burden visible as a real cost in organizational accounting. When compliance costs are hidden in staff time or absorbed as “doing business,” they persist invisibly. Making them explicit creates pressure to justify their value.

Second, they insist on evidence of benefit. Not theoretical benefit. Actual, measured benefit. Did this regulation reduce the harm it was designed to prevent? By how much? If no one can answer that question, the regulation is a candidate for review regardless of its constituency.

Third, they rotate the constituencies involved in regulatory design. If the same compliance consultants, vendors, and certification bodies design every new regulation, those regulations will naturally expand their scope. Bringing in participants with different economic interests—patient groups with no compliance vendor ties, clinicians with no certification body interests—changes what gets proposed.

The Danegeld problem has no clean solution. Every attempt to eliminate regulation entirely fails because regulations carry institutional knowledge and because constituencies defend them rationally. Every attempt to leave regulation alone allows accumulation and scope creep. The path forward is not choosing between these poles but managing the permanent tension between them with visibility and evidence.

The alternative is what we have now: regulations that no one can navigate, that consume resources without clear benefit, and that have become so complex that they are honored in the breach rather than the observance. That is not order. That is entropy masquerading as governance.