Comment by secabeen

> 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.

The piece you're missing is that the man has to pick between 10 indistinguishable men with backhoes, of which some unknown percentage are charlatans who will dig a hole, put some pipes in it, then disappear with the money. The original man will now have a puddle of human waste next to his house, no septic system, and be $20k poorer ($10k+ in cleanup, then $10k to someone to build an actual system).

Regulation ensures that the charlatans can't operate and that everyone who pays $10k for a septic system actually gets one that works for decades. This also protects the original man's neighbors who also suffer when his property develops a cesspool. Regulation also protects against well-meaning but incompetent operators, who are also common when regulation is weak or non-existent.