The extra taxes paid by all will (theoretically) improve the schools, roads, military, and services. The regulations will (theoretically) decrease the risk of poisoning ground water and injuring someone, which adds even more value to the local community.
The distinction is just that the septic tank is twice as expensive in the developed country. But that money can lift people out of poverty. The exception is when the company owner is hoarding the majority of the money tax-free instead of paying it to people who will spend it.
That's the grade school analysis and in reality we are all poorer for it.
If ten people pay $5k to avoid getting a substandard service that has a 1/10 chance of happening and will cost $20k to remediate if it does that is a massive loss to the overall economy because that money otherwise would've been spent elsewhere else.
This isn't just septics, it's every widget and service. And it's not just a government and tax problem (though those cases are frequently most flagrant). Private industry requirements cause the same problems.
People don't just build 1 thing for a house nor can they afford a $20k failure.
If you take Fred who saves up $10k for a major purchase for his house each year.
If there is a 10% chance of a failure, then Fred will have a 53% chance of bankruptcy in 7 years.
You can't run an economy where everyone is bankrupt.
A man saving 10K per year goes bankrupt if he doesn’t spend it productively? That’s what you’re trying to say?
I realize I don't speak for the more cash strapped population, and I agree that overbearing regulation can be a problem. The problem is not regulations themselves, which save lives, but the perverse execution of new regulations in countries like the US (often written by market leaders to cement their moat, with the power of lobbying.)
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.
And this isn't just insurance. Just because someone who work is being made for by law or by rule says that their work output reduces the failure rate from X to Y doesn't mean that the cost of their work when applied to everything isn't a massive loss compared to just not paying for that and cleaning up the mess X times instead of Y times.
You can appeal to emotion all you want but it's a very simple calculation. Heck, health insurance (in the US) serves a pretty obvious counterpoint.
Examples: Leaded gas, tobacco, CO2 emissions, dam breaks, reactor meltdowns, air pollution (really pollution in general; river/groundwater contamination for your septic tank example)...
If you underregulate, you end up with frequent cases where not even imprisoning and dispossessing everyone remotely involved/culpable is gonna get you sufficient compensation; this is extremely undesirable.
Companies are frequently gonna steer towards such scenarios, too, because they can allow them to externalize costs.
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.
Furthermore, people want those white-collar jobs you detest, and not everyone is inclined to R&D as this forum might think. The real problem is how technological progress has not been properly applied to improving white-collar productivity as opposed to just filtering, funnily enough of which this very thread is about regarding university.
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.