On “regulation”

18th June 2017

This post is a short essay-of-sorts about regulation.

The prompt for this post has been the tragedy at the Grenfell tower block, but this post deals with the issue of regulation in general rather than any incident in particular.  This post is an elaboration of a widely retweeted Twitter thread.

As of today, we do not know the cause of the tragedy.  We do not know (and it would be prejudicial to say) whether anyone is criminally culpable. We do not even know if any laws were broken. There is the worrying (but plausible) prospect that no laws were broken: that the disaster was allowed to happen, and that everyone was involved were in compliance with whatever (inadequate) laws there were.

This post is therefore about dergulation in general, whether or not deregulation caused the the tragedy at the Grenfell tower block.

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Regulation, like law, is inherently neither good nor bad.

Some regulations and laws can be used for bad purposes or can have unwanted effects.

But the key test for regulations and laws is a practical one: whether they work or do not work.

Each regulation should be looked at its own merits, on a case-by-case approach.

The purpose of a regulation is to affect outcomes and shape behaviour.

Some outcome should be (or would be likely to be) different *but for* the regulation.

A regulation which, for example, makes no difference to what would have happened anyway fails this test.

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A “regulate everything” approach is thereby misconceived.  Not everything can be regulated.  Or the regulations may make no difference.  Or the unwanted consequences of the regulation may outweigh the benefits.

(I have satrised this “something must be done” approach here and I have criticised the propensity to “ban” things without thinking through the consequences here.)

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At the other extreme there is the “regulate nothing” approach.

This approach sees regulation as a inherently bad thing; regulation as a thing which needs to be got rid of, as an end in itself.

So we get “crackdowns” on red tape.  Things are to be “liberated” from “shackles”. A person is to be “set free” from the “dictates” of “Whitehall”.  And so on.

Cliché follows cliché. Easy headlines and applause.

It is not hard for a politician to get a clap when calling for such deregulation in this way, just as he or she would also get a clap by saying something should be done.

(The very same nodding voter would no doubt be clapping both times.)

The bureaucrat and the official, with their invariable “lack of common sense” is the bogey here, the villain.

Health and safety has gone mad, we will say.  A return to common sense, we will demand.

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But often absent from these demands are specifics.

What regulation?

What purpose?

Does it work?

What does it make different?

What does it not make different?

What would happen if the regulation was not there?

What would be the wider consequences of a regulation not being there?

What are the costs as well as the benefits?  And the benefits as well as the costs?

These are questions for the proponents of both “something must be done” and “eliminate red tape”.  Their utterances are not enough; more is needed than virtue signalling.

Regulations (and the removal of regulations) are not ends in themselves.

A regulation is there to provide that outcomes will be (are are likely to be) different from what they would be, *but for* the regulation.

Certain bad outcomes can be avoided; certain public goods and public benefits can be achieved.  In both cases, individuals would not be able to do this for themselves without the regulation.

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And so: the next time someone says “reducing red tape” ask for specifics (just as you should with the person calling for “something to be done”).

In particular: what outcomes would be affected?

And if you do not get an equally specific answer, the demand is shallow and meritless.

And sometimes this means the demand is dangerous, and sometimes even lethal.

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Comments are pre-moderated.  

8 thoughts on “On “regulation””

  1. “One in, two out” is an example of the mindless approach to regulation. Never mind the quality, feel the width.

  2. Couldn’t agree more. Regulations should be assessed on whether they are useful and whether they achieve their purpose. It should be self evident but apparently not.

  3. The regulations and rules you refer to are for business. ‘Deregulation’ is an inherent part of neoliberal economics, to give businesses a ‘freer hand’.

    However, the rules and regulations around benefits/welfare have been made more complex; this has the effect of making some entitled people abandon a claim.

  4. Regulation seems to me to be a bit like taxes. Plenty of people want more regulation (or taxes) for everyone else, but less regulation (or taxes) for themselves. Builders, scientists, those who care for vulnerable people, tabloid journalists, motor vehicle manufacturers… the list of occupations that (other people) think should be better regulated is almost endless. While those who are regulated know best the effects of regulation, this can be very difficult to distinguish from special pleading.

  5. The basic problem is this: on one side is a particular interest; on the other are general interests. For instance, a developer wants to build as cheaply as possible with the greatest amount of profit. On the other, the potential tenants or owners of the development have a general interest in safe housing. The developer can mobilize resources far greater than individual ‘customers.’ He can lobby a council for less regulation in ways in which an inchoate group of potential occupants cannot.
    In general, those with the particular interest(s) are more likely to “win.”
    Your formulation makes sense only in general. More important, also, is the issue of whether predictions as to whether a given regulation will serve its purpose or not. One can err in two ways, but not adopting a ‘good’ regulation and one by adopting a ‘bad’ regulation. The more one is prepared to accept one of these errors, the more likely they are to make the other.

    1. There’s the issue that people who manage costs and benefits don’t come clean about how they deal with externalities, including putting a price on human life.

      There is also the issue of the nature of risk, happenstance that is not uniformly distributed but affects only some cases disproportionally.

      The business man who weighs costs and benefits and is in it for profit, crosses his fingers on one hand, thinking lighting might not strike today, and with his other hand he counts money.

      The resident also weighs costs and benefits, so he rents a place he can afford, even though it will be of inferior quality, and this includes health and safety.

      Bad luck strikes this time, but this developer isn’t more to blame than any other developers who refurbished similar businesses in exactly the same way, though luckily their tenants didn’t end up dead. They are all guilty.

      The politician who missed regulating in this case or took too long to take action isn’t more to blame than politicians regulating any other business activity that carries risk to humans. They are all guilty.

      But the residents who put up with sub-par housing without moving out and the voters who keep the politicians in power despite not keeping their promises aren’t blameless either. We’re all to blame. Not completely black or white, but to an extent. Every time we don’t speak, or only speak when it’s ‘safe’, or only when we’re directly affected, we’re allowing the chance of tail risk building up, and sneaking in, to kill or disable some of our fellow citizens.

      Just as we all own up to being ‘good citizens’ when there’s a terrorist attack perpetrated by extremists, we should seek our conscience and ask when we’ve been ‘bad citizens’, when a disaster came to pass or is waiting to happen due to our acquiescence to profit-making enterprise and status quo (and of this we’re all guilty, since we all have jobs: AFAIK any of our actions and the compromises we make and things we turn a blind eye to and orders we abide by might conceivably down the line get to kill people).

      Rights and responsibilities go both ways. We do not defend our way or life by being passive and letting them have their way. It only deteriorates. We have to fight the causes of tomorrow. Point the finger at those who act wrong even though no one has still been harmed, and do that day in, day out, all year long.

      Regulation is weakened by lobbying and only campaigning can defeat lobbying. And the campaigner is each one of us, because if we wait for others no one will.

      Hindsight is easy, effective proactive action is hard.

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