4 ms·

In what way is regulatory capture corruption? What is the alternative? I'm reluctant to consider it corruption in the same sentence as bribery, despite that it

by aggronn 14y ago

In what way is regulatory capture corruption? What is the alternative? I'm reluctant to consider it corruption in the same sentence as bribery, despite that it is an inherent conflict of interest.

GoodIntentions 14y ago
>> In what way is regulatory capture corruption? Try getting a decent mobile data plan in Canada. It will be rapidly apparent to you.
- aggronn 14y ago
  I see what you're saying, but in what way is that strictly corruption? I think what I'm really asking is, where do we draw the line on what is corruption and what isn't? To me, regulatory capture, and a fair amount of public economics, is just 'how things are'. There are ways to try to reduce certain aspects of it, but are we really willing to ban movement between working in industry and the regulatory side of things like we ban bribery?
  - GoodIntentions 14y ago
    When a government created and sanctioned body has the effective ability to make or break players in an industry, and that body becomes utterly owned by the incumbents. It stops representing the public interests and begins defending the incumbents from market forces that motivate those incumbents to compete fairly, offer reasonably current services or even innovate new ones as a means to compete. In short, they represent corporate interests while ostensibly being the people's governing body. This is imho, corruption. I don't know how exactly you regulate this away - perhaps mandate a percentage of the regulators specifically be from outside the industry. Edit: for completion of sentence/thought
srean 14y ago
I have some answers to your questions, not all, and then they are my answers, not necessarily correct answers. But, I think it will not do much good to just state them. I would say give the questions and their underlying assumptions some thought and also time. For me I had to fight of the tendency to just close the question with some answer and be done with it.
r00fus 14y ago
Regulatory Capture is, according to Wikipedia, a clear aspect of corruption, see "corruption" wiki template: http://en.wikipedia.org/wiki/Template:Corruption http://en.wikipedia.org/wiki/Template:Corruption Not sure how else to remedy your confusion here.
- aggronn 14y ago
  Its not confusion. I'm more qualified to talk about 'regulatory capture' than I'm leading on, but its a real question: how is moving from industry to regulation, or the other way around, inherently corrupt? I disagree that having a system with poor incentives necessarily means it's 'corrupt'. Bribery is undoubtedly corruption. But when a state power regulator lowers restrictions on pollutants and greenpeace calls foul play, how can tell that that they're doing it because they believe its prudent or because they're looking for a job? A major complaint that a lot people have is that oh, when you leave your S&P job thats paying 60k a year for an IB job that pays 300k a year, you're a symptom of corruption. But hell, what if your experience working for S&P necessarily means your qualified to do derivatives trading? If you're getting job offers that are conditional on you making certain regulator decisions, thats bribery. Eventually wanting to get into the business side of things because they pay more isn't the same thing.
  - kamaal 14y ago
    >>how is moving from industry to regulation, or the other way around, inherently corrupt? Because regulations work only if regulators are honest.
  - JabavuAdams 14y ago
    > I'm more qualified to talk about 'regulatory capture' than I'm leading on, but its a real question: how is moving from industry to regulation, or the other way around, inherently corrupt? It ignores human nature. People don't rat out their friends. If you're the jerk at the party, you stop getting invited to the right parties.
dredmorbius 14y ago
Regulatory agencies are supposed to, by charter, look to the public interest in overseeing companies. If they are captured by the companies they regulate, and serve the companies' interests rather than the public's, by definition their mission has been corrupted. Your question is highly disingenuous.
- aggronn 14y ago
  Your assessment of my question isn't fair. Serving companies interests vs serving public interests isn't a dichotomy, and very rarely is a regulatory decision as clean cut as 'this is obviously bad and a net loss for the society, but we're going to let them set do it anyways'. Believing that to be the case is far more disingenuous. Regardless, moving between industry and regulatory bodies isn't necessarily done in a corrupt manner. If you're the president of a state energy board, you don't need to break any rules to get a higher paying job in industry. you're already, perhaps necessarily, more qualified than almost any other candidates. This is not inherently corrupt, this is what OP was referring to (or, this is a common meme which is associated with what he described).
  - dredmorbius 14y ago
    No, it's accurate. What part of "when a state regulatory agency, created to act in the public interest, instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating" don't you understand? That is the definition of "regulatory capture". Note that regulatory capture is not "balancing the public interest with commercial realities" or similar such wording. If you're perhaps debating some other term, please provide us with an accepted term and definition of same, rather than creating a Lewis Carrol "glory" (see: http://sabian.org/looking_glass6.php http://sabian.org/looking_glass6.php) and passing off as accepted wisdom. On my planet, the appearance of impropriety is considered largely as bad as actual impropriety. Taking an example from a US government website: http://ig.navy.mil/Complaints/Complaints%20%20(Appearance%20of%20Impropriety).htm http://ig.navy.mil/Complaints/Complaints%20%20(Appearance%20... If the revolving door consistently operates between regulatory agencies and the organizations those agencies regulate, then yes, I'd say that this comprises systemic corruption.

by aggronn 14y ago

In what way is regulatory capture corruption? What is the alternative? I'm reluctant to consider it corruption in the same sentence as bribery, despite that it is an inherent conflict of interest.

GoodIntentions 14y ago

>> In what way is regulatory capture corruption? Try getting a decent mobile data plan in Canada. It will be rapidly apparent to you.

aggronn 14y ago
I see what you're saying, but in what way is that strictly corruption? I think what I'm really asking is, where do we draw the line on what is corruption and what isn't? To me, regulatory capture, and a fair amount of public economics, is just 'how things are'. There are ways to try to reduce certain aspects of it, but are we really willing to ban movement between working in industry and the regulatory side of things like we ban bribery?
- GoodIntentions 14y ago
  When a government created and sanctioned body has the effective ability to make or break players in an industry, and that body becomes utterly owned by the incumbents. It stops representing the public interests and begins defending the incumbents from market forces that motivate those incumbents to compete fairly, offer reasonably current services or even innovate new ones as a means to compete. In short, they represent corporate interests while ostensibly being the people's governing body. This is imho, corruption. I don't know how exactly you regulate this away - perhaps mandate a percentage of the regulators specifically be from outside the industry. Edit: for completion of sentence/thought

srean 14y ago

I have some answers to your questions, not all, and then they are my answers, not necessarily correct answers. But, I think it will not do much good to just state them. I would say give the questions and their underlying assumptions some thought and also time. For me I had to fight of the tendency to just close the question with some answer and be done with it.

r00fus 14y ago

Regulatory Capture is, according to Wikipedia, a clear aspect of corruption, see "corruption" wiki template: http://en.wikipedia.org/wiki/Template:Corruption http://en.wikipedia.org/wiki/Template:Corruption Not sure how else to remedy your confusion here.

aggronn 14y ago
Its not confusion. I'm more qualified to talk about 'regulatory capture' than I'm leading on, but its a real question: how is moving from industry to regulation, or the other way around, inherently corrupt? I disagree that having a system with poor incentives necessarily means it's 'corrupt'. Bribery is undoubtedly corruption. But when a state power regulator lowers restrictions on pollutants and greenpeace calls foul play, how can tell that that they're doing it because they believe its prudent or because they're looking for a job? A major complaint that a lot people have is that oh, when you leave your S&P job thats paying 60k a year for an IB job that pays 300k a year, you're a symptom of corruption. But hell, what if your experience working for S&P necessarily means your qualified to do derivatives trading? If you're getting job offers that are conditional on you making certain regulator decisions, thats bribery. Eventually wanting to get into the business side of things because they pay more isn't the same thing.
- kamaal 14y ago
  >>how is moving from industry to regulation, or the other way around, inherently corrupt? Because regulations work only if regulators are honest.
- JabavuAdams 14y ago
  > I'm more qualified to talk about 'regulatory capture' than I'm leading on, but its a real question: how is moving from industry to regulation, or the other way around, inherently corrupt? It ignores human nature. People don't rat out their friends. If you're the jerk at the party, you stop getting invited to the right parties.

dredmorbius 14y ago

Regulatory agencies are supposed to, by charter, look to the public interest in overseeing companies. If they are captured by the companies they regulate, and serve the companies' interests rather than the public's, by definition their mission has been corrupted. Your question is highly disingenuous.

aggronn 14y ago
Your assessment of my question isn't fair. Serving companies interests vs serving public interests isn't a dichotomy, and very rarely is a regulatory decision as clean cut as 'this is obviously bad and a net loss for the society, but we're going to let them set do it anyways'. Believing that to be the case is far more disingenuous. Regardless, moving between industry and regulatory bodies isn't necessarily done in a corrupt manner. If you're the president of a state energy board, you don't need to break any rules to get a higher paying job in industry. you're already, perhaps necessarily, more qualified than almost any other candidates. This is not inherently corrupt, this is what OP was referring to (or, this is a common meme which is associated with what he described).
- dredmorbius 14y ago
  No, it's accurate. What part of "when a state regulatory agency, created to act in the public interest, instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating" don't you understand? That is the definition of "regulatory capture". Note that regulatory capture is not "balancing the public interest with commercial realities" or similar such wording. If you're perhaps debating some other term, please provide us with an accepted term and definition of same, rather than creating a Lewis Carrol "glory" (see: http://sabian.org/looking_glass6.php http://sabian.org/looking_glass6.php) and passing off as accepted wisdom. On my planet, the appearance of impropriety is considered largely as bad as actual impropriety. Taking an example from a US government website: http://ig.navy.mil/Complaints/Complaints%20%20(Appearance%20of%20Impropriety).htm http://ig.navy.mil/Complaints/Complaints%20%20(Appearance%20... If the revolving door consistently operates between regulatory agencies and the organizations those agencies regulate, then yes, I'd say that this comprises systemic corruption.