Wednesday, June 25, 2014

Regulatory Capture: It's Not Just About Regulatory Agencies

And on the phenomenon of regulatory capture, the term should be applied in a broader context than just regulatory agencies being captured by the industries they regulate.  Any time the Watchers go from outsider to insider, regulatory capture becomes an issue.  Consider:

Surveillance.  Attempts to regulate government surveillance and intelligence were made in the 1970's following the Church Hearings.  The Senate and House Intelligence Committees were given greater oversight over executive intelligence agencies.  The FISA court was created to decide whether foreign intelligence surveillance was warranted.  Both attempts have proven toothless.  Congressional intelligence committees have simply been coopted into the intelligence system and provide no meaningful oversight.  The FISA court has been reduced to a rubber stamp, routinely approving requests like a warrant to gather meta-data on all telephone calls in the country. So far as I can tell, what happened in both cases was that outsiders who originally came in wanting to exercise meaningful oversight became insiders and part of the system.

The press corps.  These are supposed to be the watchdogs who keep government honest.  Instead, they have become increasingly deferential to the powerful for fear of losing access if they publish anything critical.  The press has gone from outsider to insider and been captured by -- government.

Doubtless there are many other examples that can be found.  The point here, I think, is that regulatory capture is not evidence of something especially noxious about government regulation, but part of the general tendency of outsiders to become insiders and insiders to protect their own.  The question is what to do about it.

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