This is the dirty not-so-secret of the regulatory branch of government. No matter how hard you try, the regulators sooner or later become the lapdogs of the people they supposedly regulate. All this for perfectly normal human reasons. http://www.bloombergview.com/articles/2014-09-30/it-s-normal-for-regulators-to-get-captured quote: Academics call it regulatory capture, the process by which the regulators who are put in place to tame the wild beasts of business instead become tools of the corporations they regulate, especially large incumbents. The important thing to understand is that regulatory capture is not some horrid aberration; it is closer to the natural state of a regulatory body. The regulated industry controls the information used by the regulator. Where do you get information about the banking business? From bankers. Obviously it would be nicer to get it somewhere else, but where else would you go? The regulated industry cares more about regulations than anyone else. Regulatory bodies, like other organisms, shy away from negative stimuli. Thats why the FDA tends to slow-walk the approval process unless some loud advocacy group is on their tail: A drug that could have saved lives but fails to get approval costs them little, while another thalidomide would be personally disastrous for those who approved it. For a banking regulator, unless theres a financial crisis, the worst negative stimuli is likely to come from angry bankers, not consumers The only place where a longtime regulator can get a new job is in the regulated industry. If you enact a life ban on employment in any regulated industry, youre essentially telling regulators that staying in their job for longer than a couple of years is the next best thing to a prison sentence. youll end up with a regulatory body composed entirely of fresh-faced 20-somethings who are putting a couple of years in at the Fed before they head off to graduate school. you end up with a regulatory body composed of people who naturally share the viewpoint of the industry they regulate. Its hard to stay confrontational all the time. In the real world, regulators are people, too, and people are social animals. They want to be liked. All of this subtly mutes the attack dog mode that we expect our regulators to maintain. Its hard to adopt the Conan the Barbarian approach when you know that the boss of the folks youre talking to is hosting a big fundraising dinner for your ultimate bosses in Congress and the White House. Whats easier to regulate -- a few staid old incumbents that you know well or a zillion upstarts who dont know the rules, dont have a highly competent and extensive staff of compliance officers to deal with the regulators, keep changing what they do, forcing you to figure out what that means and come up with whole new sets of rules to cover the evolving marketplace Im not saying that we should be happy about regulatory capture; Im just saying that we should expect it. Inevitably, your agency will end up captured by some special interest. Taxcutter says: No deep dark conspiracy here. Just human nature at work. Regulatory agencies and the regulated community are made up of people. Angels all seem to be too busy for this. People will be people and if you think they wont youre an idiot. Regulatory capture is just a subset of the old chestnut that Power corrupts If you want less corruption there must be less governmental power To reduce regulatory capture you have to reduce the amount of the economy that is regulated. Regulations are like defense a necessary evil. You gotta have some. How much is the debatable variable. Maybe the thing to do is recognize that regulatory capture is inevitable and limit its effect on the bottom side. Regulate the big boys and leave small fry alone.
Does this one, which points out that excessive regulation runs afoul of normal human nature, scare all the little children? Or is faux-racism and "news of the weird" easier for the intellectually lazy?
