Repost from RegBlog. Combatting External and Internal Regulatory Capture

by Reeve T. Bull. Original source: RegBlog


In these hyper-partisan times, one is hard-pressed to identify any areas of overlap between the left and right. One rare exception is the concept of “regulatory capture.” Tea Party Republicans, Progressive Democrats, and centrists in both parties regularly decry the evils of “crony capitalism,” though each side emphasizes different aspects of the problem. A recent forum on regulatory capture hosted by the Administrative Conference of the United States highlighted this bipartisan consensus: U.S. Senators Mike Lee (R-Utah), Elizabeth Warren (D-Mass.), and Sheldon Whitehouse (D-R.I.), as well as a range of academics from across the political spectrum, all pointed to a common malady, but they offered somewhat different sets of cures.

Interestingly, although everyone seems to agree that regulatory capture exists and that it is undesirable, defining this concept has proven enormously challenging. And agreement on a plan for combating capture has proven even more elusive still. Undoubtedly, this is partly a function of the difficulty of drawing a line between “illegitimate” capture and “legitimate” use of the traditional mechanisms for influencing government policy. Indeed, any accountable system of government will necessarily feature some version of capture. Although political idealists such as Jean-Jacques Rousseau believed that citizens of a democracy would check their personal ambitions outside of the voting booth, history has proven the hardheaded realism of the American Constitutional Framers more prescient. Both individual voters and “interest groups,” be they civil society groups or corporations, attempt to shape policy to advance their perceived personal or organizational interests.

In this light, the distinction between “good” and “bad” capture becomes a subjective value judgment. For instance, does a fracking corporation’s lobbying against regulation of carbon emissions represent a malign ploy to despoil the environment or a laudable effort to reduce consumer costs and promote energy independence? Does it matter whether the corporation is a large multinational or a small family business in North Dakota? Is an environmental group’s lobbying in favor of such regulations an exercise in misguided “do-gooderism” that will increase energy costs and harm consumers or a beneficent, selfless act designed to promote a greener, sustainable future? Does it matter if the environmental group is funded primarily by clean-energy corporations that stand to benefit financially from a carbon tax?

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