Regulatory capture

Regulatory capture (German as: receipt of a regulatory authority ) is a form of political corruption when a government body, rather than acting in the interests of society, the commercial or special interests of a particular industry or sector dominant interest group (which occurs lobby ) represents. Regulatory capture is a form of government failure . It enables companies to behave in a way that is harmful to the public (for example by producing negative external effects). The same authorities are called " captured authorities" .

theory

In the economic theory of politics , a regulatory authority is appropriated because groups or individuals with a high level of interest in an advantageous outcome of certain regulatory decisions and guidelines can be expected to use more resources and energies in order to influence them in their own way. The broad masses, in which every citizen has a much smaller individual interest in the exit, will largely ignore them. In the capture of a regulatory authority, the exploitation of this imbalance through the targeted use of resources is referred to as the successful “capture” of the staff or commission members within the regulatory authority so that the desired provisions of the interest group have been implemented.

The theory of the regulatory agency's capture is the main focus of an area of ​​the new political economy and is referred to as the regulation of the market ; Specialized economists are critical of concepts of state regulatory intervention in the interests of the common good. Frequently cited articles include Bernstein (1955), Huntington (1952), Laffont & Tirole (1991), and Levine & Forrence (1990). The theory of a regulatory authority's capture was honored with the Alfred Nobel Memorial Prize for Economics, which was presented to one of the main developers, George Stigler .

The capture of a regulator is a risk that is in the nature of things. It makes sense to protect a regulatory authority as much as possible from external influences. Alternatively, the raison d'être of some authorized authorities should be questioned if they are in danger of acting in the interests of interest groups instead of protecting those they were commissioned to protect. A captured regulator is often worse than none because it has outsourced authorities that are normally reserved for the state. However, increased transparency of an authority can prevent collection. The latest evidence suggests that even in mature democracies with a high degree of transparency and freedom of the press, extensive and complex regulatory environments are associated with higher levels of corruption (including the collection of regulatory authorities).

Link to federalism

There is ample academic literature to suggest that smaller units of government are easier to capture for small, concentrated industries than large ones. For example, it can happen that the legislators within a group of states or provinces with a large timber industry are taken over by the resident timber processing companies. These states or provinces then become the mouthpiece of an industry, often to the point of the suppression of national legislation that would actually be preferred by the majority of the population. Moore and Giovinazzo (2012) call this phenomenon “distortion difference”.

On the other hand, the opposite scenario is possible for larger industries. Very large and influential industries (e.g. energy, the banking sector, etc.) can capture national governments and then use their power to block laws of states and provinces that would be in the interests of the voters.

Economic justifications

The idea of ​​taking over a regulatory authority has clear economic motives in the sense that interest groups affected by regulation are most financially influenced and are therefore more inclined to influence these control bodies than individual consumers, each of whom would have only small different incentives to influence supervisory authorities . If supervisory authorities then form expert groups to review regulations, these are disproportionately occupied by current or former representatives of the industry, or at least individuals with contacts in the same.

Some economists, like Jon Hanson and his co-authors, argue that the phenomenon extends far beyond political agencies and organizations. Companies are always moved to control all power structures in their own environment, including media companies, the academic world and pop culture, so they will try to usurp as many as possible. Hanson calls this phenomenon “deep capture” (= “holistically oriented capture”).

Examples

International examples

World trade organization

The academic Thomas Alured Faunce has discussed that the World Trade Organization with "Non Violation Nullification of Benefit" (NVNOB) claims (= the right to sue the WHO in the event of a lack of trade advantage through local action by a state), especially when deployed in bilateral Promotes trade agreements, intensive lobbying of the industry, which can lead to successful capture of large areas of the authorities.

Individual evidence

1. ↑ ^{a b} Timothy B. Lee, "Entangling the Web" The New York Times (August 3, 2006). Retrieved April 1, 2011.
2. ^ Regulatory Capture 101 , The Wall Street Journal, October 6, 2014; Retrieved August 25, 2015.
3. ^ Edmund Amann (Ed.), Regulating Development: Evidence from Africa and Latin America Google Books. Edward Elgar Publishing (2006), p. 14. ISBN 978-1-84542-499-2 . Retrieved April 14, 2011.
4. ↑ Gary Adams, Sharon Hayes, Stuart Weierter and John Boyd, "Regulatory Capture: Managing the Risk" ( Memento of the original from July 20, 2011 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. ICE Australia, International Conferences and Events (PDF) (October 24, 2007). Retrieved April 14, 2011. 
5. ↑ Alexander Hamilton (2013), Small is beautiful, at least in high-income democracies: the distribution of policy-making responsibility, electoral accountability, and incentives for rent extraction [1] , World Bank.
6. ↑ Archived copy ( Memento of the original from May 26, 2013 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  
7. ↑ Jon D. Hanson and David G. Yosifon, The Situation: An Introduction to the Situational Character, Critical Realism, Power Economics, and Deep Capture Abstract at Social Science Research Network . University of Pennsylvania Law Review, Vol. 152, p. 129 (2003-2004); Santa Clara University Legal Studies Research Paper No. 06-17; Harvard Public Law Working Paper No. 08-32. Retrieved April 12, 2011.
8. ↑ Thomas A. Faunce, Warwick Neville and Anton Wasson, “Non Violation Nullification of Benefit Claims: Opportunities and Dilemmas in a Rule-Based WTO Dispute Settlement System” (PDF) Peace Palace Library. In M. Bray (Ed.), Ten Years of WTO Dispute Settlement: Australian Perspectives . Office of Trade Negotiations of the Department of Foreign Affairs and Trade. Commonwealth of Australia. Retrieved April 17, 2011.