thehighhorse
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thehighhorse

Let slip the surly bonds of… excessive regulation

Ireland is one of the very best nations in which to live on planet Earth. It is a remarkable place.

Those are the arresting opening sentences of Mark Henry’s book, An Optimist’s Guide to Ireland at 100, published last year in anticipation of the centenary of Irish independence this year. Most of the book describes the great strides we have taken as a country since 1922. But the author does not shirk from specifying areas where we need to up our game to maintain the upward trajectory.

Mr. Henry’s approach is at odds with much of contemporary commentary on the state of the country which tends towards lengthy “analysis” of how banjaxed we are with, occasionally, a few token observations about aspects that might be just about alright.

I am in violent agreement with Mr. Henry’s overall case but, for now, I want to reflect only on two examples of the progress we have made.

The first is the reduction in the number of annual road deaths from a peak of over 640 in 1972 to around 150 now — despite an approximate 60% increase in our population and more than double the number of vehicles on the roads. Henry lists various regulatory changes that contributed; the introduction of the driving test in 1964, compulsory wearing of seatbelts in 1979, roadworthiness testing via the national car test (NCT) in 2000, penalty points in 2002 and mandatory alcohol testing in 2006. More consideration for safety in the building and maintenance of roads helped as did better safety standards in vehicle construction.

The second is cigarette smoking which has declined from a peak of 10 cigarettes smoked daily per capita in 1974 to less than two now. Contributors to this trend mentioned by Henry are restrictions and, for some media, prohibitions on tobacco advertising in the 1970s, the banning of smoking on buses during the 1980s, bans on smoking in public places and public buildings in the 1990s, perhaps most notably, the ban on smoking in the workplace including restaurants and bars in 2004, removal of tobacco advertising from retail outlets in 2009, health warnings on packets in 2011 and standardised plain packaging for all cigarettes in 2017.

In neither case was regulation the sole cause of social improvement. Hard-hitting promotional campaigns depicted the reality and impact of life changing and life ending road accidents. Others drove home the message that smoking kills more than just your taste for life.

Nonetheless, regulation was critical. In some cases, the changes ran into opposition at the time of their introduction on grounds of being unworkable, unnecessary, overkill, expensive or, apocalyptically, destructive of vital strands of social fabric. But the opposition died away very quickly and there has been no enduring lobby of any substance to reverse any of them. Whatever damage they might have done to the social fabric of the past, they are all now firmly stitched into the fabric of the present.

These are examples of regulations that are broadly accepted not only as legitimate but also positively wise. That is not the foundation for a general case that all regulation is benign and worthwhile. It is not. My favourite examples of pointless, meddlesome regulation were the renaming a few years ago of the Clare towns, Ballyvaughan and Lahinch, as Ballyvaghan and Lehinch, changes that served no public purpose, only the indulgence of some petty bureaucrat.

But the examples from Henry’s book do counter the notion that regulation as such is always prima facie a “bad thing”. As an imposition or constraint on individual behaviour, this view argues that regulation should always be treated with suspicion and require rigorous justification.

Resentment of regulation as more often interfering red tape than anything positively useful has been a consistent trope in the modern day Tory party, a syndrome that encouraged Brexit and was itself reinforced by Brexit. Just as it was right that Britain should “take back control” from the EU, individual Britons should wrest more control of their lives and activity from government officials whose instinctive tendency is to live by the motto “nanny knows best and prescribes what is best in excessive detail.”

An example from the recent Tory leadership election was a short video by Rishi Sunak in which a pile of boxes is assembled allegedly containing 2,400 so-called “post-Brexit” EU regulations. A shredder is wheeled in and you can guess the rest.

Of course, Mr. Sunak lost out to Liz Truss whose new government has published a Brexit Freedoms Bill that promises to sweep away all retained EU law by the end of 2023, thus creating the space for “the UK government to create regulations tailor-made to the UK’s own needs, cutting red tape and supporting businesses to invest, stimulating economic growth across the UK economy”. The deadline, which is subject to possible extension, will, supposedly, “increase business certainty by setting the date by which a new domestic statute book, tailored to the UK’s needs and regulatory regimes will come into effect.” What that “new domestic statute book” might be is anybody’s guess.

A more sober case for a bonfire of regulations was made on 11 August on the website, Conservative Home, by Stephen Booth from the conservative think-tank, Policy Exchange. Conservative Home is a right-wing blog which supports but is independent of the Conservative Party.

According to Mr. Booth:

…the next prime minister needs a plan to address the longer-term challenges of raising productivity, boosting economic growth and improving public services. Reforming the UK’s regulatory system should be a key plank of a supply-side agenda and a signal to investors that Britain is serious about enhancing its future growth prospects.

…too often, the current culture around regulation, risk, and responsibility throughout the regulatory system — in government, parliament, regulators, regulated entities and public debate — acts as a one-way ratchet towards regulatory creep and risk aversion.

He quotes sympathetically the Chief Operating Officer of NHS England:

“the number of pennies in every pound that we spend as a percentage of the total on regulation has probably gone too far.” Those in the private sector, particularly smaller firms, would say the same. Ultimately, every pound or hour spent on regulatory compliance is one that cannot be used to improve public services or invest in innovation.

…Government and parliament should encourage and challenge regulators to adopt risk — and outcomes — based regulation, which allows for a more flexible, adaptable, and proportionate approach than detailed rules and tick-box compliance.

He reflects ruefully:

Understandably, ministers, policymakers, regulators, and those subject to regulation have a general fear of the consequences of being blamed for failures. Indeed, new regulation often comes as a direct response to a high-profile scandal.

…before concluding stoutly:

However, a system that seeks constantly to improve outcomes for society, and promotes efficient and effective regulation, rather than simply adding to its volume and complexity as a knee-jerk reaction to past crises, requires a more mature national debate about risk appetite and public safety.

We will look more at Mr. Booth’s overall argument in a moment, but I want to pause for a bit on his conclusion. It is expressed at a high level of generality that leaves it open to different interpretations. But one reasonable interpretation is that societies should deliberately refrain from introducing new regulation in the early aftermath of a “high-profile scandal” for fear of panicky overreaction.

I suspect that swallowing this prescription would require more sang froid than most politicians possess. A government response to disaster “We might do something — after a while.” would not play well with public or press.

But, more important, while simply shutting the stable door is a lame response to the horse having bolted, it surely makes sense to investigate immediately whether it is possible to construct a better lock for it.

When travelling to and from France every year by car ferry, I chafe a bit at the length of time it takes for the ship to start moving after the last vehicles have come on board. But then I remind myself of the fate of the car ferry Herald of Free Enterprise which capsized minutes after leaving Zeebrugge in March 1987. The main cause of the disaster was that, in the crew’s hurry to get going, the ferry left harbour with the bow door still partially open, allowing the sea to flood the decks and causing the death of 193 passengers and crew. The rules were changed in short order and rightly so.

Mr. Booth’s overall case comprises two main arguments. First, regulatory compliance is always and only a cost and, therefore, a drag on overall prosperity. Second, there is an official bias towards there being too much of it, which makes compliance an even bigger and expensive burden than it needs to be. He cites this example:

…the length of energy supply licences issued by Ofgem [the UK energy regulator] grew from 160 to nearly 500 pages over a ten-year period.

What I know about energy markets would barely fill the back of a postage stamp. But, I can say with confidence that managing an energy market of the size and complexity of the UK — involving large scale energy generation by different methods (renewable and carbon based) and distribution to a huge domestic and varied customer base, where some of that energy comes from or is distributed overseas as well — is a sophisticated business. As such, it reflects the intricate and expansive interweave of modern life in the round.

Five hundred years ago, insofar as people had any concept of an “energy market”, it might have involved transporting a cartload of wood from one village for sale in the next. Indeed, the next village constituted the visible limit of most people’s entire world. But now we live in a highly interconnected and complex global village. A load of timber is a simple “good” requiring only a fireplace and a match to exploit. Think of the telecommunications ecosystem that enables us to use an iphone not just in Ireland but anywhere in the world in pretty well the exact same way everywhere. That seamlessness depends on shared and sophisticated international regulatory infrastructure with which national regulation must also be aligned.

Likewise my own hunting ground in the aviation industry. Think of the issues involved in building an aircraft (including components made by many different manufacturers worldwide) and operating and maintaining aircraft to ensure that they can operate almost anywhere in the world smoothly and efficiently while still commanding the confidence of publics and governments.

I cannot say whether or not there is too much regulation of our lives now, but I can say with confidence that we need more regulation nowadays than Mr. Booth appears to understand.

More important against Mr. Booth’s case, without some level of “common denominator” worldwide telecommunications regulatory framework enabling the iphone’s global distribution in vast quantities, the market value of Apple could not have mushroomed on the back of it as it actually did and the prosperity thereby created would have been a great deal less. But the fortunes of Apple itself are only a tiny part of the contribution to global prosperity enabled by seamless, simple mobile phone communication worldwide. Likewise, reflect on the contribution global air travel has made to our economic wellbeing and overall quality of life.

I repeat my acknowledgement that regulation can be overweening and there is a cost to understanding and complying with it in today’s world. But the cost of decent regulation is not generally diverted from proper public service provision or investment in innovation as Mr. Booth presumes. Regulation is an essential facilitator and enabler of individual and public flourishing and prosperity, not an inhibitor of it.

No person is an island. No community is hermetically sealed from the rest of the world. And despite its proclamation of having taken back control of its own management through Brexit, the UK has not and never will. It entered into a trade agreement with the EU itself which obliges it to behave in certain ways and prohibits it from behaving in others. And the UK is part of a broad and deep web of international agreements and conventions governing cross border activities, and not just commercial ones like the World Trade Organisation. The UN and its agencies constitute a prime example.

Indeed, despite awarding itself a lap of honour for having escaped the constraints of EU membership, the UK happily and willingly aspires to surrender some of that newfound control by entering into bilateral trade agreements with far flung countries all over the world. All of those agreements will involve compromise and commitment and thus some surrender of its future entitlement to do as it pleases. As was the case with the EU, the UK will be unable to impose its desired template in its totality on any counterparty anywhere.

The purpose of all those agreements is to establish a common mutual understanding of and rules for how each side will behave.

The fundamental role of regulation is to enable us to navigate between the horns of a universal dilemma. One horn is this. It is an entirely reasonable human instinct to dislike having to observe any rules that are inconvenient to us, whether permanently or just occasionally. And the reason why it is irksome is because we know ourselves to be good people who can be trusted to behave sensibly and reasonably, courteously and considerately, at all times and in all circumstances, even if that involves occasionally bending if not breaking norms for our immediate purpose.

But, on the other hand, we know well that not everyone else is as sound or decent as we are. So, it is an equally natural human inclination to wish to be protected from individuals and institutions who might put our wellbeing at risk by acting as if they were immune from the obligations of social and legal norms.

Without agreement on and enforcement of common standards, sometimes encapsulated in large volumes rather than single pages, life would be very difficult indeed.

It is possible that too many junctions are regulated by traffic lights. But traffic lights provide clarity and order about when we can move as well as when we must stop. And I daresay that helps the traffic to flow better.

Or an even more fundamental domain where regulation is both informal and invisible: language. The concept of “language” means not just articulation of words but communication of meaning which depends on the existence of a shared understanding among its cohort of users of what words signify, all the while accepting that the meaning of individual words is susceptible to shading and nuance. The notion of a personal or private “language” ungoverned by commonly accepted rules is absurd. We cannot meaningfully use “words” just as we like, but only as others also understand them.

However, I must confess it is sometimes extremely difficult to understand the articulations of the current Tory high command. It is language, but not as many of us know it.

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Daire O'Criodain

Daire O'Criodain

33 Followers

Former diplomat and aviation finance executive, active now mainly in not-for-profit sector. Living in rural Clare. Weekly posts on Wednesdays.