What is regulation? Why regulate? What is good regulation?

Understanding Regulation: Theory, Strategy, and Practice (prt.1)

Photo by Wellesley Yan Edited by ys

These are my notes regarding Understanding Regulation: Theory, Strategy, and Practice by Robert Baldwin, Martin Cave and Martin Lodge (2012).

Regulation?

Sustained and focused control exercised by a public agency over activities that are valued by a community has been referred to as expressing a central meaning. — P. Selznick

Debates

A third debate that grew in the new millennium was one driven by the emergence of new technologies and products.

With respect to regulatory strategy, the past decade has witnessed a growing appetite to explore the potential of ‘non-traditional’ methods of regulation. Commentators have, for instance, devoted new attention to the potential and limitations of market-based control strategies such as franchising and permit- trading regimes. There has been greater weight given to arguments for controlling not by state regulation but by ‘meta-regulation’ and regimes that focus on auditing the control regimes being operated within businesses and corporations themselves.

A further recent change that has emerged in parallel with such ‘auditing’ approaches has been the growth of a tendency to see regulatory issues in terms of risks and to see control issues as questions of risk management. Governmental bodies have echoed these approaches, and bodies such as the UK’s (then) Better Regulation Task Force have commended the use of ‘more imaginative’ thinking about regulation and have stressed the need to adopt minimalist or self-regulatory controls in the first instance.

Such discussions of ‘meta-regulation’ and ‘steering’ raised questions about the bodies that should be given the task of regulating and the level of government at which regulation should be positioned. Just as calls for ‘meta-regulation’ indicated the interest of some commentators in placing the control function within the corporation, others grew more concerned about the degree to which regulation operated inside the government itself and still others saw the important shift to be towards regulation by supra- national bodies (state or private) within a framework of globalization.

Why regulation?

1. Market-based
2. Right-based
   Protect human rights, further social solidarity

Good regulation?

Questions of justice, it follows, cannot be answered by economists’ appeals to efficiency and distributional questions such as whether it is right to allow an extra unit of pollution.

1. Legislate Mandate
   Is the action or regime supported by legislative authority? 
   A statute, for example, may order a regulator to protect the interests of consumers, but it may be silent on the balance to be drawn between industrial and domestic or large and small consumers’ interests.
2. Accountability
   Is there an appropriate scheme of accountability?
3. Are procedures fair, accessible, and open?
4.  Is the regulator acting with sufficient expertise?
5. Is the action or regime efficient?

Such complexities pose huge challenges in assessing the legitimacy and performance of either individual regulators or the collectivity of controlling bodies that impacts on a given area. There is, indeed, no easy answer here, but an understanding of these challenges is, according to

Black furthered by taking on board three key features of legitimation within polycentric regimes:

1. It involves organizations that are institutionally associated or ‘embedded’ and relationships within this institutional environment that shape the construction and contestation of legitimacy;
2. Communications about legitimacy are dialectical — the processes of explanation and justification are shaped by not only those making legitimation claims but also those to whom such claims are addressed.
3. The communicative structures in which legitimacy claims are constituted and articulated will themselves mould the nature of those claims.

For regulators who seek to justify their actions within polycentric regimes, the most pressing problem that they may face is that they engage in a variety of discourses in an attempt to satisfy a variety of different regulatory communities, but that they find themselves unable to reconcile the conflicting demands made by those communities.