Designed to Fail: Why Regulatory Agencies Don’t Work

Designed to Fail: Why Regulatory Agencies Don’t Work by William Sanjour, May 1, 2012, Independent Science News
But my experience has shown that by concentrating all legislative, executive and judiciary authority in one regulatory agency just makes it easier for it to be corrupted by the industries it regulates. I worked for the US Environmental Protection agency for 30 years and lived through many cycles of “Regulatory Reform,” doing the same “reforms” over and over again and expecting different results. … The theme of this article is that by dispersing regulatory authority, rather than concentrating it, we would make corruption more difficult and facilitate more sensible regulation.

Why can’t you fill regulatory agencies with honest people who won’t cave in to special interests? … The life, the existence, the future of the regulated industry depends on the pressure it can exert on the regulatory agency. … The regulated community constantly deals with regulatory agencies through congressional committees, the courts, and meetings with top government officials. … Industry also constantly interacts with individual agency employees at every level, working directly with the field inspectors and permit writers responsible for making regulatory decisions. For example, the inspector general of the Minerals Management Service concluded that officials in the agency had frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives (1) … People who cooperate with industry also find that its lobbyists will work for their advancement with upper management. Those who don’t cooperate find the lobbyists lobbying for their heads.

This process of regulatory agencies being gradually taken over by the regulated parties has been the subject of academic study for many years and has earned economist George Stigler a ‘Nobel’ prize. The upshot of this research is that regulatory agencies captured by the industries they regulate are worse than no regulation at all since capture gives industry the power of government.

Why are regulations so ineffectual? The short answer is that regulators are pulled many different ways simultaneously. When I was writing regulations, I was told on more than one occasion to make sure I put in enough loopholes. The purpose of the complexity is to hide the loopholes.

The reason salaried government regulators can be corrupted is that writing and enforcing effective regulations is not their number one priority. Their main objective is keeping their job and advancing their careers. The reason regulated industries ceaselessly exert pressure to corrupt government officials is that they believe managing their regulators is their only way to survive. …

In their infinite wisdom, the Founding Fathers chose to separate the legislative, executive and judicial functions of government. For some reason, this example was not followed when regulatory agencies were established. …

How do we get out of this? Legally: not very difficult. Politically: very difficult. [Emphasis added]

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