Loading summary
Transcript13 lines
- [00:00]
A
Welcome to this edition of the Car Seat. Today's visitor on the Car seat is Frank Vibert, senior visiting Fellow in the Government Department here at lse. Frank has written widely on regulatory agencies, non majoritarian institutions, as well as recently a book on the new regulatory space. Frank, today we're talking about regulatory agencies, which we discussed at a recent car workshop, and so on. And why were regulatory agencies such an attractive policy tool in the past?
- [00:31]
B
Well, first of all, I think everybody recognized that the world of policymaking had become very complicated and there was a need to mobilize expert views and evidence from natural sciences and social sciences. And on the whole, politicians are a pretty ignorant bunch and so it was sensible to look to expert bodies to mobilize this kind of knowledge. The there's another problem with politics, and that is the term horizon of politicians is very short. There's a problem here today, maybe Greece, there's a problem here tomorrow, could be Iran, the problem the next day could be China. But for certain types of problems you just need continuity of attention and expert bodies can provide that. And I think there's also an issue of trust. Nobody trusts a politician. They don't necessarily trust experts either. But between the two evils, you might go for an expert. For example, this month there was a release of some results of a field trial of some GM wheat which had been modified to be resistant to aphids. The expert body, the research station which looked at the trials, said they showed the wheat had been a failure. Poor politicians, on the other hand, are very reluctant to admit failure. So it's in that kind of area that expert bodies seem to have an advantage, even if we don't trust experts very much.
- [02:01]
A
Regulatory agencies spread all over the place, across sectors, across countries. Sometimes one wonders, why do we need a regulatory body, separate layer where timing, consistency and expertise might not matter. At the same time, we also have sort of regulatory areas which have clearly run into trouble and so on. I mean, what would you say? Why is that? Is it too naive to only believe in experts and timing, consistency?
- [02:30]
B
Well, I think one of the reasons for going with expert bodies was that people lost confidence simply in muddling through and that that kind of muddling through culture was expressed here by the sort of view that Whitehall knows best and once you depart from that, you move into the world of expert agencies. Perhaps there was some naivety about how great an improvement expert bodies could bring. And certainly we see every day there are ambiguities of context, of uncertainties about impact which nobody can really assess, including the expert bodies. The one which is on the agenda at the moment is should central banks like the U.S. fed or the bank of England raise interest rates? They don't quite know how to assess the current state of the economy in either case, nor do they quite know the impact of rising interest rates when they come. So this shows the limitations of expert bodies, but nevertheless they're better than the alternatives.
- [03:36]
A
I mean, you've talked about ideas about unified rationality. So having everything in one body versus muddling through, which is very much a view about sort of multiple centers of knowledge, maybe co producing something and so on. I mean, you said expert bodies and so on. But why is there always this kind of call for unified rationality?
- [03:58]
B
Well, the call for unified rationality comes particularly from political scientists, and that is really a normative perspective. They like to think of politics as somehow having primacy over other systems of coordination and bringing everything together authoritatively, resolving disputes and that sort of thing. And so they like to think if it's going to play this unifying role, there is some kind of unifying rationality which underlies that role. It's very difficult for them to think otherwise. But I think we have to recognize that there's very little or empirical evidence in favor of such a view. In fact, the empirical evidence runs in the other direction, that in politics we use heuristics, shortcut methods of discourse. In the United States, a long political broadcast is a 30 second soundbite. You don't get much reasoned discourse going on in 30 seconds. So it's a communication of shortcuts and it produces polarization rather than bringing people together. And it's associated with what is known as assimilation bias. That is, you don't change your views as a result of talking to somebody else with a different view. You get consolidated in your view, I get consolidated in my view. So one has to accept, I think, that the rationality of politics is based on heuristics and it doesn't provide a unified rationality. That ideal is obviously very attractive as a normative ideal.
- [05:40]
A
Another trend one has diagnosed in the study of regulators, but also empirically one can observe as a broadening of objectives. So in energy, regulators no longer just do competition and security, supply and fairness. They also now do climate change and intergenerational justice questions. They fix our tariffs, at least at the moment, or the type of tariffs we can choose from. So what do you think? Why did that happen? This broadening of objectives, away from this view of a regulator is there to be like the substitute for the market should look at competition only.
- [06:20]
B
I think one factor was that dealing with the consumer has been much more difficult than was anticipated. The assumption was that competition would benefit the consumer and therefore that bringing in competition would end that particular story. In fact, consumer behavior is much more uninformed than one assumed or regulators assumed. And so regulators have had to move to essentially represent what they consider to be the best interests of consumption consumers. And that has meant a broadening role. I think also they have recognized that markets don't just happen. Sometimes preconditions have to be established. And so there's been a much more active role in setting the conditions of markets. And I think the third factor has been behavior. Economists had rather forgotten that markets don't work unless people behave. If you enter into a contract with no intention of keeping a contract, then the contract is meaningless. But markets depend on contracts. And so regulators have had to address behavioral issues such as conduct of business. And that means stepping again quite away from competition as being the sole focus of attention. So I think those are the three main factors.
- [07:46]
A
And you mentioned already the relationship between politics and agencies, especially sort of central to much, at least political science debate about agencies and so on. So I mean, how would you say should we develop our understanding of the relationship between politics and regulators, which is often the view of bad politics, nice technocracy, or it is evil bureaucracy and democratic will? I mean, can we go beyond these sort of stark dichotomies?
- [08:17]
B
We. Well, I think first of all one has to recognize there are going to be fluctuating boundaries between the two. There's no ideal positioning of one vis a vis the other. The relationship will always be changing. Secondly, I think it's not a zero sum game. There are certain things which regulators can do which are beneficial for politics. For example, they can help correct biased outputs in, in politics by looking at say university admissions or access to health services. They can keep an eye on some outputs of politics which are actually important for the credibility of politics. Where I think we should be concerned is about this so called adaptive bias that regulators by their nature look forward quite a long way. Politicians look forward, as I was saying, to a very limited extent. And that gives regulators an advantage in saying we can see these problems coming before you. We know the answers, give it to us. And there has been a tendency, I think, for increasing number of issues to be handed to regulators. And that I think does have a potential problem of unbalancing systems relationships.
- [09:30]
A
And how would you, I mean, are there some constitutional fixes to do this or is that more something which is implicit in the political system, an implicit bargain between regulators and politics to deal with that relationship.
- [09:45]
B
Well, I have a particular interest in constitutions, and I would say that systems relationships are to be held in place or monitored through constitutions. And so we have to think a bit more about the content of constitutions as a way of containing the habits and practices of modern government. But that means really getting away from the sort of 18th century model which we all use.
- [10:09]
A
Frank, thank you very, very much.