Regulation: The Basics
Donald Macrae
Leveson Inquiry
Royal Courts of Justice, 5 October 2011
[email protected]
Hierarchy of Norms
“The Law” is a broad concept.
Policy
Order
Norms / Values
Law as a policy tool, e.g. Economic
regulation, reducing teenage
pregnancy. Either it works or it doesn’t.
The way we do it in this jurisdiction,
e.g., Company Law, Trusts, driving on
the left. Can also have criminal
sanctions but not based on values.
Fundamental values of that society,
usually backed by criminal sanctions.
Changing Behaviours
Interventions
must be
packages of
measures.
We are
dealing with
complex
adaptive
systems – a
moving
target.
http://archive.defra.gov.uk/sustainable/government/publications/uk-strategy/
The Risk Landscape
Government
is only one of
many actors
in this
complex
system of
interests and
incentives –
and not
always the
most
influential.
Compliance chains
We may be able to take advantage of some of that complexity by working
with trends, incentives, motivations and other key players.
“Regulation is a response to market failure” – classic economics rationale.
But sometimes the market can deliver better, perhaps with some help.
The food chain is the best example of standards and compliance being
driven by each link in the chain, through to the customer. Some
inspection and enforcement functions can be left to insurance companies
or even to customers.
So, before rushing into government-based, rules-based solutions, analyse
the relationships between the key players and see how they might operate
more efficiently to deliver what you need.
But first, you need to be clear about what you need . . . . . . .
Identify the right problem
This may seem too obvious to be worth stating but is where many
policies fail.
You probably have layers of problems.
Two rules of thumb:
• gather different perspectives on the
problem from a range of stakeholders:
the “usual suspects” usually have a
narrow view of the world – get the
“wrong” people in the room as well.
• keeping asking “why?” as each layer
of the problem is proposed: eventually
you get to the real basics.
Maintain perspective
If your first Recommendation is to ensure high
level political support, start working on Plan B.
Coercion is rarely enough. Consider also:
• self-regulation by key players;
• “choice architecture” and other angles from
behavioural economics;
• an enabling framework, perhaps with an
institutional element;
• a code, principles or guidelines, instead of
legislation (or even with statutory backing);
• enabling individuals to be “inspectors”,
through conferring rights, remedies or even
just information;
• how to investigate and decide on complaints.
Questions
What is the problem – or problems - you are trying to solve?
Do you understand the relationships across all key stakeholders?
Is government best placed to solve it, or are there more influential players?
Should you try to prevent the problem arising – or instead be better placed to
deal with the consequences if it does?