CE#289: Macrowikinomics No. 7: The Rise of The Citizen Regulator

Why the old model of command and control regulation doesn’t work, and how increased transparency and public participation will replace it

…Some of the issues that challenge today’s regulators include the sclerotic pace of rule making, growing economic complexity, increasing international interdependency, the corrosive influence of “junk science” and industry lobbying, and a broadly insufficient capacity for effective oversight.

Arguably some of today’s troubles are self-inflicted. After dismantling or circumscribing centralized regulatory agencies in the 1980s and 1990s, many governments handed industry the power to police itself in areas ranging from toxic emissions to financial services. The thinking was that government regulation was too burdensome and costly, and the mechanics of updating it were clunky. Delegating rule making to industry bodies would make regulation more responsive to the needs of industries that were evolving quickly and becoming increasingly global in scope. Governments were to be the “regulators of last resort”—stepping in only after self-regulation was deemed to have failed.

The problem, in practice, is that most instances of industry self-regulation have deficiencies (like lax rules or inadequate enforcement) and governments (for the most part) have proven unable or unwilling to take swift action when market failures become evident. Indeed, after years of chronic underfunding, it should be no surprise that many regulatory agencies are ill equipped to pick up the slack, let alone confront novel challenges for which they have neither the resources nor the expertise…

Full report

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