Thursday, January 20, 2011

On regulation and deregulation

Please excuse me, this blog post is more a reminder to me, or a fragment, rather than a complete item.

I once gave a speech in which I said that some words just uttered on their own are able to evince strong emotions in audiences, but that effect different people in different ways. I the USA "liberal" is such a word, in Melbourne you can try "Collingwood".

"Regulation" is just such a word.To some in business, economics and politics it is a word that stands for stiffling innovation, restricting freedom and discouraging enterprise. To others, especially in marginal groups and the downright disadvantaged (and those who care about them) it represents an essential feature of the world to protect the vulnerable from corporations and reckless capitalism.

Unfortunately, the former view tends to dominate public discourse. Even following the GFC, when a lack of regulation is seen by some to have been a cause, President Obama can announce an attack on regulation in the cause of creating jobs. The NY Times described it as:

...the latest in a series by Mr. Obama to claim the ideological center, and in particular to signal to businesses that he wants to work more closely with them on policies that could help create jobs.

Formally the President issued two memoranda, one on Presidential Memoranda - Regulatory Flexibility, Small Business, and Job Creation
, the other on Presidential Memoranda - Regulatory Compliance
. He backed these with an Executive Order on Improving Regulation and Regulatory Review.

They make interesting reading. In particular the two memoranda. The first makes a point of emphasising the regulatory burden placed on small business might be out of proportion to the business' ability to comply. The second instructs agencies to publish on their websites in 120 days their compliance program.

The NY Times story makes it clear the order covers the Federal Communications Commission.

In Australia a particular issue for firms is that regulators don't provide guides on compliance obligations, they tend to expect firms to read all the laws and regulations and then comply. (There are some governance differences that in part explain this, but generally Australian regulators prefer not to interpret the law for others).

So Obama's thrust with these pieces isn't so much order “a governmentwide review” of federal regulations to root out those “that stifle job creation and make our economy less competitive,” as described, but seek regulations that minimize the compliance cost. There is a difference.

Novae Meridianae Demetae Dexter delenda est

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