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Regulatory Policy Assessment in the Covid-19 era: a Once and Future Pathway?
15 April 2020
Back in the 1990s and the early years of the 21st century the UK government developed a relatively sophisticated handbook to guide the evaluation of alternative lines of regulatory policy development and implementation, largely under the stewardship of the Cabinet Office and the Business Department. This was part of an international movement in which it is fair to say that the UK played a leading role. By way of example, the UK promoted the establishment of a ‘Directors of Better Regulation’ group for Member States of the EU, outside of normal EU structures, where comparative experiences could be discussed and know-how could be shared. Other innovative institutional developments of the time included the establishment of the Better Regulation Executive and the Better Regulation Commission, itself a successor to an advisory Better Regulation Taskforce dating from 1997.
Disruption and resistance
The progress of this ever-increasing knowledge base was disrupted in the later part of the first decade of the new century (I tend to date it as ‘around 2007’, that year being a fateful one across a range of public policy matters, both locally and globally). Examination of the causes of that disruption is a complex exercise, but, in my own bailiwick at the time (energy sector regulation) the proximate cause was a growing tension between the implications of thought- through policy assessments and an emergent conventional wisdom on climate change policy. Behind that, and more fundamentally, was what in the Covid-19 era might be called a very major co-morbidity: Leviathan’s very powerful ‘immune system’.
By that I mean the resistance of our system of government to any intruding ‘intellectual virus’ that might significantly alter its own cellular activity, irrespective of the wider consequences, for good or ill, of such alterations for the public. In the most powerful, imagined conception of Leviathan’s immune response, George Orwell gave it the name ‘Crimestop’ in 1984’s Newspeak: “... the faculty of stopping short, as though by instinct, at the threshold of any dangerous thought. It includes the power of not grasping analogies, of failing to perceive logical errors, of misunderstanding the simplest arguments if they are inimical to Ingsoc, and of being bored or repelled by any train of thought which is capable of leading in a heretical direction. Crimestop, in short, means protective stupidity."
Back in reality, a much more utilised common-or-garden form of defence mechanism is what I have called convenient, selective myopia, roughly meaning “don’t look at things you don’t want to see, ignore them”, a form of wilful blindness.
The original intent of regulatory impact assessment (RIA) was to discover, structure and analyse information that was judged relevant to an upcoming decision. Importantly, the intention/purpose of the exercise was to better inform those who would take the decision. It was not intended to be a cost-benefit analysis in which benefits and costs are monetized and totalled, still less a procedure via which the decision itself should be determined on the basis of a net-benefit criterion.
There is good reason for that: only those to whom decisions are formally entrusted have legitimate authority to place values on the assessed effects of regulatory measures, involving, as they not infrequently do, quite difficult balancings of positive and negative impacts/consequences on/for different communities and interests.
From a wider public perspective, the notion of ‘informative’ regulatory impact assessment (RIA) may look like a friendly intellectual virus, conferring only good (better information for decisions), but that is not typically the view of decision makers themselves. The problem lies in the risk that the assessment process will likely make transparent things they do not want discovered and made transparent. Considered decisions are not necessarily, indeed arguably rarely are, the decisions that bureaucrats and politicians want to take, and that is in large part because decision makers tend to possess ‘partial’ (meaning partisan or ‘private’) agendas of their own, distinct and separate from a wider public interest agenda. Individual politicians almost invariably want to increase their own power, civil servants are partisans in the cause of the size and influence of their own departments or units, and so on. Leviathan’s senior servants can, therefore, be expected to be, to varying degrees, resistant to evaluation processes that might threaten these interests.
In this struggle the RIA virus has a weakness: it itself is a process that takes time, a virus that, to push the metaphor to its limits, mutates as new information is discovered and new thoughts occur before it reaches its final form. As used to be said of the core working document itself, it is a “living document”. This lapse in time gives, to those to whom its unfettered expression might be unwelcome, ample opportunities to insert themselves into the development process and re engineer it. Indeed, over time, it becomes unnecessary to do even that. The assessors tend to come to recognise the likely negative responses to certain types of evidence and of certain lines of thinking and, to avoid inevitable later hassle and near inevitable defeat, self- re-engineer the process from an early stage onwards. That which was intended to inform decisions is flipped to become a process driven by the goal of justifying a decision soon to be made, without the intrusion of inconvenient facts and considerations.
In this battle between impartial (non-partisan) assessment and the partial agendas of officialdom, one idea that came out of the EU Directors of Better Regulation Group, originating from the know how of a Dutch regulator, was what researchers attached to the Regulatory Policy Institute (RPI) came to call a QuickScan. This was conceived as a first, short-duration exercise that would take a wide-angle look at the relevant issues, broadly asking “What things do we need to examine and explore in order to ensure that all relevant information is available for the making of upcoming policy choices?” Doing that at least gets a wide set of considerations placed on the table in the form of a first, speedily produced document that can later be used as a checking mechanism: if something identified in the QuickScan is later ignored or omitted, there should be substantiated reasons for so doing.
Such a process provides at least some degree of defence against disruption by Leviathan’s antibodies, and the wide vision/perspective of it is perhaps to be particularly stressed. It is interesting to note, for example, that criticisms of Government responses to the Covid-19 crisis have increasingly been based on a perception that relevant authorities have taken overly narrow views of the crisis and have become unduly fixated on a narrow range of issues, problems and questions. Moreover, exactly that same critique has been made of the conduct of banking and financial supervision ahead of the 2008 crash. It was, for example, a key part of the confessional letter sent to the Queen by a group of Fellows of the British Academy in response to a (rather good) question of Hers when visiting the LSE in the post-crash period: “Why had nobody noticed that the credit crunch was on its way?” And the critique of narrowness can, I think, be generalised.
Regulatory measures can be viewed as perturbations to a complex, adaptive, socio-economic system, i.e. as perturbations to an ecosystem. It cannot be generally assumed, therefore, that the effects of such perturbations will be limited to a narrowly confined part of the system, the parts of which are generally interconnected in one way or another. It is clearly an impossible task to identify all the consequences of a measure, but there is requirement for a sensibility that calls for identification and consideration of at least the most salient effects and for recognition that these might be neither localised nor intended by those ultimately responsible for decisions.
It is rare for a decision maker to want to see harmful consequences of a policy with which he/she is associated: it is much more common for them to want to claim positive consequences for their actions, whether or not they have any causal links with the perturbation. Therein lies an obvious problem. If negative consequences exist, the bias will be toward leaving them unexamined, for, if they are assessed, it will no longer be possible to claim later that they were unanticipated consequences and, as such, that less blame for them is merited.
This is what convenient, selective myopia (wilful blindness) looks like. The Competition Appeals Tribunal has referred to the approach as ‘pixelated’ – likening it to a propensity to focus on some blocks of pixels in a digital image and to ignore others – and that is a term that the RPI has also taken up in some of its work and thinking.
The concept of a QuickScan has some affinities with a 2006 proposal from the Better Regulation Commission (BRC) to establish a unit that it called the Fast Assessment of Regulatory Options (FARO) Panel, to examine calls for urgent government action in the event of some major health or safety risk such as an epidemic or a major rail crash . The BRC was, however, itself a victim of the disruption of the time: it was soon abolished and the proposal, like the QuickScan, was not taken up. The two approaches did, however, differ in at least two important ways.
First, the BRC sought the establishment of a distinct, new institution/unit, described as follows: "Panel should be independent, politically neutral and external to government. It should provide timely advice to ministers on appropriate, cost-effective responses which have a real impact, having considered all aspects of the risks involved, trade-offs, priorities and policy alternatives." In contrast, the QuickScan concept did not call for the establishment of a ‘sitting panel’ external to government, but rather for a capacity and willingness to assemble teams within departments or government agencies, including the sectoral regulators. Such teams would be determined on the basis of the requisite skills and knowledge, i.e. skills and knowledge that would be of value in the specific context of the relevant policy issue. Even within a department or agency specialised in a particular area of policy, such as communications, transport, energy or health, the wide variations in contexts almost necessarily imply some rotation of members from case to case, including specialists brought in from outside government.
Second, FAROP was explicitly designed to respond to situations in which heavy pressures on politicians had led them already to conclude that, with high probability, ‘something must be done’. As its name implies, fast assessment of options was intended to focus only on options, on the ‘something’ that it would be best to do. The proposal sought a pause for thought between the first political conclusion and the eventual response. The hope was that this would help foreclose disadvantageous, knee-jerk policy responses. The focus is therefore narrowed at the outset (to options) and the evaluation process is necessarily ‘pixelated’.
The QuickScan, in contrast, is much less constrained. The whole purpose is to develop a wider field of vision so as to be able to better respond to the incoming results of the discovery process that is entailed by good regulatory impact assessment, of which it is the starting point. It is the ‘good start’ of what became the RPI’s unofficial motto, an Irish proverb, Tús leath, na hoibre, a good start is half the work/journey. Consistent with RIA guidelines, that always encompasses the option of doing nothing or, more accurately, doing nothing for now. More importantly, it starts with a detailed analysis of the problem or challenge to be faced and, in particular of its context.
Verstehen, Verstehen, Verstehen
At this point I come to the most important of the concepts in play in policy evaluation, namely ‘understanding’ or ‘verstehen’, the core notion in just about all the RPI’s own work. The first step is to understand the issues and their context, which in the latter case involves understanding the workings of the relevant parts of the ecosystem so as to be able to assess how their functioning might be affected by any potential policy/regulatory perturbations.
The concept of Verstehen comes to today’s social sciences chiefly via a German scholastic tradition, associated in particular with Max Weber, where it means an approach that examines a socio-economic question from the perspective of each of the potentially many actors who might be involved or affected, asking how do/will they see things? In other words, it asks that the analyst be able to ‘put themselves in the shoes’ of those likely to be affected by policy measures, or by the lack of such measures, and see things from their point of view, taking account of their attitudes and their behaviours. It is therefore an activity that engages both empathy and imagination.
The approach is older than these 19th and 20th century developments, however. For example, in explaining his own work the great 17th century Dutch philosopher Baruch Spinoza said: "I have diligently tried not to laugh at human actions, nor to mourn them, nor to abhor them, but to understand them." Perhaps surprisingly to many, particularly given that it is a foundational document in the history of political economy (and hence economics) in the English speaking world, the most systematic exposition of the approach is to be found in Adam Smith’s Theory of Moral Sentiments (TMS). Throughout the work, Smith invites us to put ourselves in the shoes of others, both actual others and, central to moral and social judgments, a hypothetical ‘impartial spectator’, someone who does not bring any private/partial agendas interests to their judgments.
A flavour of the reasoning can be gleaned from one of the most cited passages of the work in which Smith criticises the approach of what he called a ‘man of system’. Today this term might be used to characterise someone with a proclivity for central planning or with fixed ideas about how things should be done. Since the TMS receives little coverage in modern economics courses, it is, I think, worth quoting the passage in full.
“The man of system is nothing like that. He is apt to be sure of his own wisdom, and is often so in love with the supposed beauty of his own ideal plan of government that he can’t allow the slightest deviation from any part of it. He goes on to establish it completely and in detail, paying no attention to the great interests or the strong prejudices that may oppose it. He seems to imagine that he can arrange the members of a great society as easily as a hand arranges the pieces on a chess-board! He forgets that the chessmen’s only source of motion is what the hand impresses on them, whereas in the great chess-board of human society every single piece has its own private source of motion, quite different from anything that the legislature might choose to impress on it. If those two sources coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is likely to be happy and successful. If they are opposite or different, the game will go on miserably and the society will be in the highest degree of disorder all the time.”
The importance of understanding is here in part highlighted by considering the consequences of its absence. The ‘man of system’ has fixed ideas to which he is attached. He pays no attention to the ‘great interests or strong prejudices’ of those who might be affected by his plans. Other social actors are assumed to be passive (a false assumption), like chess pieces, sitting waiting for the legislature (or, more likely today, the executive branch of government) to move them around. There is no understanding that each member of society (an assumed chess piece) has her/his ‘own private source of motion’. In consequence “the game will go on miserably” and the society will be in the highest degree of disorder all the time”.
It can be noted as a general point that Smith here is not calling for a laissez faire approach to public policy, something that he never did. Rather he is calling for an alignment of policy to the data, as that word might be used in philosophy (‘making the basis of reasoning or calculation’), where, critically, that data includes the views, relevant situation (the ‘social facts’) and hence of their own likely conduct in the light of things known or assumed as facts, beliefs, attitudes, intentions, heuristics and understandings of others who are caught up in the these things. The argument is that such alignment will lead to an outcome in which ‘the game of human society will go on easily and harmoniously, and is likely to be happy and successful’.
This is much closer to the ancient Chinese Daoist concept of wu wei (roughly ‘effortless effort’) than to laissez faire. Smith uses the word ‘natural’ to signify the functioning of the complex, adaptive socio-economic system without the perturbations of Leviathan’s hand, and he calls for that hand to be applied in ways that are complementary to and support that functioning, that ‘go with the flow’, not in ways that seek to substitute for it or stand in opposition to it. And experience teaches that, all too often we see regulatory policy interventions that create negative feedback loops that resist the intended effects, because they go against the grain of the system to which they are applied.
Verstehen as it appears in modern social science, then, emphasises seeing things as others see them, but that is only part of the relevant data. Typically, what all social and economic agents are looking at, from different angles, is the same context, the same ecosystem, of which all are part. For the political economist, therefore, the understandings of the actors provide only part of the picture of interest, which is the functioning of the system as a whole. It the aim is, so far as possible, to align policy with something, it is a good idea to understand how that something functions.
Since the relevant context invariably features the functioning of a complex system, a commonality of these different aspects of understanding is that each requires that matters be examined from a variety of different perspectives, from different viewpoints. In political psychology the ability of any one individual to be able to do this is captured in the notion of a cognitive style measured by ‘integrative complexity’: ‘a research psychometric that refers to the degree to which thinking and reasoning involve the recognition and integration of multiple perspectives and possibilities and their interrelated contingencies. Integrative complexity is a measure of the intellectual style used by individuals or groups in processing information, problem-solving, and decision making.’
Elsewhere in the Theory of Moral Sentiments Smith explains why it would be impossible for any ‘man of system’ fully to comprehend the workings of any significant part of a socio- economic system: the information required is too vast. Hayek would later call a belief otherwise “the fatal conceit”. An individual naturally inclined to integrative complexity, such as Smith’s notional ‘wise sovereign’, can get a little bit of the way. A team of people, with diverse skills and experiences, can probably get as far as can be got. From these points two rules of thumb for assessment purposes might be inferred (a) first do no harm and (b) it takes a team, a team committed to achieving the best feasible understanding of things. And that’s a high-level intellectual exercise, not a routine bureaucratic task.
Thoughts on the novel coronavirus contagion
The above reflections were triggered by observing governmental responses to the arrival of Covid 19 in the UK. As in relation to Smith’s chess metaphor, it provides an example of being able to see the importance of Verstehen by reference to events that might occur in its absence. It is, however, a different context to Smith’s example, in which a ‘man of system’ was not the source of major problems: that term would not be an appropriate characterisation of the UK Prime Minister! Rather the Government found itself in an immediate cloud of uncertainties and struggled for want of early but considered, wide-vision advice.
The Government did, naturally, turn to experts for advice and (also naturally) first to epidemiologists and experts in medicine and the functioning of the National Health Service (NHS). Such were clearly required, but they by no means encompassed the full diversity of expertise and experience relevant to the relevant assessments. Notably absent were social scientists – I do not count the behavioural specialists here, since their focus is on behaviour modification, not on understanding -- and also those with knowledge and know-how concerning the characteristics and functionings of networks.
The latter may seem to be unusual, suggested additions to a team, yet, putting oneself in the shoes of a hypothetically intelligent virus, the first thing the bug might have considered in its own strategy development was the networked structure of the ecology it was about to invade, with all its weaker and stronger lines of defence. That ecology is a socially and economically constructed network of connections between the multitudinous individual, potential hosts of the virus. It is not an animal herd, which has a much less structured and much less differentiated pattern of interactions between individual animals.
Just stating this obvious point is enough to demonstrate how easily thinking can go wrong at the very outset. The very language used can, almost instantly, lead to neglect of relevant socio economic data, constituting a major failure of assessment. The vision is narrowed and a blind eye is turned to relevant evidence.
A QuickScan process would/should have had no fundamental difficulty in addressing the uncertainty problem: the uncertainty is a blindingly obvious feature of the context. Its existence is a relevant piece of data: we can see a fog from a stationery position, even if we can’t see through it, and seeing it will affect how we proceed.
As a quick, wide vision, first-take of a challenge ahead, the regulatory assessment is intended to be a way of mapping out areas in which the discovery of new information can be expected to be particularly valuable and a way of charting the first steps forward. A first map is necessarily devoid of great detail, but it can identify areas where further, important discoveries might be made. The difference between Covid-19 and other issues for which a QuickScan might be deployed is largely one of degree, arising from the particularly high salience that a Covid-19 assessment would attach to the acquisition of new knowledge (the discovery process) and to the speed at which it would need to be achieved.
Moreover, a widely drawn team would, like a hypothetically intelligent bug, surely have recognised that the phenomenon at hand was a network contagion, with at least some characteristics in common with, say, a banking collapse or a power failure in an electricity system. Understanding of the latter problem, which runs deep among the relevant experts (not least because of the regularity with which it has to be addressed) would likely have particularly helped in framing thinking. The notion of ‘circuit breakers’ is central, both to contain the scope of a particular failure and, if that cannot be done in time, to protect those parts of the system where most harm could be done, for example by isolating a very localised part of the network and allowing on-site generation of power to replace public, grid supplies.
In fact, policy development in the face of Covid-19 did get to ideas of first suppression, then delay – a stage not to be found in electricity systems because the speed of the contagion in that case makes the speed of Covid-19 look like the slowest of snails – then ‘shielding’ (the hospital with its own, on-site back-up generators). Where discovery (or re-discovery) has been less successful, however, concerns the regulatory principles of targeting and proportionality, which the early developments in RIA had so clearly established, but which appear forgotten now.
It is to be expected, for example, that a QuickScan would have quickly recognised that, if ‘shielding’ strategy was potentially needed at a later stage, it’s success would require urgent, not to-be-delayed measures to put in place the necessary back-up arrangements, e.g. for hospitals, care homes (with circa 500k inhabitants) and households that are co-habited by older (at high risk) and younger (at much lower risk) generations (they account for about 15% of all households in the UK, but a significantly higher percentage than that in some communities). Hospitals may have back-up electricity generators, but there has been no equivalent attempt to develop emergency operational requirements for shielding in the face of events like the Covid-19 contagion. Shielding arrangements therefore require de novo development and that would pose a very major challenge.
The benefits of a QuickScan team dedicated to the pursuit of integrative complexity are partly illustrated by the electricity example above, but they are of more general value in answering an early diagnostic question that should be asked when seeking to meet a new, complex challenge: have we seen a problem like this before? It is a question that should always come with a health warning: in answering, don’t over-privilege the previous experience. The purpose of the question is to provide initial lines of attack for thinking about a new problem, not to create ready-made options for tackling it. Experts with different experiences will be in a position to come up with different, analogous problems that they have seen before, each potentially, partially informative. In this case there is one, immediately obvious answer, SARS. Looking at pre Covid-19 summaries of the SARS experience, the similarities are evident, and both viruses are part of the same family . Having failed to use previous experience to prepare for the next pandemic, the next best thing might have been to have looked quickly at nations that had learned from previous experience and were more fully prepared for the appearance of the novel virus, the most notable being South Korea.
Instead of these things, and not alone in the world in this, the UK Government has come to rely upon general lockdown and social distancing measures, which take no account of targeting and proportionality principles. At the time of writing, exit from these measures appears highly problematic. There is, therefore, indeed a threat that “the game will go on miserably and the society will be in the highest degree of disorder”, if not for all of the time, then at least for some time to come.
 See Risk, Responsibility and Regulation: whose risk is it anyway?, BRC, October 2006.
 See, for example, see https://www.nhs.uk/conditions/SARS/