The Regulatory Policy Institute Research Group

Elegant regulation vs ‘retail politics’

A quick web-search for the meaning of the word elegant yields the following (from Oxford languages): Adjective : (1) graceful and stylish in appearance or manner; (2) (of a scientific theory or solution to a problem) pleasingly ingenious and simple. In a policy context, it’s the second meaning that is the relevant one.

Our proposition is that elegance is a desirable evaluation criterion when assessing the conduct of public regulation and, further, that elegantly functional regulation is a goal well worth striving for.

The systems of regulation observed in practice clearly lie comfortably within the inelegant range of the suggested assessment scale. They are characterized by whole thickets of constraints, or (using a different metaphor) fields of trip wires, through which those affected necessarily have to carve out a path. They not only impose direct financial costs, but also, and arguably much more significantly, slow down the pace of getting things done. Over-constrained systems can be expected to work like that.

Putting it another way, they reduce the adaptive capacity of an economy, i.e. the capacity to discover and implement appropriate responses to changing circumstances in timely ways. As found in Regulatory Policy Institute (RPI) empirical research for the UK Cabinet Office and Business Department about 20 years ago, the inelegance is not conducive to growth in productivity, the underlying driver of the wealth of nations.

It’s not difficult to understand how the current state of affairs evolved. New regulations are introduced one-by-one, in piecemeal fashion, without due consideration given to their interplay with established existing regulations. This despite the facts that it is holistic systems of regulations that actually determine later consequences and that those consequences may eventuate at more or less any location in the eco-system.

Public regulations are ‘supplied’ by governments, one-by-one, constantly under the influence of partisan groups of varying stripes. Each pressure group importunes for measures favouring its own particular (‘private’) interest. Being only lightly constrained by competing systems of regulations (e.g. in other jurisdictions), no elegantly functional co-ordinating mechanism focused on securing a wider public benefit has evolved. Preoccupied by their own, internal power games, legislatures and executives tend to be over responsive to ‘clamorous importunity’ (see the The Wealth of Nations’).

Nowadays the process described is sometimes referred to as ‘retail politics’, but, whatever the name and at least at the level it has now reached, it is toxic for progress in promoting the material well-being of the public. It is not necessary for the functioning of a liberal democracy (i.e. an unavoidable side-effect of its existence), but it has become ‘institutionalised’ across many countries.

This regulation-generating process is choc-a block with what economists call ‘externalities’ (unconsidered third party effects of bilateral exchange transactions). Ironically, the rhetorical ‘justification’ for introducing new regulations is not infrequently cast in terms of taking measures to correct or remediate externalities in civic society, but that’s another story. Suffice it here to mention the words ‘beams’ and ‘motes’, and to note that it can be expected to be a major, drag on productivity growth.

Remediation of the identified dysfunctions is not a straightforward exercise. What can be said generally is that layering dysfunctional regulatory complexity (the thickets and fields of trip wires) on the complex eco-system that is the economy can not be expected to lead to a greater functionality. It is much more likely to compound underlying problems. And that’s a point from the ‘first do no harm’ or Healey’s Law (‘when in a hole, stop digging’) stables.

Nor can simplification via the removal of some of a regulatory system’s components – what is often labelled ‘de-regulation’ – be confidently relied on as a way forward. Some of the largest policy failures over the past 50 years have occurred as a result of botched ‘de-regulation’ exercises.

Whilst the elegance criterion gives simplicity a big tick – it makes the thickets and trip wires easier to navigate — it does not endorse any old kind of simplification. Simple ‘solutions’ to complex problems are legion, offered up in myriad conversations in pubs/bars, workplaces and homes across the land, but the vast majority of them would make things worse. They are not solutions at all, just candidate, inadequately considered answers to a what is to be done question. Thus, beware the logic of retail politicians: “We must offer something simple in the interests of group X. This is simple. Therefore, we will do this.”

Elegance calls for pleasingly ingenious responses to challenges of a sort that might command compliments from a computer programmer assessing coding – not clunky, not slow, not full of bugs, that sort of instruction set. There is no place dedicated to its pursuit in the current structure of government. We think that developing such a place merits urgent priority status, particularly if productivity growth is a major objective.

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