The Regulatory Policy Institute Research Group

The merits of Merits Review

As set out in To ‘see’, or not to ‘see’: that is the question. Moving on from a half-brained system of economic governance – (rpiresearchgroup.org), the half-brained governance thesis (“H-BGT”) is suggestive of a wide range of relevancies to areas of public policy where development thinking seems to be struggling. One such is the question of whether regulatory and competition policy decisions by designated agencies should be subject to review on their merits, as administrative decisions, not just on their conformity with acceptable procedures.

The H-BGT is based on an analogy with the human brain, which is characterised by an evolved, lateralised division of labour involving two different ways of ‘attending to the world’. These two ways can be respectively characterised as (A) attending to narrowed, abstract particulars (analysis); and (B) attending to a much wider and deeper context (scanning for patterns/connections). The argument is that the network topologies of many governments are seriously deficient in serving the latter function, which in the human brain is a specialism of the right hemisphere (RH), the left hemisphere (LH) being more preoccupied with narrower, often more routine and/or more recurrent tasks, ‘crowding out’ and even deliberately ignoring what does not fit within its immediate spotlight focus.

It should therefore be unsurprising to see low productivity governance. ‘Experts’ in A, who seem to be numerous in government, may be rank amateurs in B, whilst experts in (B) are missing, at least in any systematically ordered way. To the extent that attention is given to wider contextual factors, it tends to occur in fragmented ways, fragmentation itself being a LH trait. There is excess supply of inexpert/inexperienced ‘reads’ of the relevant situation, which often end up pointing thinking in quite different directions, with an overall loss of coherence.

The problem is heightened by the tendency for regulatory and competition agencies to be afforded ever wider areas of responsibility, which serves to boost the significance for overall policy performance of the B-skills, because it increases the number of trade-offs that merit consideration and expands the domain of relevant factors to consider.

So, what has this got to do with Merits Review? The answer is that the half-brained nature of the governmental system can be expected to lead to costly mistakes. Some errors are inevitable, of course, but their incidence can be reduced by having recourse to ‘a second set of eyes’, free of any organisational attachments of the eyes to the primary decision maker.

Moreover, the costliest mistakes tend to occur in cases where the effects of an agency’s decision have wider implications for the functioning of large slices of socio-economic systems. These, therefore, are the cases where the value of a second, on the merits opinion is highest, where the B-skills have their greatest value added.

The judicial system has not been developed with B-type skills in mind. Judges listen to opposing advocates and to expert witnesses, i.e. to arguments and information put before them by others. The evidence suggests that they are rather good at spotting major howlers in that material, but they have neither the power nor the resources themselves to embark upon the task of searching for understanding of how the relevant eco-system functions, and hence of what the wider impacts of a decision might be. Judicial review does not provide a wide-vision, second set of eyes.

Policy assessments with high levels of legal input also tend to be both of long duration and intensive in their use of resources, and this is a point that is often directed at the kinds of

Merits Review arrangements that are to be found in practice. It is a fair point: the reviews can be both narrowly focused (doubling down on type A skills rather than type B skills), whilst adding duration to the appellate process as a whole.

More generally, however, the tendency of regulatory and competition agencies to want to see the back of Merits Reviews appears to be chiefly driven by the normal laws of organisational bureaucracy: such Reviews act as a constraint on agency powers, which along with budgetary constraints, those entrusted with powers are ever want to see loosened.

Crucially for the assessment of the balance of arguments, Merits Review does not have to be arranged in time and resource-intensive ways, as both the recommendations of a review of appellate system for regulatory decisions in the Australian energy sector (about ten or so years ago) and the workings of the Irish Aviation Appeal Panel show. Each can be said to have achieved a closer approximation to the functioning of the ‘lateralised’ human brain, a non-hierarchical division of labour, in which each of the two, identified specialisms in activity is an aid to the other in reaching the best decision for the system as a whole. Lateralisation of the governance topology is the way to go.

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