Regulatory Capture

Today's Wall Street Journal editorial expresses wonder at progressive's sudden recognition of what conservatives and libertarians have always considered a key disadvantage of government regulation.  It was an unintended consequence of the oil spill.  Liberals are outraged at the apparently cozy relationship that has developed between oil companies and their regulators. 

In economic literature, this behavior is known as "regulatory capture," and the current political irony is that this is a long-time conservative critique of the regulatory state.

The Nobel economist George Stigler of the University of Chicago was one of the concept's main developers, and it is a seminal plank of the "public choice" school of economics for which James Buchanan won the economics Nobel in 1986. Ronald Reagan warned about this in different words in one of his farewell speeches.

In the better economic textbooks, regulatory capture is described as a "government failure," as opposed to a market failure. It refers to the fact that individuals or companies with the highest interest or stake in a policy outcome will be able to focus their energies on politicians and bureaucracies to get the outcome they prefer.

Perhaps if liberals read more conservative economists, they might understand that this is a common consequence of the regulatory state that they have so diligently constructed over the decades. It is also a main reason that many of us are skeptical of the regulatory solutions routinely offered in response to every accident or business failure.

I suspect liberals already understand that regulatory capture is a common consequence of the regulatory state, but it's such an insignificant problem, a minor blemish on a system of special interest capture where regulated industries pour billions into party coffers.  Special interest capture is the primary goal of the Obama administration and the progressive leadership in congress.  It's what health care reform is all about.  Special interest capture will insulate them from growing voter disapproval.  With special interest funding these Democrats hope to gain overwhelming control over the political narrative, entrenching themselves in power regardless of what voter sentiment may be.

Comments

[CaptDMO]

I understant that the Governor of the State of Louisiana was bestowed with
PERMISSION to ignore the usually disingenuous "it's for the environment..." based obstructions, and redistribute um...sand, against any POSSIBLE direct threat to the States border yesterday.

Wonder if they plan to use diesel powered tools to do that, or if each and every gub'mint employee hired in the last 90 days, along with each and every "volunteer corps" participant, are being asked to jump on an Amtrack and start shoveling? I understand that there's a plethora of idle union teachers and "administrators" (pre-k through "20th" grade) available for the next couple of months.

Just THINK of the new jobs numbers that could be reported from a White House press conference, or legislators "Town Hall" meeting lecterns!