tags: #publish links: [[Business Strategy and Competition]], [[Law]], [[Politics]] created: 2021-07-25 Sun --- # Regulatory Capture The tendency for government regulatory bodies to be "captured" (influenced or partially controlled) by the people and organisations they're meant to be regulating. This happens through several factors: ## Revolving door and social connection This is likely the dominant factor because it's natural and easy. Because regulation requires expertise in the target industry, **former industry folks are more likely to be hired as regulators later in their career**, and **former regulators are more likely to be hired by the industry later**. This is *obviously* is going to have a biassing effect towards favouring past or future colleagues and friends and their organisations: that's just how humans work. It might not even be conscious. Note this diaspora doesn't even need to be solicited or overtly corrupt: - You don't have to go and offer Banking Regulator Director a future job in your company in exchange for favours, it'll just be an obvious career move for that person. - You may not even need to lobby to get Former Oil Company Executive a job running the environmental regulator - they'll naturally be one of the pool of potential highly suitable candidates, because of their deep industry experience. The only way to prevent it would be to ban career moves in either direction between the two industries, but the argument against that is that it'd reduce the regulator's effectiveness by starving it of industry expertise, and it'd be hard to fully implement and unenforceable - e.g. are you going to ban contracting or consulting on both sides too? Are you going to accidentally prevent the industry working with experts in the regulation or vice versa? ## Lobbying There's easier, less unsubtle ways, but if you're willing to be a bit blatant you can just lobby your favourite politicians for your mate to be appointed as the new head of the regulator. Easy! ## Corruption Inevitably, there's bound to be some more direct corruption, coercion or bribery given the stakes. But do you even need to bother? Seems unnecessarily risky given the availability of perfectly legal ways to influence. Related: [[The legal system isn't a level playing field]], [[Lobbying]], [[Risk-seeking incentives]], [[PEST or PESTLE Analysis]]