White House Chronicle

News Analysis With a Sense of Humor

  • Home
  • King’s Commentaries
  • Random Features
  • Photos
  • Public Speaker
  • WHC Episodes
  • About WHC
  • Carrying Stations
  • ME/CFS Alert
  • Contact Us

The Return of The Regulators

June 3, 2010 by Llewellyn King Leave a Comment

Brace for the return of The Regulators.

Many Democrats and a few Republicans believe that the nation would have been saved many disasters — from the shenanigans of Enron, the financial crimes of Bernie Madoff and the subprime mortgage crisis to the explosion at Massey’s Upper Big Branch coal mine in West Virginia and the BP oil spill in the Gulf of Mexico — if there had been more regulation, or more effective regulation.

A regulation may be passed, but its intent will be evaded unless it accords with the dynamics of the situation. The punishment has to fit the possible crime; otherwise an army of federal nitpickers will be unleashed on the commerce of the nation. The cost of doing business will go up and innovation will be stifled.

Worse, an industry of evasion will be created. The IRS de facto regulates much of the economy and our lives. It also has fathered a compliance/evasion industry that stretches from storefront tax preparers to corporations moving their headquarters to Bermuda and Panama.

When it comes to technical regulation, the result can be inhibiting of effort, stifling of innovation, and can be an excuse to do things in bad old ways because the regulator has blessed those ways. The problem with regulation is that pleasing the regulator becomes a goal in itself, if the regulator is strong and independent. If the regulator is weak, he will be rolled by the regulated, as happened with the U.S. Minerals Management Service.

It has been an act of faith for decades that federal agencies that promote an industry are unqualified to regulate it. The policeman and the criminal are the same person, the argument goes.

But this is worth reexamination.

The Federal Aviation Administration, for example, promotes flying and regulates it. Given that flying is inherently dangerous and yet very safe, it can be concluded that the air traffic control part of the FAA works incredibly well. The supervision of maintenance is more questionable.

Air traffic control deserves a second look. There are dynamics at work which are absent in the government’s control of other endeavors.

A call goes out from an FAA terminal controller like this: Sierra Two-Ninety-Three heavy; turn left, heading two-seven-zero; climb and maintain flight level twenty-two; expect higher in ten minutes.

A great airliner turns west and starts climbing. No questions. No argument.

The flight controller is often someone without a college degree or, nowadays, even a private pilot’s license. The airline captain has college degree, a better pay scale, more social standing and final responsibility for the safety of hundreds of passengers on board the aircraft. Yet the controller and the pilot, while the plane is in the controller’s airspace, dance a sacred tango.

The company would like the pilot to get as direct a routing as air traffic control will allow, and he may request route modification in flight. But economics are mercifully at bay in front of the radar screen and in the cockpit.

So are personalities. Air traffic controllers do not hang out with pilots. It is a perfect intimacy between strangers. One might add that there are no lawyers or consultants in the transaction; just simple purpose, an immaculate coupling.

On an oil rig or down a mine, the dynamic is very different. The regulator is captive to the expertise and veracity of the operator. The workers may resent the interference of an inspector. After all if you have done something safely many times, even if you have cut corners, why not do it again? It will please the chain of command and, on a rig, may hasten your return to shore. People who live in dangerous environments are inured to them.

The first step in safety regulation must be to introduce an ethic of safety as goal. That is easily done in aviation, where the danger is clear and present. When the danger is present but less clear, crafting a safety dynamic is hard. On the other hand, mandating viable cleanup plans should be easy and enforceable.

When it comes to financial regulation, only the statute equivalent of bricks- and-mortar regulation works — laws like the Public Utilities Holding Company Act of 1935 and the Glass-Steagall Act of 1933. You cannot ask regulators to regulate risk among people whose business is taking risk. Just mark off their sandbox.

The present hysteria for more regulation is a blueprint for strangulation. Get the dynamics right, before you unleash the bureaucrats. –For the Hearst-New York Times Syndicate

 

Filed Under: King's Commentaries Tagged With: air traffic control, Federal Aviation Administration, Glass-Steagall Act, Public Utilities Holding Company Act, regulation, U.S. Minerals Management Service

White House Chronicle on Social

  • Facebook
  • Twitter
  • Vimeo
  • YouTube
How Will We Dress Post-COVID Now That Comfort Is In?

How Will We Dress Post-COVID Now That Comfort Is In?

Llewellyn King

There is a lot of chat about the future of work: Will we do it at home, or will we revert to commuting to the old traditional workplace? But there is an additional, different question: What will we wear? Go to the mirror and look at yourself. Except for the odd Zoom meeting you might […]

Texas Today, Who and Where Tomorrow? Action Needed

Texas Today, Who and Where Tomorrow? Action Needed

Llewellyn King

The horror of the Texas electricity catastrophe should chill the whole country. Nothing strikes at the survivability of a modern society more than the failure of its power supply, maybe nothing at all. When the power supply fails, the failure of human life is not far behind. Yet, at a time when we should expect […]

Edison’s Birthday Is a Busy Time for His Follow-on Inventors

Edison’s Birthday Is a Busy Time for His Follow-on Inventors

Llewellyn King

The electric utility industry looks a bit like a man on a ladder with one foot seeking the rung below, unsure of where it is. But find it he must. The industry is beset with technological change as well as social and political pressures. It isn’t in crisis, but it is in dramatic transition. It […]

Social Media and the Mob Factor

Social Media and the Mob Factor

Llewellyn King

Social media has an unimagined, unequaled, uncontrollable, and unpredictable ability to mobilize groups of people for antisocial action; to take a sliver of society and turn it into a mob. Last month this new force in society was on display, from mobilizing anti-vaxxers in Los Angeles to the U.S. Capitol riot, resulting in five deaths, […]

Copyright © 2021 · White House Chronicle Theme on Genesis Framework · WordPress · Log in