tannoy blog — regulate

I find that if you're responsible for setting the rules for something you do regularly, you'll focus on your knowledge and experience, so the rules will reflect how to make the doing easy. You naturally give insufficient weight to external interests, you generate poor rules.

This is what happens when a state runs a nationalised industry, and why running things and regulating them should not be done by the same people. In my view, the state should regulate, and enforce the regulations, but should not do.

For example, law regulates society, and the police and the legal system enforce those regulations, so they should remain part of the state.

The danger to avoid is for a set of regulations to say how something should be done, because this necessarily excludes those things which the regulators didn't not know about when the regulations were set. Rather, like law, a set of regulations should specify what is not allowed, so if something is not prescribed in this way, it should be permitted.

The regulators, unfortunately, must have reasonable close contact with those they are regularing, to ensure the regulations are practical. This requires that the regulation process itself is regulated, if nothing else as a defence against corruption. This regulation of the regulators is an obvious role for parliament, requiring a bureaucracy to support this task.

Any current function of the state that is not regulation, enforcement of regulation, or dealing with other states, should not be part of the state and so should be returned to the private sector.

For example, the tax collection system used to be private; William Wordsworth, the poet laureate, supplemented his income in this way. The Inland Revenue, the home of a number of recent scandals, could have each office privatised, setting up competition between offices so hopefully causing market forces to weed out the bad offices. For something like this, enforcement of regulation needs to be carefully carried out, and seen to be so, making the Audit Commission even more important.