Regulating groceries

“Great” is an understatement; this is excellent, incisive, badly needed – and, ultimately, damning. Many thanks, Richard, for highlighting this paper. Since I suspect I am one of the ‘some’ deemed to be unfairly critical of the ESRI I wish to emphasise that it is not – and never was – my intention to malign the prefessionalism or integrity of ESRI staff; I very much regret that it was decided to interpret my comments in that manner. I also accept that the ESRI – similar to all other institutions and bodies – has finite resources and that it is impossible to give every area of relevance or interest the attention it may deserve.

My simple point is that the source of funds for a particular research project may result in constraints on the scope of the analysis and, despite the best efforts of competent and professional researchers, may limit the range and quality of the findings.

This paper, clearly, is not subject to any such constraint. Quite apart from the detailed analysis what, for me, it does highlight is the totally ineffectual nature of public consultation in the policy-formulation and regulatory process. In effect decisions are made by policy-makers or regulators, a consultation paper is issued outlining these decisions accompanied by a perfunctory rationale for the decisions (normally prefaced by a rehearsal of the statutory powers of the relevant body to make these decisions), submissions are invited, received and assessed and, in most cases, any dissenting views or evidence is dismissed and the initial decisions subsequently confirmed.

This leads me to draw one conclusion and to raise one question. The conclusion is that public consultations of this nature should be conducted in an adversarial manner. This is very much the practice in the US. Most critics immediately react by damning this approach as heavy-handed, rules-based, legalistic, and time and resource-consuming. The light-handed, principles-based, public consultation-style approach, largely pioneered in the UK, is advanced as superior. And Ireland, to a considerable extent has been led by UK practice.

The demonstrable failure of financial regulation in the US also provides critics with a convenient stick to beat anyone advocating an adaption of the US approach in preference to the UK appraoch. But this was a failure of politcial empowerment and resourcing of regulation and not of the nature of the regulation per se.

Adversarial hearings provide the opportunity to regulators and policy-makers and to the interested and affected parties to present submissions – supported by evidence – and to rebut – and counter-rebut the evidence presented so that an acceptable policy change or regulatory determination (that is supported by the balance of the evidence) is arrived at.

This would be a significant improvement on the current situation in Ireland, but the entire process of policy-making and regulation is structured to avoid this type of scrutiny and participation. Indeed, the Government’s recent statement on economic regulation (already discussed in another post) is designed to ensure an even tighter circling of the wagons.

The qustion relates to an issue that has already been discussed on this site and this is: to what extent should and where should the economic expertise (amply demonstrated in this paper) be applied in the policy-making process? My belief is that it should be applied in the policy-making process, but that expertise should also be applied at the scrutiny stage in the context of public hearings that would replace the current, entirely inadequate public consultation process.

A final issue is consumer representation and advocacy in the policy-making and regulatory process. Voluntary and even statutory consumer protection bodies may have value in representing consumers’ interests individually in response to specific abuses, but they are rarely empowered or resourced (or even interested) to represent consumers’ interests collectively in the policy-making and regulatory process.

I realise I am raising issues beyond the scope of this post and paper, but I believe they are highlighted by this paper and have wide cross-sectoral relevance from an economic perspective.

Some interesting comments here which apply to economic regulation generally:
http://debates.oireachtas.ie/DDebate.aspx?F=ERJ20090902.xml&Ex=All