The Competition Authority: Vacancies

Eh? What’s going on? The CA is comprised of a chairperson and 3 members. This looks like a complete clean-out. Should we expect more of the same for other quangos in the economic regulatory area?

@BeeCeeTee,

Fair enough, but I don’t think all the previous members had run their 5 years; some have been in place for about a year. In addition to folding in the NCA, the Government has to commit to some legislation to beef up the CA’s powers as part of the EU/IMF MOU.

However, folding in the NCA, in my view, is a mistake. There is a pressing requirement for a statutory, robust, adversarial consumer advocacy presence in all competition cases and economic regulatory proceedings and consultations. The lack of such advocacy has allowed consumers to be ripped off right, left and centre.

The NCA never tried to perform this role – irrespective of its powers and duties, but it won’t be able to, even if it wanted, if it’s buried in the CA.

I suppose the question is; will we see a continuation of the optical illusion of economic regulation and competition law enforcement or will we see agencies with teeth that will benefit consumers and the economy?

Apart from that, from a quick browse on the website, senior jobs seems to be advertised and open for about 20 days.

It might make one suspect that the hiring process wasn’t going to be as thorough and fair and open as one might hope.

Looking at the boards of both the CA and the NCA, I see at least some genuinely independent voices on the NCA one. The CA board looks like the textbook definition for being at risk of “regulatory capture”.

The danger is that the austerity crowd is much the same set as those who are hostile to consumer protections, and the real intention here is to screw Joe Citizen in favour of ‘business’ interests.

@BCT,

Many thanks for the up-date. It’s impossible to keep tabs on all these statutory bodies that have sprung up in the last 15 – 20 years – but have really mushroomed under the last three governments. But it is vital to do so as successive governments have devolved more and more day-to-day economic policy and regulatory responsibilities to these bodies. While being defined as being somehow ‘independent’ from policy and politics, this is largely an optical illusion as these bodies effectively implement government policy, conveyed explicitly and implicitly, under cover of this ‘independence’.

It also has had the effect of hollowing out the capability of government departments to perform policy and regulation functions – though not, unsurprisingly, of significantly reducing numbers.

This government finally (under the terms of the EU/IMF MOU) is being compelled to tackle the under-empowerment and under-resourcing of the CA. (Up to now the sanctions and remedies it could impose if it were to make findings of anti-competitive practices were the equivalent of being hit by a feather-duster.) It was also excluded from having any role in the areas staked out by the economic regulators.

I have no doubt that are many people working in these statutory bodies who want to do the ‘right thing’ in the public interest, but either do not have the necessary powers or are aware of the explicit or implicit guidance from on high not to do so if they wish to continue and advance their careers in these bodies.

Finally, re the NCA, I fear you have misunderstood my point about the requirement that it have the power and resources, independent of any other statutory body, to advocate the interests of consumers. The CA – and the economic regulators – should be seeking to strike a balance between the interests of investors and businesses, on one side, and those of consumers, on the other. Investors and businesses, whether subject to formal price or revenue regulation or not, are fully represented in any competition or regulatory proceedings; consumers are not. That is why there needs to be formal, statutory, independent, robust and adversarial advocacy of consumers’ interests in any proceedings of this nature.

This point is relevant throughout the EU. The entire argument for the current approach is based on this convenient that ‘competition’ between businesses exercising considerable economic power will somehow benefit final consumers who are isolated, atomised and individualised. Governments of all hues and in all countries are prepared to perpetuate this fiction – not surprising, given the economic heft and potential mobility of many of these businesses (and that they are the source of marginal, but often lumpy, political funding).

Citizens throughout the EU are giving vent to a raw unfocused anger that is springing from a sense of being exploited and manipulated by economic and other forces outside of their control. This is true, but the economic forces are big business in cahoots with their own governments. Unfortunately, right-wing populist groups are exploting this anger and unease. It would be far to channel and direct it via consumer collective action and effective consumer advocacy.

Consumer collective action is fine – and has a very important role to play in shifting the terms of debate when stupid policies (or non-policies) are being pursued, but it is not the way, as a general rule, that Irish people exercise their ultimate authority in the political sphere. And this is to their great credit. They wait patiently and seize every opportunity presented to them to express their preferences and choices – and to exercise their ultimate authority – in the secrecy of the polling booth.

The Irish people collectively exercised their ultimate authority on 25 Feb. Subject to the usual vicissitudes of politics, those to whom they delegated their ultimate authority – and those elected to govern by these TDs – will be in place for 4 to 5 years. Most people have neither the time nor interest to participate actively in the political sphere. They are content to delegate this responsibility to those whom they elect – to represent their interests, to achieve a balance between conflicting interests in the common good and to establish and apply institutions and procedures of governance. And like voters in most mature, developed economies, they are content with this delegation once they have periodic opportunities to express their judgement at the polling booths.

However, given all that, there is a huge gulf between the theory and practice of economics – particularly that advanced by most economists dealing with public policy in the microeconomic area – and the institutional and commercial behaviour that most people encounter in their daily lives. THE MODEL IS BROKEN. It is as broken as the dessicated, inhuman neoclassical economics that Keynes railed against – and eventually overturned – during the Great Depression. But to the economics practitioners, it appears that economic actors – and these are mainly ordinary citizens – are not behaving as they should to validate the predictions of these economic models (and the implementation of the public policies that flow from them). So there is huge interest in behavioural economics, pyschological economics, socio-biological economics, evolutionary economics (pick any adjective from human sciences) to understand this annoying deviancy so as to ‘nudge’ these economic actors back into line.

But the problem is the same as that which first surfaced when humans began to develop forms of social and economic organisation. It is the acquisition, retention, expansion and exercise of political and economic power. Once economics, in a vain attempt to establish itself as a ‘science’ (as distinct from a discipline that applies the scientific method) and with a desire to abstract itself from grubby politics, veered away from political economy, its utility, particularly in public policy in the microeconomic area, has continued to diminish. And, even worse, its policy prescriptions actually damage the interests of consumers – and absolve the malign behaviour of those who exercise political and economic power. The theory and practice is populated by bloodless entities (firms, producers, agents, regulators, consumers – all dutifully pursuing their objectives with government appearing mainly as a ‘deus ex machina’).

The economists preach the doctrine of ‘competition and better regulation’ and politicans and officials are happy to parrot this mantra and to put it into practice in a manner that causes the least discomfort to (and more often than not advances) the interests of those who exercise economic power. And in the ‘behind-the-scenes’ market, big business is often willing to facilitate the implementation of government policy in exchange for specific concessions. The circle is completed by large firms being the source of marginal, but often lumpy, political funding.

The ‘competition’ that is espoused is a fiction and an optical illusion. And economic regulation has become a sick joke. Consumers are isolated and disenfranchised in the face of these economic forces and gouged in every possible way.

Ordinary citizens and consumers are becoming aware that they are being exploited and manipulated, but they struggle to identify the process and culprits that are damaging their interests. ‘Competition’ is supposed to be a good thing and that is supposed to be increasing, but it’s not generating any discernible benefit. ‘Regulation’ is there to protect thier interests, but they are being gouged even more now than they were before regulation was put in place.

The government has a once-in-a-generation opportunity to re-establish and apply effective institutions and procedures for competition policy and economic regulation under the terms of the EU/IMF MOU. It can either tick the boxes in a perfunctory manner to satisfy the Troika or embrace the challenge. But it will need the assistance of economists who have the humility to accept that the current model is broken and are determined to fix it in the public interest.

However, given the overwhelming interest here and elsewhere in the ‘big issues’ – bank financing, fiscal deficits, risk of default – and the almost total lack of interest in these ‘small issues’ – even though tackling these and getting them right is likely to have far greater short and long-term economic benefits, it is difficult to see how much progress will be made.