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Productivity, Inequality, and Economic Rents
REGULATORY CAPTURE SERIES
We are exceedingly grateful to the staff at ACUS-especially attorney Alissa Ardito-for her vision in organizing the forum and her gracious efforts in helping us see this Series become a reality.
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ACUS is a distinctive federal agency that produces research and expert-based recommendations aimed at making improvements to the governmental procedures and processes followed by other federal agencies.
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Some of the contributors’ essays in this series are similar to remarks that these contributors presented at a regulatory capture forum organized by the Administrative Conference of the United States (ACUS), held earlier this spring. The contributors include some of the nation’s foremost public servants and political leaders, as well as leading scholars from law and the social sciences. regulatory system, at the state or federal level, are rigged in favor of the very private interests that regulators are supposed to monitor and oversee. In this series, The Regulatory Review presents essays focused on these and other critical questions about whether some aspects of the U.S.
REGULATORY CAPTURE FREE
Do we have too much private influence–or “rent-seeking” behavior–in the regulatory system? What consequences might rent-seeking hold for the economy? How can legislators ensure that regulators enforce rules faithfully? How do elected officials and the public even know when an agency has been captured by the organizations it regulates? How can government ensure that sophisticated private actors do not effectively craft their own rules or enjoy a free pass in following them?
REGULATORY CAPTURE HOW TO
Today, the key questions about capture focus on how to identify it and what should be done to prevent it. Of course, regulatory capture is not a new phenomenon, but in the wake of the 2008 financial crisis and the ensuing public outrage over perceived coziness between financial institutions and regulators, concerns about capture have increased and taken on a new urgency. Through decisions like these, regulatory capture can work quietly, with little public scrutiny, but it can lead to devastating consequences. As a result, consumers might lose money or find their savings put at risk. Similarly, a captured agency might fail to enforce rules fully against those they are charged to oversee, such as banks and other financial institutions. A regulatory body that is overly reliant on industry representatives for information and policy direction might craft rules that prioritize private profits over public goals, such as protection of health and safety or the prevention of fraud. When a regulatory agency becomes “captured” by the organizations it regulates, the public loses.Ĭapture arises when private interests exert an outsized influence over the very agencies that are supposed to keep them in check.