REGULATORY CAPTURE

[wd40]

Here's a new one for us arm chair theorists.

Regulatory capture occurs when a state regulatory agency created to act in the public interest instead acts in favor of the commercial or special interests that dominate in the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as an encouragement for large firms to produce negative externalities. The agencies are called Captured Agencies.

For public choice theorists, regulatory capture occurs because groups or individuals with a high-stakes interest in the outcome of policy or regulatory decisions can be expected to focus their resources and energies in attempting to gain the policy outcomes they prefer, while members of the public, each with only a tiny individual stake in the outcome, will ignore it altogether. Regulatory capture refers to when this imbalance of focused resources devoted to a particular policy outcome is successful at "capturing" influence with the staff or commission members of the regulatory agency, so that the preferred policy outcomes of the special interest are implemented".

That's a horizon we are all familiar with. eh

[Happytrails]

You nailed it WD but now could you do some specifics? You might guess where I'm heading but please carry on. The best description of fascism I know defines it as a partnership between business and government. HT

[wd40]

I worked on a project in 2004 where we hired some "X" CEO's, and CFO's from Cargil, IBP, and National Beef, from the US side. Someone in that group told us how the USDA systematically (revolving doors) hired, or should I say borrowed, CFO's and CEO's, from the large multi-national "stakeholders" to build USDA Ag policy. That included the grain industry seed and chemical industry.
Little wonder what theirs no price discovery of free enterprise in the Ag. industry andy more.

[burnt]

This evening I sat beside a gentleman who fairly recently sat as president of an organization such as you described above.

I asked him why our producer org. was not taking the lead on a nation-wide issue that is being pushed by a wave of grass roots initiative. (The BSE settlement petition, you can guess the org.)

He replied that if the organization were to take this (controversial) issue and push the government on it, the org. would be shut right out by gov't. On the other hand, he said that the gov't doesn't have that same leverage over a group of loosely affiliated individuals.

Which leads me to the question - if our checkoff funded producer-elected organizations can't do what needs to be done and leaves the big battles to be fought by individuals on the ground level, then why are we paying checkoffs to fund the activities of a bunch of apparent eunuchs?

It seems that too often some of the best people in the industry are silenced by being elected onto producer boards or groups who have no real clout with anyone. Once they sit at the table with bureaucracy, their abilities dissolve or become diluted in the pressure cooker of cronyism.

They can't sway the gov't on important issues, and consequently those who elect them to represent their interests come to "hate" them for their apparent lack of effectiveness.

Kinda like being bought into slavery with your own money.

You just gotta hate that, don't you.