The Attack of the Killer Tomatoes: Part II

by Larry Grant

Who are the customers of compliance or regulatory functions? Usually elected officials. To reinventors the customer is the primary intended beneficiary of a specific service (or product). In the case of regulatory functions the primary intended beneficiaries of the process are the citizens (or the “people,” as in “we the people”). In a representative democracy such as in the United States, the interests of the people are presumed to be held by the officials we elect.

This idea resonates with some and confuses others. We need to say a lot more about the idea of “customer” and “complier,” but since this started with “killer tomatoes” and government regulation, let’s start at the beginning.

The history of regulation (or, if you will, “government interference”) is pretty interesting. It certainly goes back to Roman times with the regulation of grain and slave markets. But “modern” regulatory practices come just after the dawn of the industrial revolution when the British government began to take an interest in factory and working conditions—especially in the mines. In the United States it was certain of the states (like Massachusetts) that established regulations around factory working conditions. It was only after the turn of the 19th century that the federal government got involved. The irony being that the greatest pressure for regulation of industrial practices came from big business as a means to increase the costs of smaller businesses and thus drive out competition.

As regulation (and regulatory government agencies) became more common a certain regulatory rhythm began. A crisis (real or imagined) creates a public outcry, a set of laws are passed, a new (or old) regulatory agency is obligated to interpret and enforce the laws by creating regulatory processes, which, if followed, will end the crisis and ensure that it will never happen again. Of course, like a river, which you can’t step into the same place twice, the same crisis in need of regulation rarely occurs. In this way there is both opportunity for new crises—begetting new laws, agencies, and rules, and, as true of any good bureaucracy, processes beget even more processes, interpretations, rules, and the experts who know them. Over time the only people who really know the rules—because it becomes part of their life-blood of profit, the real engine in the whole thing—are those who work in the regulated industries or markets. The regulatory agency and its agents are now long out of the crisis-driven public eye, and dependent on the regulated to understand the regulations and the processes they are intended to regulate. A former professor of mine viewed this as a classic example of the “symbolic uses of politics” where crisis begets action, action begets, quiescence, and quiescence begets in its turn cooption. In effect, the regulatory agency gets “captured” by those whom they are supposed to regulate.

One fundamental reason why this happens is confusion about who is the customer. At the most obvious level, it doesn’t make sense to say that the individuals and businesses are the primary intended beneficiaries of the regulation. Sure, they do benefit by being regulated, but it is we the citizens who are the primary intended beneficiaries. And most government workers know this in their bones.

Look at the Federal Aviation Administration mission and vision http://www.faa.gov/about/mission/:

Our mission is to provide the safest, most efficient aerospace system in the world. Our vision is to improve the safety and efficiency of aviation, while being responsive to our customers and accountable to the public.

Who do you think they believe to be their “customers?”

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