Industry capture follows from regulators’ incentives and diffuse public interest

Evidence

There is, on the whole, some truth to these charges. For one thing, regulators have to live with their subjects. They learn to see things through their subjects’ eyes. Also, com­ missioners are supposed to regulate businesses, not kill them. A state power commission, let us say, has power to fix rates. A gas or electric company applies to the commission for a rate increase. It presents facts and figures about rising costs: coal, oil, and labor are all more expensive. If the commission accepts the facts and figures, it will grant the increase, more often than not. The commission, after all, is responsible for the health of the industry. The gas and electric companies are privately owned and must show a profit. Then, too, some commissioners come from the industry they regulate, and many expect to go back there when their terms are up. They are reluctant, then, to be tough and unyielding. Historically, the public or consumer interest has been weak, diffuse. Who, after all, speaks up for John and Jane Q. Public, day in and day out, at the agency? In many cases, nobody. Yet lobbyists and lawyers for industry have always been there, pressing their cases. — Lawrence M. Friedman and Grant M. Hayden, American Law, 584

Categorization

• DEEPTHINKING: A compact mechanism account of why public-interest regulation systematically under-serves the diffuse public — dense, generalizable, worth sitting with.
• XREF: connects to: Regulated industries often capture their own regulators — Lawrence M. Friedman and Grant M. Hayden, American Law: An Introduction, 583; Regulatory process capture by developers predates formal public participation; Default standards flipped industry incentives to favor prompt EPA rulemaking — Richard J. Lazarus, The Making of Environmental Law, 849 (+6 more)

Broader Connections

• Regulatory agencies are captured by the industries they oversee #corroborates (0.95) — Albert Bandura, Moral Disengagement, 977
• Regulators often protect the very corporations they are meant to regulate #corroborates (0.92) — Albert Bandura, Moral Disengagement, 1550
• Regulatory agencies drift toward the interests of the firms they regulate #corroborates (0.90) — Lawrence M. Friedman, A History of American Law, 2588
• Anticipated lobbying careers make sitting regulators favor the industries they oversee #expands (0.88) — Albert Bandura, Moral Disengagement, 1529
• Regulatory agencies are captured by the industries they oversee through campaign contributions #expands (0.85) — Albert Bandura, Moral Disengagement, 977
• Impending lobbying careers skew lawmakers and regulators toward the industries they oversee #corroborates (0.85)