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As much as I admire the Old Bull Mooses’ single-minded pertinacity, I’ve been unkind lately to the State Senate but at dinner last night Conor, who may be the last of the Jessecrats, set me straight.

I’d written – a couple of days ago – how the Democratic political wizards around Raleigh believe the Senate Republicans have captured the state Chamber of Commerce, turning it into a political appendage of their campaign committee, and the proof is the state and national Chambers contributing $800,000 to a couple of Republican organizations to pay for ads to defeat Democratic Supreme Court Justice Robin Hudson.
As soon as Conor – who has a photographic memory and a penchant for shedding light on obscure pieces of history – set down the menu last night he leaned back and said, You got it ass-backwards – or haven’t you ever heard of Stigler’s theory of ‘Regulatory Capture’?
I had to admit I hadn’t and grinning Conor explained how George Stigler an Economics Professor at the University of Chicago had won a Nobel Prize for his theory of Regulatory Capture – which works like this:
The government, with the best of intentions, sets up an agency to regulate, say, coal ash ponds and immediately the corporations who’re being regulated focus on the new agency, wining, dining, lobbying, wooing, cajoling, and making contributions to politicians to influence the new regulations.
At the same time, on the other side of the ledger, the average citizen (who personally has very little or no stake at all in the regulations) does nothing.
Time passes and all the flattering and wooing and contributing (in hopes of getting their friends appointed to the agency’s staff) bears fruit and, suddenly, instead of regulating the corporation the agency’s been captured by it.Then a worse thing happens: The agency starts passing regulations to help the corporation by giving it an edge over its competitors.
According to Professor Stigler it’s a problem there’s no avoiding and ‘Regulatory Capture’ is a threat every regulatory agency faces by its very nature – protecting an agency from external pressure may be a palliative but in the end, Stigler warns, no regulator at all is better than a captured one.
Conor began ticking off examples of regulatory capture – explaining how the Securities and Exchange Commission was set up to protect the public from Wall Street but now protects Wall Street from the public – then rolled through a list of bills the State  Senate had passed which the local Chamber of Commerce supported and said: So wouldn’t you say instead of the Senate capturing the Chamber of Commerce, the Chamber captured the Senate?


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2 comments on “Who Captured Whom?

  1. Anonymous says:

    Carter, I wonder why you seem to constantly spin things against the more conservative of the two legislative bodies? The one most captured by the special interests is the House, under Tillis, not the Senate. Berger moves much more on principle than Tillis and it is reflected in both chambers Civitas Conservative Effecctiveness ratings.

    What particularly blows your theory apart is that the Chamber of Commerce is working hard nationally to push moderate and liberal Republicans over conservatives. The less conservative House is where their influence clearly rests rather than the more conservative Senate.

    As to Hudson, who you seem to be pushing for some odd reason, she is in the pocket of the liberal trial lawyers, and the Chamber and the trial lawyers have been at each others’ throats for ages. It is no mystery why they would try to take her down. Your conspiracy theories are amusing but the reality is much simpler than that.

  2. Anonymous says:

    How can anyone understand, “Regulatory Capture”, and not understand that government only causes more problems than it fixes. Free market capitalism is in no way perfect, but it is head and sholders above anything else. Perfect doesn’t exsist in this world, and never will. Leftist think they are smarter than the rest of us and they always feel they can regulate better than anyone else. This ends up favoring one business over the other businesses. The real problem happens when neither of the two parties believes in capitalism, and it becomes a contest between who favors who, or is that whom.

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