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Opinion

Industry regulation proves to be a challenge

Carl Meeker

February 21, 2018

Ajit Pai, chair of the Federal Communications Commission, spent several years as the associate general counsel for Verizon; he served as a corporate lawyer advising them on matters of regulatory policy.

There is growing concern regarding the relationship between Pai and Verizon, and those concerns came to a head at a dinner he hosted in December of last year. During this dinner, less than a week before the Dec. 14 vote to repeal the Title II Net Neutrality policy, he made a joke about how Verizon wanted to install a puppet into the FCC to act on their behalf.

In light of this joke, multiple parties have submitted Freedom of Information requests regarding Pai’s communications. The FCC refused these FOIA requests, stating that releasing the information “would expose an agency’s decision-making process in such a way as to discourage candid discussion within the agency and thereby undermine the agency’s ability to perform its functions.”

Regulation of industry has become a controversial issue within the last few decades. Some say that there are too many regulations and that this stifles industry development and growth. Some say that there aren’t enough regulations and that we cannot trust these industries to act in the public good. Others say that the government is not giving these agencies enough funding to do their job either way!

The history of regulatory agencies as they grew out of the Industrial Revolution is fascinating.  In 1906, there was growing public pressure on the government and growing awareness of the failures of the free market to self regulate, as exposed by Upton Sinclair’s book “The Jungle.”

As a result, the Pure Food and Drug Act was passed, leading to the formation of the Food and Drug Administration. The FDA was tasked with regulating the food and drug industries to protect the public from nefarious and dubious industrial practices that put the health and safety of American citizens in jeopardy.

Since the establishment of the FDA, multiple other regulatory agencies have emerged to deal with industries that are unwilling to regulate themselves and that are endangering public health and safety. A few of these agencies include the Environmental Protection Agency, the Federal Communications Commission and the Occupational Safety and Health Administration.

Each of these agencies is tasked with serving the public good against private enterprises that will not regulate themselves. These agencies, therefore, stand as the main protector of the public in the face of industries that stand to jeopardize public welfare for lack of self-regulation.  

Over the decades, these agencies have been actively attacked and undermined by the industries that they were tasked to regulate. In seeking to staff these agencies, the government often turns to individuals that work in the very industries the agency is meant to regulate.

Often this leads to a conflict of interest. Once a person’s term within the agency is complete, they might return to the private industry they came from or to a special interest lobbying firm. This is known as the “revolving door,” which leads to the regulatory capture of these agencies. The agencies begin to serve the industries they were meant to regulate at the cost of the public good they were intended to serve.

If we cannot trust industries to self regulate, can we trust individuals with a conflict of interest to faithfully perform their duties as regulatory agencies in service of the public good?

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