Stephen Littlechild was a regulator and influential in the whole story of privatisation and the regulation of privatised utilities like telephones and electricity. Last night, though, he described some of the downside of regulation.
He told how he was involved in one of the utilities - I think it was telephones. The rules for the companies concerned ran to 250 pages then, in 1984. The rules, when they were revised ran for 500 pages. Five years later they were 2,000 pages. Recently they have reached 4-5,000 pages.
Regulation has exploded. They now substitute the regulator's view of what people want for the consumers'.
He commented that regulation undermines the 'discovery process' whereby markets find out what people want and what producers can provide and at what price. Regulation means that companies don't compete on price since the regulators set prices. Also the customers don't need to shop around since the prices and services are regulated. So 'discovery' is prevented.
He offered a proposal that users of a utility should negotiate with producers. Apparently this is successfully done elswhere. But he was running out of speaking time when he mentioned this idea and I confess I did not really understand it.
Still - it was interesting to hear what is wrong with regulation from someone who has been there and done it.
Stephen Littlechild was one of the speakers at an Adam Smith Institute event last night on Austrian economics.
I talked to the litigation partner in a London firm of solicitors afterwards. He said that litigation on regulation had developed into a big, complex field of its own. People went to law to try to work out exactly what the voluminous rules do and do not mean.
I wish the great believers in regulation - notably John Humphrys, of BBC Radio 4's Today programme who regularly airs his assumption that regulations are a good thing and we should have more of them - could be made aware that their views are not held by quite as many people as they think.
Posted by James Bartholomew • Indexed in Media, including BBC bias • Off the subject
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I had two phone lines with BT. One for my office and one for domestic. When Broadband became available in my area, I didn't really need two separate lines, but I didn't want to lose one of the two phone numbers. So I contacted someone at BT's sales office and explained that if they would simply re-route all calls on either line to one (on a permanent basis - there are plenty of spare numbers on our local exchange), I would buy broadband from them. The salesperson said that they'd never done that before. I said that just because they'd never done it before didn't mean that it couldn't be done. The salesperson said that they would speak to a superior and ring me back. They never did. I bought broadband from another supplier.
I suspect that might be what Stephen Littlechild might be hinting at.
Posted by: John Harrison at September 27, 2010 12:23 PM