‘No battle plan survives contact with the enemy’ was a sentiment expressed by Field Marshall von Moltke (the Elder), who knew a thing or two
Delivered as part of ‘The evolution of UK regulatory policy in retrospect: What has worked well? What hasn’t? What can be learned from experience?’, Annual Competition and Regulation Conference 2016
Prof. John Muellbauer has recently shown that the regulatory wedge in the UK between house prices and the construction cost of new homes is currently at the highest level of the period covered by his data, and the highest in the G7.
As set out in To ‘see’, or not to ‘see’: that is the question. Moving on from a half-brained system of economic governance – (rpiresearchgroup.org), the half-brained governance thesis (“H-BGT”) is suggestive of a wide range of relevancies to areas of public policy where development thinking seems to be struggling. One such is the question of whether regulatory and competition policy decisions by designated agencies should be subject to review on their merits, as administrative decisions, not just on their conformity with acceptable procedures.
To ‘see’, or not to ‘see’: that is the question. Moving on from a half-brained system of economic governance
Why do similar mistakes appear to be repeated over and over again in the conduct of economic policy? Why does there appear to be so little error-learning/learning-from-experience in this domain of human activity? Why does knowledge and the application of knowledge in these matters appear not to progress cumulatively in the manner of the physical sciences?
In this major Essay in Regulation, Harold Hutchinson and George Yarrow seek to outline some answers, building on insights from brain science. The first picture in the Essay, from the clinical work of Dr Iain McGilchrist, suffices to signal a ‘now for something completely different’ moment.
Net migration flows (about the regulation of which members of the RPI have been writing since 2017) are again a hot topic in political debate. In this latest blog, the Insights team briefly sketches out a potential, alternative way of looking at the issues: a different ‘gestalt’, based on a tradeable right to residency, which does not need to rely heavily on enforcement by coerced deportations (difficult in practice) or creating ‘hostile social environments’. Rather, it simultaneously seeks to make unlawful immigration more financially expensive and emigration of residents more financially rewarding, in each case relative to the status quo. Even in a bare bones form, it could give government three immediate ‘control variables’: the total number of rights available, the level of financial penalty for unlawful immigration, and the level of the bid-ask spread in the purchase or sale of the relevant right.
We have written before about the need for effortful and holistic thinking in the context of global decarbonisation, and about the perils of disconnecting local actions from global outcomes by retreat into a ‘net-zero in one country’ mindset. In this RPI Insights blog we highlight the dangers of partial thinking associated with indulgence of the false prophet of universal technology solution(s), blindness to potential ‘concentration risk’ and the resulting creation of systemic vulnerabilities, inadequate thinking around the physical resilience of energy infrastructure in the face of a changing climate, and reluctance to acknowledge either the regional realpolitik of the energy transition or the implicit policy tensions, uncertainties, and trade-offs around how it unfolds.
In a recent blog, the Insight Team highlighted the dangers of poorly constructed policies in terms of the increased distractions imposed on managers at the expense of a focus on business investment and innovation. In this follow-up, we consider recent financial market turbulence as another example of policy gone wrong. We argue that help in assessing and learning from it might lie in an appreciation of both history and the present – from the work of Adam Smith to recent developments in modern neuroscience, in particular the insights of Iain McGilchrist.
Policy debates about the burden of regulation have tended to focus on estimates of administrative costs imposed upon firms and have tended to rely on an assumption that simply eliminating some of the regulations (“cutting red tape”) will lead to significant reductions in the costs imposed. Here, the Insights Team take a different perspective, recalling both RPI empirical research on these issues for the UK Cabinet Office nearly 20 years ago and the earlier “Penrose Effect”, named after Professor Edith Penrose. They argue that much more substantive effects arise from poorly considered and conducted changes in regulations in consequence of their increased calls on limited senior management bandwidth available for addressing the challenges involved in investing, innovating and expanding a business.