Very few regulators are in a position to specify how a product should be changed or improved although they all seem to want to show their (limited) knowledge of a topic by being highly proscriptive.

A much better solution for both the public and the regulated would be to provide regulations specifying only the desired outcome - not how it should be implemented. This form of regulation opens up a far grater world of potential solutions, the best of which can be selected by the marketplace.

But this would be a significant cerebral burden on the regulators (or lawmakers) because they would have to understand the basic problem to be addressed.

For instance we currently have a problem with CO2 emissions from our petrol. Our legislators, in their infinite wisdom, have decreed ethanol a solution. Whereas the fundamental problem is a clean source of energy. Why can't the legislators simply demand a mobile energy source that meets a low CO2 emission standard. That way the car manufacturers can redesign or invent new power plants for our cars. Maybe pure ethanol engines or small nuclear powered cars might come to market in a few years

re:
"The report also argues that firms with a proven commitment to excellence should be subject to fewer impositions from regulation."

An interesting little throwaway line. I thought that idea was going to be argued systematically.

Instead, I find a litany of "Ain't it awful!" instances, and a mention of
"Our report to the Victorian Government, released yesterday ..."

Is this what Dr Nicholas Gruen, CEO of Lateral Economics, calls lateral thinking?

Perhaps Dr Nick could list a few criteria and standards which would help separate "firms with a proven commitment to excellence" from those Draculas wanting freer reign at bloodbanks.

Leaving aside the typically brazen self-congratulation, Dr Gruen has opened a debate that we should have as a permanent feature of our political discourse. Unfortunately it suffers from all the usual vested interest issues that infest every level of the public service industry.

Doing away with unnecessary and even positively harmful legislation will threaten the livelihood of the innumerable faceless folk whose daily crust is earned from perpetuating inefficiency.

Apart from that, the mechanisms simply don't exist to review such laws, absent a political agenda. Which will automatically taint the outcome, and probably result in increased, rather than reduced, red tape.

I recently took issue with an edict from a government department that cut across all logical and reasonable application of the concept of intellectual property. I was told that the decision had been taken "by a committee". When I suggested that the committee, when in possession of the full facts, would rescind the order with joy and alacrity, I was informed that the committee concerned had, having fulfilled their remit, been disbanded.

Scary.

Sir Vivor,

You might find the actual report of interest. I is the first item on this page.

http://www.lateraleconomics.com.au/outputs.html

Thank you, Nick. I am not an economist or financier, nor have I ever had any confidence that economic analysis has a theoretical basis much sounder than that of 19th century medicine. As a result, I try to stick to areas I understand more thoroughly, such as arguing a stated idea.

I saw no evidence, in your submission to the Victorian Government, that you had substantively addressed my concern about risks of increasing self-regulation among chosen entities.

Greater institutional stakeholder involvement and feedback sounds good, but, following from Pericles' remark, every stakeholder has vested interests. If regulatory feedback patterns do not address this reality with a system of checks and balances that adapts viably in a wider context of social and natural environments, then Dracula gets greater latitude in running the bloodbank.

Did you ever get around to reading Gregory Bateson's "Mind and Nature: A Necessary Unity"?

That book develops a very interesting discussion on the pattern of institutional evolution, as distinct from the pattern of organic evolution, which has feedback mechanisms of a fundamentally different nature.

In general regulators are not innovators, and feel threatened by innovations which dilute their role. A more entrepreneurial, innovative society requires less regulation, less government;neither governments nor bureaucrats favour such reductions, whatever their rhetoric.

Queensland is a pro-regulatory stance with a very poor record in determining what to regulate and in designing, administering and reviewing regulations. A suggestion of “regulatory innovation” was made in a 2003 paper for the Queensland Government by John Foster of UQ. Foster argued for an increased role for the state government in reducing uncertainty for “emerging” industries, and suggested that “protective and facilitating regulations may be required in emerging industries that would be highly inappropriate in mature industries.” I noted in response that Foster’s policy prescriptions were optimal neither in terms of the Schumpterian paradigm he espouses nor in the light of empirical evidence on these issues; and that the Queensland Public Service does not have, and is never likely to have, the capacity to devise and implement Foster-style policies in a manner which advances the public interest. In effect, “regulatory innovation” was a new cloak for the failed “picking winners” approach, andassumed that bureaucrats know better than private sector investors how to identify “emerging industries” which will succeed on world markets.

I further argued – to deaf ears in Queensland – that regulation should be a last resort used only when certain conditions are satisfied, namely

1. There is a clearly identified and serious issue of public interest to be addressed.
2. There is an expectation of a clear net public benefit from addressing the issue.
3. This benefit can not be obtained by enhancing the operation of market forces or other non-regulatory mechanisms.
4. The regulation proposed is demonstrably the minimum required to obtain the objective, is clearly defined, well-targeted, efficient and effective.
5. Any costs and secondary consequences of the regulation do not exceed the expected benefits.
6. There are clear and effective mechanisms to amend or repeal the regulations as circumstances change.

In my experience these criteria are rarely met in practice. Most often, they are not even given attention