Sir Vivor, you saw no evidence that Nick had substantively addressed your concern about risks of increasing self-regulation among chosen entities.

A major question is whether the risks of heavy-handed regulation exceed those of light-handed/no regulation. The justification for the former is generally that there is some "market failure" that leads to sub-optimal outcomes for the community. In practice, this argument is generally put by those who find that the market outcome does not meet their own particular agenda. Even if MF is demonstrated, there can be no presumption that governments outperform markets: indeed, “government failure” is more common. The World Bank advised that “the countless cases of unsuccessful intervention suggest the need for caution. To justify intervention it is not enough to know that the market is failing; it is also necessary to be confident that the government can do better.” A Bureau of Industry Economics paper assessing the 15 major interventionist policies of the Commonwealth Government from 1970-85 found no positive outcomes: 13 had negative returns, while for two the net outcome was unclear.

Should the cost to the community of market failure be significant, government should first see whether it is possible to improve the workings of the market. If not, it must assess its capacity to produce a better outcome, and the costs and benefits of any intervention. Given that a number of studies have found administrative costs of around 15-50 per cent in government industry support programs, the prospect of a net benefit from intervention must be considered doubtful. Regulation is a form of intervention which rarely meets the criteria outlined in my previous post.

The Economist noted that "The skills of government in addressing market failure are often exaggerated. Government intervention must overcome three formidable difficulties: the tendency of regulated firms to “capture” their regulators, weak incentives for efficiency within the public sector, and missing information (where markets lack it, governments are likely to lack it as well). … The record of intervention is poor … history suggests that the burden of proof should lie with those who would extend the government’s role.”

Faustino,

You say that
"regulation should be a last resort used only when certain conditions are satisfied"
then 6 conditions, and point out that these conditions are rarely met or considered.

You note the bias of stakeholders who object to outcomes of ventures which damage their interests, real or otherwise; damage expressed as "sub-optimal outcomes for the community".

It seems to me that you have strayed from Nick Gruen's point that regulation ought to be more extensively and effectively shared among stakeholders.

You appear to make the assumption that governments govern poorly with respect to regulation of the marketplace, but I would argue that sizeable corporations are no less likely to implement poor regulatory regimes in an effort to control competition for their interests. In my opinion, regulatory regimes need not be defined by regulatory legislation.

The Australian Coal Association might be considered as a regulatory bureaucracy. Here's a brief quote from Wikipedia:

"By the 1990s, the Australian Coal Association was known as a major political donor to both major political parties in Australia, with donations to the Liberals estimated at around $50,000 per year. During the Kyoto Protocol in the late 1990s, the ACA and a number of other groups were responsible for giving Australia what is generally regarded outside the closed circles of Australian politics as an extremely lenient target, and in a 2006 program on Four Corners it was listed as one of the principle groups behind the "greenhouse mafia", essentially a large coalition of lobby groups representing the car, fossil fuel, and light metal industries of Australia."

How many of your 6 conditions does the ACA meet, in its "regulatory strategies"? What criteria would you apply to protect the bloodbank, in this case a sustainable energy future, from this particular Dracula? Or are you happy to put your faith in Market Forces?

Well then, Dr Nick and Faustino, a week has gone by with no reply.

Are you unable to think outside any box not of your own making?

Well then, Dr Nick and Faustino, the weekend has gone by and you plainly had nothing to write.

You may find the whole article, from which the below is excerpted, interesting.

It fits into my "big picture" of regulation as something which occurs in natural and built systems, which may involve negative or positive feedback, linear or nonlinear, in response to changes to flows of materials, energy or information, and which is (thus, plainly) not the exclusive domain of public servants and government committees. Checks and balances are a manifestation of regulation, in government and organisations.

http://business.guardian.co.uk/comment/story/0,,2165023,00.html

" ... A free market in consumer products can coexist with free public health care, with public schools, with a large segment of the economy - such as a national oil company - held in state hands. It's equally possible to require corporations to pay decent wages, to respect the right of workers to form unions, and for governments to tax and redistribute wealth so that the sharp inequalities that mark the corporatist state are reduced. Markets need not be fundamentalist."

"John Maynard Keynes proposed just that kind of mixed, regulated economy after the Great Depression. It was that system of compromises, checks and balances that Friedman's counter-revolution was launched to dismantle in country after country. Seen in that light, Chicago School capitalism has something in common with other fundamentalist ideologies: the signature desire for unattainable purity."
Naomi Klein

I'm still wondering what's so damned great about keyless cars. Sliced bread, OK; canned beer, OK; but keyless cars?