Justinian the Great on Orwell’s Australia: Home of the Overly Regulated, Crony Capitalist State

Further to TAFKAS “Nationalising the means of production” post yesterday today let me elaborate with the following from someone mildly experienced in the operations of regulators. I emphasise mildly.

Embedded agents in private companies is indeed Orwellian in the extreme. But it also says a lot about the competence and/or motivation of regulators, government, the legal system and the compliance and culture of corporate Australia such that it is deemed necessary.

It is a legal offence to mislead and deceive company shareholders and the ASX. That being the case the problem the government is trying to solve is is one of compliance and ultimately enforcement. This completely comes back to the failure of regulators and government who receive billions in taxpayer funds to do their job properly.

Referring to TAFKAS how hard would it be to reconcile ASX 200 companies inflated claims against actual results and punish the fraudulent outliers? Isn’t this what we pay our regulators to do?

Unfortunately our regulators are more interested in empire building not results. Empire building is best achieved through “soft” regulation of the voluntary, awareness, culture, international conference, industry capture kind.

It pays well, the KPI’s are vague and largely meaningless and it enables cozy networking throughout an entire industry both here and internationally. The work is also pretty soft being mostly a pseudo communications and marketing exercise.

The alternative is “hard” regulation, predicated on investigations, enforcement and prosecutions. This is not only antithetical to empire building but due to its adversarial nature and the skill sets required (i.e. cops versus bullshitters) is far less prone to industry capture and the lucrative exchange of personnel between regulator and regulated.

Compounding the disincentive to “hard” regulation is that it requires the recruitment of personnel that can bring depth of industry expertise and technical knowledge which is far harder to recruit and far harder to professionally manage than a bullshit “soft” PR type of regulator.

Hard regulators enforcing hard regulations lead to uncertain outcomes politicians fear because they are less susceptible to political manipulation.

Worse still “hard” regulation comes with a risk that investigations can be complex, enforcement is arduous, and prosecution protracted and uncertain. These factors make for tough KPI’s, difficult senate estimate hearings, and burdensome public accountability that few career public servants are willing to accept.

We don’t need to embed Stasi-like agents of the state into private companies. This will only lead to perverse hiring outcomes and even more perverse corporate management decision-making, leading to even more perverse corporate activity that has nothing to do with providing value adding products and services.

What we need is a tough cop on the beat. That means a return to “hard” regulation and measures designed to prevent industry capture and collusion. For example, a minimum period of say 3 years during which a regulator cannot work for a regulated client due to conflicts of interests, a realignment of resources to hard regulatory functions, and tougher penalties for those who fail to uphold the law or breach regulatory compliance.

Government could clean up corporate culture and malfeasance in a second but no government has the guts to do it, much less do they want to. After all, ex-poliicians are amongst the biggest beneficiaries of trading on insider knowledge, conflicts of interests, networks and problems of their own making.

With excessively vague “soft” regulatory interference in markets Australia has degenerated into a crony capitalist state in which government favour is the most the lucrative game in town.

This entry was posted in Guest Post. Bookmark the permalink.

4 Responses to Justinian the Great on Orwell’s Australia: Home of the Overly Regulated, Crony Capitalist State

  1. Behind Enemy Lines

    Justinian the Great on Orwell’s Australia: Home of the Overly Regulated, Crony Capitalist State
    Posted on 1:06 pm, April 18, 2019 by Guest Author

    With excessively vague “soft” regulatory interference in markets Australia has degenerated into a crony capitalist state in which government favour is the most the lucrative game in town.

    So far as I can tell, that’s exactly how a voting majority of Australians like it. The main difference seems to be the views an individual has toward the market for goods and services, versus the markets for labour.

  2. Nob

    I can vouch for the legalised corruption of “soft” regulatory empire building.

    The main task of the regulators is not to improve their industry but to create more secure jobs for regulators.

    When SMEs find themselves suffocating under this bullshit, they’ll find that they can hire consultants who are especially good – because they took part in framing the requirements.

    Whether it be the blank cheque of “safety” or compulsory bullshit such as “anti child labour policy” (they will demand this without irony from a small company where nobody is under 50) these corrupt “helpers” are on hand, emanating an air of righteousness and superiority.

  3. John Stankevicius

    The regulators set laws up which are draconian and lack common sense and decency. These regulators force this garbage on industry so the business owners has to employ consultants to advise the business owner. The regulators who set these laws up then leave govt and are contracted as consultants to big business. They consult on who to speak to but do not know the laws themselves. Easier to consult on strategy than sitting hard on your arse trying to apply the law to everyday situations.
    Then you have the new programmes which govt employees get a hold of before anyone else knows about it. They know the rules and how the money flows so they set up their own businesses. How did Therese Rudd make her money’ Tim Flannery and his hot rocks, they all had insider information.
    Then you have the mendicants, charities, the serious money is offered to ex ministers eg Julia Gillard , and these salaries are six figures.

    Make govt employees face the same laws as a professional annalyist and small business owner.

  4. Spall

    The three year moratorium on fence-jumping is a good idea.

    From what I have seen, only a small number of die-hards spend their career within the one regulator. A smaller number might go on to other regulators or the wider public service, but a much bigger group jump to the regulated sector, a lobby group (industry body) or professional services firm advising the sector.

    From what I have seen it is usually the regulatory knowledge that gets them the job, not any broader industry skills. They generally don’t go into marketing or accounts, at least not immediately. Would this affect the behaviour of the regulator? It would have to; no point in getting a reputation as a hard-nosed cop and bugger up your prospects of a job elsewhere down the track.

    On regulating culture, social licence, embedding staff to monitor culture, and all the soft stuff, I agree, it’s creepy. Regulators, and people in government generally, don’t seem to know when to stop. They must learn early on that setting rules gives them authority and they get ahead by setting more and more of them in every area they can think of. (In the US they used to call them policy entrepreneurs.) Then they decide it’s all too complicated having all these checklists and rules and processes, so they try to simplify things by delivering sermons on ‘culture’ and ‘social acceptability’, whatever TF that means.

    At that point the regulator becomes a god because only they can apply their personal test of what passes as appropriate and what doesn’t.

    And that is why industry people spend a lot of time discussing the personalities and vague utterances of particular senior regulators, as distinct from the rules they are applying.

    What you can end up with is a weird and unhealthy merger of government and the private sector with mutual back-scratching and a foggy consensus that the two can work together in partnership, overseen by a priesthood of executives who’ve been on both sides of the fence.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.