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.