Article

Restraining Regulatory Capture? Anglo-America, Crisis Politics and Trajectories of Change in Global Financial Governance

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Abstract

A growing number of respected commentators now argue that regulatory capture of public agencies and public policy by leading banks was one of the main causal factors behind the financial crisis of 2007–2009, resulting in a permissive regulatory environment. This regulatory environment placed a faith in banks own internal risk models, contributed to pro-cyclical behaviour and turned a blind eye to excessive risk taking. The article argues that a form of ‘multi-level regulatory capture’ characterized the global financial architecture prior to the crisis. Simultaneously, regulatory capture fed off, but also nourished the financial boom, in a fashion that mirrored the life cycle of the boom itself. Minimizing future financial booms and crises will require continuous, conscious and explicit efforts to restrain financial regulatory capture now and into the future. The article assesses the extent to which this has been achieved in current global financial governance reform efforts and highlights some of the persistent difficulties that will continue to hamper efforts to restrain regulatory capture. The evidence concerning the extent to which regulatory capture is being effectively restrained is somewhat mixed, and where it is happening it is largely unintentional and accidental. Recent reforms have overlooked the political causes of the crisis and have failed to focus explicitly or systematically on regulatory capture.

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... Другая группа исследований использует для проверки гипотезы фальсификационные методы (чаще всего кейс-стади). При этом, как и в случае с верификационным методом, авторы часто рассматривают модель регулирования в целом и/или ее отдельных компонентов (Spendzharova, 2016;Quaglia, 2019;Lall, 2015;Baker, 2010). Все указанные исследования подтверждают несоответствие применяемых регуляторных моделей целям их реализации. ...
... Третья группа исследований, рассматривающих соответствие результата регулирования целям его применения, основывается на методе системно-логического анализа. С помощью данного метода рассмотрен глобальный уровень регулирования (Wolff, 2019;Rixen, 2013;Baker, 2010;Zhao, Ke & Yi, 2020). В отельных случаях на основе системно-логического анализа исследуются отдельные аспекты регулирования. ...
... Вторая группа исследований, рассматривающих влияние изменения регулирования на фактическое регуляторное воздействие, опирается на фальсификационные методы доказательства. Метод анализа кейсов лежит в основе работ следующих авторов: C. Dunlop и др., Overdevest C., Zeitlin J., Browne J., Stellinga B., Mügge D., Mennillo G., Roy S., Baker A. (Dunlop et al., 2012;Overdevest & Zeitlin, 2014;Browne, 2020;Stellinga & Mügge, 2017;Mennillo & Roy, 2014;Baker, 2010Baker, , 2018. ...
Article
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The main objectives in regulating brokerage activities are to ensure the interests of brokers clients while minimizing the regulatory burden. At the moment, in connection with the flow of households assets to the securities market, the Bank of Russia is actively developing direct tools to protect the interests of investors, including the mechanism for qualifying investors. However, its effectiveness is questioned by the expert and professional community. To assess the results of the use of direct and indirect regulatory instruments aimed at protecting retail investors, a comparative analysis of the regulatory policy in this area in countries with the most developed financial markets was carried out. Based on the results of the analysis of regulation in the United States and China, it was established that they used tools of both direct and indirect regulatory impact. Despite the differ-ences in regulation in both cases, the emphasis in regulation is placed on indirect measures of influence. Direct bans on access to financial instruments for certain categories of investors in the countries under consideration are not applied. It was also noted that despite applying certain measures in Russia, similar to the indirect regulation in the United States and China, their implementation is often sufficient, which reduces their effectiveness.
... The GFC highlighted how regulatory responses in a crisis do not necessarily create systemic stability and that powerful financial actors have been able to intellectually and politically capture regulation in order to make profit [17]. Financial regulation can be said to be captured when a subset of actors, usually powerful elites, are able to strongly influence, if not determine, the regulations to which they may be subject [57]. More specifically, "strong" capture occurs when regulation, in law or application, is directed away from the public interest and toward the interest of the regulated industry [58]. ...
... Both mechanisms of capture are likely to occur when industry-generated self-regulation is the basis of formal regulation. That is, the regulations cease to serve the wider public interest and instead systematically favour specific vested interests [57]. Another indicator of capture could be where a particular fintech product is not regulated by more comprehensive entities, such as credit regulation, where the agency or industry may claim that such regulation could impose significant regulatory costs [17]. ...
... Compelling arguments that the damage caused by events such as the GFC is evidence of the need to have greater social and intellectual heterogeneity in regulatory policy debates have grown and are questioning the social purpose of finance [57]. That is, financial services used to once be part of the social fabric, but by talking only to itself, finance has torn that fabric and now needs to rediscover their social usefulness [17]. ...
Article
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Fee-based Buy-Now-Pay-Later services (BNPL) are becoming widely adopted in many developed countries, including Australia. Across a variety of regulatory approaches there appears to be relatively minimal regulatory coverage of fee-based BNPL. This review applies a results-oriented, behaviourally informed market failure approach to assess the regulatory outcomes of fee-based BNPL. The review makes the case that the impacts of the regulation of fee-based BNPL in Australia demonstrate multiple forms of regulatory failure. The regulatory failure is particularly due to regulatory capture at a broad level and especially in terms of a lack of consumer protections. Consumers may particularly need consideration and protection because understanding the increasing complexity and financial knowledge at the heart of many fintech services is beyond the capability or responsibility of the consumer. Incorporating social and consumer considerations into analyses of regulatory structures can enable analyses of the regulation of fintech and move financial services regulation toward providing more socially useful and sustainable financial services. In the future, a behaviourally informed approach to the regulation of fintech may be beneficial and enhance sustainability.
... Within political economy, this simple mechanism of in-group preference has carried heavy analytical weight. In the US context this has helped to explain processes of regulatory capture leading to the financial crisis (Baker 2010;Engelen et al. 2012), patterns of lobbying at the SEC , and contact with regulators both before and after the crisis (Carpenter et al. 2013). Social factors influence financial regulation in many other domestic contexts as well (Grant and Sargent 1993;McPhilemy 2013;Selmier II 2013;Van Der Pijl and Yurchenko 2015). ...
... This is especially salient in the case of lenders of last resort, spanning a broad collection of institutions from the IMF (Chwieroth 2015;Chwieroth 2009), to domestic central banks (Johnson 2016). The effect of elite professional socialization has been tested not only in the industrialized West, but also in various Asian countries (Baker 2010;Selmier II 2013). It is not a circumstantial influence on financial governance, but rather generalizes across contemporary capitalist economies to a notable degree. ...
Article
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During the global financial crisis, the Federal Reserve issued billions of dollars in liquidity swap agreements with foreign central banks, serving as a global lender of last resorts. Most studies of this event have analyzed the distribution of these swap lines using materially rational frameworks, which is logical under normal lending conditions. However, this approach does not account for the extensive evidence on social influences over decisions made under uncertainty. Meeting minutes from the Federal Reserve exhibit significant flexibility in recipient selection, and the content of these discussions suggest that social dynamics were important in members’ decision-making. This paper tests the effect of social similarity between foreign central banks and the Federal Reserve on the likelihood of receiving a swap line during the crisis. I introduce new measures of social similarity among central banks with data on employees’ professional ties and public speeches in the years preceding the global financial crisis. Statistical results show a positive, significant effect for social similarity on swap line receipt, even when tested alongside material predictors, and this social rationality appears to have been a deciding feature in some cases of swap distribution. I conclude with implications for future crises, and potential regulatory consequences.
... In contrast to material capture, regulators do their best but fail to recognize problematic behavior. 1 Although there is extant research on the social foundations of such misperceptions (Baker 2010;Fligstein & Goldstein 2010, 2012, the literature has only begun to explore when and how cognitive capture takes place. Most arguments invoke homophily: regulators adopt the perspective of those who are similaror closeto them in some way (Kwak 2013). ...
... For this hypothesis, researchers must demonstrate, first, a misperception on the part of the regulator; second, that this misperception originates in interactions with the regulated. Despite much work that explores the impact and social dynamics of regulatory misperceptions (Abolafia 2010;Baker 2010;Fligstein & Goldstein 2010, 2012, the mechanisms behind cognitive capture are less well-documented. Much of the literature argues that regulators are more likely to listen to those they feel are like them (identification), have a high social or economic status (status), or are in their social networks (social networks) (Kwak 2013, pp. ...
Article
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To explain cognitive capture, economic sociologists often examine the structure of relationships between regulators and market participants. This paper argues that the nature of regulators' misperception should be subject to analysis as well. Different types of misperceptions develop over timelines of varying lengths. Depending on the misperception, different sets of relationships and parties may therefore be the cause of regulators' capture. The paper illustrates this point with a case study of regulators' failure to detect pervasive market power in California's electricity markets between 1998 and 2001. Existing explanations focus on sellers' short‐term attempts to distract regulators from widespread evidence of market power. Using data from three archives and in‐depth interviews, I show that the regulators did not fall prey to such “information problems.” Instead, their misperception resulted from a more foundational “worldview problem.” This error affects regulators' basic conception of the marketplace and can be traced to earlier and more gradual forms of influence exerted by utilities that, ironically, would become the victims of market power.
... Indeed, banks may also have used the models as a protective foil of 'mechanical' objectivity [17,18]. Furthermore, criticisms characterising market risk bank regulation as neoliberal selfregulation and/or regulatory capture infer that internal VaR is a conduit of regulation, which therefore assumes integration of internal practice and regulatory VaR [19][20][21][22][23]. This paper examines (1) whether the internal practice VaR is decoupled from regulatory VaR and its successor expected shortfall (ES) and importantly, decoupled from regulatory capital, and (2) whether the impending implementation of FRTB has compounded this and deepened this decoupling effect. ...
Article
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The central role of Value-at-Risk (VaR) within bank market risk regulation received significant criticism from financial media and government investigations into the events of the 2007–2009 financial crisis. Impending reform of bank market risk regulation under the Fundamental Review of the Trading Book (FRTB) demotes VaR, replacing it with a layered framework centred on expected shortfall (ES). However, many of these criticisms assume full integration of internal and regulatory market risk models and further, a linear relationship between risk models and regulatory capital. We examine bank practitioners’ perspectives and experienced realities to better understand the operational relationship between internal and regulatory market risk models, and between risk models and capital. This has important policy implications for the efficacy of the reforms to banking regulation, financial stability and navigating the dichotomy of private and public interests.
... From this perspective, the process of financialization can be understood as having reinforced the structural power of the business community and constrained the capacity for states to regulate financial markets and institutions, because the state itself has become dependent on continued financial sector expansion (Baker, 2010;Culpepper & Reinke, 2014). Bell and Hindmoor have argued that the fact that before the global financial crisis the financial sector in the UK comprised 8.3% of the GDP , employed more than 300,000 people in London, and accounted for 25% of Corporation Tax Revenue contributed to its political clout vis-à-vis British authorities and the emergence of a "light-touch" regulatory regime (Bell & Hindmoor, 2017). ...
... They run the risk that non-executives will be "captured" and pay insufficient attention to their "control" responsibilities (analogous to regulatory capture; cf. Baker, 2010). Nonetheless they have been strongly defended by corporations and investors alike during the 1980s and 1990s, when European legislation sought to abolish them to enhance boards as a controlling mechanism of corporate governance (Montgomery, 1989). ...
Article
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Purpose: This paper examines the puzzles of "ownership", the legal and psychological commitment of directors, through the experience of the work of boards at non-profit organisations. Design/Methodology/Approach: An exploration of the literature on charity governance leads to a first-person reflection on the tensions in directing two common types of non-profit organisations. Findings: In the UK as in other countries, charities are companies, bound by company law as well as regulatory constraints of the non-profit sector. This creates responsibilities of ownership without the material benefits. In contrast to corporate share ownership, a sense of psychological ownership may pre-date appointment as a director, facilitating stewardship behaviour, facilitating stewardship and accountability. Research implications: This paper calls for expanded empirical work on boards of non-profit organisations, giving a focused agenda of aspects to highlight the differences between charities and the corporate sector. Practical implications: The focus on psychological ownership can influence recruitment, induction and organisation of the work of charity boards, helping to ease resource deficits. Social implications: With pressure mounting in deliver of public services, the charity sector needs to fill growing gaps in provision. The constitution of boards plays a valuable role. Originality/Value: By incorporating psychological ownership in a framework of accountability, this paper points towards both a research agenda and practical considerations for charity boards.
... There is a general perception that states yield to financial sector lobbying, introducing regulation that favours funded, and privately provided, pension schemes (Klein, 2003;Leimgruber, 2008;Meyer and Bridgen, 2012;Naczyk, 2013). While the financial sector undoubtedly seeks to directly exercise power through lobbying (Nölke, in press), its influence often seeps more indirectly into public institutions for instance through the 'revolving door' of senior public servants and financial executives moving back and fore between public-and private-sector employment (Baker, 2010;Davis and Walsh, 2017). As a result, norms and discursive practices are shared across public authorities and financial institutions, forming an epistemic community (Davis and Walsh, 2017). ...
Article
Understanding the nature of state financialisation is crucial to ensure de-financialisation efforts are successful. Therefore, this article provides a structured overview of the emerging literature on financialisation and the state. We define financialisation of the state broadly as the changed relationship between the state, understood as sovereign with duties and accountable towards its citizens, and financial markets and practices, in ways that can diminish those duties and reduce accountability. We then argue that there are four ways in which financialisation works in and through public institutions and policies: adoption of financial logics, advancing financial innovation, embracing financial accumulation strategies and directly financialising the lives of their citizens. Organising our review around the two main policy fields of fiscal and monetary policy, four definitions of financialisation in the context of public policy and institutions emerge. When dealing with public expenditure on social provisions, financialisation most often refers to the transformation of public services into the basis for actively traded financial assets. In the context of public revenue, financialisation describes the process of creating and deepening secondary markets for public debt, with the state turning into a financial market player. Finally, in the realm of monetary policy, financial deregulation is perceived to have paved the way for financialisation, while inflation targeting and the encouragement, or outright pursuit, of market-based short-term liquidity management among financial institutions constitute financialised policies.
... They also shape international standard-setting processes. Private associations of major firms have played a leading role in setting international standards in areas like accounting and, even when they aren't the principal decision-makers, large financial firms have become adept at shaping internation al standards (Baker, 2010;Goldbach, 2015;Johnson and Kwak, 2011;Pagliari and Young, 2014;Romano, 2014;Tsingou, 2008;Underhill and Zhang, 2008;Young, 2012). ...
Chapter
This chapter distils key findings from the case studies, highlights areas for further research, and makes a series of policy recommendations. Overall the case studies provide compelling evidence of the powerful reputational, competitive, and functional incentives generated by financial globalization that lead regulators to adopt international standards. They also show that some domestic political economy dynamics generate incentives to diverge from international standards, particularly interventionist financial policies, political lending, and regulators sceptical about the appropriateness of international standards for their local context. Our findings speak to wider debates in the literature, including over the agency of actors from peripheral developing countries in the global economy; the importance of policy ideas such as the role of the financial sector, in economic development; and the inner workings of bureaucracies in developing countries. We highlight areas for future research and make policy recommendations on how to reform international standards to better reflect the interests of peripheral developing countries.
... Krisen nicht automatisch zu weitreichenden Reformen führen, hat sich anhand jüngerer Krisensituationen bereits gezeigt, z. B. im Zuge der globalen Finanzkrise von 2008/2009 oder des Reaktorunfalls im japanischen Fukushima im Jahr 2011 (Baker 2010;Kingston 2013;Walter 2016 ...
... Critics suggest that asymmetries among regulatees induced by powerful industry players were the primary reason behind the accumulation of market risks, as conventional and shadow banking professionals carefully lured the regulatory agencies into believing that new financial products (such as mortgage-backed securities, credit default swaps and collateralized debt obligations) were safe and did not pose any systemic risk. While mandatory accountability measures of IRAs, including the Securities and Exchange Commission (SEC), appeared strong and solid, these were increasingly ineffective to prevent regulatory bias favoring the industry players, as the information provided lacked the necessary knowledge and expertise regarding the technical details of how these products were structured (Baker 2010). In particular, the skyrocketing profits reported by these actors during the 1990s allowed them to avoid closer inspection as long as profits kept on rising. ...
Article
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Independent regulatory agencies (IRAs) have a significant capability to choose how to implement their decisions to be effective, given the mix of managerial autonomy, supervisory powers and political independence that most of these agencies enjoy. As such, traditional approaches which focus on their institutional characteristics or their reputational problems do not fully capture the variation in IRAs’ behavior. This paper suggests a complementary approach to interpreting IRAs’ autonomous behavior, focusing on the possibilities that the practice of accountability offers to these public agencies to make relevant choices for the agency itself and the policy environment. To that end, we identify a key background variable that affects the practice of IRAs, namely, the varying power configurations existing among the regulatees and focus on how this factor shapes their voluntary accountability in different contexts. Lastly, we examine several cases of IRA accountability behavior to discuss whether the patterns we submit might constitute a starting point for a theoretical development on the use of accountability by IRAs.
... Regulatory capture is considered to have been an important factor in the global financial crisis, both at the national and global levels; after the crisis, the problem persists despite positive changes in global financial regulation [Baker, 2010]. ...
Article
Nowadays the global financial system faces a triple challenge: the threat of a new systemic financial crisis at both global and regional levels; difficulties of constant adaptation of existing financial business and regulatory practices to intensive technological innovations; direct and hidden consequences of excessive political influence on the financial system through sanctions and selectively applied practices for sanction purposes. Improving the quality of financial regulation will require deeper cooperation between regulators of leading economies and a proactive position of the financial industry, as well as the decentralization of financial regulation. However, it is unlikely that this will happen at the global level. Financial stability became a key goal of global financial regulation in the post-crisis period. We consider financial stability as the «tragedy of commons». The article describes the main trends of financial markets regulation after the crisis: transformation of global financial architecture, anti-money laundering and counter-terrorism financing practices (AML/ CT), financial sanctions. The article analyzes the existing failures of modern post-crisis financial regulation: credit crunch, reduction in the effectiveness of monetary policy, regulatory arbitrage, and increased compliance costs (AML/CT legislation, tax legislation, and the sanctions regime). In the future we expect simultaneous trends of harmonization and standardization of requirements in traditional sectors of financial markets (including traditional institutions of the shadow banking sector), but at the same time regulatory arbitrage1 will induce new financial technologies in order to reduce regulatory costs. The crisis triggered by the coronavirus pandemic in 2020 despite its non-financial nature will almost inevitably have a major impact on financial markets and their regulation. Possible steps to eliminate failures in the financial regulation system are proposed, including recommendations for international organizations.
... First, high-profile cases of widespread private sector's corruption and malpractices in industrialized economies that were revealed after the 2008 financial crisis but which had spread during the pre-crisis economic expansion phase (Baker, 2010;Thiemann, 2014), remind us that the corruption-windfalls nexus is neither exclusively a problem of the poor, nor of natural resource-rich countries alone. Second, it is far from uncommon, for instance, to witness an intensification of rent-seeking, especially corrupt practices, in periods of revenue contractions. ...
Article
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In this article we uncover a positive effect of both export booms and busts on firm-level corruption. Our theory underlines the central role played by human capital in the underlying mechanism. In low human capital settings, export-related revenues are highly elastic to incremental gains of export shares, thence pushing firms to intensify corruption with export busts so as to avoid a radical drop in their revenues. In high human capital settings, export booms lead to more corruption as an increment of export share achieved through bribery concerns a large export market. We corroborate these findings with an extensive database of some 48,000 firms from 72 developing and transition economies, surveyed over 2006-2017. Besides confirming that export booms and busts corrupt and highlighting the mediating role of human capital, we also highlight the corruption-deterrent effect institutions during export market expansion and contraction.
... been a consequence (Baker 2010;Seabrooke and Tsingou 2014). The revolving door phenomenon points to how transnational elites affirm their class position through networks (Carroll and Carson 2003), to how policy elites in finance maintain their 'social space' (Lebaron 2008), and to how the transnational circulation of actors affirms the construction of particular forms of policy knowledge (Fourcade 2009). ...
Article
‘Revolving doors’ is a well‐suspected phenomenon of skills and knowledge transfer between the private and public sectors. It is thought to be especially notable among elites in transnational policy networks, where mobility can accrue status. In this article, we investigate revolving doors in the area of international financial governance. We target policymakers linked to the Basel Committee on Banking Supervision (BCBS) and the International Monetary Fund's Financial Sector Assessment Program (FSAP). We test for revolving doors by examining the career histories of those working with the BCBS on the development of the Basel II accord, and staff on policy teams for financial systems monitoring via FSAP missions. Using sequence analysis, we trace career histories between 1971 and 2011 to observe the extent of revolving doors. Revolving doors are observed in club‐like elite policy communities but are less prevalent in policy teams in intergovernmental organizations. We find that revolving doors are important in establishing intellectual capture in how an issue is treated within transnational policy networks.
... Existing research in the 'regulatory capture' stream has addressed this fluidity of authority involving actors outside the traditional formal 'power roles' of nation-states and international bureaucrats to whom nation-states delegate, and has studied how such authority is activated across organizational domains. Yet, this literature has tended to emphasize one particular causal dimension of influence, namely that elite professionals representing business or dominant class interests 'capture' and dominate transnational governance processes to define policies in their own interest (Baker 2010;Bó 2006). In the transnational tax governance literature, Hampton and Christensen (2011: 172) have for instance argued that the emergence of offshore tax havens was facilitated by elite lawyers. ...
Article
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Since the global financial crisis, international corporate taxation has risen to the top of the global political agenda, as political leaders have called for collective action to shore up corporate tax systems. However, high‐level political initiative alone does not create new international corporate tax rules. Rather, these transnational governance processes are centrally driven by elite tax professionals competing for prestige and influence. In this article, I investigate this competition in the case of one crucial post‐crisis reform – the OECD/G20 Base Erosion and Profit Shifting project. I argue that hierarchies of prestige and influence for elite professionals in transnational tax governance are based on strategic combinations of career resources in issue‐specific ‘linked ecologies'. In particular, I detail the expertise and network positioning of elite professionals, and discuss how these resources were mobilized in competitions for professional authority, which in turn shaped the transnational policy process. Evidence is drawn from qualitative interviews and career analysis.
... Global financial governance looks like an important case in point. On the one hand, the structural importance and political influence of 'Wall Street' has made successive American governments unwilling to act decisively against an industry that poses systemic risks, but which wields a profound influence over the regulatory framework that supposedly controls it (Baker 2010). On the other hand, middle powers have often suffered enormous collateral damage from the crises that continue to grip the global economy on regal occasions. ...
... Yet this does not mean that access money is "good" for the economy-on the contrary, it distorts the allocation of resources, breeds systemic risks, and exacerbates inequality. The harm of access money only blows up in the event of a crisis: for example, America's first great depression of 1839 (triggered by risky public financing and state-bank collusion) (Ang 2016, chapter 7;Wallis 2000Wallis , 2001, the 1997 East Asia financial crisis (Kang 2002), and the 2008 US financial crisis (Baker 2010;Igan, Mishra, and Tressel 2011;White 2011;Fisman and Golden 2017;Fligstein, Brundage, and Schultz, Forthcoming). To be sure, crony capitalism was not the singular cause of these events, but it was undoubtedly a precipitating factor. ...
Article
Corruption is conventionally measured in global indices as a one-dimensional problem—one score for every country—a practice that has profoundly shaped our conceptualization of corruption and its relationship with capitalism. What if we unbundle corruption into qualitatively distinct types and then measure them across countries? How will this approach change our understanding of corruption? This review article serves two purposes. First, it introduces a new framework for “unbundling corruption” into four varieties and highlights their differential economic effects. Based on this typology, I piloted a new cross-national measure of these four varieties of corruption in fifteen countries, using an expert, perception-based survey—the Unbundled Corruption Index (UCI)™. Second, I review six questions on corruption through the lens of unbundling corruption. Shifting our focus of corruption from its aggregated quantity to its quality not only changes our responses to commonly asked questions about corruption, it also prompts new questions.
... The advancing collaborative governance regime, however, may face multiple obstacles like regulatory capture, where the policy implementer (possibly a regulator, a section of the bureaucracy) socializes with the regulated (i.e., the regulator being "captured" by the regulated) and identifies more with the interests of the latter, resulting in distortion in the implementation of the regulatory regime (Carpenter & Moss, 2013;Dal Bó, 2006). Prominent cases include the regulatory capture of the regulators by the global finance industry, exposed by the global financial crisis (Baker, 2010;Boyer & Ponce, 2012;Carpenter & Moss, 2013;Johnson & Kwak, 2010;Young, 2012), and the capture of the Federal Aviation Administration (the U.S. aviation safety regulator), by Boeing whose the B-787 MAX model was approved, despite lethal design lapses (Hoppe, 2018;Soupcoff, 2019;Yeoh, 2019). More recently, as populism, nationalism, and trade-wars seem to have initiated the reverse of globalization (i.e., de-globalization), a research agenda featuring the corresponding evolving policy context, policy subsystems, and paradigm-shift is also gaining momentum in multiple disciplines, including political science (Burgoon et al., 2017;Latoszek & Dugiel, 2018), public policy (Haselmayer, 2018), business management (Butzbach et al., 2019;Meyer, 2017;Witt, 2019aWitt, , 2019b, trade (Dür et al., 2019), and finance (Cerutti & Zhou, 2017;Pesendorfer, 2020). ...
Chapter
Bureaucracy is one of the oldest institutions of a government system. Its role and importance have grown immensely in modern government systems. Bureaucrats or public administrators are indispensable in the policy decision making process in the 21st century. From the early conception as a branch of government responsible for the implementation of policy decisions and everyday functioning, bureaucracy has assumed a more active role in the policymaking process. It has gone through many reforms; however, these reforms have been largely incremental and static. While the external environment or the problems faced by bureaucracy is continuously evolving, the change in bureaucracy has not been in the same proportion. In the 21st century, many issues confronting bureaucracy are not only wicked but also global in nature. Moreover, challenges posed by technological disruptions and long-term processes such as climate change put bureaucracy at all levels of a government in a far trickier position than their earlier envisaged basic functions. In dealing with such challenges, the policy capacity of bureaucracy cannot be taken for granted. There are often significant gaps in capacity to anticipate a policy problem, to ensure coordination and preserve legitimacy, to translate global issues at local levels, and to learn from the past. It is crucial to strengthen analytical capacity at the individual and organizational level, operational capacity at the organizational level, and political capacity at the systems level to address these gaps. Tackling capacity gaps systematically would enable bureaucracy to design and implement policy and administrative reforms with a long-term vision of adaptation and evolution instead of merely in reactive mode. The policy capacity framework presented in this article is useful in identifying the capacity gaps that inhibit bureaucracy from evolving and the remedies to address these gaps.
... ). Ces travaux portent plus particulièrement soit sur le pouvoir structurel du capital transnational, soit sur les activités de lobbying des institutions financières qui « capturent » les autorités publiques de différentes manières. La capture peut prendre plusieurs formes : une capture « économique » ou « matérielle », qui renvoie à la taille et l'importance du secteur financier dans certains pays et les ressources mises en oeuvre par l'industrie pour le lobbying ; ou encore la capture « intellectuelle », basée sur le haut niveau d'expertise et de connaissances techniques dont dispose le secteur privé, souvent mise à contribution par les régulateurs eux-mêmes(Baker 2010). Cette littérature tend quant à elle à sous-estimer le fait qu'au sein de l'industrie financière, y compris parmi les acteurs transnationaux, il existe des intérêts divergents, articulés par les gouvernements nationaux, qui demeurent le principal canal de lobbying vis-à-vis de la réglementation de l'UE(Grossman 2004).contexte a contribué à l'adoption, en 1999, d'un plan d'action pour les services financiers (PASF), programme législatif ambitieux qui visait à éliminer les obstacles à la circulation des capitaux et des services financiers d'ici à 2005. ...
Thesis
Cette thèse analyse la production de la réglementation financière dans l’Union européenne aprèsla crise de 2007-2008. Elle repose sur une étude globale des réformes financières introduites dans l’UE entremars 2009 et novembre 2014 (n=51), ainsi que sur deux études de cas portant sur la proposition de taxe surles transactions financières (TTF) et la proposition de réforme structurelle du secteur bancaire. Notre thèsemontre que la crise financière mondiale n’a pas conduit, à l’échelle européenne, à une remise en cause dunéolibéralisme réglementaire. On observe cependant, dans les différentes réformes étudiées, undéplacement de l’approche réglementaire anglo-saxonne, favorable à l’autorégulation du secteur financier,vers une approche ordolibérale reposant notamment sur des exigences de transparence et de gouvernanceafin d’assurer des conditions « saines » de concurrence. La crise a par ailleurs conduit à la mise à l’agenda dedeux mesures de rupture, la TTF et la séparation des activités bancaires. Notre recherche met cependant enévidence le pouvoir structurel mobilisé par les grandes banques universelles afin d’obtenir l’abandon ou lamise en suspens des deux mesures. Ce pouvoir structurel est fondé institutionnellement à l’échelleeuropéenne et à l’échelle nationale.
... A similar model is suggested by Boyer and Ponce (2012) who then go a step further and suggest that spli ing supervisory power between di erent regulators might be bene cial. Baker (2010); Tsingou (2007) among many others argue that Basel II was the prime example of regulatory capture at the international level. However, Young (2012) questions this view and argues that access to the transnational policy process does not always translate into in uence. ...
Article
In this article, we discuss how the too-big-to-fail dilemma for large financial institution is addressed in the regulatory framework and how (differently) regulators in the EU apply it. The European Banking Authority (EBA) has devised a buffer guideline for identifying other systemically important institutions (OSIIs) to address this issue. This guideline defines how to identify OSIIs by a scoring process but does not specify how to map these scores into additional capital buffers. In this study, we empirically show that the OSII buffer assignment is very heterogeneous in Europe. First, based on all EU banks that were classified as OSIIs, we show that the OSII score has less impact on the OSII buffer than the headquarter country dummy. Second, if all countries applied the German OSII buffer assignment, the additional capital requirements in the euro area would increase by 90 bn EUR. Third, we analyze if our results could be explained by regulatory capture which is measured by supervisory quality, supervisory funding, importance/concentration of the banking system and political orientation of the government. We find amongst others that supervisory quality and supervisory funding without banks’ participation increases OSII buffers significantly.
... While financial industry had largely enjoyed privileged access to the technocratic decision making process pre-crisis (Tsingou 2008;Baker 2010), recent works within IPE have illustrated that the regulatory reform context was characterized by increased issues salience accompanied by qualitative shifts in policymaking displaying increasing divisions among policymakers and the private sector (Young 2013, 4). To sum up, the contextual conditions allowing the causal mechanism to operate are marked by a (temporal) de-legitimization of the financial industry after the financial crisis which somewhat neutralized the financial sector's organizational advantage and led to increasing fractions with policymakers, thereby changing interest group dynamics. ...
Thesis
The goal of this study is to examine and challenge questions of regulatory capture by concentrated industry interests in the reform debates in response to the credit crisis which originated in the US in 2008. Policymakers in the EU and the US set ambitious reform efforts in motion to better protect consumers of financial services. Decisions to reform credit regulations marked the end of highly politicized reform debates in the US Congress as well as in the European Parliament, involving lobbying from business associations and civil society groups, in which proponents of reforms would normally have been considered to be much weaker than their opponents. Paradoxically, a poorly-resourced civil society coalition successfully lobbied decision-makers and countered industry attempts to prevent regulatory change. What, then, explains that rather weak and peripheral actors prevailed over more resourceful and dominant actors?
... References 2003 2 1.5% (Bohringer, 2003;Conconi, 2003Conconi, ) 2007 1 1% Wijen andAnsari (2007) 2009 4 3% (Bosetti, Carraro, & Tavoni, 2009;Hanefeld & Musheke, 2009;Lawson & Zimkova, 2009;Sapir, 2009Sapir, ) 2010 10 7.4% (Asada et al., 2010;Baker, 2010;Barbier, 2010;Crafts & Fearon, 2010;Hepburn, 2010;Hume, 2010;Konzelmann, Wilkinson, Fovargue-Davies, & Sankey, 2010;Shalizi & Lecocq, 2010;Vlachou & Konstantinidis, 2010;Wedawatta et al., 2010Wedawatta et al., ) 2011 7 5.2% (Bosetti et al., 2011;Carballo-Cruz, 2011;Cunha et al., 2011;Cwik & Wieland, 2011;Gandellini & Venanzi, 2011;Savrul & Kilic, 2011;Yurtsever, 2011Yurtsever, ) 2012 13 9.6% (Apak et al., 2012;Bohm, Misoczky, & Moog, 2012;Butler, 2012;Dionne, 2014;Dornean, 2012;Gallastegui, Gonzalez-Eguino, & Galarraga, 2012;Gatti, Gallegati, Greenwald, Russo, & Stiglitz, 2012;Hassler, Krusell, 2012 (Dodig & Herr, 2015;Feld & Galiani, 2015;Gupta et al., 2015;Kuzemko, 2015;Marginean, 2015;Nelson, 2015;Schor, 2015;Totten, 2015Totten, ) 2016 28 20.7% (Anderson & Beresford, 2016;Arestis & Gonzalez-Martinez, 2016;Barbosa, Carvalho, & Pereira, 2016;Brkic, 2016;Christoplos & McGinn, 2016;Dabrowski, 2016;Dulebenets, 2016;Elliott & Okubo, 2016;Falkner, 2016;Fernando & Siani, 2016;Finke, Gilchrist, & Mouzas, 2016;Gavard, Winchester, & Paltsev, 2016;Karplus, Rausch, & Zhang, 2016;Michalak, 2016aMichalak, , 2016b; Millar, Allen, Rogelj, & (Ahmed, Chakraborty, & Bhattacharyya, 2020;Caligiuri et al., 2020;Crick & Crick, 2020;Das, 2020;Elkerbout, 2020;Fernandez & Shaw, 2020;Fiordelisi et al., 2020;Gilson, 2020;Handfield et al., 2020;Hotte, 2020;Kuhl, Van Maanen, & Scyphers, 2020;Laitner, 2020;Laitner et al., 2.3.1.1 Great Depression Following a rapid recovery from the Great War (1914)(1915)(1916)(1917)(1918), the United States enjoyed a decade of unprecedented prosperity and a consumer boom. ...
... 37 On regulatory capture, see Mattli and Woods (2009). For a summary of applications to financial regulation, see Baker (2010) and Young (2012). 38 Culpepper (2010). ...
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After the subprime financial crisis, the countries who were worst affected set about reforming legacy financial regulations. Given multiple similarities in the way they experienced the crisis and the similar complexions of their post-crisis economies and politics, the contrast between the UK and the Netherlands' approaches to breaking up their largest banks presents a puzzle for prevailing theories in the politics of financial regulation. Both countries explored a range of reform options using similar expert committees, but while UK policymakers determined that commercial and investment operations should be ring-fenced in the largest British banks, the Dutch reform program centered on the banks’ own recommendations to change banking culture from the bottom up by developing a code of conduct and banker's oath. The paper traces this divergence to two related effects produced by the countries’ contrasting majoritarian and consensus party systems: power sharing and coalition formation. Under conditions of high issue salience, both worked to encourage British policymakers to prioritize reform, while in the Netherlands each factor reduced party political responsiveness and de-emphasized alternatives to the banks’ own reform prescriptions. The paper ultimately suggests that institutional democratic variables are worthy of greater recognition among scholars of business power and financial regulation.
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At the heart of the last financial crisis stood the shadow banking system, a mesh of financial activities and entities that grew outside of bank balance sheets but with the support of the banking sector. These activities were not regulated or supervised like banks, and they were characterized by high maturity mismatches and leverage. Two prime elements were Money Market Mutual Funds and Asset-Backed Commercial Papers, which jointly performed bank-like functions. This paper sheds light on the fate of these entities post-crisis and the regulatory dynamics at play as policymakers shifted their focus from constraining their activities to drafting a European regulatory infrastructure that delivers both stability and growth. Based on expert interviews and document analysis, we show how European policymakers opened up to private experts during this shift to learn about the technical complexity of Money Market Mutual Funds and Asset-Backed Commercial Papers, but in the end were restricted in their efforts to craft such regulation due to competing national factions and the legislative time pressure at the European level. We argue that the process was heavily influenced by, first, nationally held visions about the future role of financial markets that came to the fore at pivotal moments during the negotiations, and, second, the specific European institutional set-up and its electoral cycle.
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The empirical changes in global financial governance (GFG) and China's position in it, against the backdrop of the 2008 global financial crisis and China's economic rise in recent decades, suggest two plausible conclusions: (1) the present GFG system has been significantly reformed and improved by forming a networked architecture and a regime complex; (2) China's economic rise has automatically extended to China's rise in GFG, embodying its full integration into the architecture and regime. This article constructs a three-dimensional international political economy (IPE) analytical framework to reexamine the two conclusions and thus finds two illusions: an increasingly widespread—or rising—illusion of a much improved and more stable GFG system and an illusion of China's rising in GFG via an automatic transformation from economic might to governance power. The “rising illusion” of a much-improved GFG risks resulting in a reform dilemma, while the illusion of China's rise in GFG risks escalating the China-US and, more broadly, emerging-dominant states conflicts into full-scale confrontation. The prevalence of these two illusions highlights the need for greater attention from academic and policy spheres to relevant issues.
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Our article uses text mining techniques to examine confidential letters sent from the Bank of England’s Prudential Regulation Authority (PRA) to financial institutions it supervises. These letters are a ‘report card’ written to firms annually, and are the most important, regularly recurring written communication sent from the PRA to firms it supervises. Using two complementary machine learning techniques—random forests and logistic ridge regression—we explore whether the letters vary in substance and style depending on the size and importance of the firm to whom the PRA is writing. We find that letters to high impact firms use more evaluative, judgment-based language, and adopt a more forward-looking perspective. We also examine how PRA letters differ from similarly purposed letters written by its predecessor, the Financial Services Authority. We find evidence that PRA letters are different, with a greater degree of forward-looking language and directiveness, reflecting the shift in supervisory approach that has occurred in the UK following the financial crisis of 2007–09.
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Although the idea of revolving doors evokes the dynamic image of moving in and out of public and private sector jobs, most scholars take a static view of the revolving door phenomenon, looking mainly at entrances, sometimes at exits, but almost never at both. This is a serious oversight given that normative concerns about revolving doors turn mainly on assumptions about how individuals become socialized through their multiple interactions working on both sides of the revolving door. Our study seeks to revive a bidirectional picture of revolving doors. To this end, we use financial regulatory politics in the European Union (EU) as our case and a unique dataset of nearly 200 regulators from three EU financial regulatory bodies as of 2018. We first describe the extent to which these multiple movements are happening and, second, we explain differences between those who make zero revolving door movements and those who make multiple movements. Our central argument is that previous job experience in the regulated industry (finance) generates valuable expertise and network ties that in turn lead to more movements. Experience in industries outside of finance, however, diminishes this expertise and loosens network ties and hence leads to fewer movements. Our results support these arguments. We also find those making multiple movements are not in the business of finance (traders or those leading sales or marketing teams) but instead have careers on both sides of the revolving doors focused on law, policy, and government affairs.
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Das globale Finanzsystem befindet sich in einer tiefen Krise. Die Hüter des Geldes, Zentralbanken wie die EZB oder die US-amerikanische Fed, sind inzwischen zu seinem eigentlichen Rückgrat geworden und haben eine neue Ära eingeläutet: die des Zentralbankkapitalismus. Dafür mussten sie ihre Geldpolitik revolutionieren sowie als Marktmacher der letzten Instanz agieren. Joscha Wullweber steigt in den Maschinenraum des modernen Kapitalismus hinab, diskutiert die neuen Instrumente der Zentralbanken und erklärt, auf welch komplexe Weise Staat und Finanzmarkt heute verschränkt sind. Dabei nimmt er auch das Schattenbankensystem unter die Lupe, von dem die globale Finanzkrise ausging und das dennoch immer bedeutender wird. Ein unverzichtbarer Beitrag zum Verständnis aktueller globaler Geld- und Finanzpolitik.
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It is widely assumed that when private financial actors seek to influence the regulation of global finance, their preference is for fewer or weaker rules. But is this preference tied to fixed material interests, or is it more malleable? Can it change over time? If so, why might it? I address these questions by examining a recent shift in private creditor preferences toward the regulation of sovereign debt restructuring. I argue that changed material circumstances created demand for regulatory change among creditors but did not determine the nature of their preferred solution. Instead, it was shifts in collectively-held ideas—the specific content of which was informed by important historical and contextual factors—that led private creditors to embrace stronger debt restructuring rules, despite being historically opposed to such rules. In making this argument, the article contributes to a fuller understanding of private market actors in global financial politics, challenging the assumption that these actors necessarily prefer weaker rules, and highlighting the more contingent nature of their regulatory preferences. It also contributes to wider debates about preference formation and change, highlighting important complementarities between distinct theoretical traditions, which together provide a much richer explanation of the case at hand.
Chapter
This chapter introduces an original critical IPE (International Political Economy) theoretical framework in the analysis of the EU interest groups’ lobbying. First, it offers a review of the literature on the EU post-crisis financial regulation and corporate influence, discussing its merits and shortcomings. A critical transnationalist approach is thus outlined, built on the Neo-Gramscian literature. Structure and agency both shape the emergence of conflicting transnational coalitions of socio-economic interest groups and policy-makers. Structural determinants, lobbying resources, and political factors are linked together in a three-tier analytical framework to assess the leading public-private coalitions and their influence capabilities at the EU level. Thus, an explanatory mechanism is hypothesized, according to which high policy salience conditions interest groups’ adaptation and lobbying strategies, while competition dynamics shape their coalition-making at the European or domestic levels.
Chapter
This chapter defines the structural, organizational, and issue salience dimensions of our analytical framework in the context of global financial turmoil and the ensuing Eurozone crisis. It provides the essential coordinates for analyzing the case studies, by elucidating the overall structural conditions, competitive patterns, lobbying resources, and public issue salience of banking regulation. The first section reconstructs the main competitive challenges faced by the European banks during and after the crisis. Then, this chapter maps the corporate and non-corporate interest groups in banking regulation, together with their organizational characters and resources. The last section shows the increase in public salience of issues related to banking regulation, as defining the politicized context in which the post-crisis reform process took place.
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This article analyses the nature of policy debates on financial regulation during the onset of the Global Financial Crisis (GFC) by considering three elements that shape them: the salience of the debate, the actors that dominate the debate, and the degree of anti-status quo pressure. Theoretically, it contributes to Culpepper’s quiet/noisy politics framework by clarifying its multidimensionality and explicitly introducing the degree of contestation. Empirically, it focuses on two regulatory issues: (1) the restriction of banking and financial activities and (2) the debate on the remuneration of bankers. The data captures political claims during the first 12 months of the GFC and covers 19 established democracies. The findings indicate that policy debates were unevenly politicized across countries and issues, and that structural factors are not enough to account for the observed variation in pressure for reform for all types of actors, thus constituting a puzzle for further research.
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Chapter
The gradual reform of the international financial architecture has markedly accelerated as a result of the global financial crisis (GFC). This chapter discusses structural developments at the international level regarding the regulation of securities markets as one of the sectors of financial regulation. It examines the changing dynamics shaping the international securities regulatory regime and how post-crisis developments are affecting its governance and policy-making processes, highlighting both shifts and continuum in cooperation. The focus is on the International Organization of Securities Commissions (IOSCO) as the recognised global standard-setter for securities regulation and the leading policy forum for securities regulators. Throughout the past decade, the Organisation, comprising governmental regulatory bodies from some 115 jurisdictions, including those of the G-20, has endorsed two subsequent strategic direction reviews. It has undergone important institutional reforms and is working intensively with the G-20 and the Financial Stability Board (FSB) on the global regulatory agenda. The chapter’s original analysis and discussion of how IOSCO currently fares against some selected governance norms proposed in the scholarly literature suggests that institutional inclusiveness and regime effectiveness are complementary and potentially reinforcing. However, it also shows that clarity of function and sharp focus are other necessary elements for regime effectiveness.
Chapter
Communities across the globe face myriad and interacting socio-economic and environmental challenges. This chapter evaluates a citizen-led, community-scale response to these challenges offered by the Transition Movement. Phronetic inquiry is used as an analytic framework to answer four value-rational questions posed: Where are we going? Is this desirable? What should be done? Who gains and who loses? The analysis points to the strengths and potential of the Transition Movement for mobilizing a community-scale response to global hazards, but it also highlights possible shortcomings, especially for who gains and loses because anecdotal evidence suggest that Transitioning communities are predominately White, educated, upper-middle class. The chapter empirically tests these anecdotes and finds that Transition host communities in the United States are indeed generally better educated and less racially and ethnically diverse than American communities on average. There is less evidence for an upper-middle-class nature of the Movement in the United States.
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Following the 2007–2008 global financial crisis, a number of prominent academics, journalists, and activists were quick to pronounce the demise of neoliberal capitalism and governance. This rather optimistic prediction, however, underestimated the extent to which neoliberalism has shaped the 21st-century world order and become entrenched in our sociopolitical and cognitive fabric. Indeed, 11 years after the crisis, and in spite of the significant levels of socio-economic inequality, psychological distress, and environmental destruction generated by neoliberal policies and corresponding business and cultural practices, the ideological hegemony of neoliberalism has not been supplanted, nor has it really faced any serious unsettling. How, then, has neoliberalism inflected and shaped our “common-sense” understandings of what is politically, economically, and culturally viable? To help answer this question, this book combines leading theories from sociology, media-communication research, developmental psychology, and cognitive science, and draws on primary evidence from a unique mix of ethnographic, survey, and experimental studies – of young people’s leisure practices and educational experiences, of young adults’ political socialisation processes in relation to exposure to social networking sites, and of the effects of commercial media viewing on material values and support for social welfare. In doing so, it provides a nuanced and robustly empirically tested account of how the conscious and non-conscious cognitive dimensions of people’s subjectivities and everyday social practices become interpellated through and reproductive of neoliberal ideology. As such, this book will appeal to scholars across the social and behavioural sciences with interests in neoliberalism, political engagement, enculturation, social reproduction, and media effects.
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The concept of regulatory capture is multidimensional according to data from Australian nursing home inspectors. There are three empirically distinct forms of capture: identification with the industry, sympathy with the particular problems that regulated firms confront in meeting standards, and absence of toughness. Inspectors who have prior senior management experience in the industry tend to be less tough in their attitudes to regulatory enforcement. For the other two types of capture, it is not coming in the revolving door (from an industry job), but aspirations to go out of the revolving door (to an industry job) that predicts capture. Captured regulatory attitudes and revolving door variables have little power, however, in explaining the toughness of actual enforcement practices. We do find that over time tougher inspectors are more likely to leave the regulatory agency than softer inspectors. These data are used to inform a policy analysis of capture and corruption. It is concluded that there is limited analytical merit in a conception of capture as an enduring unitary character trait that is structurally determined by a history of interest group affiliations. Capture, we attempt to show, is instead a situational problem that requires situational solutions. Constraining the free movement of the revolving door by restricting regulatory appointments from or to the regulated industry is an example of a flawed policy grounded in an overdrawn structural determinism.
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Political protest in Europe and the problematic politics surrounding bank recapitalization in the US have raised growing concerns about the rise of populist politics. Populist politics is problematic in its search for simplistic solutions to complex problems, its disdain for institutions and its political ambiguity. Nonetheless, the rise of populist mobilization also points to genuine concerns about the functioning of democracy. The politics of financial regulation has been dominated by a narrow, utilitarian and technocratic mode of policy-making that has tried to limit public debate, favouring an expert discourse which privileges questions of efficiency over questions of distribution. This article explores the distributional issues at stake in banking recapitalization (particularly questions about the returns governments receive for their investment) and regulation (through an exploration of the financialization literature). It argues that, while populist appeals to ‘the people’ are too ambiguous to be helpful, given the complexity of the interests at stake in financial regulation, there is a need for a wider and more democratic debate about financial regulation that pays greater attention to distributional issues. Populist mobilization can create pressure for debate, even if it presents few solutions. As a result, we should be wary of moves to shift too much regulation to the international level where populist mobilization is less effective.
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The logic of free trade does not apply to currency convertibility, as the Asian currency crisis should have made clear.
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George Stigler changed the way economists analyze government regulation. This enormous legacy is essentially embodied in two articles: his 1962 analysis of electricity rates with Claire Friedland and his 1971 theoretical piece. There were, to be sure, precursors and successors in his own work. But none of them so profoundly affected the course of intellectual inquiry as these two. The importance of both articles rests more, I believe, with the questions each posed than with the answers. Even by the standards of the day, neither piece evinced the sort of technical sophistication that the profession has come to admire. Neither produced conclusions that were impervious to all serious subsequent challenges. But both produced insights that have altered the course of research in the area to this day. To understand Stigler's contribution, it is best to proceed chronologically and to begin with the state of the field around 1962. There is room here only for caricature rather than extensive survey. However, I think it is fair to say that the field derived its main energy from the normative economics of marginal cost pricing. The proper role of government was to correct the private market failures that prevented attainment of marginal cost pricing. Applied economic analysis of regulation was then largely descriptive, and its main tendency was to show how the regulatory institutions constrained departures from marginal cost pricing. Monopoly was viewed as the main barrier to marginal cost pricing, and the "natural monopoly" occupied center stage in the economics of regulation.' The prime examples of natural monopoly were sup1 Man-made monopolies were the main subject matter of industrial organization. Stigler's profound influence on this field is summarized by Harold Demsetz's article in this issue.
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The potential usex of public resources and powers to improve the economic stuius of economic groups (such as industries and occupations) are analyzed to provide a scheme of the demand for regulation. The characteristics of the political process which allow relatively small groups to obtain such regulation is then sketched lo provide elemenls of a theory of supply of regulation. A variety of empirical evidence and illustration is also presented. W The state—the machinery and power of the state—is a potential resource or threat to every industry in the society. With its power to prohibit or compel, to take or give money, the state can and does selectively help or hurt a vast number of industries. That political juggernaut, the petroleum industry, is an immense consumer of political benefits, and simultaneously the underwriters of marine insurance have their more modest repast. The central tasks of the theory of economic regulation are to explain who will receive the
Dudley are among the better-known individuals making that journey, while Gerald Corrigan left the New York Federal Reserve and became CEO of Goldmans
  • Robert Rubin
  • Henry Paulson
  • C William
Robert Rubin, Henry Paulson and William C. Dudley are among the better-known individuals making that journey, while Gerald Corrigan left the New York Federal Reserve and became CEO of Goldmans.
Corruption and the global financial crisis', www.forbes.comcorruption-finan- cial-crisis-business-corruption09
  • Daniel Kaufman
Daniel Kaufman, 'Corruption and the global financial crisis', www.forbes.com/2009/01/27/corruption-finan- cial-crisis-business-corruption09, accessed 26 Jan. 2010.