Regulators live to regulate. Governments live to govern. The
policy, regulatory, and legislative instruments in place today
reflect that genetic coding. The machinery of government was for
the most part conceived in the pre-internet era, predating
today's modern - and mobile - tools of commerce. Consumers have
adapted to the pace of technological change, but governments at
home and abroad are struggling to reconcile rapidly evolving
economic realities with an antiquated oversight toolkit.
Governments have long recognized the effect their decisions can
have on individuals, businesses and markets and developed the
Take the legislative process as an example. Traditionally,
someone would perceive a gap that might need legislative attention.
The issue would be brought to the attention of politicians or
within the bureaucracy; there would be some preliminary analysis
and discussions, maybe among knowledgeable individuals, officials
or politicians. Further analysis, formal consultations, and
briefings of a Minister might lead to legislation being drafted. If
given a Cabinet green light, it would then proceed through
Parliament. If regulations were required a similar, albeit
abbreviated, process would follow and, ultimately, the law would be
live. While we have seen exceptions where issues were either fast
tracked or the process was bypassed entirely, getting new laws in
place typically takes years. The system was designed to ensure
balance and mitigate unintended consequences.
Turning to the regulatory machinery, the situation is similar.
Look at how the CRTC, the Competition Bureau, tax authorities and
other regulatory institutions work: analysis and action takes
years. Given the stakes for individuals and businesses, these
institutions and their processes were rightly designed to balance
state intervention and the protection of private interests. Public
consultations, transparent deliberative processes and clearly
communicated findings reassure us all that the right balance is
being maintained. Rules around due process and procedural fairness
underpin the credibility of decisions and the institutions
themselves. But all of that takes time, leaving many Canadians
often scratching their heads and wondering, "Why did that take
so long?" Or increasingly, "What were they
Economic analysis and regulatory gamesmanship can be hard to
explain to your family and friends. For many that toil away within
those institutions, leading edge technology files are very
attractive – much more interesting than their regular day
job. The institutional challenge is to resist the impulse to feed
their curiosity (what the official finds interesting and would like
to know more about --- looking at the trees) and to focus only on
their core responsibilities (what is truly necessary for the job at
hand --- managing the forest).
The risks that regulatory decisions will have adverse unintended
economic consequences are now higher than ever before. Decades of
technological advances and social networks have changed how
individuals relate to one another and the world, allowing them to
communicate directly with decision makers and policy makers. In
response some institutions have tried to change, adopting new
process tools to gather information. Having done so once a
regulatory process gains speed, it is now almost impossible to
manage the flood of data and stakeholder input, or separate fact
from strategic behaviour - let alone identify if a real problem
even exists. (Having tossed the Google and Netflix submissions
because, according to a CRTC spokesman, they were unsubstantiated
"anecdotes", it will be interesting to see how
they'll handle the input of average Canadians).
In today's digital economy, the market is difficult to
model: there are multiple layers of partners, intermediaries and
competitors. Products and services can serve overlapping markets.
Despite slight process upgrades, regulators continue to segment and
analyze markets through decades-old frameworks, even as markets
shift under their feet. Their staff economists, lawyers and
analysts try to narrow the issues using traditional models. They
struggle over a few weeks or months to understand a market that
businesses live in every day. They try to outperform those markets
at predicting the future, issuing decisions and solutions that are
often out- dated as soon as the ink dries. And they continue to
focus on individual trees, even as the forest grows thicker.
Things will not get easier. In exercising their authority and
enforcement discretion, operators of government machinery today
more than ever need to continuously remind themselves of their core
responsibilities and always ask "Do I need to go there, or am
I being drawn into the trees to the detriment of the
Originally published by The Hill Times, October 6,
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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