Rethinking Regulation: Preventing Capture and Pioneering Democracy Through Regulatory Reform

April 19, 2016

A more inclusive economy depends on an inclusive political process. Regulatory agencies are central institutions in economic policymaking, yet regulators remain vulnerable to undue political influence from established business and industry interests. How then can we reinvent regulation to be more accountable and responsive to the public at large? This white paper provides a progressive framework for addressing the problem of regulatory reform. The paper argues that instead of seeking to undo regulations or further insulate regulators, we must instead pursue reforms that expand participation and representation for a more inclusive set of stakeholders within the regulatory process itself.

The paper begins with a brief history of different attempts at reforms to ensure regulation serves the public interest, from the New Deal’s faith in expertise to the rise of procedural statutory requirements for regulation to the attempts by both left and right to respond to the charges of capture in the later 20th century. The paper then highlights two particular episodes of democratizing reform efforts: the War on Poverty in the 1960s and 1970s, and more recent innovations in participatory governance in the U.S. and internationally. These episodes suggest some ways in which governance can harness democratic participation and representation to improve accountability and responsiveness.

The paper then offers specific policy recommendations for reinventing progressive regulation by incorporating these democratizing strategies. In particular, the paper calls for reforms that: (1) institutionalize stakeholder representation within regulatory agencies; (2) empower grassroots citizens to drive monitoring and enforcement of rules; (3) update the procedural and presidential oversight requirements for agencies to enable greater participation; and (4) expand and rethink the staffing, resources, and structure of agencies to facilitate participation.