The talk of governments across the world in this brave New Year of ours has tended to be all about deregulation. This sounds appropriately optimistic and often involves people from outside government who have a reputation for business flair.
But long term the track record of such efforts has never been good and people forget what on earth they achieved. Who can now recall what came out of the days when the government of the time pulled Richard Branson in to fulfil the role of ‘business person plucked out of the hat to turn the economy round and stimulate growth’?
As business people who have been brought in as government advisers will ruefully tell you over and over again, politicians need spectacular growth within the electoral cycle, whereas the reality of business growth is that it is a long-term process.
Targets intended to improve a service often result in the loss of expertise as management becomes the target
It is not a question of Jack planting his seeds one day and having an impressive beanstalk reaching up to the skies the next. What politicians need to do is set up departments of unintended consequences. That is where the greatest potential savings of public money lie.
Too often the emphasis is on the theory behind a change in regulation. The emphasis ought to be on the likely practical effects. And that requires the use of principles of common sense, not the simplistic hopes of politicians.
Predictably…
Take the NHS, knee-deep in a plethora of targets. Its public perception is increasingly of a shambles of politician-imposed targets missed. Yet as the health and social care charity The King’s Fund recently pointed out, the targets that are supposed to improve the service by benchmarking, improving and learning often result instead in the loss of expertise as senior management become the target.
In local government the closing of the central organisation that provided audit expertise resulted in audit firms and demoralised audit staff pulling out of the market. Now, several years on, there is a huge backlog of audits yet to be finalised and the fees for clearing up the mess have risen exponentially, one council extraordinarily finding its previous annual fee of just over £40,000 rising to over £300,000. A government department watching out for unintended consequences could have flagged the potential disaster up years before it occurred.
Selling out has provided senior partners with a windfall leaving junior partners demoralised
The examples of such nonsense come in multitudes. The traditional model for accountancy partnerships was deemed to be dull; the senior partners allowing expertise and income to slowly move down to the generation following on was a largely no-nonsense and sensible one. But in the US, the fashion for selling out to private equity has provided the senior partners with a once-in-a-lifetime windfall but leaving the junior partners and staff demoralised, with diminished firms and a diminished profession that now has problems in attracting recruits.
The list goes on
There are examples wherever you look in the deregulatory dance. Allowing pension funds to invest in riskier sectors is not, as a department of unintended consequences would tell you, going to end in anything other than tears.
Relaxing the rules around social media companies will flood the market with, er, lies
And loosening the rules on the ratio between earnings and borrowings in the mortgage market will always result in higher property prices. The market, regardless of arguments about what ‘affordable’ housing might actually be, will raise prices to take up the slack.
Likewise, relaxing the rules around social media companies is not going to result in a growth of something approaching accuracy or truth but instead will flood the market with, er, lies.
Consequences, unintended or not, are invariably out there in plain sight. Recognising them would provide the protection of public money that politicians and citizens, ostensibly, crave. Time to set up that department.
