Regulating Complex Industries
Saturday 31st January 2009 - 2:00pm - 4:00pm
Regulating Complex Industries
• Stuart E. Eizenstat • Christoph Franz • Yasuchika Hasegawa • Shirley Ann Jackson • Lord Levene • Joost Martens • Yossi Sheffi
• Subramanian Rangan
Saturday 31 January
Subramanian Rangandescribed regulation as a guard rail of human or economic progress. He said that 10-20 years ago we would have been talking about deregulation. He asked three questions: Why regulate? How should we regulate? And, “so what?" Among the responses and observations:
• Why regulate? To level the playing field.
• Because of pressure from the food industry, it took five years just to pass simple legislation for clear, understandable labels on food in the US and there is still a battle to get clear labels on sunscreens.
• Business people have their feet on the gas; regulators have their feet on the brake. The same person cannot act both as judge and jury.
• It is human nature to try to beat the system. Regulation is needed to prevent information asymmetries.
• The government responds when industry fails to take responsibility.
• Feedback failures exist. For example, there is a disinclination to report negative drug effects; pilots don’t like to file near-miss reports; and banks do not file reports with the police when their computer systems are attacked.
• The quality of regulatory output is good; the quality of regulatory efficiency is not.
• No regulatory system works well if it relies on enforcement. Voluntary compliance comes when the regulatory system is readily understood. The more regulation, the more people think unregulated things are not so bad.
• Global standards are needed in a globalized world. Regulatory efficiency comes from public engagement, clarity and commonality of regulations and cross-border harmonization.
• The operational system and the way it works should be reviewed by consumers and regulators.
• The EU operates through “mutual recognition.” When Member States do not have common standards, they mutually accept each other’s standards. Negotiated sectoral mutual-recognition agreements are different from standardization.
• Participants criticized the International Monetary Fund for doing a relatively poor job in developing regulatory capacity in developed and developing nations.
• There should be global scrutiny for those doing business internationally. Aside from persuasiveness and diplomacy, a “name and shame” list and international opprobrium could be imposed.
Winding up, Rangan said, “What I am hearing is that the guard rails are being built, and progress requires citizenship.”
Chairman, Roche, Switzerland
1983, graduate, General Management and Engineering, Ecole Supérieure de Commerce, Ecole Centrale de...
- Joost Martens
Shirley Ann Jackson
President, Rensselaer Polytechnic Institute (RPI), USA
SB in Physics, PhD in Theoretical Elementary Particle Physics, MIT. Senior leadership positions in a...
Professor of Engineering Systems and Director, Transportation and Logistics, Massachusetts Institute of Technology (MIT), USA
1975, BSc, Israel; 1977, Master of Science, MIT; 1978, PhD. Founder of five companies in logistics a...
Chairman of the Board, Takeda Pharmaceutical Company, Japan
1970, degree, Waseda University, Tokyo. Since 1970, with Takeda: 1993, President, TAP Pharmaceutical...
Lord Peter Levene
Chairman, NBNK Investments, United Kingdom
1991-94, Chairman, DLR; 1991-95, Deputy Chairman and Managing Director, Wasserstein Perella & Co.; 1...
Stuart E. Eizenstat
Partner and Head, International Trade and Finance, Covington & Burling, USA
1964, degree (Hons) in Political Science, Univ. of N. Carolina; 1967, degree in Law, Harvard. 1977-8...
The Abu Dhabi Crown Prince Court Endowed Chair in Societal Progress, INSEAD, France
MBA, MIT Sloan School of Management; PhD, Harvard University. Member of the Board: Funda+ºa+Á Dom ...