The Regulatory Cathedral and the Bazaar

by on March 19, 2009 · 17 comments

Yochai Benkler ponders the death of the newspaper:

Critics of online media raise concerns about the ease with which gossip and unsubstantiated claims can be propagated on the Net. However, on the Net we have all learned to read with a grain of salt between our teeth, like Russians drinking tea through a sugar cube. The traditional media, to the contrary, commanded respect and imposed authority. It was precisely this respect and authority that made The New York Times’ reporting on weapons of mass destruction in Iraq so instrumental in legitimating the lies that the Bush administration used to lead this country to war.

This is a fantastic insight, and indeed, it’s precisely the insight that we libertarians apply to the regulatory state. That is, just as a decentralized media and a skeptical public is better than the cathedral style of news gathering, so too are decentralized certification schemes and a skeptical public better than a single, cathedral-style regulatory agency “guaranteeing” that businesses are serving consumers well. Most of the time the regulators will protect the public, just as most of the time newspapers get their stories right. The problem is that no institution is perfect, and the consequences of failure are much more serious if you’ve got a population that’s gotten used to blindly trusting the authority figure rather than exercising healthy skepticism. Regulatory agencies are single points of failure, and in a complex economy single points of failure are a recipe for disaster.

Will Wilkinson makes the related point that journalists are prone to journalistic capture that’s very much akin to the regulatory capture that plagues government agencies.

Worried that decentralized news-gathering sources won’t be able to do the job the monolithic newspapers are leaving behind? Jesse Walker has a great piece cataloging the many ways that stories can get from obscure city council meetings to popular attention.

  • http://sethf.com/ Seth Finkelstein

    “decentralized certification schemes and a skeptical public better…”

    (sarcasm)
    Which is exactly why the government should not be in the business of determining “fraud”, because that makes people lazy and weak. It puts The State into determining truth. Lies will be taken care of by the Free Market, by “decentralized certification schemes and a skeptical public” so there is no need for The Men With Guns to be involved …
    (/sarcasm)

    No?

  • http://enigmafoundry.wordpress.com eee_eff

    This is a fantastic insight, and indeed, it’s precisely the insight that we libertarians apply to the regulatory state. That is, just as a decentralized media and a skeptical public is better than the cathedral style of news gathering, so too are decentralized certification schemes and a skeptical public better than a single, cathedral-style regulatory agency “guaranteeing” that businesses are serving consumers well.

    The is revisionism.

    The reality is: for the better part of 65 years, the Glass-Steagall Act protected the banking system from the collapse we now see. The act was abandoned, and the unregulated baking systemically failed because of massive instability.

    Furthermore, it is wrong to see that regulatory efforts are all Cathedral-like. They are not. Many are more bazaar like–arising after a specific failure, and becoming legislation only after a full and public debate.

    My one experience is with building codes, seeing how any specific failure such as the Lakeview Elementary School Fire (see: http://www.deadohio.com/collinwood.htm) and the Triangle Shirtwaist Factory Fire (see: http://en.wikipedia.org/wiki/Triangle_Shirtwais…) each lead–incrementally to specific changes in building codes.

    This is why I have such an issue with libertarianism–by denying the validity of the regulatory process you condemn countless millions to unnecessary suffering.

    There exists no libertarian answer as to how public safety could be provided, through a “decentralized certification scheme” equivalent to what is provided by modern building codes.

    Of course, doubtless you can point to an example that proves that building codes are not presently perfect. That, however, does not detract from their demonstrated utility, any more than pointing out that many people die in Emergency Rooms would be an argument for their closure.

    Banking and Finance admittedly are not my area of expertise, but even Clinton noted recently that he regretted loosening the Glass-Steagall restrictions, and now there are millions who will experience what deregulation has brought them: destitution and hopelessness.

  • http://enigmafoundry.wordpress.com eee_eff
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