The rhinoceros is reputed to be a single-minded and short-sighted animal. The current European Commission’s determination to make “better regulation” its historical contribution to the shaping of Europe smacks of the same obduracy and myopia.
“Better regulation”? Who could be against that? It would be like complaining about sunny weather. But the eye-catching label is on a bottle of bitter potion. So what exactly is it about? The basic idea boils down to two things.
The first is explicitly stated, the second implied:
1. Public regulation of any kind is apt to hold back business growth, especially where firms are bound by obligations to society and accountable for what they do in different ways. So it is about cutting the red tape on firms, especially their duty of information;
2. The only good legal rule is one that works to grow the economy. The legitimacy of public intervention must be measured by impact analyses, which means different kinds of cost-benefit assessment.
These ideas hark back to former US President Ronald Reagan’s administration of the early 1980s. In “Reaganomics”, the State was not the solution to the problem, it was the problem. An odd claim by the man who as chief executive of the world’s most powerful state headed up an unprecedented military machine. The deregulation credo found willing ears in Mrs Thatcher’s Britain. The New Labour government spun it, but never disowned that legacy.
Meanwhile, the Organization for Economic Cooperation and Development (OECD) formed a kind of pro-deregulation think tank by setting up co-operation between deregulators of the leading industrialized countries. The OECD sponsors the models for calculating the costs of regulation that so appealed to the Barroso Commission. The results yielded by these models are lacking in serious substantiation. But so what? The economic calculation is just a smokescreen. The real point lies elsewhere: it is about more self-regulation by business, cutting the information firms have to give to the public authorities, their workers or consumers. It is less an economic than a political issue. Putting more power in the hands of employers creates a policy-making system unhampered by the annoyances of democratic elections.
The current financial debacle ought to have dampened the deregulationist zeal. It again gives the lie to the old free-market credo that the sum of individual selfishness will add up to the common good. Telephone-number amounts are being poured into bailing out the financial system, but the political lesson of 25 years of deregulation has not been learned.
The Commission’s chosen path for health and safety at work calls into question the entire policy thrust followed since 1989. The duty to inform is the Community directives’ single biggest contribution, reflecting an intention to establish a management systems approach to health and safety. But you cannot manage without information that is collected, stored and processed. Workers cannot participate unless that information is communicated and discussed. The public authorities cannot police compliance without information from employers. Cutting down information requirements inevitably undermines prevention. Workers and society will pay a high price for the administrative costs saved in the form of work-related accidents and diseases.
The “better regulation” lobby hide behind the sophistry of protecting small and medium-size businesses (SMEs). It is a myth that must be debunked. All available research shows that ludicrously little time is spent on prevention in SMEs. A preventive strategy means beefing up, not cutting down, the health and safety management obligations of SMEs. The real issue is far less “how much” than “how well”. SMEs too often resort to outside consultants who often go through the motions of what can be a costly tick-box exercise. In this area, it is the lack of regulation that has a cost and constitutes an obstacle. This is precisely the paradox of the rhinoceros charge – a blind rush towards an object which is often not what they think it is. The real object is elsewhere. But they do not see it, and still less do they care.