RETHINKING PROFESSIONAL REGULATION

Market forces could deliver improved outcomes in the case of professional regulation by removing the monopoly status of professional regulators. A framework of competitive regulation could involve multiple professional regulatory bodies regulating a profession and would maintain quality standards whilst lowering fees for professional services.     

REGULATION OF CHILD LABOUR

The authors discuss the reasons for the employment of children in developing economies and analyse the appropriateness of regulation in this controversial area. The political economy of enforcement of child labour legislation is also examined. In most cases, they argue, domestic policies to address the underlying causes of child labour are better suited to improve children's lot than regulations; in particular, trade sanctions may be counterproductive     

REGULATION IN AN UNTRUSTING WORLD

If trust could be rebuilt, it would be possible to develop a regulatory framework that was less detailed and intrusive. This article shows how this could be done in the financial services sector.     

THE PROS AND CONS OF GOVERNMENT REGULATION

Regulation of human behaviour and human social interaction is a universal feature of both traditional and modern societies. In the latter, on account of their complex structure, regulation inevitably takes place at different levels, albeit within a framework set by government. Consequently, these societies are characterised by a web of formal as well as informal regulation and self-regulation, in other words by a plurality of regulatory systems. And this plurality of regulatory systems is an important source of tensions and conflicts in society.     

WATER PRIVATISATION : TOO MUCH REGULATION?

Water privatisation has had some success in allowing capital to be raised without going to government, in improving efficiency and in depoliticising industry decisions. But there is little sign of the liberalisation that, in other privatised utilities (notably gas and electricity), has been so beneficial to customers. It is time to reconsider the view that 'water is different' and to examine how to liberalise the water market. Two necessary steps appear to be to separate the pipeline networks from other activities and to adopt a more light-handed approach to environmental and quality regulation.     

LABOUR MARKET REGULATION: SOME COMPARATIVE LESSONS

Labour market regulation that undermines freedom of contract leads to fewer, higher productivity jobs with employment being across a narrower range of ages. More people are excluded from the labour market, in highly regulated countries and they remain unemployed for longer. This seems to be damaging to welfare. It is possible that the extent of regulation is explained by the relative ability of those who gain from regulation (those in work) to influence the outcome of political processes to a greater extent than those who lose (the unemployed). However, the legal framework and legal traditions may also play a part.     

EDITORIAL: BETTER REGULATION WITHOUT THE STATE

There has been mounting concern about the increasing level of regulation in the UK economy over the last decade or more. Regulation has significant costs and is difficult to repeal. The government has set up various bodies to examine deregulation and better regulation. This article and the other articles in this issue look at those approaches and ask whether the state should be involved to a lesser degree in regulation. In many areas, it may be appropriate for the state to withdraw altogether, either because the private sector can spontaneously develop better regulation than the state can or because the unintended costs of state regulation are so great.     

READINGS IN THE ECONOMICS OF LAW AND REGULATION

Book reviewed in this article:
READINGS IN THE ECONOMICS OF LAW AND REGULATION
THE REGULATION GAME, Ed. Aalan Poacook
MARX'S CAPITAL, Ben Fine
POUCY, POWER AND ORDER: THE PERSISTENCE OF ECONOMIC PROBLEMS IN CAPITALIST STATES, Keny Schott     

LIFE INSURANCE: REGULATION AS CONTRACT ENFORCEMENT1

Debating the minutiae of insurance regulation without a clear understanding of why insurance companies are regulated is futile. In this article I discuss the economic rationale for insurance business regulation and conclude that the appropriate role of the regulator is to enforce contracts which might otherwise be broken. I argue that if this is the case, regulation should be optional, and that it need not be a monopoly activity.     

ADVERTISING REGULATION AND CO-REGULATION: THE CHALLENGE OF CHANGE

This article tells the story of how advertising, by leveraging the success of its self-regulatory system, challenged the assumption that statutory control should remain for broadcast advertisements. Five years later a new, singular system exists with the flexibility to confront a changing media landscape. It has business support, regulator approval and consumer confidence.     

GAMBLING AND REGULATION: WHY THERE IS NOTHING TO FEAR FROM LIBERALISATION

There could be significant benefits from the liberalisation of gambling in the UK. It would lead to a more efficient allocation of economic resource and could legalise activities that are currently extra‐legal. The case against liberalisation is not well founded on evidence and there are, indeed, some ‘social benefits’ from gambling.     

LAND MARKETS AND THE EFFECT OF REGULATION ON FORMAL-SECTOR DEVELOPMENT IN URBAN INDONESIA

Until recently, urban land and housing markets in Indonesia seemed to function well. Informal-sector development provided low-income housing affordably. Through government programs, formal-sector developers could build housing for all but the poor. Since 1989, however, daily conversation pictures land speculation as rampant and formal-sector housing as rising beyond the means of the middle class. Newspapers carry stories of conflicts between small landowners and large developers with government officials in between. This article investigates this situation by addressing two related questions: are urban land prices rising “too fast?”; how do land regulations and development practices affect costs, and who pays these costs? The article includes quantitative estimates of urban land prices, changes in urban land supply, movement of land through the permitting process, and the effect of development regulations on costs. Data come from a literature survey and interviews of some of the largest formal-sector developers in Indonesia. A principal finding concerns a development regulation called a “location permit” and the “social function” of land in Indonesian law. Although helpful as a means of assembling land in Indonesia's highly fragmented land markets, location permits allow formal-sector developers to hold land off the market and pay low prices to small landowners. Ultimately, the “social function” of land under Indonesian law holds down the price formal-sector developers pay for land, but not at the price at which they sell their product. The article concludes by proposing reforms to the regulatory process.     

THE REGULATION OF LIFE ASSURERS IN A LOW SOLVENCY ENVIRONMENT: THE UK EXPERIENCE

When adverse financial conditions mean that many life assurers have sharply reduced solvency levels, a number of new issues arise for regulators, including the basic issue of how solvency is measured. There are also issues about life assurers' investments, and their products and how they are priced. Lastly, the regulator (in the UK, the Financial Services Authority) needs to ensure that customers and their advisers have suitable information about the solvency of the firms they are dealing with.     

PLANNING BY FREEHOLD

Government planning of urban development is inefficient as it is controlled by political processes rather than conducted on behalf of the people it is intended to benefit. Certain forms of property rights such as divisions of freehold and leasehold can, and in practice do, lead to much more effective use of resources and provision of shared services as the owners of the freehold have an incentive to maximise site values and rents.     

PLANNING BY COMMONHOLD

So-called 'gated' communities have become common throughout the continents of Asia and America. Such communities are characterised by the ability to provide public goods and perform governance functions, independent of central and local government. It would be surprising if such communities did not develop to a greater extent in Britain, especially as a more complete legal framework now exists for their governance. Examples in Asia and America demonstrate their effectiveness, as do historical examples in the UK, such as the garden city movement. There are outstanding legal and regulatory issues that will need to be addressed as 'gated' communities do develop.