[FOUNTAIN]‘Capturing’ the governmentWhy does the government come up with wrong policies or regulations? This is a major research topic for scholars studying public administration and policymaking. From a common-sense view, we can point to incompetence and corruption. Incompetence may lead to wrong-headed policies, and corruption may bring about intentionally wrong decisions. But that is not all. There is one more thing that can cause fundamental failures.
George J. Stigler, a U.S. economist, illuminated this other factor clearly and was awarded with the Nobel Prize in economics in 1982. His seminal study of the effects of government regulation, “The Theory of Economic Regulation,” published in 1971, propounded a “capture theory.”
Those being regulated try to make use of the government for their own benefit, the theory explains. The government is easily brought under control of the arguments and persuasions of interest groups, particularly in places where market principles don’t work or highly advanced specialties dominate. These groups literally “capture” the government.
It is not the same as corruption. The government is captured not with bribes or kickbacks, but with expertise or information. Nor is it similar to mistakes made from inability or insufficient knowledge. Except in underdeveloped countries, governments are usually equipped with competence and knowledge, but the interest groups know more. In extreme cases, the “capture theory” deems government’s policies and regulations as favors and benefits for a certain interest group.
Some may object that the theory intentionally looks askew at the government. But the theory warns us that government policies, even when they are undertaken in good faith, can hurt the public interest, if the government is colonized by interest groups.
The theory has often been cited to explain government regulations in the United States that encourage monopoly. Industries in which monopoly prevails over competition, such as medical services and transportation, have been major arenas for the operation of the capture theory.
Looking into Korean government’s dealings with recent labor strikes, I’m afraid that the capture theory will affect labor issues here, though there are many specialists in the government for whom expertise in labor issues is claimed.
by Nahm Yoon-ho
The writer is deputy social affairs news editor of the JoongAng Ilbo.