Saturday, January 5, 2013

Cass Sunstein and regulation

Preparing my forthcoming presentations in Chile and England on the political economy of regulatory institutions, I have been reading about Cass Sunstein and his work. Sunstein is a US legal scholar from Harvard University (previously, in Chicago University), who was also between 2009 and 2012 the head of the unit, the Office of Information and Regulatory Affairs (OIRA), supervising regulation in Obama’s White House. He was called for that the “regulatory czar”. Sunstein was a controversial figure during his tenure, and his academic work, although with very high standards, has also been surrounded sometimes by controversy.
As head of OIRA, Sunstein was criticized by progressive consumer groups because he tended to side with large firms more often than not. Although in favor of a balanced cost-benefit approach to regulation, he also was and is in favor of a light regulatory touch.
His work as a scholar is very illuminating. He is the co-author with economist Richard Thaler of “Nudge”, the bible of behavioral economics as applied to regulation and public intervention. He has a recent paper summarizing his initiatives in a behavioral direction during his tenure at OIRA. His concern with transparency and making life easy for consumers is to be praised. However, in this same paper one can see how he easily bends in favor of big business (and big politicians or their families), as when he extols the virtues of what he exaggeratedly calls “public-private partnerships” like the initiative between Wal Mart and Michelle Obama against child obesity.
Prior to his experience in the administration, Sunstein was involved in a very interesting controversy with social psychologist Paul Slovic and other scholars, about the role of expert independent agencies in regulation, with Sunstein in favor of an important role for them and his critics in favor of constraining this role. Actually, the role of OIRA not only in this administration, but also in Republican administrations since the Reagan era, has been seen not as coordinating regulation with a cost-benefit approach in mind (something for which the presidency is not necessarily well equipped, as explained in this fascinating paper), but to make sure that regulation responded to the political (and fund-raising) priorities of presidents, as suggested by this article in the Huffington Post.

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