Here is a quick thought: in the aftermath of various financial crises – the 1997 Asian crisis (remember that one?), Long Term Capital Management (1998), various business blowups (Enron, etc), and of course, the latest excitements, one invariably hears from the Great and the Good that what we need to stop is the “box ticking mentality” when it comes to regulation. We need, so the argument goes, to rely a lot less on making sure the correct forms are filled in, and to require people in business and enforcers of laws to use more common sense. So true.
And yet. Every time a new problem emerges, what happens? You guessed it right: more box-ticking. Take the case that this blog has written about in the past few days concerning the attempt to put a quarter of all UK adults under some sort of oversight in case they come into contact with children, and other groups. What is a distinguishing feature of such a bureaucratic, and in fact dangerous, development is that it is bound to involve people answering various forms, entering various answers into a sort of database. In other words, box-ticking. So if you pass the test, then voila! you are in the clear. And so certain crooks and villains will continue to get through, because they have passed the test.
So the next time you hear a politician piously informing us that we are going to “get beyond the box-ticking approach”, do not believe them.
It’s not just the box-ticking mentality that’s the problem. After all, there is the possibility that some of the boxes include information that’s of value in deciding whether a person is or is not a danger to others.
The real problem is that a system such as ISA contains multiple perverse motivators.
– for a small sum of money, a criminal pervert who goes about it carefully can obtain a certificate of innocence – a Persilscheine which many actually facilitate his ability to access victims. Look, it says here that I’m innocent! It’s safe to hire me!
– the existence of such a certificate of innocence will cause normal caution and inquiry to be relaxed or done away with altogether. We didn’t pay too much attention to the odd things we saw going on – after, all, he’s been cleared by ISA! This is a perfect fit for the bureaucratic mindset, which craves a digital certainty to answer any question.
– Such a system will inevitably produce a surfeit of false positives. Noone wants to take any sort of a risk, and if this system works primarily on ‘soft’ intelligence, there will be a mass of nonsense that gets used to make decisions. It’s for The Children! So there will rapidly form a vast mass of people branded forever with the Scarlet P – unemplyable in vast areas of the ‘caring’ State, whose status will inevitably become public knowledge, at which point they will become unemployable, full-stop. There is a distinct danger that such folks will form a large and growing outer-class, rootless, homeless, disaffected, unemployed and unemployable, mostly-male, mostly young. Not a good thing to have.
– Such a vast system will be unable to prevent corruption. False accusations, incorrect approvals, access to vast and interconnected databases for private or nefarious purposes, and so forth. The people who feed the system its data will rapidly be suborned to either insert false data or remove true data. Soon, the ISA “approval’ will become deeply suspect – but, of course, like any state program, it will never be cancelled or corrected.
Vast dragnets have a surpisingly-low rate of effectiveness and a suprisingly-high rate of error. Read the history of the Yorkshire Ripper, for example, to see how the real criminal can hide in plain sight while the dragnet goes haring off after an endless train of false leads. The Soham case, which led to all this, is another such. This tendency gets worse with the irresistable urge to apply IT to the problem, which exponentially-increases the mass of data gathered but really provides no good tools for better-sorting through all of it. Much of the ‘crime-solving’ IT technology relies upon statistical modelling and tools, which tends to bypass the fact that many criminal of this sort are statistically-aberrant only in very-specific areas of their lives and are otherwise outwardly completely unremarkable. Vide Peter Sutcliffe (again), or a man like Dennis Rader. But even these tools are fatally-vague in their effect – Ian Huntley, the Soham murderer, was directly-associated with his victims and had a long history of violence towards women and offences against underage girls, as well as other crimes.
llater,
llamas
To a bureaucrat, the solution to any human problem must involve more bureaucracy. That much is self evident. Thus, in our database state, all problems are solved by the creation of another database.
I see this in action once more in Scotland, where the pretendy wee government wants to have a database of deer stalkers. Not that there is any problem, you understand, they just want another database. It will cost money and employ bureaucrats, no doubt in a marginal seat, so what’s not to like?
The only solution to this is less state, nothing else will work. They cannot be trusted to regulate themselves, state bureaucracies expand unless they are simply eliminated, there is no other long term way to control their expansion.
“False accusations”
This is the fun one. Imagine every 13 year old schoolboy/girl who doesn’t like their teacher filing an anonymous report. How long before every single teacher in the country is banned from working. Then the petty criminals start making the same accusations on their arresting officer, the tutting social worker, the petty council official……..
The first question to ask someone who comes up with ideas to “prevent this happening again” (as if it has stopped happening and we are in a real recovery – but an examination of that in a little while) is “did you oppose the bailouts?”
If the reply is “no” or some unclear string of words – then one need not waste time considering the “ideas” on financial matters of the person one is dealing with.
If the person can honestly reply “yes” to the question “did you oppose the bailouts” one can then go on to the next question.
“Do you understand that the general increase in the money supply by the Federal Reserve and the Bank of England (and so on) set the conditions for the crises – and the specific interventions of the American government (led by such Senators as Christopher Dodd and Barack Obama and such Congressmen as Barney Frank) made certain that it would be a crises seen in housing and financial instuments based on housing?”.
Again if the reply is “no” or some unclear string of words one need not waste time considering the ideas of the person one is dealing with.
If, however, the reply to both questions is an honest “yes” then one should devote time and thought to considering the ideas of the person or organization one is dealing with. Whether they are Austrian School people like Thomas Woods (see his book “Meltdown”) or nonAustrian School people like Thimas Sowell (see his “Housing: Boom and Bust”).
Almost needless to say the “Economist” magazine fails the above tests.
Any box-ticking assessment can be easily fooled, once you grok the test itself and what it is after. As an example: the company I work for has an online personality test as it’s initial recruitment proces, which I passed first time (having completed several similar tests out of curiosity) by giving the answers I knew it wanted rather than honest ones.
Systems that rely on discrete measurements are easy to ‘game.’ It is the same as the setting of targets and kpis, reasonably intelligent individuals will find ways of meeting the targetsthat may not necessarily be the ways intended.
But then, this assumes that the intention of this system is a misguided attempt to protect children when in fact that is almost certainly not the case.
I never did give the explination of what I meant by putting scare quotes round “recovery” and so on.
Simple enough – the whole thing is fake, a phony “recovery” based on a mountain of debt.
A giant con which is going to collapse just so soon as the politically connected people have pocketed their stock market gains.
However, Mr A. Clarke has informed me that I need not feel smug about knowing this – as, according to a survey done by one of the London free newspapers, more than 70% of the population know all the above.
Fair enough – I am nothing special any more.
Paul:
This would be the day:-)
Back to the initial essay: “We need, so the argument goes, to rely a lot less on making sure the correct forms are filled in, and to require people in business and enforcers of laws to use more common sense. So true.“ [my emphasis]
Please permit me to disagree. I most emphatically do not want “enforcers of laws” to apply what they might conceive to be “common sense” when applying the regulations. Consider who these people are: petty bureaucrats who haven’t the ability or the drive to work (or succeed) in the productive sector. Do you really want such people exercising their judgment in deciding how much loan loss reserve to maintain, or what a bank’s capital requirement should be? No, thank you; I want them following very explicit and clear rules, ones which have been published and are available for everyone to understand and follow. I want certainty, predictability, and managability. The very last thing I want is to have to get into a dispute with a primary regulator (who has much power over my job and my business) over the calculation of “tangible common equity” or some such. Even if I win, I lose, because he will remember and he will be back to haunt me next year and every year thereafter.
If you’re going to have regulation (and in most industries that’s a given), boxes are good! We just need fewer of them, not big sloppy ones.
Well yes and no. Rules should be clear, few and easy to interpret. But that is not quite what I mean by a “box-ticking approach”. Take the case of a fraudster such as Madoff. He may have been able to pass certain dumbass tests set by the regulators, but the regulatory officials clearly did not smell a rat when any questions were asked by folk about Madoff. In fact, it is clear, as shown by a recent SEC report, that despite a number of red flags being raised, the regulator failed to take action.
What I am driving at is that one expects police officers, anti-fraud officials and the like to use a bit of common sense in detecting stuff they happen to think is suspicious, and if necessary, passing those concerns up the line. That most emphatically does not mean arbitrary decision-making on the hoof, which is what I think you imagine I might have been defending.
Of course, one of the key ingredients of a better approach is to cut back on the vast morass of regulations that we now have, and to enforce the basic laws of contract, and punish fraud and theft severely. Simply carrying out those functions would go a long way to dealing with some of the recent problems we now face.
Part of the problem with the “box-ticking” approach is that it demonstrates how much red tape there now is.
I think we’re talking about somewhat different things. You are thinking about “forensic” regulation aimed at detecting fraud. I’m talking about the everyday, routine regulation which constitutes 99% of all regulatory activity. I certainly don’t mind a suspicious regulator digging deeper into a questionable activity. I worry, though, that encouraging such a regulatory mindset would spill over into routine examinations (after all, where do you draw the line?).
Keep in mind, also, that if someone is determined to defraud you, he will. Using the Madoff example, perhaps the mere existence of the SEC contributed to his ability to maintain the fraud for so long, because his investors relied on the governmental “watchdog” rather than doing their own due diligence.