Moins de lobbying
What’s the problem?
I’m sure you’ve heard a story about someone that wanted to sue a big multinational firm, or was sued by one, and the multinational hired hundreds of lawyers and dragged the case on for years and years. Usually the big guns win simply because they can afford to fight their corner for longer.
Well the same is true in the making of financial laws and regulations, only this time the little guy is the bulk of society. Financial firms in Europe alone spend millions per year on lobbying and employ hundreds of lobbyists. They can lobby while lawmakers are thinking what to put in the law (and what not), while they are being written and agreed, and at the end when the technical standards are finally drawn up. They lobby international bodies, the EU and national governments. In contrast civil society’s lobby is tiny, and cannot possibly be everywhere all the time.
What’s more, financiers and regulators tend to think the same, have similar interests, come from similar backgrounds. So much so that regulators often hire ex-financiers and financiers often hire ex-regulators – they call it the “revolving door”. So regulators and the like end up being pretty un-representative, either of other stakeholders such as consumers or employees, or of broader society.
What’s so bad about that?
This lopsidedness gives us double trouble….
First, if different groups are not represented then it is unlikely their interests will be properly considered. And conversely if some groups are over-represented then their interests will get more attention. The result? A financial system that serves the financial system before it serves society. Because the financial lobby can spend so much more on lobbying, it can heavily influence the agenda even before proposed laws are up for public consultation. At the other end of the chain they can afford to contest the technical details needed to implement laws – you’d be surprised at how much difference it can make to financial firms to make a few small, apparently technical changes to a law’s implementing rules.
Second, it’s dangerous. If everyone has the same background and the same training then there is a very good chance they see the world in the same way – what they call “groupthink” (inspired by George Orwell’s 1984), or “regulatory capture” . Before 2008 financiers, their regulators, supervisors and central bankers had convinced themselves that the system was safe, that securitisations and credit default swaps were a fail-safe way to spread risk about and so on. Ten years after we are still paying the price of that groupthink.
What’s the alternative?
The alternative is to limit the lobby power of the financial sector and to greatly increase the representation of other stakeholders to regulators, supervisors, central banks and international institutions and in their actual governance and organisation.
How will it help?
This will help by bringing new thinking to the table and by letting the public represent their own interests more directly, reducing the danger of groupthink and embedding the representation of everyone’s interests in every stage of controlling finance, making it servant not master.
What steps could we take to get started?
- Coming soon