Science-based approach needed to combat unintended consequences of regulation: Cayton
Harry Cayton science-based regulation
In his latest Voices column, Harry Cayton argues that regulation always has a market impact, and misdirected regulation can spur unintended consequences like raised prices and unlicensed or illegal activity.

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So, let’s start the new year with a quiz:

  1. In which country are barrel makers regulated?
  2. In which country was the regulation of farriers ended in 2005?
  3. In which country, and when, could you be executed for wearing an unregulated hairstyle?
  4. In which country is it illegal to replace an electrical plug yourself?
  5. How many trades have mandatory regulation in Ontario?

The answers are as follows: Germany, U.K., China in the 14th century, Australia, 21.

What these random examples show is that regulation is a social and political construct. It is not a science based solely on evidence.

The Government of Ontario asserts, as do most other governments, that the purpose of regulation is ‘to protect public health and safety’. It is curious, therefore, that some occupations are thought to create sufficient risk of harm to be regulated in one jurisdiction but not in another.

For example, in Ontario technologists and technicians are not regulated while in British Columbia, the Applied Science Technologists and Technicians have been brought under the oversight of the Office of the Superintendent of Professional Governance.

Deregulation is harder than creating new controls on occupations, manufacturing, or trade

The general trend in most jurisdictions is to regulate more and more occupations at the same time as governments promise to get rid of ‘red tape’. Getting rid of European Union regulations was an enthusiastic ambition of those arguing for Brexit in the U.K., but six years on they are finding that doing so is rather complicated and has many unwanted consequences, such as restricting rather than liberating trade relations. The U.K.’s Deregulation Act of 2015 was claimed to be a bonfire of red tape but resulted in such disappointments as the deregulation of farriers, mentioned above, and an amendment to the regulations relating to the wearing of turbans by Sikh police officers. Deregulation, it seems, is a great deal harder than creating new controls on occupations, manufacturing, or trade.

Of course, there are many occupations where no one doubts the importance of state-sanctioned regulation. The health professions lead the list. The practice of medicine has been controlled in various ways for many centuries and licensing of physicians and apothecaries has a long history. The General Medical Council in the U.K. was established by law in 1858. In 1902, New Zealand was the first country to introduce national regulation of nurses.

Yet even within professions there is a great variation in what a license permits a professional to do. A fascinating study from 2012 showed the huge variation in the permitted level of autonomous clinical practice by nurse practitioners across U.S. states; in some states nurse practitioners could provide primary care, prescribe medicines, arrange therapies, and sign death certificates within their own professional judgment. while in other states they could do none of these things except on the instructions of a physician. There seems to be no reliable evidence to tell us if patients are more or less likely to be harmed by nurse practitioners in, for instance, Alabama as opposed to Oregon. How can we know if the differences in scope of practice are justified by differences in patient safety or health outcomes?

Regulation always has a market impact, and misdirected regulation can spur unlicensed or illegal activity

Regardless of its intentions in relation to the public interest, regulation always has a market impact. By restricting supply and putting a cost on work, professional regulation raises prices. Raise prices too much, and a black market emerges. Studies of payday loans in the U.S. show that a flourishing black market exists in states where they are illegal, whereas in those states that allow small short-term loans but regulate repayment terms, they continue to meet a social need but at a more moderate cost. In California, fence contractors campaigned to be a licensed occupation, but they were less sure it was necessary when it increased their costs and reduced their trade as consumers switched to cheaper unlicensed builders or did it themselves. Good fences make good neighbors, but not at any cost.

An unintended consequence of misdirected regulation which tries to cut off supply in the face of strong demand is the creation of unlicensed or illegal activity. The most notable example of this is the vast international market in illegal narcotics, estimated at $32 billion each year, a trade which does immense harm to individuals, funds a huge range of organized crime, promotes global conflict, and costs governments billions of dollars in prevention and treatment.

It is therefore fascinating to consider the impact of the slow liberalization of attitudes to the use of cannabis. Long permitted in limited circumstances in the Netherlands, its quite recent legalization in Canada and some U.S. states, as well as the introduction of the licensing and regulation of both manufacture and supply, will provide an important case study both of how previously illegal activities can be legalized and controlled through regulation and of the impact such significant changes have on personal behavior, health, crime, and the economy.

There are two things I think we can be sure of: firstly, there will continue to be an expansion of and variation in the regulation of occupations across the globe and secondly, that we still do not know enough about why, what, and how to regulate for the best social, political, and economic impact. We must continue to develop the research and knowledge base for regulation and licensing.

Harry Cayton is a sought-after global authority on regulatory practices who created the Professional Standards Authority (PSA) and pioneered right-touch regulation. He is a regular Ascend Voices contributor. 

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Harry Cayton
Written byHarry Cayton
Harry Cayton is a sought-after global authority on regulatory practices who created the PSA and pioneered right-touch regulation. He is a regular Ascend contributor.

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