"I'm from the Gubmnt, and I'm here to help you...."

Every time I hear or read about people recommending that we need more gubmnt regulation to control greedy, selfish behaviour, I think of stories like this one:

WASHINGTON – Staff members at an agency that oversees offshore drilling accepted tickets to sports events, lunches and other gifts from oil and gas companies and used government computers to view pornography, according to an Interior Department report alleging a culture of cronyism between regulators and the industry.

In at least one case, an inspector for the Minerals Management Service admitted using crystal methamphetamine and said he might have been under the influence of the drug the next day at work...

The report cites a variety of violations of federal regulations and ethics rules at the agency's Louisiana office. Previous inspector general investigations have focused on inappropriate behavior by the royalty-collection staff in the agency's Denver office.

This is just one of the latest examples of the selfishness and greed of gubmnt regulators. Another that frequently comes to mind in our area is the case of the gubmnt employees who drank on the job and essentially caused the Walkerton water tragedy a decade ago by falsifying water safety tests.

In both cases, employees became careless in their sinecures to the point of criminal negligence. And in the case of the ongoing Gulf oil spill, it appears that even more than criminal negligence was involved.

When this type of regulation does not work, what do most people see as the remedy? More regulation! Here is another option: how about if regulators are found negligent, they are held personally liable? How about the Koebel brothers in Walkerton lose their life savings? And how about the regulators in the gulf lose theirs, too? I.e., how about placing more emphasis on tort-negligence and less emphasis on gubmnt regulation?

A standard response to my questions is that people will not take these jobs if they must bear such risk. That strikes me as a fine result. People will be induced to assume these risks by taking these jobs only if they are paid more. And knowing that they face the loss of their life savings, they will exercise diligence and care in their daily work. 

As is clear, I am not saying there should be no regulation. I am not that much of a libertarian. But I am concerned that gubmnt regulators can shirk responsibilities with little regard for losses they or others might suffer.

On a broader scale, it looks as if the gulf oil spill might be an extreme example of Regulatory Capture:

Regulatory capture occurs when a state regulatory agency created to act in the public interest instead acts in favor of the commercial or special interests that dominate in the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as an encouragement for large firms to produce negative externalities. The agencies are called Captured Agencies.

[R]egulatory capture occurs because groups or individuals with a high-stakes interest in the outcome of policy or regulatory decisions can be expected to focus their resources and energies in attempting to gain the policy outcomes they prefer, while members of the public, each with only a tiny individual stake in the outcome, will ignore it altogether. Regulatory capture refers to when this imbalance of focused resources devoted to a particular policy outcome is successful at "capturing" influence with the staff or commission members of the regulatory agency, so that the preferred policy outcomes of the special interest are implemented.

Regulatory capture theory is a core focus of the branch of public choice referred to as the economics of regulation; economists in this specialty are critical of conceptualizations of governmental regulatory intervention as being motivated to protect public good. ... The theory of regulatory capture is associated with Nobel laureate economist George Stigler, one of its main developers. The risk of regulatory capture suggests that regulatory agencies should be protected from outside influence as much as possible, or else not created at all. A captured regulatory agency that serves the interests of its invested patrons with the power of the government behind it is often worse than no regulation whatsoever. [emphasis added]