Wednesday, March 21, 2012

On Why Indonesia Needs a Regulatory Czar

Just when we are still absorbing the decision of President Susilo Bambang Yudhoyono to create an anti-pornography task force, Cass Sunstein, the head of the United States Office of Information and Regulatory Affairs and former professor at the University of Chicago Law School, is reporting his success in fostering a more efficient regulatory environment in the United States, at least from the perspective of government agencies. This news just made my day.

No words can perfectly express my deep envy of the above news. For a lawyer who pursues the art of law and economics, having an Indonesian governmental task force whose main purposes are to evaluate the costs and benefits of all existing regulations and to provide recommendations — or even having power to revise or cancel regulations that are not justified — might be a faraway dream. Yet, the dream is still there and we have many good reasons to pursue it.

Too often we see Indonesian regulations that are not justified, not only based on the costs but also their basic reasoning. What is the purpose of having regulations? Regulations exist to maximize the welfare of the society (which include maintaining order and promoting justice).

The fact that regulations are applicable to and will affect the lives of many people means that no regulations should be promulgated unless we clearly understand the intended and unintended consequences of such regulations to society.

In an age where people demand more accountability from the government with respect to the use of their tax money, doing a cost and benefit analysis prior to issuing a regulation and evaluating the issued regulations periodically should be the norm that must be satisfied at all times. It is a continuous process because no law will ever be perfect for all times and places. Yet, I find that many people cannot understand (or maybe refuse to understand) this very simple principle.

If the president really loves to create task forces, this is the ultimate task force that he should make in the first place. The rest can be disbanded immediately simply because we don’t see any justification for their existence other than for wasting our money.

What would be the task and scope of authority for this task force? The task is simply to evaluate all existing regulations in Indonesia, assessing the costs and benefits of having those regulations, especially the actual benefits and costs of enforcement. The task force should also be authorized to revise any regulations issued by governmental agencies, making it a super body standing at the top of the hierarchy of governmental agencies, ensuring that all policies of the government will be synchronized.

For laws issued by the legislature, the task force should only have the power to make recommendations. After all, the legislative body represents the basic idea of our democracy. While I support an efficient and effective government, it does not mean that I support tyranny. Thus, the authority to change regulations should stay within the scope of governmental agencies.

I don’t think that the task force should be granted the power to issue regulations by itself. That part should still be the main job of various governmental agencies and departments, assuming that they have a comparative advantage in starting the process.

By focusing on evaluating and revising the regulations, we can save the costs from doing a redundant job. In short, one body to make the regulations, another to evaluate the regulations. In addition, we cannot expect the drafters of regulations to review their own products. Hence, naturally, the authorities must be separated.

What ideas should be promoted by the task force in evaluating regulations? First, flexibility within the rules. We should always favor flexible rules except in special circumstances. The fact that the world can change drastically in a short time means that there should be less room for rigidity in the law. More freedom should be given to society while the government ensures stability via security maintenance and institutional support.

Second, efficiency. The regulations should aim at maximizing benefits while reducing the costs. This means less administrative procedures from the government side. Don’t make things more difficult when you can make them easier. It’s as simple as that.

It also means that government should only regulate important things when the costs of enforcement are justified. As an example, government should not waste its time to regulate and enforce the laws on private conduct that might be better enforced by family members such as in the case of pornography. Instead, it should focus enforcement on reducing crimes that are disastrous to the society, such as corruption and money laundering. We have limited resources, so please focus only on the pressing matters.

1 comments:

Anonymous,  Thursday, April 05, 2012 10:59:00 AM  

Dear Pram,

Actually we do have institutions/task force with similar authority (or tasks), take in to account BPHN (under Ministry of Law & Human Rights), KHN, LIPI, Bappenas and even UKP4R often produce good academic researches on law. The problem is these institution and its researches never maximized by our lovely government. Anyway, i second your opinion on regulatory czar.

rgds,
BRM

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