Sunday, March 08, 2009

Regulation under pressure and regulating by the press

These days I have been receiving some interesting emails from several places, some of them making good jokes on almost everything and others informing about changes of policy of sites where I buy things. One of them related to a change of policy in and it exemplified the need for evidence-based policy making, the imperative necessity of having regulation enacted by those elected to do so and not for companies acting out of hysteria (which could lead to the need of a stable legal framework so companies don’t hyper-react in fear of regulation) and the importance of having a transparent policy making process. The issue relates to the almost blanket ban on the sale of knives on eBay's UK site…but, shouldn’t it be good news?

The first issue relates to whether such a ban was needed and, if needed, whether was implemented in the correct manner. The “evidence” supporting eBay’s measure came out of a BBC programme that showed that you could buy knives clearly fitting the classifications found in the Prevention of Crime Act 1953, the Restriction of Offensive Weapons Act 1959, the Criminal Justice Act 1988 (Offensive Weapons) Order 1988, Knives Act 1997 and the Criminal Justice Act 1988 (Offensive Weapons) Order 2002 in the UK’s site from US sellers (the examples were so outrageous that even “stealth knives” were on sale in eBay). The solution that eBay found was quite simple: “[f]rom 10th March 2009, all knives and swords except cutlery will be banned from sale on and”…good news! Is it? Let’s go a little further than the headlines sought by the BBC and let’s see what the ban actually means…under the new rules the knife I use for scuba diving (you can see it above) will be banned even being blunt and not easily usable as offensive weapon, but the kitchen knives used to kill the Harry Potter’s actor would be allowed and because the killer was 22 years old he also would be allowed to buy them in eBay…is that the purpose of the ban?

The second bit takes us to the classic analysis that Larry Lessig popularized in his Code. There are different ways of regulating behavior (through the market, social norms, technology and law) and when law gives up its legitimate place other forms take it. However, what we have with eBay’s policy is a company making regulation via “law” (not strictly but it is a rule specifically “enacted” to modify, prohibit, certain behavior), which would imply a private company telling people that they cannot do what the law authorizes them to do (buying certain non-kitchen knives is legal in UK). One could easily argue that as providers of a venue, they can choose to allow people to do whatever they want unless is against the law, and it would be clearly correct, but that would be missing the point, because the fact is that a profit seeking company enacts regulations that go against its rent-seeking activities to enforce some social norm that those elected to do so have decided not to enact and enforce.

Finally, even if we agree that knives should not be easily available, should the state enact such a heavy handed regulation? It is a tough call and there are many people sensible to the issue, but I normally have a bad feeling about regulation that comes out of particular or minority cases and that respond to a perceived public outrage fuelled by the media. The world is full of examples where a single case motivates very tough legislation that tramples over people’s rights while distracting attention from the real causes of the problem (knives have been available for ages so the cause of the rise in knife crime might be well in a different place). The legislation seems reasonable to the victims and to those influenced by hysterical media, but it is expected that public policy is designed based on the interest of the majority with some principles as foundation and not on the state of mind of a grieving parent, friend or relative. So, althought the probable and likely result would be some form of ban (English law is already quite restrictive about the topic), whatever the result is it should come out of sensible policy making enacted via a transparent manner and not as a reaction to one (or several) articles in the press because when public policy and regulation usually come out in that unsuitable manner, one can expect that companies would react going beyond what is needed and/or warranted to avoid running afoul of some hypothetical government hyper reaction…what is not ideal, especially when we are talking about taking away some freedoms…