How do we regulate the regulators?

The State of Alaska has 142 active boards and commissions that regulate professions such as doctors, trades such as hairdressers, and industries such as fishing. While most of the Alaska Policy Forum’s attention is paid to boards and commissions that deal with occupational licensing, all such organizations risk taking actions that may result in diminished economic freedoms and that add to the cost of state government.

Byron Scholmach, Director of the 1889 Institute (a “sister” think tank in our network), details the risk of corruption inherent in the institutional structure of many governing boards. His paper entitled “Baked-In Corruption: The Need to Reform Boards and Commissions,” begins by explaining the natural consequences of automatically relying upon industry participants to populate state boards and commissions due to their subject matter expertise. Unless legislators consider carefully the way boards will operate, even the best-intentioned participants can find themselves unintentionally practicing crony capitalism.

Further analysis details the ways in which licensing boards, health boards, lawyer and judicial boards, and educational boards can stifle competition and harm the free market. Actions taken ostensibly to protect the public may actually cause greater harm by increasing the cost of business, decreasing consumer choice, and stifling innovation. Though cases of explicit self-serving activity that rises to levels of illegal behavior are thankfully rare, Scholmach shows that the line between actions taken in matters in which board members have a pecuniary interest and what might otherwise be considered corrupt behavior is at times thin.

The policy paper finishes with suggested alternatives to the current model of legislatively-created boards and commissions, which have traditionally been operated by the very people that are intended to be regulated. The 1889 Institute is working to facilitate the adoption of free market centered policies that result in needed protections without distorting competitive effects. Likewise, the Alaska Policy Forum is Alaska’s source for timely information related to free market policies.