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     regulators

This page considers public and private sector regulators.

It covers -

• introduction
• frameworks
• government
• private

     regulators

In some sense we are all Thatcher's children, affected by the deregulatory zeitgeist of the 1980s and 1990s. Part of the excess of speculative investment in dot-coms and telcos is attributable to reliance on self-regulation by financial markets. It is also attributable to the weakness of government regulators in the US, Germany, Australia and elsewhere.

In retrospect agencies such as Australia's ASIC took too positive a view of those they supposed to regulate. In some cases, such as insurance sector regulation by the Australian Prudential Regulation Authority (APRA) the lack of will appears to have been compounded by lack of expertise and resources, resulting in the HIH, OneTel, Froggy.com and Enron debacles.

Blame must be shared with private sector financial service providers, in particular global groups such as as Arthur Andersen that had expanded from audit activity to embrace management consulting and even legal advice. Critics have noted the 'expectations gap', rediscovered every decade. Investors appear to believe the accountants are supposed to stop fraud. Accountants refuse to accept that responsibility, arguing that their task is not to suspect that management is lying but simply to make sure that the data — whose accuracy is the responsibility of boards and managers responsibility — is presented in a manner consistent with accounting convention.

In the US the 'big five' - PricewaterhouseCoopers (US$2.2 billion turnover in 2000), KMPG (US$1.3bn), Deloitte Touche Tohmatsu (US$1.2bn), Ernst&Young (US$1bn) and Arthur Andersen (US$0.9bn) - were belatedly found wanting by the SEC and other agencies. As noted on the preceding page, Andersen appears to have made more money from providing management advice to Enron than underpinning corporate compliance through rigorous independent audit services.

Insights are provided by Inside Arthur Andersen: Shifting Values, Unexpected Consequences (New York: Prentice Hall 2003) by Susan Squires, Cynthia Smith, William Yeack & Lorna McDougall, Paul Barry's Rich Kids (Sydney: Bantam 2002), Maggie Mahar's Bull! A History of the Boom, 1982-1999 (New York: HarperBusiness 2004), Jean Gadrey's New Economy, New Myth (London: Routledge 2003), Pump And Dump: The Rancid Rules of the New Economy (New Brunswick: Rutgers Uni Press 2005) by Robert Tillman & Michael Indergaard and Icarus in the Boardroom: The Fundamental Flaws in Corporate America and Where They Came From (New York: Oxford Uni Press 2005) by David Skeel.

     other government agencies

Government regulatory action was sometimes contested by other government agencies. One of the products of notions of 'internet exceptionalism' and 'policy by media release' was the establishment of 'new economy' agencies such as Australia's National Office for the Information Economy.

The effectiveness of such agencies in facilitating uptake of the net by business and the wider community or driving the development of coherent whole-of-government policies is uncertain. Most appear to have succumbed to hubris, serving as cheerleaders and distinguished by publishing of glossy reports rather than much of substance, offering legitimacy to media noise about the unendable boom.

Comparison of the 'digital' cheerleaders with other government new technology facilitators (such as those in the biotechnology sector concerned with policy-making and funding) is instructive. We'll be exploring the performance of the digital agencies and biotech agencies in a forthcoming paper.

Other parts of government, such as agencies responsible for auction of radiofrequency spectrum to mobile phone companies, were also fundamental actors in the bubbles.

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