What could building a simple thatched house in rural Cambodia teach us about regulation? Or about how humanity is going to tackle global problems like pandemics, climate change or orbital debris?
A lot, it turns out. At the time of my Cambodian volunteering (about 12 years ago), I didn’t see the lessons. They came to me more recently.
We were about an hour away from Siam Reap, building a house for a local family, in the local way. Skilled trades from the town helped with the tricky bits, like milling timbers, forming and pouring concrete footings, and weaving movable wall panels out of palm and bamboo.
Nothing was written, and government authorities were few and far between. International volunteers funded the house and supplied most of the labour. You’d think we could have built it any way we liked.
Yet, looking back, a code of rules had to be followed.
- There were unwritten but firm construction specifications. The logs had to be legally obtained, and squared by a recognized expert cutter, who showed us how to chisel the timber’s interlocking joints. Footings were sited and levelled by a senior builder (with a levelling trick I’d never seen before). The whole house was designed to a local standard pattern. Wall panels were modular and interchangeable.
- Some of the rules were ceremonial. To dedicate the site, the right elders had to recite prayers, give ritual blessings, burn incense, and oversee small sacrifices of paper money and food, then a feast. All steps were needed to make the house legitimate.
Building on the other side of the world
At the time, I didn’t view any of this as constituting a regulatory framework. And it didn’t – at least, not in the sense of formal rules for how private actors must do things, made under legislation by public authorities somewhat removed from politics, preferably basing their decisions on expert advice.
I gained further insights into the topic last year when I started trying to get a building permit for a one-room addition to my house. Ontario’s Building Code Act is 81 pages long; the regulatory code (O. Reg. 332/12) runs over 800 pages. My process will likely take about 18 months.
The economist in me – trained in the neoconservative 1980s – might think of grumbling about needless oppression by the intrusive hand of overbearing government. And I confess, I did briefly fantasize a little about living in a freer land, or a deep forest, where I could build whatever I thought best.
Then I remembered Cambodia – and realized that such a place might be hard to find, and maybe not so good a place as I might dream. After all, the Cambodian rules certainly helped to ensure that a house, even if built at minimal cost for destitute people, suited its purpose, minimized infestation by pests, wouldn’t wash away in a flood, and maintained harmony in the community.
The Ontario rules, however burdensome they seem, do most of this and much more. They protect effectively against erosion, leakage, fires and storms, ensure livable comfort, and allow structures dozens of stories tall to stand up for a century or longer.
Anarcho-capitalist thinkers might say the 800 pages of Ontario’s building code are the work of a busybody state that can’t help meddling in things we could all perfectly well do as private agents in a free market. Taking a different angle, some might say those 800 pages codify the preferences of property developers and other business interests, whose economic influence inexorably captures the regulatory machinery.
Looking back to that house in a Cambodian village, I see regulation more sympathetically. Those 800 pages of Ontario building code must have grown organically, over many decades, from simple, mostly honest, community-conscious needs. Buildings should not fall down. They should not irritate close neighbours by blocking their light or offering uncomfortable lines of sight. Building design should keep inhabitants warm enough when it’s cold and cool enough when it’s hot. Great care should be taken to stop disastrous urban fires (one of which levelled much of my city 120 years ago). Fire exits and smoke detectors and other measures should reduce the risk of loss of life.
No one person in that Cambodian village needed to know every one of the local specifications for building a house correctly. Nobody had to hold or read a building code document. The community just gathered the requisite knowledge and qualifications when it was time to build a house. Many sets of skills and experience were involved.
Modern building codes surely grew out of such practices. We have codified those practices so that they can be enforced honestly and transparently. Those codes clearly, if intricately, delineate the settled boundary between what private markets do, and what the public interest requires.
Few of those who need to be involved in designing and building my one-room addition in Ottawa will have read those 800 pages of building code. They just need to be in the practice of building things according to that code and following construction drawings based on it. As they and other designers, builders and tradespeople have no doubt done, in progressively more sophisticated ways, for 200 years.
The building will pass an inspection when they’re finished, by an inspector who does know the code thoroughly, or can at least refer to it when in doubt.
More recently, I’ve become qualified to drive small marine vessels, such as water taxis or whale-watching boats. Doing this gave me fresh lessons in modern regulation and its origins.
Consider a small, busy harbour located at the mouth of a navigable river in ancient times. Even among diverse traffic, consensus would have to develop around certain practices. Larger, less maneuverable vessels should be allowed the right of way. Certain flags and signals mean certain things. The owner of a beach or wharf can fairly ask a daily fee. A visiting ship should take a local pilot aboard before entering the harbour. The owner of a sunken boat ought to have it hauled out of the way. Such rules could be understood and accepted by crews from many places and backgrounds.
With time, these rules might be codified and enforced by a local port authority that, incidentally, could eventually provide public goods like lighthouses. So we have the ancestor of today’s airports and civil aviation regulators.
Can we condemn these as unwarranted inventions of an overbearing nanny-state? Or protections that are bought and tailored by capitalists just to maximize their profits? Helped by that house in Cambodia, I prefer to see regulations in their evolutionary context. They codify millennia of practice, and entrench incremental improvements in how human beings do things.
Public regulation of labour markets has helped to end child labour, slavery, indentured servitude and other inhumane practices in many parts of the world. Regulatory boards and commissions did not do this by themselves. The labour movement and social reformers brought such progress at tremendous cost and enormous struggle. Still, our modern labour codes cannot just be dismissed as state meddling with what should be private contracts. They, too, embody centuries of effort to improve society.
Without regulation, what is there?
What were the alternatives? If regulations mark the line between public interest and private markets, how else might we have drawn that border? The Soviet economy from the 1930s to 1989 offers one answer: have the state encompass as much of the economy as possible. But this left political freedom almost absent, living standards low and black markets flourishing. We know that system failed.
Another fact we’ve learned is that outright bans of anything (pornography, sex work, abortion) generally do not work. Cannabis is now legalized and regulated in Canada and in some U.S. states because banning it was an utter failure, just as outlawing liquor in the U.S. was a century ago. The wonder is how we took so long to learn this.
Regulation, even of things we disapprove, works far better fiscally, economically and socially. It allows government to make market forces an asset, rather than the sort of expensive and ineradicable opponent that bootlegging became during Prohibition, or the narcotics trade has been in recent decades.
How does this all this experience help us take on today’s big policy challenges: Climate change? Pandemics? Internet privacy? Artificial intelligence? Orbital traffic and debris?
All involve constraining the activities of both public and private players, which could be many in number and creative in their evasions. All these challenges are transnational; even the most competent governments can’t really handle them alone. All these challenges must be tackled among the chaos and distractions of other problems and conflicts, of which there could be some big ones coming.
Modern success stories
Humanity had a challenge like this in the 1940s and 1950s: nuclear technologies.
Nuclear weaponry was a terrifying threat, its power and menace abundantly demonstrated at Hiroshima and Nagasaki in 1945. Yet only a few people really understood it, and even they had difficulty estimating how easily or quickly it might proliferate.
The postwar world was deeply unsettled: the Iron Curtain was still forming; so were the futures of Germany and Japan, and China was in revolution. There was a lot to be afraid of, and reasons to doubt our power to control this seemingly supernatural force.
But nuclear technology also held promise. Radiation’s applications in health care had already been explored for more than half a century. Within a decade, fission reactors would be harnessed to drive marine vessels and generate power. These opportunities had the potential to form part of a carrot-and-stick (incentive and disincentive) bargain, a bargain expressed in the Eisenhower administration’s Atoms for Peace concept. Refrain from weapons development, that bargain said, and we’ll help you get the civilian applications of the technology. That’s what the owners of nuclear secrets offered the world 75 years ago.
It required the invention of unprecedented regulatory machinery: national nuclear regulators, the International Atomic Energy Agency and its system of weapons inspectors and materials accountancy, and industry self-regulatory bodies like the World Association of Nuclear Operators.
To a considerable extent, it worked. Nuclear technology sanitizes food and health products (preventing thousands of deaths), provides precise medical imaging (allowing early diagnosis), and treats cancer (by destroying tumours in increasingly targeted ways). It drives marine vessels cleanly and quietly (something that ought to be applied vastly more than it has), and provides over 30% of the world’s non-carbon-emitting electricity (which is the portion that must grow).
For more than 75 years, the world’s nuclear regulatory system has somehow prevented the use of nuclear weapons. This is not to say that there hasn’t been some good luck involved, or that the system has no flaws, faces no challenges, and needs no updating. We haven’t kept nuclear weapons entirely away from the Pakistans or North Koreas of the world. But if you told those shaping the postwar system in the late 1940s that the system would work even this well, for this long, they surely would have been glad to hear it.
The IAEA and its UN cousin, the International Civil Aviation Organization (ICAO), may be our best bases of experience for managing a problem like, for example, orbital traffic and debris. At the same time, both the IAEA and the ICAO are using very old architecture in a rapidly changing world to govern industries that are likely to grow much further, especially in Asia. While they are good models, they themselves need reinforcement now. The work of improving such systems will never stop.
What other regulatory systems have worked well, even in the face of changing technologies that don’t respect borders? The worldwide spread of electrical and communications products in recent decades comes to mind. Our phones, laptop computers, hair dryers and rice cookers rarely shock us, burn us, make us sick, or set our houses on fire. With changes in packaging and labelling, they can be marketed from Bangkok to Berlin to Bamako. We can take and use them nearly anywhere, and increasingly connect them to the internet.
Again, this is not to the sole credit of the regulators, who sometimes create many small barriers, particularly to international trade. But the system has worked strikingly well. It has let the private sector be competitive and innovative and dynamic, driving constant improvements in safety and performance. Regulations then codify those improvements, propagate them, and lock them in.
Flawed, but essential
What are the problems with modern regulatory systems – even when they seem to work?
- Complexity of detail and the burden of compliance are legitimate complaints, particularly from the business sector. But if regulations codify generations of best practice, much of the complexity is needed and justified. It is jurisdictional overlaps and long, unpredictable timelines that cause the most easily removable complexity. (Canada’s energy sector offers many examples.)
- Regulators come to see their mission as being to perpetually tighten standards, without ensuring the benefits of a regulatory change exceed its costs. When this happens, standards may get tightened where the regulator has leverage to do so, rather than where the net benefits are maximized. Needless tightening of standards may skew a whole industry’s research and development effort toward regulatory compliance.
- Activists misuse the regulatory arena by bringing political fights into it. If they can’t kill a project in the course of the regulatory hearings, they then sue the regulator afterward – generally by accusing it of some error of process. Such legal corrosion can hobble the effectiveness of the whole regulatory system. It points to a need, not to reduce regulation, but to further remove our regulatory bodies from politicization and to uphold the integrity and objectivity of their processes.
What better base of knowledge does humanity have to take on today’s big emerging policy problems? How else will we face up to pressing, complicated, world-spanning challenges?
Our regulatory bodies and systems are the best toolkit we have to face the future with. We have shown they can work globally. We have shown they can pursue moral ends, not just moneyed interests. They are complex, but that’s because they evolve out of decades to millennia of human experience.
Whatever their imperfections, like that house in Cambodia, you might say that they codify generations of knowledge, with the blessings of our elders.
About the author
John Stewart is Director of Policy and Research at the Canadian Nuclear Association, a national industry association based in Ottawa. He is also a member of the teaching faculty of the Max Bell School, and a Fellow of the Canadian Global Affairs Institute. In 2017-19 John was manager of the Small Modular Reactor Roadmap Project, a collaboration among federal, provincial and territorial governments and industry to engage stakeholders on the future of SMRs to supply clean energy in Canada. John chaired the Policy Committee of Canada’s National Electricity Roundtable from 2015-18, and has also been Canada’s representative to the Washington-based Global Nexus Initiative. He worked with the U.S. Embassy in Ottawa from 1990 to 2010 as an economist and manager. He is the author of Strangers With Memories: The United States and Canada from Free Trade to Baghdad (McGill-Queen’s University Press, 2017). John has been active in immigrant integration since 2002 and is former Chair of two of Ottawa’s immigrant services organizations.