The *Realpolitik* of Regulation:

Offensive and Defensive Strategies

By Harold Furchtgott-Roth

Commissioner

Federal Communications Commission

American Enterprise Institute

Amgen Forum

FRIDAY APRIL 28, 2000

Thank you, Chris, for that very warm introduction and thank you to AEI
for having me here today and to AMGEN for sponsoring this forum.  I
would also like to thank the CSPAN viewers from across the country for
tuning in today.

It is humbling to come to AEI to give an AMGEN forum on regulation. 
This institution throughout its history has stood for the highest
standards of academic research on regulation.  Practically all the
scholars here at AEI work on regulation in some capacity or another. I
would just like to mention a few whose research overlaps perhaps most
closely with my kind of simple minded work today.  Chris DeMuth your
work on the expansion of government regulation and your recent addresses
on this topic; Bob Hahn on national regulatory structures; Greg Sidak
and Tom Hazlett on the subtleties\--and not so subtleties\--of
telecommunications regulation.

Government officials often think that academics don\'t really understand
what the real world is about, and academics often understand that
government officials don\'t really understand what the real world is
about. AEI provides a very  good bridge for the two.  Having a foot in
both worlds, I probably don\'t understand much of anything. 

I have thought about writing a book on regulation.   Someone recently
put me in touch with a leading book agent on regulation. This was the
person who was the most sympathetic to the idea of a book on regulation.
I called him up for a lunch appointment to discuss this book
possibility. He said, "First of all, tell me about this book you want to
write." I said, "Well, it\'s about regulation."

He said, "Thank you, but really there isn\'t a market for books on
regulation. No one wants to read about regulation."

I tried to deepen my voice and sound important. I said:

"I really have some new ideas." He said: "Save yourself some trouble,
kid. Photocopy your pages, and hand them out to your ten closest
friends. No one else wants to read this book. If you have a book on sex
or health, something like that - - that\'s a book I can sell. But
regulation \-- never!"

I\'m just glad I didn\'t talk to one of the agents who was not
sympathetic to the idea of a book on regulation.

People in government sometimes have an inflated sense of
self-importance. Much of the outside world really doesn\'t care about
what goes on in government. I once met with a venture capitalist in
California. He asked me what I did. I said that I was an FCC
Commissioner.

He said, "That's interesting. I have a friend who is on some blue ribbon
panel in Washington. He flies there once a quarter and has a good time.
So tell me, what\'s your real job?"

I said, "Well, I am an FCC Commissioner." The venture capitalist was
startled to discover this was a full time job. A lot of people in
Washington are startled too. While the outside world doesn\'t know much
about what regulators do, those who have to deal first-hand with
regulators know all too well.   

There is a story of the regulatee who had been called to a meeting with
a regulator. You can pick your favorite regulator to fill in the blank.
This regulatee was in a lot of trouble, so the company sent a junior
officer to go to the meeting.

The regulator just grilled this corporate officer all day long: "So,
have you filled out these forms and those forms? Do you know how to fill
out the forms?" The officer did not know the answers to any of the
questions. And at the end of the day, the regulator turned to the
regulatee and asked: "What are you going to do?" 

The poor officer said, trembling: "Well, I\'ve no idea what you\'ve told
me to do. I don\'t understand what I\'m supposed to do, but I\'m sure
the good Lord will see me through this."

The regulator shakes his head and goes in to see one of his colleagues. 
He says, "Well, I have some good news and some bad news. The bad news
is: this corporation has no idea what they are supposed to be doing.
They really don\'t understand. The good news is: he recognizes that we
are actually God."

**The *realpolitik* regulation**

 

I am going to look at regulation as an economist would.  But at times
there is this element of god-like nature of the regulators that is
troubling. That is the theme of my talk today\--as Chris so eloquently
pronounced\--the *realpolitik* of regulation.

I am also going to suggest that there is a market for regulation with
demand and supply characteristics. But I am also going to suggest that
pure economic analysis alone can only take us so far in understanding
regulation. We also need to understand some institutional and political
considerations of the regulators themselves.

One of the main themes of the talk is that regulation today is monopoly
provided. There is a government-sponsored set of regulators, and we all
have to deal with them. We cannot choose a different set. The monopoly
position of regulators gives them substantial power in regulated
markets, all of which may harm both competition and consumers in the
market.

Regulators expand their power in markets by enhancing their discretion
to make market-affecting decisions through a series of techniques, the
*realpolitik* of regulation. I am going to list ten of these which will
be mentioned throughout the talk. These are:

a\) Lack of strict adherence to the law

b\) Expansion of agency jurisdiction

c\) Refusal to write procedural rules

d\) Refusal to have transparent processes

e\) Refusal to have predictable processes

f\) Refusal to collect, disseminate, analyze, or systematically evaluate
information on the costs and benefits of regulation

g\) Complexity

h\) Inefficiency

i\) Promotion of benefits and hiding of harm to consumers

and (j) Treatment of similarly-situated parties in different ways.

Each of these ten attributes contributes to the ability of a regulatory
agency to make discretionary decisions that may affect regulated
markets. The offensive strategy for regulators is the *realpolitik* of
regulation is to expand these characteristics;  and to use them as much
as possible. The defensive strategy for the rest of us is to diminish
these powers. 

Let me give a disclaimer\--

DISCLAIMER: I will speak about regulation generally. By regulation I
mean government decisions that restrict what can be provided in a
market. It could occur at any level of government, by any agency, and by
any level of employee of the agency. Many of my examples will come from
the FCC because that is the agency that I know best.  But it is by no
means the only one that these principles apply to.. My comments are
academic in nature in nature, as befits an academic institution that\'s
hosting this event. They are not intended as a criticism or endorsement
of any particular agency, or any particular person.

The employees of government agencies in general, and the FCC in
particular, have, to the best of my knowledge, the highest integrity and
standards. Chairman Kennard of the FCC has, in many areas, done much to
limit agency discretion, and I commend him for his efforts. But all of
us, as regulators and employees of regulatory agencies, must understand
how best to administer the agencies the public has entrusted with us. In
that spirit, I offer these comments which apply equally well or poorly
to the FCC and to every other government agency.

**Economics of regulation**

Before I describe in more detail these 10 characteristics of the
*realpolitik* of regulation, let\'s examine briefly the economics of the
market for regulation. What does the demand for regulation look like?

[Demand]{.underline}:

There are at least four sources of demand for regulation: consumers,
businesses, support industries, and bureaucrats. Consumer demand for
regulation is the public finance, textbook description of regulation.
That is, regulation is mechanism to cure market failures and to
internalize externalities. Thus, for example, we have environmental
regulation to provide for a cleaner environment, because there are
externalities to environmental quality, and many consumers if not all
consumers want a cleaner environment.

Or there may be non-market failures such as high transaction costs, high
enforcement costs, and high litigation costs. Thus, we have a county
recorder of deeds not because there is an externality or market failure
that prohibits a purely private market solution, but because the
transaction costs of deed recordation, and enforcement costs associated
with property and contracts, may be lower with governmental recordation
of deeds.

Similarly there may be cases of peculiar distributions of risk in a
market, and the government steps in with risk-sharing mechanisms, such
as government-subsidized health care. These may or may not be better
market-based solutions, but my discussion today is not premised on
whether or not a specific regulation meets some form of economic
rationality. Indeed, the general result is that all of the above forms
of government intervention can be rationalized in a world in which
common law, property rights, and contract rights are paramount, and in
which government intervention is merely there to enhance some form of
quantifiable social welfare where the benefits of regulation
demonstrably exceed the costs. Economists will quibble about how best to
quantify these benefits and costs, but today I simply want to discuss
something different.

The second source of the demand for regulation are the bureaucrats
themselves.  Folks like me. Folks like employees of the federal
government\-- a lot of jobs at stake.  Also, a lot of power. That\'s
part of the theme of the *realpolitik* of regulation.

The third source of demand is the service industry of lawyers and
accountants that demand regulation their livelihood depends on
regulation. The more regulation and the more complex the regulation, the
more the demand for the service industry to interpret it. 

Finally, businesses also demand regulation, they want regulation
favorable to themselves and unfavorable to their competitors. In
Washington, it is called the "level playing field."  Much academic work
has been directed at all of these *sources* that have a demand for
regulation, and I am not going to dwell on them today.  What I am going
to describe briefly are what an economist would describe as the
*factors* affecting the demand for regulation.

The demand for regulation depends on various price effects both its own
price and price of alternatives certain quality characteristics and
income.  I am not going to belabor all of these today. They are the
topics of chapters of the book that won\'t be written because no one
will read it.  I will, however, discuss in some detail the
characteristics of  the demand for regulation.

Let me just note in passing that the own price or cost of regulation is
substantially different for different individuals in an economy. For
some consumers, who do not drive automobiles, a regulation such as a
CAFE fuel efficiency standards is a regulation that may be costless. For
others, who drive for many hours each day, it may be extremely costly.
Consumers like those regulations that favor them individually, and hate
those that harm them individually, and are indifferent to the vast
majority of regulations that don\'t really have an effect on them as
individuals.

Is it possible that some regulations uniformly benefit all consumers or
uniformly harm all consumers? It is possible to construct regulations
that serve no purpose and harm everyone, but it is very difficult to
make sweeping statements about uniform consumer views on all
regulations. There are some groups who claim they speak for all
consumers on regulation. But this is impossible: actual consumer views
on regulation are as varied as there are many people. Indeed it seems at
times that some consumer groups almost get it exactly wrong. 

As an example, about two years ago AEI sponsored a paper here in this
very conference room in which Prof. Jerry Houseman from MIT gave an
extremely interesting paper on the distribution effects of taxes on
various forms of telecommunications services. And the result of
Professor Hausman\'s paper was that placing taxes on the elastically
demanded minute-of-use charges on telephone services is one of the most
punishing taxes in the arsenal of the American government. It is a tax
that probably ought to be gotten rid of. 

In contrast a far more efficient tax would be one that is not user
sensitive, just a simply a flat tax on lines.  Consumers would lose far
less welfare with that form of tax, but both of the forms of tax are far
less efficient than the simple personal income tax that the government
administers. You would think that consumer groups would be all in favor
of the tax that is the most efficient, the one that harms consumers the
least.  But, paradoxically in a proceeding before the Commission right
now to reduce access charges on long-distance telephone calls, many
consumer groups are opposed to shifting access charges\--which are
usage-sensitive taxes\--to a flat tax. Instead, many of these groups
want yet another usage-sensitive tax, the universal service fee. This
position is to me an extraordinarily anti-consumer outcome, and one that
I find quite paradoxical as being advanced by consumer groups. 

Let me also note that the question of cross-price demand effects on the
demand for regulation is interesting. In many cases, consumers do not
face other price effects because they have no alternatives. Regulation
is a government monopoly and consumers must take or leave it.  There
simply  is not much choice of water sources for consumers who want to
clean their clothes in their own home. They have to purchase tap water
from the local water source.

Consumers may be able to substitute demand for some unregulated services
or goods.  For example, Consumers can switch to the Internet for
long-distance service. In this case, less Internet regulation
substantially lessens demand for consumer use of long-distance services.
Conversely, raising Internet regulation would likely increase demand for
long-distance services.

**Quality characteristics of regulation**

Let me illustrate the quality characteristics of the demand for
regulation with one of my favorite agencies: your friendly Department of
Motor Vehicles. Every adult is familiar with it. It is where you go to
get a driver's license, change title to a car, have your car tested for
emissions, and so on. The department handles hundreds of thousands of
people every year. It is slow, tedious, frustrating. But in the end, it
works.

In their demand for regulation, consumers care about at least seven of
the ten characteristics of the *Realpolitik* of regulation that I
introduced earlier. Some, but not all consumers, care about:

a\) Written rules

When you go to the Department of Motor Vehicles, most procedures are
written down in simple detail. Required documents are written down. Even
the questions for a driver\'s license are written down. There is a
written standard for appeal if the rules are not followed by DMV.

b\) Predictable processes

Not only are procedures written down at the Department of Motor
Vehicles, they are followed in a predictable manner

c\) Rational rules

While some people may not think that everything that the Department of
Motor Vehicles does is rational, it is difficult to fault them for their
processes. If you don\'t think they are doing their process efficiently,
you can complain. Yes, it is true that they cannot always hire more
clerks, but they are probably fairly  responsive if you have a useful
suggestion

d\) Simplicity

You don\'t need to hire an army of lawyers or accountants to get a
driver's license in the United States.

e\) Full disclosure

The DMV does not try to hide from the public its failings. If it is
going to take half a day in line, the DMV will tell your that it will
take a half a day in line.

f\) Efficiency

All right, this is not the strong point of the Department of Motor
Vehicles.

Finally, and to me perhaps most importantly,

\(g\) Similar treatment of similarly situated parties

We don\'t expect to be treated differently from the person in line in
front of us or behind us  in line at the Department of Motor Vehicles.
We certainly don\'t expect to be pulled out of line, put in a separate
building, and be told that we will face an entirely different process
from everyone else.

**Consumer reaction to discrimination based on viewpoint**

Consumers do not seem to care much about whether a regulator is acting
according to law, expanding jurisdiction, or following transparent
processes.  Just this week a high ranking official at the FCC sent a
letter to Congress saying that we are not going to meet a date for a
spectrum auction that is required by law.  I\'m sure most consumers will
have a big yawn. Well, what\'s the big deal?  The law says "Do it." The
agency says: "No we don\'t want to do it." What\'s the big deal? 

Nor do consumers particularly care about the expansion of jurisdiction. 
A few years ago, the Food and Drug Administration decided it could
regulate tobacco. That\'s not precisely what the law said they could do
but they decided they wanted to do it anyway. This would be good.

There really was some consumer resistance. The decision was eventually
thrown out by the courts, but, for several years, the FDA asserted it
had jurisdiction. 

Nor do consumers particularly care about transparency.  Some government
agencies are supposed to have transparent processes; others don\'t.  The
Department of Justice is not supposed to have transparent processes.  No
one knows exactly how the Department of Justice's Antitrust Division is
coming to its conclusions about the Microsoft case, but there isn\'t a
profound consumer outrage about that either. 

But we do care about discrimination.  We Americans like to express our
views, but we do not necessarily expect anyone to change his or her
business behavior as a result of our opinion.  Try this experiment the
next time you are at a grocery store.  Tell the cashier your views on
the environment, and see if the cashier charges you any more or any less
depending on your views about the environment. Of course, there will be
no difference in the amount charged. A few comments on the environment
may provide a smile, or frown, but little else. We Americans demand and
expect to be treated the same as everyone else in line.

Now flip the experiment around  and suppose the cashier lectured you on
the environment and then offered you a 10-percent discount if you signed
a petition or if you decided not to sign the petition you would be
charged 10-percent more, would you be offended?  Of course you would be,
and quite possibly you would march into the managers office, and demand
that the cashier refrain from these practices or be fired on the spot. 
When it comes to business dealings, we Americans expect to be treated
the same as anyone else, regardless of policy viewpoints. Businesses
that treat their customers or suppliers differently, based on their
viewpoint would, likely, soon go out of business.

Expectations of non-discriminatory treatment based on viewpoint extend
not only to business dealings but to government activities as well. A
parent would be dismayed if the principal of a school set school rules
that favored or disfavored children based on the political viewpoint of
a child or a parent. A property owner would be offended if the county
council set property taxes based on the political view of owners such
that identically situated property owners are taxed at different rates.

We Americans are not so naive as to believe that lawmakers and rule
makers have no political views. Of course they do, whether they are
members of Congress, a State legislature, a county council, or the local
school principal. But we do expect the laws and rules that they write to
apply equally to equally situated individuals or businesses. And we
don\'t expect laws and rules to single out for reward or punishment
individuals based on their viewpoint.

Our expectations of neutrality also extend to those who enforce laws and
those who adjudicate disputes. Don\'t expect a sympathetic ear on
environmental policy from a policeman as he writes you a ticket for
parking violation.  Nor should you expect the traffic court judge to be
amused by a long testimonial about your  good ideas on the environment. 

We would be shocked however if we flipped the experiment. As the
policeman is writing you a parking ticket, the policeman said: \"You
know, this is what I think about the environment. If you agree with me,
I won\'t write the ticket."   Or what if the traffic court judge said:
\"Your stock of good will in this court has been greatly diminished
because you wrote to your Senator to support environmental legislation
with which I personally disagree.  Now if you were to withdraw your
letter to your Senator, perhaps this parking ticket might go away."  

We Americans expect our government officials -whether federal, state, or
local - to treat each of us anonymously. We don\'t expect our views or
our behavior in unrelated matters to be held against us by government
officials. 

**The supply of regulation**

Now, let me describe the supply of  regulations. How do regulators
supply it?  Keep in mind, regulators are monopolists.  In economic
terms, they are not price takers like competitive entities. They
implicitly set marginal revenue or marginal benefits equal to marginal
costs where benefits are unlikely to be revenue, but a motive associated
with some welfare function other than profit. Which welfare function? 
The public\'s? The agency\'s? The individual  regulator\'s? Who knows?
It can and does vary by regulator. Is the welfare function to follow the
law?  To promote certain values?  Promote competition? Protect
consumers? When you listen to regulators in Washington, you\'ll hear
each of these and other welfare functions described.  But all too often,
it is not simply "follow the law"; instead, it\'s something else. 

Moreover, the marginal costs in the monopoly calculation are not
necessarily the costs to a business, industry, or even the economy. They
may be some other form of cost, perhaps even the costs of regulation to
the regulatory agency.

In any case, we do not have the standard monopoly result for profit
maximization for a normal good in which the supply by a monopolist would
be less than what exists in the competitive market. If anything, there
is far more regulation than exists in some hypothetical competitive
market for regulation, although it is difficult to describe what a
competitive market for regulation would look like. This empirical result
is at least suggestive of the shapes of the regulatory marginal benefit
and marginal cost curves in the regulatory decision-making process
relative to the actual economic marginal benefit and marginal cost
curves.

The actual economic description of prices and technology in the
formulation of regulation by government monopolists is a fascinating
topic for yet another chapter of this unwritten book on regulation.
Suffice it to say, one could take any standard textbook on public
finance or on regulation and develop a fairly accurate description of
what rational regulation might look like. And at the end of the day, it
would likely have many of the quality characteristics that many
consumers demand, certainly rationality with  benefits exceed costs.

But for anyone who has spent any time in Washington, one realizes that
that is not how regulation is done in Washington. There isn\'t a
textbook model where regulators look at a social welfare function and
try to calculate costs and benefits of regulation. It simply doesn\'t
happen.

Moreover, in a textbook setting, one might expect some consistency
across agencies and across regulators in the 10 characteristics of
*Realpolitik* that I have discussed. In practice, they diverge
substantially. To some extent, they diverge because some regulators have
an objective to go out and  simply "do good."  To some regulators,
"doing good" is what regulation is all about, and to do the most good
you want to do it by having the most discretion which gives you the
opportunity to do even more good.  

So how does an agency do the most good? Here are some strategies that
are often followed by Washington regulators.

*(1) Don't worry about strictly following the law.* Well, frankly, the
law is often vague. What do you do if the law is vague and at times even
self contradictory? Why follow it if you are not required to do so? When
agencies don\'t follow the law, there\'s no punishment.  

*(2) Expand agency jurisdiction.* Never miss an opportunity to expand
agency jurisdiction. This goes on at every agency in town  They go into
court and assert they have lots of jurisdiction. The next time they\'re
in court, they have even more jurisdiction. For instance, the FCC has
held that all packet-switched telecommunications services are interstate
in nature and therefore under FCC jurisdiction.  This might put state
regulators out of business. It probably extends FCC jurisdiction to
central Australia, central Africa, and outer space. There\'s no
limitation on the assertion of FCC jurisdiction. And it is a good way of
getting rid of potentially competing regulatory bodies.  

*(3) Refuse to write procedural rules.* This is one of my favorites. 
The FCC has tens of thousands of license transfer applications every
year  The FCC has few written rules though on how to deal with these
tens of thousand of license transfer applications every year.  If you
want to know how you\'re supposed to be treated, there is no written
process for guidance. You hire a Washington lawyer to try to figure it
out. At the of the day, you have no written rule on which you can go to
the FCC or to court to complain that procedural rights are not being
followed. 

*(4) Refuse to have transparent processes.* An agency gets a bit more
discretion if outside people don\'t know exactly what you\'re doing. 
For example the SBC/Ameritech transfer license of a year ago involved
weeks and months of meetings behind closed doors. The public wasn\'t
invited to these meetings. Who knows what happened at these meetings? A
deal was struck that involved a lot of conditions on license transfers,
conditions that had nothing to do with the transferred licenses. But
these conditions had everything to do with unrelated matters involved in
the merger. The parties, facing a monopoly regulator, agreed to the
conditions for the lack of an alternative.

Many of the conditions broke the law. Sections 251 and Section 252 of
the Telecommunications Act of 1996 were violated by the negotiated
conditions. The only parties, however, with standing to object
apparently were the parties that cut the deal. The FCC has not been held
accountable.

*(5) Refuse to have predictable processes.* At the FCC, timelines and
possible conditions for license transfers are unpredictable. If you are
one of the tens of thousands of license transferees at the FCC, you
really don\'t where you stand in the process.   The Office of General
Counsel has invented some timelines without Commission approval. The
same Office of General Counsel can unilaterally change those timelines.

(6) *Refuse to collect, disseminate, analyze, or evaluate systematically
    information on the costs and benefits of regulation. * When I was
    Chief Economist for the House Commerce Committee, the Committee
    would send out annual survey forms for dozens of agencies under the
    Commerce Committee jurisdiction. The surveys had some simple
    questions about the collection of information on the costs and
    benefits of rules that the agency had made in the past year. Not a
    single agency had any complete information for a cost benefit
    analysis of rules. The vast majority of agencies in Washington do
    absolutely no cost-benefit analysis, and the few that do any
    analysis do it only minimally as required. No agency has a clue
    about whether a single regulation that had promulgated in the past
    year or any time in its history had benefits that exceeded cost.  

(7) *Make regulations complex.* Complexity seems to define regulation.
    At the FCC, we have a computer cost model that is supposed to
    describe the cost of telephone service. Now, you might think the FCC
    would know something about the cost of phone service. We regulate a
    lot of phone service, and we collect much information on those
    regulated services. We know what rates companies charge customers
    for a large range of services. If any government agency should be
    able to point to some cold, hard facts for the costs of phone
    service, it should be the FCC. And we should be able to describe
    them in a hurry.

The FCC does not seem to be in much of hurry when it comes to describing
the costs of phone service. Nor did we want to make it simple and
transparent.  It seems, we needed a cost model that no one could
possibly understand, because if people understood it then they might
challenge it.  So how do you develop a cost model that no one can
understand? You hire a bunch of programmers to develop a model that is
not intended to be a cost model. Then you force the new model to be a
"cost" model. 

The net result is a cost model that takes 180 hours to run. I don\'t
think you have to be a rocket scientist to know that, in the year 2000,
a model that takes 180 hours to run is a model that does not work. By
definition, it doesn\'t work. No one believes it works. Everyone know
that it doesn\'t work, but it is too complicated to say precisely why it
doesn\'t work, because it takes more than a week to do one run. Yet this
is the cost model that the FCC insists on using for universal service.
The agency would like to use it for all sorts of other proceedings. Few
people believe its results, yet the agency hides behind the model's
complexity to be able to say: "It\'s so complex it must be right."

(8) *Be inefficient*. We\'ll leave that for another day.  

(9) *Promote benefits while hiding of harm to consumers.*  Part of the
    game of regulation is to persuade people that you doing a lot of
    good and you\'re not doing any harm.  So one way of doing that is to
    prohibit people from describing any harms that there might result
    from regulation. For instance, last year the FCC had a proceeding
    that is called the "Truth and Billing" proceeding.  Now, anytime any
    government agency employs the word *truth,* watch out! It is a word
    that is more commonly used by other governments-like Cuba or China.
    It is word rarely used by the government of the U.S.

This proceeding essentially prohibited telephone companies from
describing the details of universal service programs to the consumers. 
Companies are prohibited by regulation, not by statute, from telling
their consumers about the costs of universal service. The public
doesn\'t know.  Cal Thomas wrote an op-ed piece earlier this week in
which he praised Bell Atlantic for disclosing the amount of his
universal service fee contribution. But Cal Thomas wasn\'t really told
for what purpose the money was collected, and he wasn\'t told precisely
how much Bell Atlantic was contributing on his behalf.  

*(10) Treat similarly-situated parties in different ways.* This is the
fundamental basis for the realpolitik of regulation.  For maximum
discretion, a regulator must treat different parties in different ways.
How do you do this? Well, one of the ways you do this is you promote the
idea that there is such a thing as good will, or political capital at
agency.  Recently a high-ranking official at FCC suggested that a
certain industry had  lost "good will" at the FCC by lobbying for
legislation at Capitol Hill. Are industries or businesses treated
differently at regulatory agencies depending on their stock of *good
will* at any given point in time? Do agencies keep running tabs on good
will?  Does an outside party lose its free speech and opportunity to
petition Congress if it is involved in regulatory proceeding?   The
answers to these questions are just too chilling.

**Conclusion**

With all of these ten attributes of the *realpolitik* of regulation at
work, it is impossible to determine whether the benefits of regulation
exceed the costs. It is not surprising, therefore, that agencies refuse
to engage in the collection, dissemination, and analysis of the cost and
benefits of their regulations.  Different agencies have different
combinations of these characteristics. In general we are at a
disequilibrium where consumer demand does not match the regulatory
supply, because regulators often have no incentive to do so.  Perhaps
the regulators really are god.  The offensive strategy for regulators in
the realpolitik of regulation is to expand these characteristics; the
defensive strategy for everyone else is to diminish them. Although a
regulator by trade, I am interested in diminishing these attributes at
the FCC and  at other agencies.

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