What is regulatory capture?

This post originally appeared on Instagram on August 24, 2021.

Regulatory or agency capture is the theory that a regulating agency is controlled by the very industry it regulates.

Let’s say you buy a bicycle. Shortly after purchase, your bicycle malfunctions and you have an accident that puts you in the hospital.

You reach out to the bicycle company but they give you the cold shoulder. At first, they say it was just a coincidence, then claim it was user error. Your medical bills are piling up and you become desperate. In a moment of frustration, you threaten to sue for damages. Their lawyer sends you recent legislation:

Bicycle manufacturers are not liable for accidents caused by their products, EVEN IF they’re caused by manufacturer negligence.

Confused, you try to figure out how this law could have been passed. You discover that bikes are regulated by the National Agency for Bicycle Safety, so you reach out to NABS.

NABS assures you that if your bike was purchased at an authorized retailer, it must have been safe. The error must have been yours, or otherwise a coincidence.

Stunned by the similarities in language between the company and NABS, you dig deeper. Not only are companies immune to liability, though. There’s more:

•All bicycle companies are required to do their own safety testing and report their findings to NABS. However, little to no follow-up is done.

•NABS is funded in part by road taxes, but also receives a significant portion of funding from the NABS Foundation, which receives almost 100% of its funding—oddly enough—from bicycle companies.

•The director of NABS is the former CEO of the bike company who made your faulty bike. Seems like there’s a lot of movement between NABS and the private companies it regulates.

It soon becomes apparent that NABS, while it may have been founded with good intentions, has now been captured by the agency it was meant to restrict and regulate. In other words, NABS is not an agency for the people, it’s for the protection and propagation of an industry.

That, my friends, is regulatory or agency capture. And if you just replace NABS with “CDC/FDA” and bicycle with “pharmaceutical,” you begin to see why so many of us are not impressed with a rubber stamp of approval.