The abuses and harmful effects of social media are known, if not fully understood. Social media has been used to instigate violence and even plan murder. There are other ways in which social media is abused. Thus, people may have sympathy with the government’s recent decision to restrict the use of social media in Bangladesh, at least temporarily.
But, what has happened the past few days following the government decision -- the reactions and frustrations, the innovations and diversions, has important lessons.
Many people, young and old, rich and poor, have reacted negatively, some silently but unhappily adjusting to the disruption, others being vocal in expressing their frustration. Ironically, quite a bit of the frustration has been expressed on Facebook itself as people have found innovative ways to bypass the control.
All this is not surprising. Social media, including Facebook, has many benefits, some profound, some mundane. Business is transacted, useful information is shared, and profound thoughts exchanged.
Facebook is now an integral feature of our lives, generating utility on a daily, even hourly, basis, and, much to the chagrin of parents, bosses, and neglected spouses, even by the minute!
Yes, from time to time social media becomes addictive, distracting us from the important things in life -- studies, workplace productivity, and attention to loved ones. But overall the benefits are substantial.
How should a government, concerned about the abuses of social media but cognisant of their usefulness, strike a balance? I don’t know enough of the working of social media or what is going on in the labyrinths of Bangladesh to assess the merits of the government decision to temporarily ban Facebook. But I shall use this case to illustrate a more general issue -- how a government should go about the business of regulation.
It is said that there are three certainties in life: Birth, death, and taxes. I shall add a fourth: Regulations. Consider the case of business regulations. Businesses do many good things.
They produce and supply useful goods and services. They provide jobs, generate exports, and help raise productivity. They keep finance ministers happy by generating tax revenue and let central governors sleep easy at night by helping build foreign exchange reserves. But business operations may do harm as well.
Products supplied may be of poor quality, in some instances outright dangerous, working conditions may be unsafe, employees may be treated poorly, and the environment harmed. Businesses thus need to be regulated. Laissez-faire is a useful construct for textbooks; it is rarely, if ever, practiced in real life. The regulatory function of the government is a legitimate one.
But how governments carry out their regulatory functions has an important bearing on the economy and on people’s welfare. Regulatory reflux, ie the tendency to have a knee-jerk reaction to a problem, is unfortunately all too common. At times the problems are imagined. Sometime they are real. But even in the latter case, regulation is not always the best answer.
Regulatory reflux is the reason why we end up with such confusion and backtracking. Sometimes, governments realise their mistake but, having carried out a policy change, find it difficult to swallow their pride and retract. Sometimes, good sense prevails and they do. In both cases, damage is done not only to the economy and society, but the credibility of governments too.
This is why in many developed countries, and now increasingly in the developing world, governments are introducing a discipline.
Ministries and other government agencies that seek to introduce new rules or amend existing ones, need to justify their proposals to higher authorities. They are required to answer the following questions: What is the problem that will be addressed through the regulation? Is regulation the best way to address the problem? What will be the benefits from the regulation? What will be the costs to the government for enforcing it and to the businesses for complying with it? Do the benefits justify the cost?
Such evidence-based, disciplined approach to rule-making helps ensure that irrelevant rules are not enacted. And these help ensure that the ones enacted are those whose benefits outweigh the costs. As the recent Facebook episode suggests, a balance needs to be struck.
How do you protect social welfare while allowing businesses to pursue their entrepreneurial and innovative talents?
An important part of this process is consultation with the stakeholders: Businesses, consumers, employees, and anyone else who may be affected.
Many countries have set up public consultation practices to promote transparency and increase regulatory predictability. “Notice and Comment Systems” is one practice that is used in OECD countries.
Here, governments give notice about new regulations and then, when the regulations are drafted, they invite comments from businesses on the drafts.
Nowadays, information and communication technology is much used for this. Thus, governments have put up web sites, for example www.regulations.gov in the US, through which notices and drafts are posted, and comments solicited.
Even if such good practices can’t be implemented for all regulatory actions in Bangladesh, some form of consultation is desirable, perhaps essential, for regulations with widespread impact.
A good practice Notice and Comment system provides adequate time for consultations and ensures that the process is inclusive. Governments seriously take into account the comments received and are transparent about how the comments have been addressed.
Nobel Prize-winning economist Paul Samuelson had once famously said of Marxism that it is too important a subject to leave to the Marxists alone. The same is perhaps true of regulations: It is too important a subject to leave to governments alone.
