Why do regulatory organizations fail? - Understanding Society Blog

From my experience a failure that results in a loss of life or less tragically a loss of equipment is a series of failures, rarely one. The lack of oversight from management is understandable, they only care about the next quarters profits or their own bonuses so they are shortsighted. Regulatory agencies by original charter are supposed to take the long view but with the revolving door between regulatory agencies and those they purport to regulate it is has become the wild west. Eventually companies go out of business once the public is fed up or refuses to fly on the airline, sail on the ship or whatever the case may be. But not before many lives have been lost . Sadly, the public has bought into the idea that regulations are bad. However,I doubt the thinking portion of the population would be so keen on going back to the days of cars with no seat belts, engineered crash protection and air bags all of which came about thru regulation to keep people from dying. But on the other hand I know there is a portion of the public that thinks it is their God given right to be thrown thru a windshield and let others pick up the medical bills.

I was using the term “regulation” in the way I understood Perrow and the blogger were using it: actions of a government agency that limit the behavior of corporations. I understand that compliance with published standards can be characterized as regulation but that was not what I intended. Also, I was using"moral hazard" to describe the spirit of the term and not its narrow legalistic usage. Apologies for the confusion.



Those published standards are quite literally ‘regulations’ which is an action of a government agency that limits, prescribes, prohibits or otherwise specifies behavior which is, or is not permissible. Moses didn’t come down from the mountain with a set of objectives. First step is to establish a standard within a legal instrument, codification if you will, like, e.g. the Code of Federal Regulations.

Best Wishes for the New Year!

I recall a USCG and ABS dry dock inspection 20 years ago. In my opinion, a very halfass inspection. The USCG handed out 835s like candy, that said: ‘fix this within 6 months.” I don’t recall the ABS demanding anything. The crew specifically showed serious defects to the USCG and ABS, they did nothing. An insurance company surveyor arrived afterward. He hit the panic button and demanded repairs. The crew pointed out other defects. He added those to his list of no sail items to be fixed immediately. Everything was promptly fixed.

Regulations are very poorly and sporadically enforced. Blame is shifted from cheapskate owners to the Master.

Regulations are minimum requirements which in effect license the cheapskate owners to treat them as all that’s required. How many times have we heard owners say “that’s not USCG required.”

Some segments of the industry refuse to rely upon ineffective USCG and class inspections. That’s why they have additional safety requirements and inspections like SIRE, IMCA, NI, OPITO, etc. It’s also why why some customers do their own vetting (with varies from soft glance to hard look).

So I have to ask the question: Would mariners actually be better off with less government regulation?

If there were fewer government minimums for cheapskate owners to rely upon to justify their unwillingness to spend on better equipment and maintenance, might we be better off?

With fewer government minimums, would the tort lawyers, insurance companies, and vettors, apply the principles of the TJ HOOPER case to available modern equipment, and do a much better job of regulating safety than the government does?

I don’t think so. The regulations issued by government serve more than the people who have standing and serve to prevent bad things more than assign liability to those who bring a suit. The TJ HOOPER case is a civil suit, and it could have gone the other way easily. And having the courts decide everything is unwieldy. Plus, imagine all the employment agreements that would be drafted to make employment conditional on indemnification of the employer from employees bringing suit or mandatory arbitration and then it’s no system for the working sailor at all. Settlements and non disclosure agreements, and then regulation becomes a secret vice a standard. Having public regulation also prevents excess, think about the nuisance suits if everything is just based on tort law.

I have been really interested in the discussion about whether regulations do any good. The answer of course is “yes and no”. In the UK after the Piper Alpha offshore disaster in which 163 people died the judge who led the enquiry initated a requirement for “goal setting regulations”, the operators of offshore installations having to prove that they are safe, due to his lack of confidence in prescriptive regulations. And in the marine business designers seem to take a pride in their ability to circumvent regulatory requirements. There are many examples, but here’s one from just the other day. It is contained in a press release about a company operating CTVs (Crew Transfer Vessels) on the East coast of America.

Quote: “The new CTVs will comply with regulations protecting the migration route of endangered Right Whales off the northeastern seaboard, with a specially adapted catamaran hull.”

How is this hull specially adapted we might think. It will somehow not hurt the Right Whales then. But no, the press release goes on:

“Under the Right Whale Ship Strike Reduction Rule (50 CFR 224.105), vessels that have an overall length of 65 ft (19.8 m) or more are required to operate at speeds of 10 knots or less during Right Whale migration season in the US Atlantic, which runs from 1 November to 1 April. As the CTV will have an overall length under 65 ft (19.8 m), it can operate at normal transit operating speeds.”

So even though the CTV will conform with the regulations the unfortunate Right Whales have not been made safer.

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ABS is non-governmental with regard to Class. For many foreign flag vessels, they will also carry out SOLAS, MARPOL and LOADLINE inspections which ARE governmental. There may be deficiencies to the vessels that are NOT part of class, and therefore would not warrant comment. For deficiencies that DO apply to Class, the surveyor should either demand repairs, or issue an Outstanding Recommendation (or Condition of Class) with a certain time limit to carry out permanent repairs. If a vessel is in drydock, I am not aware of a situation where permanent repairs should be carried out and no Outstanding Recommendation issued. I do know of situations where permanent repair were NOT carried out in drydock to Outstanding Recommendations, but for some reason, they were “written as having been completed”. In one particular case, 4 lives were lost. . . .Even so, as stated above, Class Requirements are the minimum. . .

I had personal experience with class vs regulatory years ago.
On the same day an ABS inspector came to inspect for another 60 day extension for a shipyard period as did a USCG inspector. ABS came first, walked around and was ready to extend. USCG inspector came on and went to the problem area, called me back there and asked questions. I gave him honest answers. He said he was not approving an extension. I went back to the control room and told the ABS guy, who was writing his report, what the USCG said and suggested he might want to cover himself. When the company’s ship manager heard about what the USCG said and then talked to the ABS inspector he came on board and stated to the captain. I can make a phone call to Houston and stop ABS but the boss will have to call DC to stop the USCG and this will cost us $xxxxxx/day while we wait so your chief is probably out of a job. As it turned out we went to the yard and I wasn’t out of a job but it was a good lesson in the way things really work.


Vessel inspection is a cesspool of apathy, incompetence, and corruption.

And that is without even getting into the Subchapter M pseudo-inspections.

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“Regulatory failure” is not just about the occurrence or not of accidents. Regulations certainly exist to prevent accidents, but they also exist to prevent unethical practices and fraud. They protect society from corporation’s ability to pass off external costs that are incurred when chemicals are dumped. The ability of corporations and wealthy individuals to influence congress to underfund the IRS is something that costs all of us billions of dollars a year in tax revenue. This is a failure of the IRS for which the agency itself is not responsible, rather due to the factors discussed in the subject essay.

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I don’t think deregulation is a “liberal” value in the sense of today’s politics. Quite the opposite. Democrats, who are considered the liberal side of US politics, favor regulation. Republicans oppose it. Or are we talking about a different country?

I don’t think that either, as I noted in the post to which you responded:

“we seem to be at the beginning of an important reveal of the cost of neoliberal efforts to minimize regulation”.

Is what I was responding to.

Of course liberal in the sense of US politics does NOT equal neoliberal. Neoliberal is broad enough to include Ronny Raygun to the Clintons. Ostensibly they believe in liberty as a concept and look for systems of governing that profess that but in reality they believe in more liberty for / less restrictions on corporations, financial institutions etc rather than actual people type citizens. The post you are quoting I believe refers to the true costs of the neoliberal fascination with massive and ill considered deregulation on the bulk of real people citizens.

If you feel the system is working just fine as is you are probably what seems have become termed a neoliberal. If you think maybe the government could provide some protections from the corporate-financial domination for the lives of normal people type citizens you may be a liberal in the sense of favoring freedom over monarchy, totalitarianism or anarchies but not a neoliberal. As long as the favored sector continues to frame what’s wrong with your life as being caused by government and not unfettered greedy and in the end unpatriotic corporate “citizens” and not much change for the overall good of the nation will be possible for as long as people buy that argument.


Oh, it goes thru Obama and Trump too. The Neolibrals have taken over governments. Obama’s administration gave trillions to save the “too big to fail” big money boys and Trump promised to drain the swamp but appointed Goldman Sachs and ex Goldman Sachs to key positions in his administration. Goldman Sachs is a serial felonious outfit as are most of the recipients of the bailouts of 2009. The Neoliberals and their, not our, senators and congressmen distract by saying the reason your standard of living is not going up, your pay is not going up is because of…the lack of a border wall, abortion, too much regulation, socialism etc, etc. If any of us were guilty of 1/1000’ths of the crimes these guys are we’d be in prison. But they own the government.

Reply to KPChief and Tengineer1 -
Well then, I am not a “neo-liberal” by the definition provided. It would seem that both political parties have contributed to the regulatory failures described in the subject essay. Probably explains the popularity of Trump and Sanders even though they seem to be polar opposites.

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Yes, except Trump has proved he is a neoliberal by his appointments and policies, Sanders is on a Denmark or Scandinavian like capitalistic tack that the USA is not ready to accept yet. Trump in fairness probably doesn’t know what neoliberal means as he was born one. Neoliberal is kinda like merry old England with their feudal society where a very small minority control government and people for their own advantage. Given time it inevitably fails.