“There’s just a lot of things not happening the way we would like them to happen. And that sparked my curiosity about what’s holding us up.”
Stupid Rules offers a more nuanced look at the cultural and economic issues that are slowing us down – and how we might change them.
“It’s not really a right-wing book or a left-wing book,” she says.
“It’s not just a choice between regulate or deregulate … markets or rules.”
Hamilton-Hart advocates a third option, which focuses on looking at organisational structures and how we delegate authority.
“This third option, which is organising things in a hierarchy, is efficient, and it’s effective,” she says.
Inside those hierarchies, whether they be corporate, public sector agencies or universities, things work best when they are not running on rules and contracts.
“They’re running on something kind of a bit more basic, which is commands,” she says.
Hamilton Hart believes a culture of fear has developed around delegating decision-making authority.
“We need to delegate more authority to people to make decisions on the basis of overall impressionistic judgment, not holding them to the letter of the law or the fine details of a standard,” she says.
There were two reasons why society had become wary about doing that.
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“One is that, from the point of view of the people who are getting told what to do, they might like some protection,” Hamilton Hart says.
“What about the abusive boss, or what about if the person above me in the hierarchy is arbitrary or incompetent or whatever?”
But then there was also the fear of people who occupy these more senior levels.
“[If] they actually exercise their discretionary choice and make decisions and tell people what to do they are being held responsible and that might be pretty uncomfortable.”
Exercising that authority meant providing feedback and saying “no, you didn’t get it right, that wasn’t appropriate behaviour”.
That could be uncomfortable at a personal level.
But they also had to carry the responsibility for the outcomes of decision-making.
Areas like employment and HR have become a minefield of complexity, Hamilton-Hart says.
“What do you do with employees who are just not up to par. You can try and work with them and improve them but at some point it becomes evident that it’s not going to work out,” she says.
“Of course, people who are out there advocating for workers’ rights and unions say, well, if you just make it easy to fire people at will, you’re going to open the door to a lot of people losing their jobs.”
Employment insecurity was a real issue, so there has to be trust and goodwill, she says.
But there are other options available.
“The example I use in the book is the Danish system where it is reasonably easy to get rid of underperforming employees … but you have to give compensation.”
“After all, you did make a commitment to give someone a job, and so if you’re gonna fire them, you should give them a payout.”
So the key was a system that was fair but straightforward.
“I think getting the settings right might involve deregulating and letting people carry the burden of responsibility for the choices they make,” Hamilton-Hart says.
“In some cases, it might mean we do need a regulation, but it needs to be a simpler, harder regulation.”
If we are going to have simpler regulations with much less compliance burden, then we need to allow a bit more authority, she says.
“A bit of discretionary latitude for choice, to people further up in some kind of organised hierarchy.”
Hamilton Hart argues that, ironically, some of the red tape that has built up in New Zealand over the past few decades may actually be a result of the free-market reforms that were supposed to free us from the regulatory excesses of the 1970s.
“The book is definitely not a case for going back to the ’70s, and I’m not in favour of price controls,” she says.
“I think there are lots of scenarios where the market really does work quite well, and if it doesn’t, sometimes all that’s needed actually is a competition agency with the teeth to make it work well.”
She says deregulation that came in the 80s was clearly overdue.
“But it actually swept up a whole lot of services and functions, and said, well, instead of telling people what to do and getting things done through command and control, what we’re gonna do is contract for these services.”
“We’re talking about the language of KPIs [key performance indicators] and performance contracts and, that contract-based sort of model.”
“And it turned out that called for a whole lot of red tape, to effectively monitor and keep track of what was happening.
“I mean, it’s very hard to monitor and set up market-mimicking mechanisms.”
Hamilton-Hart uses the example of outsourcing prison services to the private sector.
“If you want to try and get a market mechanism going, you don’t have the basic prerequisites because the prisoners who are consuming the service, they’re not choosing their prison, they’re not spending their own money,” she says.
“So there’s no feedback about who’s providing the best prison service.”
“If you want to set up a way of trying to mimic market-based contracting, you have to devise all these KPIs and standards and indicators, to see if, you know, your service provider is doing a good job or not … to make sure they’re not cutting costs and doing bad things along the way.”
“Over time, if there are few disasters or scandals, you go, okay, we need to tighten up on quality control, monitoring, conflict of interest, quasi-corruption scenarios.”
“Then you’ve actually got a whole contracting apparatus, which is really expensive.
One thing we might have to get better at dealing with is that “granting humans the authority to make decisions means that sometimes things will go badly,” Hamilton-Hart concludes.
The other big question was: who should have the power to exercise discretionary choice “as to whether those with delegated authority have exercised it appropriately”, she says.
The book’s answer is, ultimately, that this should be determined by “voters exercising their free choice in democratic elections and the marketplace”.
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