When you think of government regulators, you probably imagine watchdogs protecting you-from clean air and safe drugs to fair banking and reliable power. But what if those watchdogs have become part of the pack? That’s regulatory capture: when the agencies meant to control industries end up serving them instead. It’s not conspiracy. It’s systemic. And it’s happening right now, in plain sight.
What Regulatory Capture Really Looks Like
Regulatory capture isn’t about bribes or backroom deals (though those happen too). It’s subtler. It’s when the people meant to enforce rules start thinking like the people they’re supposed to police. They adopt the industry’s language, priorities, and fears. Over time, the regulator stops seeing itself as a guardian of the public and starts seeing itself as a partner to business. This isn’t theory. It’s documented. The U.S. Securities and Exchange Commission (SEC), tasked with protecting investors, had staff who moved back and forth between Wall Street firms and the agency. By 2011, the Financial Crisis Inquiry Commission found that 87% of major Wall Street firms had direct revolving door ties to SEC staff. The result? Oversight of $23 trillion in risky derivatives was ignored until it was too late. In the UK, energy regulator OFGEM approved £17.8 billion in bill increases between 2015 and 2020 for network upgrades. Yet, energy companies kept profit margins at 11.2%-nearly double the 6.8% limit set by the regulator. Consumers paid more. Shareholders got richer. The regulator? It didn’t push back.The Three Ways Capture Happens
There are three main paths to regulatory capture-and they’re all happening right now. First, materialist capture. This is the obvious one: money. Industry gives political donations. Former regulators get high-paying jobs in the companies they once oversaw. The U.S. Department of Defense saw 53% of its top officials join defense contractors within a year of leaving government between 2008 and 2018. That’s not coincidence. It’s incentive. Second, cultural capture. This is quieter, but just as dangerous. Regulators spend years talking to industry experts, attending their conferences, reading their reports. They start to trust them. They begin to believe that what’s good for the company is good for the public. The result? Enforcement gets softer. Deadlines get stretched. Violations get excused as "industry best practices." Third, information asymmetry. Regulators don’t know how a new drug works, how a cryptocurrency algorithm runs, or how a power grid balances supply. The industry does. So regulators rely on the industry to provide the data, the models, the risk assessments. That’s not just convenience-it’s dependency. And dependency leads to control.
Why It’s So Hard to Stop
You’d think the public would push back. After all, we’re the ones paying the price-higher drug costs, dirty air, unstable power, rigged markets. But here’s the catch: the costs are spread out. Every American household pays about $33 a year more for sugar because of tariffs that protect 4,318 domestic producers. Individually, that’s barely noticeable. But collectively? $3.9 billion a year in extra costs. Meanwhile, the sugar industry spends millions lobbying, funding think tanks, and shaping the narrative. They have a clear, concentrated interest. The public? We’re distracted, busy, and unaware. And that imbalance is by design. Research shows industry groups spend 17.3 times more per person on lobbying than consumer groups. In the U.S., industry political contributions outspend consumer groups by 22.4 to 1. That’s not a market failure. That’s a power imbalance built into the system.Real Cases, Real Harm
The sugar tariff is one example. The Boeing 737 MAX is another. The FAA, responsible for aviation safety, delegated 96% of the plane’s safety reviews to Boeing employees. When the planes crashed, killing 346 people, the investigation found regulators had been too close to the manufacturer. They trusted the company’s own safety reports. They didn’t question them. In the UK, HM Revenue and Customs ran "Project Merlin" from 2012 to 2019. It gave 1,842 multinational corporations confidential tax deals averaging £427 million each-while publicly claiming corporations paid a 19% tax rate. The public never knew. The regulators didn’t enforce. The companies saved billions. Even in pharmaceuticals, former FDA officials who left government to join drug companies were linked to a 28-day average delay in enforcement actions. That’s not just a gap. That’s a loophole.
Who’s Fighting Back?
Some places are trying. Canada introduced "Regulatory Integrity Training" for officials. It cut industry meeting times by 27% and boosted public stakeholder input by 43%. New Zealand’s independent review process dropped industry-preferred regulations from 68% to 31% between 2016 and 2022. The European Commission now requires at least 40% consumer representation on advisory panels. The U.S. Federal Trade Commission launched its own "Regulatory Capture Initiative" in March 2023, with a $23 million budget and mandatory disclosure of all industry contacts. But these are exceptions. Most reforms fail. Between 2015 and 2022, 78% of proposed anti-capture laws in the U.S. never passed. Why? Because the industries that benefit from the status quo have the money, the access, and the influence to block them.What You Can Do
You won’t fix regulatory capture alone. But you can help expose it. - Demand transparency. Ask: Who advises the regulator? Who funds them? Who’s on their board? - Support independent watchdogs like Public Citizen, Transparency International, or local consumer groups. - Pay attention to "revolving door" hires. When a regulator leaves for a company they once oversaw, ask why. - Vote for officials who prioritize oversight over industry comfort. Regulators aren’t neutral. They’re shaped by who they listen to. The system isn’t broken. It’s working exactly as designed-for the few who profit from it. The question is: who are you willing to let win?What is regulatory capture?
Regulatory capture occurs when government agencies created to protect the public end up advancing the interests of the industries they’re supposed to regulate. This happens through financial incentives, cultural alignment, or reliance on industry-provided information-leading to weaker rules, lax enforcement, and policies that favor corporations over consumers.
Is regulatory capture the same as corruption?
Not exactly. Corruption involves illegal acts like bribery or embezzlement. Regulatory capture is often legal-it’s about influence, access, and relationships. A former regulator taking a job at a company they once oversaw isn’t illegal, but it creates a conflict of interest that undermines public trust. The harm isn’t always in the violation-it’s in the erosion of accountability.
Which industries are most affected by regulatory capture?
The financial sector has the highest rate of capture at 67%, followed by energy (58%) and pharmaceuticals (52%), according to the World Bank’s 2022 assessment. These industries have high profits, complex regulations, and strong lobbying power. The sugar industry, for example, spends heavily to maintain tariffs that cost consumers billions while protecting a small group of producers.
How does the revolving door contribute to regulatory capture?
The revolving door refers to officials moving between regulatory roles and industry jobs. When regulators know they’ll get a high-paying job in the industry after leaving government, they’re less likely to enforce tough rules. Research shows 92% of former SEC commissioners took positions with regulated firms within 18 months of leaving office. This creates a chilling effect: regulators self-censor to avoid burning bridges.
Can regulatory capture be reversed?
Yes, but it requires structural change. Canada’s training programs reduced industry meeting times and increased public input. New Zealand’s independent review process cut industry-preferred regulations by more than half. Transparency, mandatory cooling-off periods, and public representation on advisory panels are proven tools. But they only work if there’s political will-and that’s the biggest obstacle.
Why don’t more people know about regulatory capture?
Because the costs are invisible. You don’t see the regulator bending the rules-you just pay more for sugar, medicine, or energy. The industry controls the narrative, funds think tanks, and shapes media coverage. Meanwhile, the public is overwhelmed by daily concerns. Regulatory capture thrives in silence. Awareness is the first step to change.
