Helen Sampson and Michael Bloor (2007), "When Jack gets out of the Box: The Problems of Regulating Global Industry," Sociology, 41(3), June, pp.551-570.

• p 551, from the abstract: "This article considers the challenge of regulation across national borders using the example of the shipping industry. ... It concludes that effective global regulation faces considerable challenges."
• p 552. shipping is a "critical case" for global governance, in the sense that, it's so important to be globally governed that it of all things ought to be globally governed, and if it's not, then global governance probably isn't working/happening anywhere. A dubious thesis, if you ask me, because historical accidents could have influenced any specific "critical case".
• p 553. Further elaboration: shipping is a critical case because "in this industry there have been long-standing and sustained efforts to establish effective forms of global governance dating back to the first decades of the 20th century." I think this whole "critical case" thesis is not helping anything other than bulking the introduction up by an extra page or two.
• p 553. "given the advantages inherent in the shipping sector in relation to the possibilities for regulation ... if regulatory compliance cannot be adequately secured in this sector it is unlikely to be achieved elsewhere." Was that just a third justification for "critical case"? Note that "critical case" comes from a 1968 paper about "embourgeoisement in Britain".
• p 554. "Associations between profitability, regulatory avoidance and workplace safety have been noted elsewhere". I assume they mean that as regulatory avoidance goes up and safety goes down, profitability goes up.
• Flag states. If nations really cared about losing regulatory power over ships (which they probably don't, since shipping companies have lobbyists and dead seagulls and invaded species don't), they could just ban ships from nations with inadequate regulations.
• p 555. Actual data. two studies. 104 ship visits. UK, Russia, India.
• p 555. Alternatives to command and control regulation: enforcement pyramid, accomodative or compliance strategies, "smart" regulation, using market mechanisms, transparency.
• p 556. "Port-State control" is an attempt to enforce regulations regardless of flags of convenience. That's what I said a few pages ago; I guess I'm really proactive here.
• p 556. A ship operator claims "Everybody is using EQUASIS ... 'Name and shame' works: it's helping to remove the sub-standard ships that are driving down the freight rates."
• p 558. Inconsistencies in port-state control render is useless. "One inspector boarded a ship [that had] broken down off Ushant. In a port-State inspection in Spain, only two months previously, no deficiencies had been recorded. Yet this inspector identified fourteen separate deficiencies"
• p 563. self-regulation doesn't work either. Some members are corrupt so the white lists of well-self-regulated companies can't be trusted.

Virginia Haufler (1999), "Self Regulation and Business Norms: Political Risk, Political Activism," in A. Claire Cutler, Virginia Haufler and Tony Porter (eds.), Private Authority and International Affairs. Albany, New York: State University of New York Press, pp.199-222.

Business norms and strategies make a difference in governance. Examples: insuring ships against war risk;

Michele Fratianni & John Pattison (2002), "International Financial Architecture and International Financial Standards," The Annals of the American Academy of Political and Social Science, 579, January, pp.183-199.

The authors argue for leveraging the US/UK dominance in global finance markets for purposes of regulation. "these two centers ... are the conduit of systemic risk, [and so] can establish both the rules for market access and the core regulatory and supervisory framework to deal with international systemic issues."

Hans Tietmeyer (1999), "Evolving Cooperation and Coordination in Financial Market Surveillance," Finance & Development, 36(3), September, pp.20-23.

German banker's report on setting up the Financial Stability Forum at the request of G7. The three priorities he identified included identifying vulnerabilities, making better rules and having those rules followed, and consistent rules and information flow internationally. To its credit, the FS Forum seems to publish a lot of stuff on its website. Here's a detail from the January 2007 European Regional Meeting: "Participants noted the current benign global financial conditions, which had fostered and reflected robust global growth, rising corporate profitability and financial innovation. At the same time, markets were seen to be characterised by a very low level of risk premia, especially in credit markets." No word on any, ah, vulnerabilities looming in the future. Apparently all that risk is properly priced as of January 2007.

Class discussion

Who regulates international financial markets? Not really anybody; ad-hoc committees to some extent. Bank of International Settlements. Basel Accords.

Competitive regulation theory: Financial actors are regulated by the laws of their home country, even when operating in other countries. Standards set by international bodies but enforced by states. Reserve requirements. (Here's an especially thorough Wikipedia article on reserve banking.)

Q: If competition will regulate everything, why do we need state regulators?

Q: This mode of quasi-regulation is happening in every industry. Why is it more complicated in finance? A: Low transaction cost and high volume in finance. Affects many others.

Consensus that most needed type of regulation is to slow down super-fast flow of money which causes excess volatility. E.g., tax on currency exchange.

This issue is in the public interest, so why aren't there any NGOs involved? Which ones might be? Bono/Geldof, debt relief NGOs?

Non-disclosed books: conduits, off-balance sheet. Represent a move by heavily regulated companies (US banks) to decline to be regulated.

What's the point? Banks must be regulated because otherwise they will take bad risks in search of profit and collapse, taking out other banks in the process and damaging the financial system. Without a healthy financial system, the economy can't function well. So some type and level of international banking regulation is required to have either a global or even local economies.

Canada, New Zealand, and Australia are trying to slow their economies by raising interest rates, but their currencies are rising (as the US dollar weakens and the US lowers interest rates) and, as a result, their exports are getting hurt.

Shipbuilding industry. After WWII, US had as much as 36% of the total world fleet.