REGULATORY SHAMING.

Author:Yadin, Sharon
 
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  1. INTRODUCTION 408 II. CIVILIAN SHAMING AND GOVERNMENTAL SHAMING 412 A. Shaming by Civilians 412 B. Shaming by the Government 413 C. Psychological and Moral Aspects of Shaming 418 III. REGULATORY SHAMING 419 A. What is "Regulatory Shaming"? 419 B. Types of Regulatory Shaming 425 C. Shaming Regulation Versus Disclosure Regulation 427 D. The Mechanism of Regulatory Shaming 431 IV. JUSTIFICATIONS FOR REGULATORY SHAMING 433 A. The Economic Justification: Shaming as an Efficient Means of Enforcement 434 1. Enforcement Costs 435 2. Enforcement Pyramid 437 3. Deterrence 441 B. The Democratic Justification: Shaming as a Tool for Enhancing Public Participation 443 C. The Liberal Justification: Corporations Cannot Feel Shame 446 V. CONCLUSION 448 I. INTRODUCTION

    Should the government engage in public shaming? This Article aims to evaluate administrative agencies' practice of shaming corporations into good behavior. Regulatory shaming is now at a crossroads. While some agencies are currently adopting new shaming strategies, others are rolling back such practices. For instance, an Occupational Safety and Health Administration (OSHA) rule introduced in 2016, which promoted workplace safety by naming and shaming companies responsible for safety violations that resulted in injuries, illness, or fatality, (1) is currently in the process of being repealed. (2) However, the United States Food and Drug Administration (FDA) is taking a different tack, as it recently published a list exposing pharmaceutical companies that are acting to prevent the entry of generic drugs to the market in order to protect their own branded versions. (3) The United States Securities and Exchange Commission (SEC) has adopted a new shaming strategy as well, introducing a regulation that requires companies to disclose the compensation ratio between their median employee (by salary) and their CEO. (4) In light of these contradicting approaches, now is the time to seriously explore regulatory shaming from a normative perspective. In this Article, I assert that shaming is a legitimate and efficient regulatory tactic, and examine its many advantages as well as some possible pitfalls.

    The word "shaming" is often used in the context of social media, or other types of media, to refer to cases where a person is exposed and condoned by others for an inappropriate or unseemly behavior or characteristic. (5) These practices may include, for example, shaming sex offenders for their crimes, (6) shaming parents who irresponsibly subject their children to danger, (7) and shaming college professors for being "difficult." (8) Regulatory shaming is different from these civilian shamings. It refers to situations in which shaming is undertaken as a governmental regulatory strategy by administrative agencies and not by a private person. Though other branches of government are not the focus of this Article, judges and legislators can also engage in regulatory shaming. (9)

    While there is no definitive definition of general shaming, this Article is based on the relatively broad meaning that was formulated by the well-known criminologist, John Braithwaite, of expressing disapproval with the intent of invoking condemnation by others. (10) My definition of the specific term "regulatory shaming" will be discussed in detail below, (11) but in a nutshell, regulatory shaming refers to any intentional publication, by regulatory agencies in the executive branch, of information regarding companies' misbehavior that is designed to convey a normatively negative message to the public, for a regulatory purpose. (12) The main question the Article will discuss is whether the modern administrative state should "shame" companies as part of its regulatory functions. It will examine whether such an act is efficient and legitimate, and if so, under what circumstances.

    I use the term "regulation" to refer to governmental activities intended to steer the markets through the institution and enforcement of laws, rules, and regulations aimed at private entities. (13) It relates to the function of authorized bodies that have legal powers to set standards, monitor compliance, and enforce laws and regulations with regard to private bodies. (14) The regulatees include, inter alia, corporations, businesses, industry sectors, and non-profit organizations. This type of regulation is usually aimed at the business and social activities of private markets, in which goods and services that are supplied to the public--such as health, education, communications, retail, food, and electricity--need to be adjusted and directed by some form of government intervention. (15)

    This Article aims to fill a void in both shaming literature and regulation literature, which so far have neglected to address regulation by shaming. Until now, shaming was mainly discussed in the context of private citizens, in which individuals shame other individuals, and in criminal contexts, in which the government, mostly through the judiciary, shames offenders by publishing information about crimes and criminals after crimes are committed. (16) Where shaming of corporations has been discussed in the literature, it was mainly in the context of shaming by the media and by civil society organizations. (17) Meanwhile, shaming of corporations by the government was discussed mainly in the context of criminal proceedings in courts, usually toward corporate officers. (18) Previous works on adverse publications by administrative agencies regarding corporations have focused on actions taken for informative and warning purposes, in the context of disclosure and transparency. (19)

    Unlike those previous works, this Article deals with shaming in the context of administrative regulation, introducing the concept of "regulatory shaming" for the first time. It combines shaming scholarship and regulation scholarship in order to examine shaming from a unique regulatory perspective. Regulation by shaming can be utilized by an administrative agency to help enforce administrative or civil norms, and not only to punish and deter criminal behavior. Regulatory shaming can even be used in connection with corporate moral and social responsibilities, in situations in which no legal norm has been breached.

    The Article's main argument is that shaming is a desired regulatory strategy from both normative and practical perspectives. First, regulatory shaming is inherently efficient. It can achieve regulatory goals in a quicker, simpler, and less expensive fashion than other enforcement tools. Second, it encourages citizens to play an active role in regulatory processes, advancing cooperation, democratic values, and trust between the government and its citizens. This advantage is especially important in an era in which citizens' trust in the government, its bureaucratic and regulatory systems, and the corporations themselves, is diminishing. Third, regulatory shaming does not affect regulated corporations in the same manner that shaming affects individuals psychologically and emotionally. Thus, it can be considered a soft and proportional tool in comparison with other enforcement strategies, such as criminal or administrative proceedings.

    The Article is organized as follows: Part II distinguishes between two types of shaming--shaming by civilians and shaming by the government. It discusses the main characteristics of these two categories, explores their chief justifications, and reviews key arguments against them. This Part concludes with a discussion of the moral and psychological aspects of shaming. Part III introduces the concept of regulatory shaming and outlines its features, key actors, goals, methods, and procedures. It then differentiates between shaming regulation and mandatory disclosure rules, which regulators sometimes use in order to share relevant information with consumers regarding a commodity or a service provided by private corporations. Part IV proposes three main justifications for regulatory shaming--economic, democratic, and liberal--and addresses the possible pitfalls of regulatory shaming. Finally, the Conclusion summarizes the Article and its arguments and offers some brief practical guidelines to regulatory bodies.

  2. CIVILIAN SHAMING AND GOVERNMENTAL SHAMING

    1. Shaming by Civilians

      Shaming of civilians by other civilians has metamorphosed in the internet age. (20) In the past, civilian shaming mainly took the form of "a false and derogatory statement" regarding a person or a corporation, made in a physical public space where other people could hear or read it. (21) Such derogatory statements were communicated to third parties via, for example, conversations, letters, and telegrams. (22) However, this type of shaming, which is regulated mostly under defamation laws, (23) is no longer the main arena of shaming practices. (24) The spread of social media networks, as well as other online platforms, has resulted in a substantial increase in the possible damage that public statements can inflict, as the ability to reach an extremely wide audience in a matter of seconds via online platforms has immensely intensified the adverse effects of shaming. (25) The greatly increased exposure means that online and mass-media shaming today may inflict grave harm on the person being shamed, as well as on others in their circle, and in extreme cases can even lead to loss of life. (26) Such shaming has been described in the literature as the current technological form of stoning, facilitating "lynch-mob justice." (27) According to this approach, private shaming--that is, shaming by individuals--is considered immoral, undemocratic, and disproportionate. (28)

      Private shaming usually does not relate to formal legal proceedings. (29) Rather, it is used as a kind of "social justice" tool, to punish a person considered to have acted illegally or immorally, at least in the eyes of the "shamer." (30) Though many view shaming as a harmful social practice that should...

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