MEASURING CROSS-SECTORIAL LAW ENFORCEMENT CAPACITY OF REGULATORY AGENCIES IN HUNGARY.

• Author: Gajduschek, Gyorgy

1. The (social and research) problem

   It is a recurring finding of both local and international researchers, as well as various international organizations, that law enforcement or the implementation of legal decisions is insufficient in Hungary, and in post-communist states generally. Since the book 'Implementation' was first published four decades ago (Pressman and Wildavsky, 1984), researchers of the policy process have been/are increasingly aware of the fact that adopted policy decisions may greatly change during the implementation process (Howlett, Ramesh and Perl, 2003, pp. 185-204, especially pp. 188-189). Their systematic failure of implementation is a persistent weakness of public administration, both in Central and Eastern Europe generally (Dunn, Staronova and Puschkarev, 2006) and in Hungary specifically (Hajnal, 2005; Hajnal, 2010).

   This paper addresses the implementation of policies relying on regulation as a policy instrument. More specifically, the paper aims at measuring the regulatory or law enforcement capacity that, for the purpose of this paper, is defined as the ability of regulatory agencies to deter potential law-breakers. Regulatory agencies are typically not empowered to make rules themselves in Hungary; they are responsible solely for overseeing compliance with laws enacted by the legislature or other executive actors (i.e., Cabinet decrees). These agencies play a pivotal role in enforcing legal rules in Hungary (Hajnal, 2012). Regulatory agencies can be found in the fields of consumer rights protection, food and drug safety, work safety, control over bank and insurance activities, environmental protection, and special control over various fields of business activities, like mining, gaming, wine production, transportation, and energy services.

   The activity of these agencies, such as issuing construction permits, controlling the construction of family homes, or determining whether a particular garden is kept in an acceptable way, extends not only to firms and other legal entities, but individual citizens as well. The state attorney's office and criminal courts are involved only if the penal code is breached. Most offenses, however, are handled by regulatory agencies, which determine and apply sanctions. The law enforcement activity of agencies (including certain departments of municipal offices as well) may involve on-the-spot inspections and other ways of monitoring the potential infringement of laws, as well as applying penalties, almost exclusively in the form of levying fines. In sum, these agencies play a dominant role in implementing regulatory policies.

2. An overview of relevant literature

   The interest in taking feeble implementation in the region as a research topic occurred first within the framework of governmental, policy, and administrative capacity (e.g., Nunberg, 1999; Goetz and Wollmann, 2001). Nunberg (1999, pp. 241-242) notes that laws are frequently not implemented, whereas Dimitrova (2010) argues that informal rules could be more relevant than laws in administrative reality. Goetz (2001) draws on the similarities to Latin America, in that regard.

   The accession of Central and Eastern European countries (CEEC) to the EU has stimulated further interest in policy and related research. The problem of ineffective law enforcement, or--in policy terms--the 'implementation gap' has been raised in reports prepared by the European Union on Hungary (European Commission, 2003) and on countries of the region generally (European Commission, 2002, especially pp. 55-56). OECD-SIGMA, as early as 1998, highlighted the great difference between adoption and implementation of EU laws in the region. Since accession, the implementation gap has not diminished. Discussing the field of labor laws (working time, equal treatment), governed mostly by regulatory agencies, Falkner and Treib (2008) and Falkner et al. (2008) classify the implementation style of new member states as the 'world of dead letters'. Dimitrova (2010) treats this implementation gap as a dependent variable (i.e., as a fact not needing to be proven) and seeks potential explanations for the phenomenon. Investigations of specific administrative fields have concluded similarly. For instance, an OECD report (2007, p. 2) on environmental protection noted: 'The implementation gap persists. The basic legal and policy frameworks are often in place and keep improving, even if further important reforms are still needed. The real problem is implementation ...'. Batory (2012, p. 67), writing in the field of anti-corruption laws, finds that 'policy design problems are compounded by a very evident implementation problem'. Meyer-Sahling (2011) provides another good example from the field of civil service policy. In sum, dozens of studies argue that policy implementation in Central and Eastern European (CEE) countries and in Hungary is weak generally, and particularly in terms of executing laws.

   Empirical analysis of implementation and implementation capacity in CEE countries is surprisingly scarce, and what exists is limited in both scope and methodology (Treib, 2008; Sedelmeier, 2011; Angelova, Dannwolf and Konig, 2012). Most of the studies focus on the implementation of EU regulations within the theoretical framework of pre- and post-accession compliance, where 'conditionality' is a key word referring to the ability of EU institutions to force national governments to adopt the acquis. Implementation occurs typically as 'compliance', which, in this context, refers to the EU-national government relations, and as such has not much to do with effective implementation of policies at the local level (Hartlapp and Falkner, 2009.) As Sedelmeier (2011, p. 26) notes: 'Studies ... focused most on formal rule adoption, i.e. the legal transposition of the acquis, but a key issue [would be] ... practical implementation on the ground ...'. Indeed, empirical analysis in this field is limited to a few studies, mostly of Gerda Falkner and her colleagues.

   Most of the empirical studies focus on specific policy fields, such as environment protection, anti-corruption, and antidiscrimination policies (see Krizsan (2009) and most articles in that journal volume). To that end, there exists a reasonable doubt about the generalizability of findings, as Falkner and Treib (2008, p. 310) explicitly indicate.

   Somewhat surprisingly, there are hardly any comprehensive empirical studies on implementation focusing specifically on national policies, irrespective of EU conditionality. The few studies that investigate effective, street-level implementation rely predominantly on expert interviews and the judgments of one or a few experts. Surprisingly, implementation studies that would utilize such self-evident information sources as agency databases and/or statistics can hardly be found. In fact, I could not find any publication that (i) addressed the question of 'implementation gap' in several agencies or policy fields (ii) relying on the availability of administrative information (iii) in the CEE context generally or in a country. There are two main reasons why agency data are not used in this regard. First, agency statistics may not be available for research (or for the public) in a particular area. At the time of this research, the agency statistics which we were able to obtain existed only at some agencies and on select issues. (Though, when we wanted to repeat the research in 2012 we found that most of these agency statistics were not available anymore.) Second, the 'standardizability' of data is questionable. How could we compare data from the work safety sector to that from highway patrol or construction control? The method suggested, applied and reviewed below makes standardized study of implementation in various policy fields possible. The aim of this paper, thus, is to propose and apply a method to measure the ability of regulatory agencies to effectively enforce laws. The proposed methodology allows for measuring quantitatively the agencies' potential for effective law enforcement. The method can be applied to diverse administrative fields and in various countries. Furthermore, the method may provide some explanation of the presumed incapacity.

   In the next section, a simple model will be presented, that allows the assessment of regulatory agencies' performance. It is argued that this model fits best to the task, even though it has some limitations, which are also discussed briefly. First, the applied methodology, then the findings of the research will be presented. Two specific cases will be reviewed in greater detail, and then overall findings in several fields will be presented in numeric format. Finally, the paper attempts to answer the two ultimate research questions: (i) can law enforcement capacity, as defined above, be considered effective? and (ii) is the proposed method appropriate to provide a general cross-sectorial measure for question (i)?

3. Methodology

   3.1. The model applied

   The proposed model emanates from law and economics. Our starting point was the simplest approach to deterrence and/or sanctioning. Becker (1968), in his seminal work, laid down the economic model, which has been further discussed and elaborated by Stigler (1970) and Posner (1985) among others. However, several elements of these models were omitted from ours. In fact, a simplistic rational choice model is offered here based on the presumption that social actors circumvent laws if it is worth it for them and would not do so if the expected penalty is higher than the benefit one expects to gain from breaking the rules. In other words, we compare the expected penalty, typically the monetary value of the fine, and the assessed monetary value of the potential gain from breaking the law. If the gain (G) is larger than the expected fine (E), then we hypothesize that a rational actor will break the law. The expected fine is calculated according to the Neumann-Morgenstern...