The Administrative State’s Irredeemable Devotion to Central Power

I remember when I first became a libertarian. There was no Internet, just countless enthusiast flyers in the mail. One of them showed a bureaucratic overlord warning a subject, “The line in the road never shines brightly: I tell you where the line is.”

As we reckon with the administrative state’s “legitimacy crisis,” for which Philip Wallach’s “Farewell to the Administrative State?” advises “middle way” solutions, I must make a foundational observation: We are dealing with the fruits of the assumption of sweeping powers by Congress in the first instance, and the over-delegation of power to administrators atop that. Whatever the roots of the expansive administrative state (progressivism, neglect, populism, envy, cronyism, power lust; you can find books arguing each), lawmaking power left the house of classical liberalism long ago.

Granted, most want more government than I do; my own personal “Article I” limits Congress to picking a national bird. OK, I exaggerate; however a “national mammal” was just selected this week.[1] I’m the sort who appreciates Henry Hazlitt’s framing in “The Torrent of Laws”: [I]f the government confined itself to enacting a code of laws simply intended to prevent mutual aggression and to maintain peace and order, it is hard to see how such a code would run into any great number of laws.”[2]

That’s an alien idea today when legislative, executive and judicial one-upsmanship seemingly comprise an unbounded societal game of rock-paper-scissors. We would worry less about the “profound lack of trust” in our governing institutions if government remained confined to specific functions.

So what to do? Philip Wallach seems reconciled to the legitimacy of the administrative state. He seems to hold that its problems are not innate and that incremental reforms can make it efficient and responsive. We aren’t told exactly what solutions would be in his brief Cato Unbound essay, but his larger paper “The Administrative State’s Legitimacy Crisis” defines his “middle way” as one “in which statesmen lead with the guidance of experts and are made accountable to those parts of the public capable of meaningfully judging their results.”[3] That reads a tad like there are some members of the public from whom Wallach isn’t interested in hearing.

The Yes Minister joke goes, “If the right people don’t get power do you know what happens? The wrong people get it.”[4] But I am concerned less about the wrong people, and more about the existence of the power in the first place. James Madison wrote that if men were angels they wouldn’t need government;[5] and since they clearly are not angels, “statesmen” is not the label defining the kind of men that emerge in an unlimited power scenario. Nor, for that matter, do they emerge in today’s “pen and phone” scenario of unilateral executive action.[6]

Wallach asks, “Should we have allowed the administrative state into our common law home, so long ago?” He answers that we must settle for “disciplining and humbling the administrative state we have, not rerunning more than a century” of progressive rule by experts. I’m in favor of such incremental reforms, but I see the administrative state as authoritarian and irredeemable, and so I do want a “rerun.” Perhaps we can find a different “middle way” that doesn’t celebrate centrally managed health care at one extreme, and imposing dribble EPA gas cans and FDA serving sizes for breath mints at the other.

 

Rule of the Unelected

The abuses of the democratic “legitimacy crisis” cannot be described as accidental; they are conscious policy. President Barack Obama’s 2014 State of the Union pledge to use his “pen” and “phone” to implement a “year of action” with or without Congress became a taunt. Problems with a polluter? The EPA administrator said to “crucify them” to make them “really easy to manage.”[7]

The unelected do the bulk of lawmaking. Congress passed 114 bills last year that President Barack Obama signed into law. Outside the normal legislative process, though, agency regulations from the allegedly “most knowledgeable and healthy branch” numbered 3,410.

I call the large annual multiple the “unconstitutionality index.” Notionally, those rules undergo Administrative Procedure Act scrutiny, and the public gets ample time to comment. But over a third of agency rules are issued without a Notice of Proposed Rulemaking,[8] exploiting the “good cause” exemption by claiming notice is “impracticable, unnecessary or contrary to the public interest.”[9] Agency and Office of Management and Budget (OMB) cost-benefit analysis of the costliest subset does not actually exist; seven rules out of thousands had cost-benefit analyses in 2015, and 14 the year before.

Atop all this is what I’ve taken to calling “regulatory dark matter.” Agency memoranda, guidance documents, bulletins, circulars, notices (thousands annually), administrative interpretations, letters—a veritable galaxy of words—has become almost intractable and dispenses with democratic accountability altogether.[10] A Department of Labor blog post and “Administrative Interpretation” made many independent contractors employees;[11] New Housing and Urban Development guidance made landlord and home seller denial of those with criminal records a likely violation of the Fair Housing Act.[12] Some agencies have become self-contained little national governments, raising their own funds outside congressional oversight,[13] with bosses that even the president cannot remove.[14] Countless more examples could be added.

 

The Pretense of Expertise

Wallach also notes that some “argue that the best thing would be to make a clean break, chucking out such obsolete baggage as the Congress.” In short, the unification of executive and legislative power.

Shall we have an elected king? The technocrats are already willfully oblivious to the public.

The founders erected a different system, one recognizing the simple idea that most things are not public policy questions. Progressivism and the administrative state, the rule by experts, whatever one calls it, disagrees. As more of the economy falls to federal government rather than private sector management—retirement, medical choices, finance, insurance, energy, science funding and “manufacturing hubs,” critical infrastructure, control of lands and so on—the gap will grow. And progressives have done a good job entrenching themselves. Regulators have a gigantic head start in domineering frontier sectors like drones and driverless vehicles, since the government controls the airwaves and owns the roads, and will use that oh-so convenient fact to pander to emergent cronies.

Even as this “absolute imperious style”[15] threatens liberties and prosperity, administrators display a cavalier technocratic attitude. It’s not just that the FCC ought not turn the Internet into a utility via net neutrality, nor that public utilities enable rent-seeking or cronyism; rather it’s that the utility model—guaranteed profits and the prohibition of competition to replace competing networks—was the product of rent-seeking in the first place. (There may have been aesthetic problems with crowded wires, but not natural monopoly problems.)

Precision has never been the object of our minute federal regulations. It has been deployed chiefly to build the appearance of credibility. Few know that Competitive Enterprise Institute president Fred L. Smith Jr. was once a starry-eyed “planner” at EPA. Relating to me a joke symbolizing his transformation, he described the “young precise analyst” who proudly finished calculating results to four decimal places, as the older analyst looked over his shoulder and pointed to the estimate and proclaimed: “Son, I don’t know about the last decimal place, but your first one is wrong!”

 

Toward Solutions: Most Things Are Not Public Policy Questions

Wallach calls for iterative solutions. I like that, and I guarantee there are places we can meet. Valid, important approaches suggested in his broader work such as localism, justification, more agency scrutiny, and building congressional capacity relative to the executive branch are vital. But emphasis belongs too on what the Congress ought not be doing, not just what it should “do.”

Wallach hears and is sensitive to those frustrated with institutions and the disconnect between government and the citizen,  as for example when populists want to throw off the yoke but can worsen matters by creating a vacuum filled by still worse experts. Yet some “populists” on the right I’d argue do not wish to dismantle institutions. Rather they admire the institutions of limited government, and they voted Tea Party precisely to have them reestablished, a promise they have yet to see fulfilled. Wallach is right that imperfect politics can easily best imperfect populism.

Addressing a perceived libertarian “escapist” tendency, Wallach asks “how to get from here to there?” I have an answer: We start by not expanding government at each new frontier as is current practice. Again, government controls the airways but it doesn’t have to regulate drones under 1950s air traffic control; government owns roads but doesn’t have to regulate driverless cars or communications among them. Both are aggressively underway. Wallach also notes, skeptically, the libertarian wish for “anti-technocratic technocrats” to take charge and start streamlining. Yet the OMB’s Office of Information and Regulatory Affairs under Reagan was that, kinda sorta, and I bet Wallach and I could agree on a strengthened role for it in regulatory review and rule sunsetting.

Wallach respects the ideas of Professor Philip Hamburger, who accepts politics and a governing apparatus as a value rather than yielding to the populist vacuum. Hamburger would replace the administrative state with, well, Congress. When Hamburger calls today’s system a “return to our ‘preconstitutional past’” it’s a way of saying lawlessness. The Constitution was a deliberate repudiation of that, more than made clear by Hamburger when he said that the Constitution actually bans delegated power.

Wallach continues, “Indeed, the force of [Hamburger’s] argument relies on people understanding why democratic legislatures are superior bodies for decisionmaking relative to expert-led agencies.” But then: “To [Hamburger’s] credit, he acknowledges that this is sufficiently revolutionary as to feel somewhat quixotic”

But why? Why are classical liberal values quixotic? Enshrining constitutional values beyond just those that remain acceptable to modern liberalism shouldn’t be impractical. That voting to take property of a fellow citizen is today’s non-quixotic baseline speaks volumes. Even our hosts at the Cato Institute (my former haunt, by the way) called voter ignorance a threat to American democracy.[16] Of course, a remedy for excess and for voter ignorance is to make sure that government can’t do all that much damage, and that’s what the Constitution did.

Again, getting from here to there is a problem. But assume intervention is warranted; Wallach rightly proposes to “move our government’s center of gravity out of the administrative state” by challenging academic pieties and the arrogance of the ministers. He warns against partisanship in chiding us not to “blame Obama” and presumably thereby derail compromise. Fair enough, but one need only observe Obama’s own word about going around Congress, something alarming not merely to Obama’s detractors.[17] Congress should directly legislate wherever possible rather than tolerate open-ended agency regulation, or today’s dishonorable “informal” guidance. Confronting the obsolescence of decades-old statutes is a necessary, fundamental task, as David Schoenbrod has argued with respect to environmental regulation.[18]

Wallach wants evidence that Congress can “actually do the work of an intermediary.” If that’s the case, he might support the Regulations from the Executive In Need of Scrutiny (REINS Act).[19] Nothing in play now would go so far to make Congress directly accountable for what agencies do, in this instance by requiring a vote on “major” regulations. REINS would require owning up to major and controversial government mandates, and more importantly would change the calculus of future lawmaking. President Obama promises a veto, but I submit that you’ll stop hearing about REINS if Republicans keep congressional majorities and gain the presidency; entrenched regulatory rents may be too powerful for them.

Wallach observes that “If Congress actively demonstrates itself to be a body devoted to zero-sum posturing…a technocratic state [will] look relatively appealing.”  Yet anger is not directed only at the administrative state, but also at a Congress that cannot or will not stop it. The populist right’s perception is that Congress enabled the administration’s pursuits (spending, Obamacare), which is a big part of the “legitimacy crisis.” Such people aren’t tempted by agency technocrats; they want to see Congress get things undone, not get things done.

Wallach urges libertarians like me to join the call for “disciplining and humbling” the administrative state rather than “rerunning” some libertarian, non-technocratic past. I’m partly there, but the administrative state doesn’t even follow its own rules, and it’s getting worse with the rise of dark matter.

Still, I am certain we in this symposium shall find common ground on middle way, so to speak. Some of the past’s best proposals have required bipartisanship. Sen. Ted Kennedy helped drive transportation deregulation.[20] It was Lloyd Bentsen who proposed a regulatory budget,[21] an idea now in play again in the House Budget Resolution. It was Sen. Mark Warner who proposed a modest “one-in, one-out” for regulations, something being tried in Canada, the UK and the Netherlands. Whatever today’s disconnects, cooperation will occur again with urgency if the economy recovers more robustly and interest rates rise.

As we push Congress to take on its proper role, we might also attempt to enlist the executive. It certainly must be the case that if executive power is acceptable to progressives in 2016, it shall be so again in 2017. Reagan’s executive order 12291 brought rule counts and Federal Register page counts down by a third. We had a pen and phone that curtailed liberty, we can have “liberty’s meataxe” to expand it (within bounds). In 2012, for example, Mitt Romney urged passage of REINS, but vowed that if Congress didn’t he’d still forbid agencies to put rules in effect without Congress’s approval.[22]

Real “technocratic expertise” entails not curtailing liberty and substituting political choices for private ones, but discovering and extending institutions of liberty and voluntarism, and patrolling for ways to lessen the scope of the state in private concerns. Just for example, allocation systems for private property rights remain in their infancy (airsheds, watersheds, drone corridors, roadways, and intangible property) and require extension, not the obliteration they get at the hands of administrative bureaucracy. Such is the challenge of expertise in complex modern society: not to pretend to run things efficiently, but to help make sure healthy institutions enable the rest of us to do so.