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In a recent article at Bloomberg View, Harvard law professor Cass Sunstein discusses “an important but widely overlooked speech” by Elizabeth Warren, in which the Massachusetts senator bemoans the influence of powerful industry groups on the regulatory process. To Warren, the problem is not overzealous administrative bodies, eager to impose unwanted, unnecessary new rules, but regulatory capture — the notion that regulation is, in the words of economists Michael E. Levine and Jennifer L. Forrence, “simply an arena in which special interests contend for the right to use government power for narrow advantage.”
Libertarians have been touting the insights of regulatory capture theory for a long time, and its ideas are simple enough: Special interest groups have both a concrete incentive and the resources to engage in the convoluted minutiae of the regulatory process, whereas the citizenry at large has neither. The general population doesn’t have the time, money, or the inclination to engage in byzantine federal rulemaking affairs, which means that well-organized pressure groups have a significant advantage and, importantly, an opportunity to tailor rules not for the public good but in accordance with their own interests.
It is refreshing to see a prominent progressive acknowledge this conundrum, particularly because the modern administrative state, often called the fourth branch of government, is a distinctly progressive invention. At the beginning of the twentieth century, during the Progressive Era, reformers began to see the Enlightenment principles of traditional or classical liberalism as outdated and obsolete, at odds with new scientific and political thinking. Guided by the objectivity of science and therefore free of bias, federal experts in new executive branch agencies would work with academia, think tanks, and the private sector to chart the correct course, to rescue society from the perceived precariousness and chaos of laissez-faire.
The problem, of course, is the one that Warren highlights: Even if we assume that sclerotic bureaucracies are able to identify the ever-elusive “public good,” what incentive do they have to serve it and not their own ends? Progressivism and its crusaders simply never bothered to answer this fundamental question; their solution is always to further concentrate power in the executive branch of the federal government, in unaccountable, unelected “public servants.” As is so often the case, there is a grain of truth of Warren’s speech, but one that is quickly lost to basic misunderstandings about the interactions between the government and the economy. In all of her worries about the dangerous power of special interests, Warren seems not to realize that as the power of the administrative state has grown, so too has the list of perquisites available to it and the opportunities for corruption and collusion.
Today’s libertarians and conservatives believe that limited government, individual rights, and robust private property never stopped being good ideas, that the progressive administrative state gives far too much power and discretion to supposed experts — power that is rightly vested in the free and voluntary spheres of civil society. Moreover, we challenge the legal bases of the administrative state as a constitutionally-suspect revival of, as legal scholar Philip Hamburger describes it, “the era of the prerogative,” a time of arbitrary class rule.
The administrative state and its “law” represent a return to a government of men rather than law, based on the idea that we need not worry about pesky notions of the separation of powers. Constitutionally limited government isn’t some aesthetic fetish of libertarians and conservatives; it is a pragmatic response to the problems associated with concentrated political power, an attempt to divide that power and prevent the kind of political economy that sadly obtains today, government picking winners and losers.
Real regulatory reform — that is, reform that actually addresses the fundamental problem — means retrenchment, diminishing the authority of the administrative state and dispensing with millions of its pernicious rules.