There are many ways to experience the joys of overregulation, but friends tell me that one of the finest was a dinner date in Moscow circa 1986. First, you were lucky just to find a cab: Drivers got a salary that didn’t depend on taking passengers, so many just siphoned off their gas for resale, set out the pickles and vodka, and called it a day. Local chefs, meanwhile, desperately cultivated a reputation for inedible food — their paycheck came in even as patrons kept out. Richard Epstein, who has recently been installed as the Laurence A. Tisch Professor of Law at New York University School of Law, knows this country isn’t the USSR, but neither is it quite the U.S.A. of his youth. “Once upon a time,” he writes in his new book, Design for Liberty, “I was confident that the forces of growth and prosperity could maintain the upper hand. But watching the flailing of political actors, and the drift of our economic system, I am no longer so sure.”
When Professor Epstein speaks, you listen. He is author of two dozen books, the best known perhaps being his classic Takings: Private Property and the Power of Eminent Domain (1985) and How Progressives Rewrote the Constitution (2006). In an academy that prizes specialization, he has singlehandedly taught an entire curriculum: civil procedure, constitutional law, corporations, communications, contracts, criminal law, and corporate taxation — just to take the ones that start with “c.” His comprehensive mind unfolds here in what amounts to a 200-page brief against the errors of modern American law and governance. His “central proposition” is that “ambitious social agendas introduce massive amounts of administrative discretion that are inconsistent with the rule of law.” The time is ripe for “critics of central planning” to “resurrect” the “modest and more focused classical liberal system” that progressives displaced, an order based on the “twin pillars” of contract and property common law.
What went wrong? He would answer: What didn’t? Woodrow Wilson’s Federal Trade Commission (1914) and Herbert Hoover’s Revenue Act (1932) only prefigured FDR’s National Labor Relations Act (1935), Fair Labor Standards Act (1938), and Securities and Exchange Act (1934). LBJ signed the Economic Opportunity Act (1964), Civil Rights Act (1964), and Medicare and Medicaid acts (1965), while Nixon and Ford waded into environmental protection (EPA, 1970), workplace safety (OSHA, 1970), and employee pensions (ERISA, 1974). Behind each aggrandizement of authority was the conviction that impartial experts could protect us in ways that free markets, overburdened legislators, generalist judges, and citizen juries could not. That spirit, Epstein feels, thrives. Last year saw the Wall Street Reform and Consumer Protection Act and the Patient Protection and Affordable Care Act.
Government today, in terms of sheer tonnage, means agencies. They take shape in departments, boards, and commissions. The Bureau of Land Management leases public land; the Internal Revenue Service collects taxes; the Centers for Disease Control gathers epidemiological data; the Air Force orders jets; the Transportation Security Administration removes your shoes. The more muscular agencies bring lawsuits, inspections, and criminal fines, or promulgate binding “rules” that govern banking, insurance, utilities, finance, industry, labor, professions, health, and morals. Without them, government as we know it would not exist.
Epstein, however, is unable to reconcile their power with what we call the “rule of law,” that ancient, majestic union of legal principles comprising “neutrality, generality, clarity, consistency, and prospectivity.” He sees a society choked with regulation, needlessly and self-defeatingly inefficient, ignorant of economic fact. He knows that Social Security must be dispensed and highways built; his plea, rather, is to have us recognize that “large doses of discretion” produce rent-seeking, caprice, waste, and delay. The SEC checks the free flow of information; affordable-housing schemes reduce the supply of homes; politically charged green hearings strangle investment. A California developer reports that the number of functionaries needed to issue a permit authorizing a new 2,700-square-foot building outnumbered the number of construction workers that built the thing. And the flipside of an agency’s specialization is often deep bias, whether toward management or labor, landlord or tenant, firm or investor.