(Continued from “Wonderful Life,” Part IV; see “It’s a Wonderful Life,” American Political Edition (Parts I-V) for all five parts combined and revised)
“Finally,” said the angel, “let’s look at what your country and world would look like without the rise in America of the Administrative State, through which to regulate the complex modern economy.”
“Without the regulatory agencies that promulgate regulations, conduct hearings and inspections, license facilities, and engage in a complex web of tasks necessary to implement the laws passed by Congress, we would live in a far more insecure and unhealthy environment. Incidents such as the infamous ‘Love Canal’ toxic waste dump beneath a housing developing, causing an astronomical rise in cancer rates, would be the norm rather than the exception. The manipulation of markets, such as those by Enron which caused the California energy crisis of 2000-2001, would be constant and economically devastating. Confidence in investments would plummet, the economy would contract dramatically, and the financial system near-collapse of 2008 (resulting from underregulated financial markets) would be a constant and continuous event rather than a once-in-a-century crisis.
“The absence of the regulatory structure that has developed since the 1930s, and under the Administrative Procedure Act of 1946, would be akin to removing the mortar from between the bricks of the modern economy. The entire edifice would be less securely bound together, more unstable, and more likely to collapse. Those sheltered within it would feel every cold wind that blows through and storms would whip through it with discomfiting regularity. Market failures would dominate the economy, and health and safety violations would be constant and ubiquitous. Commercial enterprises would know that they could sell toxic and dangerous substances with impunity, recognizing that there is more profit in not paying the costs of avoiding doing so, and a niche would emerge for those that compete by avoiding such costs, simply changing names and products each time information of the health and safety risks made the old one unprofitable to produce and sell.
“The already underfunded Food and Drug Administration would leave even more food and drug safety responsibility to the companies that have a vested interest in overlooking foreseeable dangers. The New York Times reported (September 28, 2007) that due to defunding the FDA audits less than 1% of clinical drug trials in the United States. As a direct result we have increasing cases of pharmeceutical companies fudging of results of drug trials, leading to waves of preventable deaths, such as occurred in the cases Propulsid (Johnson and Johnson), Bextra and Celbrex (Pfizer), and Vioxx (Merck).
Similar stories of the consequences of deregulation and defunding of regulatory agencies can be found in food safety (increasing salmonella and E. coli contamination, even after cases have been found and companies have been asked to address them), and product safety (such as children’s toys, imported from China, containing lead in seriously toxic quantities, undetected due to underregulation of imports). The more we ‘shrink government’ by reducing regulatory oversight even more, the greater the frequency of such incidents will become. In the unregulated paradise that some in America are striving for, life would be, literally, ‘nastier, more brutish, and shorter.’
“While there are some dysfunctional dynamics that lead to the production of laws that are thousands of pages long (e.g., earmarks, and other porkbarrel spending provisions; and controversial riders designed to piggyback on necessary legislation), the main reason is the complexity of the social institutional landscape that those laws are addressing. And those laws, even with their tens of thousands of pages of qualifications and provisions, don’t even begin to anticipate all contingencies, all unexpected consequences, all complexities that will emerge as the law is implemented. For that reason, regulatory agencies are necessary to implement the laws, to address those complexities, to adapt the execution of the law passed in Congress to the realities of the world to which it will apply.
“It is a very information-intensive enterprise, with an amazing amount of very precise expertise embedded in these organizations, able, for instance, to research the precise cancer rates associated with each commercial chemical substance on the market, or incorporated into items on the market; the ways in which these substances move through the environment and contaminate human beings; the probabilities of contamination and of contracting associated diseases from contamination; the fatality rates of doing so; the costs of regulation at each level; the balancing of legitimate economic concerns with legitimate health and safety concerns. The same kinds of calculations are required to oversee the use of public lands, the mining of water from aquifers and of minerals from the Earth, the emissions and dumping of toxic substances into the air and water and land; the determination of where to build roads and interstates and how to balance all of the concerns and interests involved; the determination of where to allow coal plants and nuclear plants and other installations to be built; the determination of what kinds of safety devices and scrubbers they require; the oversight of all of these protections and provisions without which we would all be dramatically worse off.
“Our economy has been growing (and continues to grow) in complexity at an accelerating rate. For example, the use of supercomputers programmed with complex algorithms to buy and sell stocks in order to reap gains made in fractions of a second distort the market, caused a freefall several months ago that rattled investors and required shutting the stock market down, and creates a competition for locating the computers closest to the stock market servers in order to receive the information milliseconds before competitors. The market collapse caused by a malfunctioning algorithm resulted in an enduring loss of perhaps billions of dollars to investors, as the market had to creep back up, in a context of diminished investor confidence, from the depths to which it had plummeted. We need regulatory agencies equipped with human and material resources capable of keeping up with the tens of thousands of similar demands on them, if we want our market economy to continue to function, and to do so in the interests of all rather than at the expense of the many in the interests of the few.
“Yes, many of the problems that would occur in the absence of such a regulatory structure still occur with it; the poor are still burdened more than the rich by undesirable facilities in their neighborhoods; acquiescence to economic necessity still often triumphs over public health and safety; the interests of corporations still works its way through the system in a variety of ways at the expense of the public without always being off-set by a commensurate economic benefit; “industry capture” of regulatory agencies to some extent puts the foxes in charge of the henhouse. All of these problems diminish the degree to which our regulatory infrastructure efficiently and effectively does what almost of us implicitly recognize to be necessary and desirable. But the absence of our regulatory infrastructure would erase the performance of that function altogether, and the significant shrinkage of it that periodically occurs under Republican administrations almost always results in catastrophic effects, with a regularity that is matched by the public disregard of the repeated lesson.
“To be sure, throughout this tour of an alternate reality, I have ignored the ways in which a strong centralized federal government, an ‘activist judiciary,’ and the rise of the administrative state have led to negative rather than positive outcomes for both Americans and the world (perhaps more the latter than the former, since a strong America has been strong to its own citizens’ advantage, and only when it incidentally served those interests to the advantage of others who did not belong to that club. See “Democracy IN America,” But Not BY America). But the danger in America today, the one that most needs remedy, is not an exaggerated belief in the virtues of centralization of governmental power and effective political coherence, but rather an exaggerated belief in something that does not and cannot exist in the form imagined, a Liberty Idolatry, and so that is the imbalance that I have addressed.
“Those poetic aspirations of your national youth were what defined your spirit and channeled your energies. They still guide you today. But meeting real responsibilities as they arose is what carved you into the more-often-than-not admirable world citizen and leader, and reliable agent of your own people’s interests, that you have become. The world, and the people at home who give the federal government life and whose lives that government in turn embues with expanded opportunities, would be poorer for the partial death that some would impose on this vital vehicle of your spirit. The demands that you’ve risen to meet through it were not optional, could not have been disregarded. And idolizing rather than respecting the guidance given by our founding leaders and documents is an insult to them, and a disservice to those alive today, as well as those who will be alive tomorrow.”
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As I began to discuss in the third installment in my series on “Political Fundamentalism”, “Liberty Idolatry,” the notion of individual liberty divorced from recognition of social interdependence just makes no sense. We are all aware of the most dramatic limitations on individual liberty in service to mutual responsibility: Laws against violence and predation. We are not free to act in ways which hurt others for our own benefit. Everyone understands, implicitly, that that is the limiting factor in defining individual liberty: One’s freedom ends where another’s rights begin.
We each have the right not to be assaulted, robbed, defrauded, or otherwise victimized, though there can certainly be legitimate debate over how far the law should reach to protect each from the victimization of others (few, for instance, would recommend criminalizing being a dishonest and self-serving “friend,” and the gray area between that which obviously should be legally prohibited and that which obviously should not be is bound to be contested terrain).
But, while most would agree that poisoning someone else is not an ambiguous instance of when my liberty to poison ends at the point where your right not to be poisoned begins, many can’t even contemplate the possibility that poisoning the air or water with toxic wastes might fall into a similar category, and that governmental regulations preventing it might be as necessary and appropriate as governmental enforcement of the law against poisoning less incidentally.
My point is not to argue that there is no difference between the two: Some relevant considerations are how harmful to others something is, how much an action harmful to others is also helpful to others, and how much something harmful to others is a traditionally acceptable practice embedded in our social norms and customs. But all acts that are harmful to others fall on the continuum defined by these variables, and all must be subjected to an analysis weighing them in a well-reasoned manner. And that is exactly what our regulatory agencies do, in a very well-developed procedure that explicitly considers all of these dimensions, and involves both experts and the affected public in the process.
It should be obvious that the need to balance the liberties of each against the rights of others permeates our social institutional landscape. One can argue whether it is enough to inform consumers of unhealthy or dangerous ingredients or parts in consumer goods, and that to fail to do so should be criminal in the same way that other intentional or reckless inflictions of harm are. But none can argue that that is sufficient for by-products of commercial or private activities which adversely affect others who are not willing participants (such as consumers of given products are). The demands imposed by our interdependence simply cannot be denied.
There are many gray areas to be discussed and explored: At what point does your right to smoke infringe on my right to breathe unpolluted air? At what point does your right to engage in unhealthy and dangerous activities infringe on my right not to have to bear the public costs (e.g., higher insurance premiums for those who do not engage in those activities, and higher tax burdens to pay for the emergency services sometimes involved)? Defining where one’s liberty ends and another’s rights begin is an information intensive, case-by-case requirement of good governance, and one which cannot simply be ideologized away.
This is just one of the many ways in which the Small Government Idolatry of the political fundamentalists is untenable: We need as much government as we need to address the challenges that government has to address. Doing so with complete consideration of all relevant concerns does not mean imposing one and only one imperative on government (that it be shrunk), but rather weighing all concerns in a complete c0st-benefit analysis, on a case-by-case and comprehensive basis. The concerns expressed by Tea Party fundamentalists are not irrelevant; they simply aren’t the only relevant concerns, nor the only relevant considerations. Often, ironically, they even lead to a government that is both more expensive and less functional (avoiding proactive services that both increase human welfare and reduce more crushing reactive costs).
Perhaps the best way to conceptualize how to balance all relevant considerations is captured in John Rawls’ “A Theory of Justice”, since a fully-informed and rational decision about what social institutions and policies would be optimal from a position of not knowing one’s own location in the social firmament (including not knowing whether one would be alive today or in the future) would include consideration of both the value of personal liberty and the value of being protected from the harmful effects of others’ exercise of their personal liberty. It would also include considerations of economic consequences, including a balancing of efficiency, fairness, and sustainability. Public policy subjected to the tyranny of a single fixation is harmful and destructive; public policy which balances competing values and concerns is healthy and rational.
Debates over where to draw the line are necessary and useful; debates over whether to draw the line are absurd and dysfunctional. Those political fundamentalists who fight tooth and nail to impose an absolutist, unbalanced notion of “liberty” on the rest of us are not contributing to a healthy public dialogue over how best to govern ourselves, but are rather arguing outside the bounds of reason, trying to advance the cause of harmful irrationality.
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Colorado has several comparative advantages that position us to combine a commitment to the preservation of our natural endowment; a commitment to the preservation, refinement, and expansion of the pleasant lifestyle that many enjoy in our beautiful state; a commitment to contributing to the development of the New Energy Economy (an inevitable component of future global economic development); and a commitment to fostering the most robust, sustainable, and equitable state economy, and most proactive, efficient, and effective state government possible.
Our natural endowment, particularly our spectacular mountains, are an economic asset both directly, in the tourism industry, and indirectly, as an attractor for investment capital by those who want to locate small start-ups, particularly in high-value-added information-intensive economic sectors, in the most attractive locations possible (since such sectors have no geographic constraints). And, of course, many Coloradans treasure our natural beauty for its inherent, aesthetic and recreational value, considering it to be one of our greatest assets, even independently of economic considerations.
For these reasons, we need to place a very high emphasis on the preservation of this endowment, carefully regulating other industries and practices (such as mineral extraction) that pose a threat both to the environment, and to public health and safety. Fortunately, despite erroneous ideological assertions to the contrary, mineral extraction, as an economic enterprise, is not highly sensitive to regulations or severance taxes, since there is very little flexibility in where minerals can be extracted (they must be extracted where they are found). Furthermore, since extracted minerals are sold in national and international markets, the increased costs of state regulations and taxes have only a marginal effect on market prices. In other words, the benefits occur within the state while the costs are distributed all over the world. For these reasons, sound policy requires that mineral extraction be a well-regulated and taxed enterprise.
Not only is Colorado rich in minerals, but it is also rich in sun and wind and the researchers and institutions doing the most to tap the energy contained in them. The future can rarely be predicted with confidense, but one thing that is virtually certain is that clean, renewable energy technologies are a growth industry, and will be enormous economic engines in the not too distant future. Foresight pays off in the long run. Investing in the New Energy Economy today, despite the modest size of that economc sector at present, and regardless of short term ups and downs in the market for “green energy”, is sound economic policy, and a smart move for the state of Colorado.
Our natural endowment is part of our pleasant lifestyle, with hiking trails, ski runs, rocks to climb and mountain rivers to float down, and spectacular vistas to appeal to all who enjoy nature’s wonders. But the Colorado lifestyle extends into our cities and suburbs as well, with excellent cycling opportunities, beautiful pedestrian malls, open spaces, and an increasing investment in the combination of excellent public transportation and sustainable, localized, aesthetically pleasing urban development. Continuing in this direction not only provides Coloradans with the benefits of all of these public goods, but also attracts the entrepreneurial capital of precisely those kinds of small start-ups that can create the most robust state economy possible. We live in a world in which the most information-intensive industries (e.g., computer software, and cutting edge technologies) create the greatest number of high-paying jobs, and contribute the most to the local and global economy. And such start-ups in such industries locate in places that provide the combination of natural beauty, pleasant life-style, and infrastructural investment that Colorado can provide, if we pursue wise policies.
But to attract such investment capital, and the young professionals and their families that bring it, we need to provide, competitively, what they are looking for: A well-developed human and material infrastructure on which they can depend, and the assurance of the availability of excellent and affordable public and higher education institutions for their children. We are currently, disgracefully, near the bottom of the country in investment in both public and higher education, and that is a very powerful disincentive to small information-intensive start-ups to locate here. More importantly, it is a moral failure on the part of the people of Colorado. As much of a cliche as it may be, our children are indeed our future, and failing to invest in them, to provide them with the best education possible, simply because an alliance of popular economic platitudes and well-funded corporate interests have displaced economic analyses, is a choice that can end up crippling and impoverishing this state, when nature has endowed us with such soaring opportunity.
There is a clear path forward for Colorado, a coherent strategy that preserves our natural endowment, fuels our economy, and secures a high quality of life for our residents. We need now to make sure that we elect the people, and cultivate the public commitment, to realize this vision, and create a more prosperous, sustainable, and opportunity-rich future for all Coloradans.
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