Archives

(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.”

Leave a Reply

You must be logged in to post a comment.

Topics