Thursday, April 28, 2005

federalism and administrative agencies

One of the interesting things that happened during the 20th century is the rise of the administrative agency. A lot of law-making these days is really rule-making: Congress passes a broad law, which tells an agency "you handle the details". The agency then does just that, passing rules. Those rules act pretty much just like laws, except Congress didn't pass them directly. For example, the FCC decides how many radio stations a given company can own in a given market. The FTC figures out if a pair of large corporations can merge. The FAA decides how old you can be and still fly a 747. The IRS decides where and how you can submit your taxes. All of these things affect our lives just like laws, but they don't go through Congress.

Is that a good thing or a bad thing?

Well, in the Old Days, before the administrative state, the rule-making bodies tended to be the courts, who were doing it through common law. If you thought your neighbor shouldn't be allowed to raise hogs up-slope of you so that the smells and nastiness came down-slope into your back yard, you went to court. There, the judge would look at past cases. If there was already a case on point, the judge could apply it. If not, the judge would look at the closest cases, make a decision, and either tell your neighbor to cut it out, or tell you to suck it up (figuratively, of course). And that decision would get written down and (most likely) applied to the next up-slope hog farming case.

Notice, though, that that if there was no case directly on point, neither you nor your neighbor knew what the law really was until after the trial. And after you'd spent a bunch of time and money. In fact, you might not know even if there was a case directly on point, because the judge could say "that case was from a hundred years ago, times have changed, and we're not going to do it that way any more."

Nowadays, there would probably be an administrative agency that passes a regulation saying whether or not you can hog farm up-slope of your neighbor's back yard. That has a couple of advantages. The first is that you most likely know ahead of time what the rules are (unless you're playing really close to the edge, or the rule's ambiguously worded.) The second is that rules usually go through a public comment period before they come out.

Still, you can't vote a bureaucracy out of office, and CSPAN isn't camped out in front of their deliberations. So there might be an "accountability gap."

Also, it raises an interesting question: why the shift?

Is it that society's gotten more complex as the GDP's increased? Increasing GDP suggests an increasing number of interactions, which may increase the opportunities for conflict beyond what we can handle using common law techniques. Or maybe it's the other way around: maybe using regulations has made the system more efficient, so the GDP's gone up.

Or is it driven by a population increase? For a heirarchical management structure, you need a manager for every N peons, and an uber-manager for every N managers, and an uber-uber-manager for every N uber-managers, and so on. Net upshot is that the number of people in management has to increase as the number of peons does. In fact, the fraction of managers to the total population has to go up. Maybe something similar happens with rules and regulations.

Or is it driven by an increased centralization of power in the federal government? Note that increasing centralization might be good: it could make things work more smoothly since they don't have to cross as many government boundaries. It could also be bad: who's to say voters in Salt Lake City want to regulate and manage things the same as voters in San Francisco?

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