We Regulate What We Don’t Understand

In the first few decades after the founding of our great Republic the role of the federal government was essentially to deliver the mail and protect us from threats like the still brisling British Empire and the bipolar French. Over time, through spasms of progressive idealism, the role and power of the federal government has expanded. Scholars, gadflies, politicians, and philosophers have spent lifetimes arguing about the benefits and dangers of government expansion but whether you’re for or against it the reality is that the shapeless all encompassing whatever it is that we refer to as ‘the government’ continues to grow.

So I am confused (a feeling I deal with most of the time so it’s kinda like my safe place) as to why we’re now hearing that corporate domination of Washington is the cause for everything from the financial meltdown to the oil spill in the gulf. I think it’s safe to assume (of course it’s not but I’m playing economist here) that most of the voting public understands that businesses contribute billions of dollars to political campaigns and political action committees (PACs). We can also assume with little risk that the same organizations hire thousands of lobbyists and fund associations to represent their interest. Finally, this game has been going on for a long time and it’s not just big business that plays. Groups as diverse as the NRA, MoveOn.org, and the Teamsters all fork over tons of cash to influence government action. Sure they’re probably outspent 10 – 1 but many of the non-business special interests can compete with the oil companies and banks through the use of voters as currency.

The conundrum, I believe, is that there is something akin to a physical law of the universe at play here. As government expands the opportunities to influence government also expand. Build it and they will come, wearing nice suits with long donor lists in the pockets and attractive ‘analysts’ who would like to meet with you after work for a few drinks to discuss this or that or who need you as a keynote speaker at a conference in Fiji, all expenses paid of course.

So if government expands on the premise of helping to provide services not adequately provided by the private sector or to regulate services to protect citizens from the foibles and shenanigans of those private sector hooligans, one would think that said services and regulations would be developed and operated to serve and to regulate as intended. Sure, if one was huffing a can of keyboard duster every three minutes. Truth be told (more precisely the shade tree economist’s version) the expansion of government as presently conducted, especially in terms of regulation, favors those being regulated more than the stakeholders supposedly being protected.

How’s that? When a real juicy piece of legislation is introduced, say healthcare reform or financial reform (the next time I get mad at my kids I will implement TV reform or video game reform) that’s too big for a rep’s staff to handle they enlist the Office of Legislative Counsel, a small band of intrepid public servants who impartially draft legislation. But 40 lawyers can only do so much and that’s where lobbyists come in. I won’t get into details (because that would require a lot of effort) but it’s not as simple as someone showing up with briefcase full of unmarked bills and getting a little somthin’ somthin’ for the effort. As John Dickerson marvelously points out in a 2006 article in Slate, the way to a Congressman’s vote is through his clueless and overburdened staff. A deft lobbyist will insert himself into the legislative process as an expert or a connection point to experts who by wonderful chance say just what the lobbyist told you at the Super Bowl but with reams of data and footnoted research.

So as government expands its not the corporate takeover of government we should be concerned about, it’s the government takeover of corporations. Yes, those greedy bastards from Goldman-Sachs and BP blew up the financial system and a mother of an oil well but they were allowed to. Instead of offering simple and clear laws with stringent penalties and no loopholes, we get thousand page laws with more escape clauses than a Florida building inspection. The offices of government charged with enforcing these laws are mostly overseen by Congress. Need I say more. And yes, you’re right if you’re thinking what a wonderful score a lobbyist has when they are present at creation, through implementation, all the way to enforcement.

When government takes upon itself the responsibility of managing something it doesn’t understand it becomes a cat’s paw for those that do. There is a tipping point at which regulation turns from useful and thoughtful to promiscuous and negligent. My guess is we passed that point around the Grant administration.

Later