The Administrative and Regulatory State

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It can be argued that those features of our government most closely related to the people, namely, the legislatures and the chief executive, be he or she the President or the governor of a state, have little to do with actual governance today beyond people management, getting the right people into high-level jobs as commissioners or cabinet chairs, and ushering budget bills through Congress. One has but to examine the so-called “signature” pieces of legislation attributed to our last four Presidents. The middle two had but one each, the Affordable Care Act that enabled as many as 20 million Americans to obtain health care insurance but left the very troubled health care structure in America untouched, and the tax reduction act that produced enormous deficits (it was accompanied by increased spending by our last Republican President) and largely benefited the rich—it was called “the Heist” by the Center for Public Integrity. President Biden, profiting in a way by the necessities imposed by Covid, has the best record of the four, but most were adding necessary funding to existing programs. President Bush’s record includes getting into a war with Iraq after 9/11, a dubious distinction; the rest were hardly breathtaking.

Meanwhile, the federal government’s more than 430 agencies ran and run the country. Around 60 of these agencies operate largely independent of the President. He (or she, someday) appoints commissioners, with Senate approval, usually under the condition that each party be equally represented, but cannot remove them except for cause. The FED, the Post Office, the SEC, and the Federal Trade Commission fall within this latter category. These agencies grew out of a model established by the Interstate Commerce Commission (1887) designed to regulate railroad pricing. The ICC began as an advisory group to the Congress, but soon acquired administrative powers through a commission that was, by law, required to have a politically balanced set of commissioners, providing a level of independence from the partisan positions taken by any President. (The ICC was closed in 1995, living for more than a century, but some of its duties were relocated to other independent agencies.) We can see this partisan effect in the Environmental Protection Agency (EPA), not one of the independent group. Under Bush the EPA was given as its top priority economic development (this paradoxical demand is true); Obama restored its original mission and added the effects of global warming; the next President removed this mission and shrank its size considerably, appointing chairs with no experience in the field; President Biden is restoring its size and charter but precious time has been lost in the battle. Meanwhile, the EPA’s 17,000 employees, including 2500 lawyers, peddle along in pursuit of the EPAs central mission of protecting the environment, suing those who pollute, studying and testing the atmosphere, and generally working on behalf of the people but with no elective relationship to the people.

This regulatory and administrative state exists in all states as well as the federal government, and in all large cities. It also exists in every developed nation on earth. Its origins are everywhere the same—compensating for the inequities and damage caused by free market economies, without which economies modern life is inconceivable, one of our central tensions. The best study of free market economies with which we are acquainted was written by Marx in his Communist Manifest of 1848. Ignore his preposterous argument for the withering of the capitalist state and some unfathomable utopia following. Ignore his very simple-minded claims for the class struggle and a proletariat of one mind. But pay attention to his claims that free markets tend to concentrate economic power in fewer and fewer hands, tend towards monopolies, promote growth, over time will require cooperation between businesses and governments, and will over time expand beyond national borders. Check, check, check, check, and check. The ICC mentioned above came into existence precisely to offset these very tendencies within the railroad business while protecting the third key property—growth. The 1890 Sherman Anti-trust Act hoped to limit monopolies to retain competition in the markets, largely to protect natural mechanisms for price controls and consumer access. Many of the acts passed under Roosevelt during the Depression and under Johnson following the Civil Rights Movement had the effect of redistribution, moving money from the wealthy through the government to those struggling, or in need of education, or health care, or housing, or food. Note that the principal index of inequality in America is money.

It is easy, and commonplace, to deplore the “unelected” state as one derisive book calls it. The general argument is waste, inefficiency, invasion of private rights, and isolation from the people. Yet every President after Roosevelt except Bill Clinton increased regulations and spent more money on discretionary domestic programs than their predecessors, including Ronald Reagan. The Code of Federal Regulations has grown from 20,000 pages in 1954 to 185,000 pages today. Republican Presidents have targeted specific agencies like the EPA, largely one suspects to satisfy the oil companies, but they have increased domestic regulations like the rest in aggregate.

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We noted this effect above, and suggested that the wisdom of the Federalist Papers applies, namely, that governments must have means commensurate with their duties, which duties will necessarily change with time. The preponderance of total government spending in America now goes for health care, social security and related social services, public education, infrastructure, the military, and debt service. A few Republican legislators, usually in the House, wave around proposals to cut Medicare and Social Security, but no serious proposal of the sort has ever hit the floor or is likely to hit the floor. Public education likely needs more money, not less, and the Infrastructure Bill under Biden fell short of full infrastructure repair by 50% according to the most conservative claims, 75% by more aggressive estimates from engineering firms. Health Care clearly needs help, with administration eating 25% of total costs according to some estimates, but no elected official has proposed anything resembling a serious program to either reduce administrative spending or transfer administrative spending to actual health care.

However one feels about the administrative and regulatory state, it is with us to stay.