What the American economy needs is more politics in economic affairs. No, I have not lost my mind —well, perhaps not entirely and not on this particular point.
The Supreme Court is already getting us to take those first few baby steps along this desirable path. The end of the Chevron deference in Loper v. Raimondo moves decision-making on the details of regulations from the bureaucracy to Congress. This is the net effect of not having to simply accept the decisions of the bureaucracy on what regulations mean. It is for Congress, politics, to state in more detail what is really meant.
Now, the idea that the economy needs more politics is pretty out there, I grant you. Less interference overall is the usual ideal from free marketeers and capitalists such as myself. But we can’t ignore the vital role policymakers must play in economic matters.
As it stands, economic decisions are made far too often via bureaucratic rulemaking. The problem with this, and the legal decisions over such rules, is that the bureaucracy looks only to the specific task at hand. Someone tasked with rulemaking about financial fraud, say, will look only at frauds caught or curtailed by those rules without taking into account the effect of those rules upon corporate formation, economic growth, or even just the simple liberty to do as one wishes.
Bureaucracy concentrates at too fine a level of detail. It really is necessary to work at a higher level than that. As economist Thomas Sowell put it, there is no such thing as a solution. There are only trade-offs. Trade-offs are the very meat and drink of regulatory formation. So, regulation that manages the fine details of the law needs to be at a level that takes account of those trade offs, those larger questions.
That level is called politics. This is also the level at which we, as the taxpayers and consumers, have a say in those rules since we can, and do often enough, get rid of those we think have made the wrong decisions. That’s a little difficult with someone buried three levels down in the federal bureaucracy.
We may not like the way Congress operates. It is certainly not enjoyable watching the sausage being made. But it is still true that elected politicians are the only group who do have to, and therefore do, consider the trade-offs inherent in any decision about anything. They may not do it enough, they may do it badly, but they are still the only people doing it at all. Therefore, the more regulatory details they decide, the better.
This is not just to be provocative.
The Federal Register now reaches some 90,000 pages a year, all new and changed rules for what people may do in our economy, and all written by monomaniacs intent only upon their own detail, with no one looking out for the overall effect, which is why we’ve got 90,000 pages a year, of course.
True, it is possible that one particular complaint has merit to it — that Congress simply doesn’t have the bandwidth to be able to deal with the volume of administration and rulemaking that the modern regulatory state requires. Hopefully this means we not only would gain better regulation, but gain less of it.
We are doubly blessed, no?
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Tim Worstall is a British-born writer and blogger and senior fellow of the Adam Smith Institute