Beware of Coercive Utopians and Quack Capitalists

President-elect Obama inherits a massive federal regulatory state, much of which pre-existed the gargantuan “Bailout to Nowhere.”

Reforms to make agencies more clear about the impacts of their thousands of annual rules would be worthwhile. Unelected agency personnel exercise massive power to regulate, authority that rightfully belongs to Congress, according to long-defunct Article 1, Section 1.

Our entire regulatory enterprise displays unsettling comfort with force applied against non-violent Americans in the name of the “public good.” That mindset helps blind us to the contradiction of a representative democracy that tolerates unelected yet aggressive agency heads ruling over large chunks of our lives and making decisions for us.

Common among coercive utopians is a belief that individuals heading government agencies are somehow less self-interested than their private sector counterparts. But human nature doesn’t change just because one works in the public rather than private sector.

Meanwhile quack capitalists abound; those who seek profit not through free exchange, but through regulatory barriers (like antitrust) that hobble competitors. Economic regulation is often merely pork for inefficient, politically connected “businessmen” wrapping themselves in the cloak of the public interest. When a businessman seeks rather than repudiates regulation—beware.

Relatedly, the view that government ever protects consumers against monopoly power forgets that government is the source of coercive monopoly power in the first place, such as the express mail statutes and legacy utility monopolies.

Even government health and safety rules can backfire or over-reach. Consider FDA drug approvals: we lack the moral right to withhold medicines from those who need them. Thus—at least in the classical liberal view of the relationship between the individual and the state—there’s no legitimate way we can delegate that power to congressional representatives, let alone to unelected bureaucrats.

If motivated by genuine public interest rather than misplaced loathing of commerce, reformers in this new administration should urge that unelected regulators’ decrees not take effect until our elected Congress expeditiously approves them. Grappling with “regulation without representation” is one of today’s most critical public policy challenges.