Risk & Other Four-Letter Words
Wriston, Walter B.
1986
The Law May Be Hazardous to Society's Health
All free societies that endure are based upon the rule of law; indeed, the dictum that we are "a government of laws and not of men" is embedded in the American consciousness. Democracy can be based on no other presumption. We are the masters, not the servants, of the state. The Declaration of Independence made this point with great clarity: Governments derive "their just powers from the consent of the governed," and further, "it is the right of the people to alter or to abolish" unsatisfactory procedures. Our first government failed, and in 1789 it was replaced by one based on the Constitution. Its first words state the thesis with maximum economy -We the people. | |
Unlike some revolutions, ours articulated a rationale that has stood the test of time and forms the basis for a free society. The assertion by the Declaration of Independence that the power of government derives from the consent of the governed depends upon a citizen being able to find out what his government is doing. Otherwise, consent is clearly impossible. Today, a good case can be made that no one knows, or can know, what our government is doing. Thus the legitimacy of its acts can no longer be supported by the consent of the | |
p.36 | governed. The same kind of proliferation of laws and regulations we are experiencing today was one of the complaints against George III enumerated in the Declaration of Independence. It specified that he "erected a multitude of new offices, and sent hither swarms of officers to harass our people, and eat out their substance." Our language today may not be as eloquent as Jefferson's but the thought is the same. |
It has been said that if history never repeats itself, it at least offers parallels. From a part-time, one-man shop when first established in 1789, the Attorney General's office has grown into a vast nationwide bureaucracy with more than 56,000 employees and a three-billion-dollar annual budget. | |
Looking at our present legal and regulatory situation, one is reminded that ancient Rome started with laws consisting of Twelve Tables, which were committed to memory by schoolchildren, but which ultimately grew to some three thousand brass plates deposited in the capitol and read by nobody. It cannot be said that this process caused the decline and fall of the Roman Empire, but it certainly did nothing to prevent it. Between the end and the beginning, Roman society evolved into one where, in Edward Gibbon's words: | |
The civil jurisprudence . . . was . . .a mysterious science and a profitable trade, and the innate perplexity of the study was involved in tenfold darkness by the private industry of the practitioners. The expense of the pursuit sometimes exceeded the value of the prize. | |
It seems fair to say that what it took the Romans thirteen centuries to do, we have accomplished in only two. In fact, most of this has been achieved-if that's the right word within the past eighty years. One of the reasons usually advanced for the legal avalanche is that life has become more complicated. We cannot expect to live in the 1980s according to rules that worked in the 1880s. No doubt the Romans were told something very similar. It was no more true then than it is now. | |
Anyone who thinks that the growth of government produced our social progress and vast improvements in the quality of life has lapsed into a logic fallacy known to Latin scholars as Freely translated, that means: "If one thing follows the other, it must have been caused by the other." If that were so, then the crowing of the rooster forces the sun to rise. | |
Social progress and the improvement of life are often the declared intentions of a government bureaucracy, but they certainly are not the results. To the contrary, most major advances proceed from areas of private initiative that government has not got around to stifling as yet. | |
Life's most important quality, health, has improved dramatically in the past four decades. Commonplace killers and cripplers like polio, smallpox, and tuberculosis are becoming dim memories as new medical resources and knowledge make ours the healthiest and longest-lived population ever. Government did not lead Jonas Salk to produce his vaccine, however. It merely stepped in and managed it after the fact. | |
Another key to the quality of life is what people do to earn a living. Millions who forty years ago would have strained their backs now exercise their brains and operate ingenious new machines, thanks to rapid advances in technology. But government did not invent these labor-saving devices and new technologies. It simply regulates some of them, and in so doing, retards their productivity. | |
In social progress, blacks, the elderly, women, and minorities now assume rights and opportunities barely dreamed of forty years ago. Government did not initiate this broadening of civil rights, however. Only when private individuals and groups demanded those rights-long and vigorously-did government yield and legislate them. | |
The heavy hand of bureaucracy rarely aids the advances made by individuals. More often it slows down that progress, or stops it altogether. | |
However the Romans accounted for their predicament, they presumably did not blame the invention of automobiles, | |
p.38 | airplanes, telephones, or intercontinental ballistic missiles. Nor is it likely that they attributed the need for regulation to the operations of J. Pierpont Morgan, Cornelius Vanderbilt, or John D. Rockefeller. Perhaps in Rome the emperor had a sinners' list of his own. If so, I'm sure it served the same useful purpose that such a list would have today-that is, invoking the evils of the past, real or imaginary, to gain acceptance for new laws and expanding authority for the lawmaker. |
The old Romans were jealous of their freedom. But they failed to anticipate-and we have no excuse for not now anticipating-that when the laws became so numerous that even the lawyers could not keep up with them, their government could become as arbitrary as it liked, simply by deciding which laws to enforce and which to ignore. This process continued until, according to Gibbon, their government finally "united the evils of liberty and servitude, and the Romans were oppressed at the same time by the multiplicity of their laws and the arbitrary will of their masters." | |
In short, government authority no longer rested on the consent of the governed. | |
That we are perilously close to that point in late-twentieth century America seems almost self-evident. While new technology is not responsible for this, it provides some new refinements. There are now, for instance, some four billion records on individuals stored in the data systems of some ninety-seven federal agencies. A push of the button can produce a complete picture of the financial, medical, political, and personal life of almost any one of us. Since it is impossible to process simultaneously the records of 230 million Americans, who gets singled out for special attention comes to depend more and more on the whim of the button pusher. That is not government by law; it is government by men, and what is true for individuals is also true for corporations, universities, associations, or any other organization. | |
Citicorp spends sixteen million dollars a year in legal fees, and it is a possibility that we might be in conformity with every law or regulation affecting the banking business-but only a | |
p.39 | possibility. Every now and then the bank is accused of an obscure offense that it did not even realize existed, despite floors of lawyers working full time to try to ensure our conformity. Still, the bank can slip up on something as commonplace as the film in a surveillance camera running out, which is a violation, because the branch manager was too busy taking care of his customers to check on it. |
Since the web of laws is now so pervasive, it puts the power of selective enforcement in the hands of the bureaucrat, a politician running for office, or an investigative reporter looking for a story. Billy Carter, brother of the former President, found out that not having his fire extinguisher charged was a violation of the law, but millions remain in ignorance of that important fact because the ordinary worker has no news value. A dim bulb in the taillight of your car can fail to pass the legal screen. Farmers have been made to carry their federal marketing cards, aliens their visas, workers their social security cards, travelers their passports, and poultry handlers, architects, tattoo artists, photographers, miners, and social workers their licenses. A government permit has become necessary for everything from getting married to hiking in the wilderness. | |
The list could run on forever. It is so long that no index can be made just listing the subjects covered, let alone what the law says. | |
It would be tragic if what began as the rule of law was in the end brought down through the sheer confusion that the mass of law now creates. As more and more laws and regulations are put on the books each day, more and more people have to ignore them. We are training an entire generation that, with some justification, can have little respect for the law. We are suffocating voluntarism under a blanket of laws, rules, and regulations. Our free society, which is rooted in voluntary compliance, stands in danger of strangulation. | |
We are a nation of immigrants who voted with their feet that America was their voluntary choice. Voluntarism thus became the rock on which we all stand. Immigration is only one evidence of voluntarism, but a powerful one. In no other | |
p.40 | country in the world do men and women move so freely from place to place and from one occupation to another. We are the most mobile society in all history, and no other nation can match the American people in the multiplicity of voluntary societies for every form of social welfare. Those voluntary associations do society's work through the unpaid work of free citizens. It is a system that has worked for America. The great judge Learned Hand put it succinctly: |
Our democracy rests upon the assumption that set free, the common man can manage his own fate; that errors will cancel each other by open discussion; that the interest of each, even when unguided from above, will not diverge too radically from the interests of all. | |
The implementation of that philosophy has produced the most productive society the world has ever known, evidenced not only by our national outpouring of goods and services but also by the large measure of individual freedom we all enjoy. The framework that supports our unique society is that, until fairly recently, most of us voluntarily conformed to the law. Unfortunately for all, such voluntary conformity is becoming literally impossible for the majority of the American people. | |
Surely, a precondition for voluntary conformity is knowledge of at least the broad outlines of the law, but in America today, only the very rich or the very poor have any possibility whatsoever of learning what the law is. There are so many laws, and regulations with the force of law, that it is a fair bet everyone reading this book is in violation of some statute, myself included. We just do not know which one. Nor can most individuals afford to find out. The poor man learns about the law with a nightstick across his head. The rich are able to hire enough lawyers to advise them on at least some of the laws and regulations that pour out of government at all levels. The big corporation learns about it from a headline in the papers: "X Corporation Violates Y Law." | |
For all their insight, the framers of our Constitution could | |
p.41 | not foresee a day when 535 legislators would employ a staff of 25,000 aides to assist them in their legislative tasks. One of the horde of Senate aides, Michael Scully, wrote in : |
The real question is not who runs the Senate but rather which group-the elected or the unelected-dominates the operations: Senators, by being elected, or staff, by being numerous. | |
His question is sharpened when we read in the that a number of senators often request permission for unelected staff members to attend the business of the greatest deliberative body in the world on their behalf. | |
Our Founding Fathers could have told their successors that such a horde would propose far too much legislation. There are, in fact, about twenty thousand bills introduced in Congress annually-almost one for each staff member, by an odd coincidence. On a single day not long ago, no fewer than 272 committees and subcommittees of the Congress were in session, and at the end of that day, the President of the United States signed 843 laws. | |
On a typical day, the prints 300,000 words, each one of which is amending or putting out a new regulation. Who can read 300,000 words a day? I don't know how long is, but it can't be much more than that. I, for one, could not read that in a single day, though it is surely far better reading than the | |
In one year there appeared in the Federal Register 175 new rules and 2,865 proposed amendments to existing rules. By that year's end, 309 final rules and 7,305 rule amendments were promulgated. There was a synergism there rarely equaled in other fields, if ever. | |
All this hyperactivity at the federal level must then be multiplied by fifty to get the true impact of our penchant for legislative overkill. In just one year more than 45,000 bills were introduced in the fifty state legislatures. In my own state | |
p.42 | alone, New York, 20,000 of them were introduced and the New York Legislature passed 2,000. The governor mitigated the effect somewhat-he signed only 1,800. |
In New York City, suffering from urban decay and desperately needing new housing, the building code consists of 843 pages, and it requires that every builder obtain anywhere from 40 to 130 different building permits and licenses. | |
So it is very simple to say that someone broke the law! But I will hazard a guess that there is no one yet who has read those 1,800 laws, including the members of the New York Legislature who passed them, or read the New York City Building Code, much less anyone who makes the daily reading. | |
Obviously, we have ignored the warning uttered long ago by Spinoza: "He who tries to fix and determine everything by law will inflame rather than correct the vices of the world." | |
Exhibit A is the Truth-in-Lending Act, a great title that implies that prior to its passage in 1968 the truth was hard to find. By 1977, the fifty-three sections of that law had been interpreted forty-three times by the Board of Governors of the Federal Reserve, no doubt practicing law without a license. Their pronouncements have been revised in the light of some twelve hundred staff letters of further interpretation. The result is six thousand pages of regulations. In addition, there are parallel state laws: no fewer than seven in the State of New York governing your MasterCard bill. One delineates the size of the type in the text of the bill. Another specifies the length of the text and states that if the type is smaller than a certain size the contract is not enforceable in court. Still another delineates what must go on the front of the bill and what must go on the back. I commend Spinoza's advice to the well meaning but misguided authors of all these laws and regulations, and I would point out that 90 percent of the banks in the United States have fewer than two hundred employees. There is no way the small banks can read those six thousand pages of Federal Reserve regulations, much less all the applicable state statutes. Consequently, at one point there were ten | |
p.43 | thousand lawsuits in courts throughout the United States based on Truth-in-Lending laws. You don't have ten thousand lawsuits if everyone agrees on what the law is. |
Overregulation is partly our own fault. We let something run wide open until the law of compensating forces operates. Businessmen sometimes fail to anticipate or even respond to the demands of the consumer. If that continues too long, the public becomes angry. Typically, then, the industry or the labor union that is perceived to be out of control forms a "self-regulating" group to set standards and police its own activity. Those self-regulatory groups usually fail to respond quickly and strongly enough, so that pressure continues to mount and the government steps in. Lawyers who let some of their brethren disrupt the decorum of the courtroom without effective censure are moving into that zone of trouble. So, too, are those bar associations that see nothing wrong with publicly recommending people as judges before whom the members themselves will soon practice. Failure to reform themselves, or to perceive how rapidly our value systems change, will create volumes of regulations that we will all live to regret. | |
The legal precedent upon which much of our regulation is still based was established in 1670, when Lord Chief Justice Matthew Hale declared that "property does become clothed with a public interest, when used in a manner to make it of public consequence, and affect the community at large." Defining the public interest in precise terms has occupied the time and attention of generations of judges and lawyers, economists and accountants, businessmen, labor leaders, and politicians, at a cost of billions of dollars to government and industry. With the passage of time, the doctrine of public interest has become buried beneath an avalanche of charges and briefs, statistics and analyses. | |
The regulator is always adjured to serve the public interest. Sooner or later, the regulatory body makes rules with the force of law, and an administrative judge, who is often an officer of the regulatory body, then becomes prosecutor, judge, and jury all at the same time. The regulatory body | |
p.44 | substitutes its opinion for the judgment of the free market. As time goes on, the bureaucracy changes the active verb "to compete" into the passive "to be regulated." This process tends to create a rigid, backward-looking system which is neither business-oriented nor consumer-oriented. Instead it is bureaucracy-oriented. |
Time and again when there is opportunity to introduce a new technology, or a new service to meet public need, the regulator's first question is not whether the consumer or the public will be better served, but whether what is new fits into the regulatory pattern. Can it be regulated? Will it require a new statute? Does it call for a shift in policy? The result has often been that what the regulator cannot regulate he will not approve. | |
Many industries continue to be regulated as though they were monopolies, when in fact new competitors have long since taken away a good share of their business. Free competition, which grows up outside the reach of the regulator, creates a whole new situation, with the odds heavily stacked against the regulated. Instead of welcoming the competitive challenge posed by new industries or applauding the new benefits to the public, the regulatory reflex is to reach out and regulate the new lot too, permitting no industry to either win or lose on its merits, but causing the public to pay the check for poorer service and higher costs. | |
Creativity, particularly the invention and application of new technology, requires brains, capital, and hard work. Reward runs with risk, but the regulatory system is not receptive to change. Talented people, therefore, move on to areas where talent is rewarded. With some notable exceptions, the history of railroad regulation is a classic example of this. It also demonstrates opposition to change through improved technology. | |
Before the Interstate Commerce Commission clapped the railroads into a regulatory straitjacket, railroads were pioneers in technology, creating the standard track gauge, new freight cars, and safety devices. One of the first acts of the ICC was | |
p.45 | to tell the railroads that rails should be made of domestic iron and not imported steel, which at the time was far more durable. Time after time, the efforts of the railroads to improve efficiency through the introduction of new and applied technology were hampered by infuriating and costly delays in regulatory decisions. The regulators expended their efforts in setting tariffs that distinguished between horses for slaughter and horses for draft, between rates for sand used for cement and sand used in glass making. This bureaucratic concern with trivial instead of key issues at a time of trouble can only be compared to the steward's obsession with rearranging the deck chairs while the was sinking. Predictably, many railroads chugged slowly down the road to ruin. |
By what route have we arrived at this danger point for human freedom? If we look closely at where we are now in our national journey, I think it can be argued that, almost without being aware of it, we have ignored the basic intention of the Founding Fathers to achieve a fair and equitable government through the checks and balances prescribed in the Constitution. The constitutions of some of the original states, notably those of Virginia, Maryland, and Massachusetts, provided specifically for the separation of powers between the executive, legislative, and judicial branches. | |
The separation-of-powers concept was nailed to the mast by John Adams in the Massachusetts Constitution of 1780: | |
In the government of this commonwealth, the legislative department shall never exercise the executive and judicial powers, or either of them; the executive shall never exercise the legislative and judicial powers, or either of them; the judicial shall never exercise the legislative and executive powers, or either of them; to the end that it may be a government of laws and not of men. | |
That may sound tedious, but its clarity is classic. The framers of the U.S. Constitution incorporated that basic doctrine, | |
p.46 | though not in so doctrinaire a form. In the , James Madison said with emphasis that the separation, though not absolute, must be observed. |
Current practice violates not only the letter but the spirit of the principle. We have ignored John Locke's dictum that "the legislative cannot transfer the power of making laws to any other hands, for it being but a delegated power from the people, they who have it cannot pass it over to others." | |
Between 1970 and 1975, seven major federal regulatory agencies were created by Congress, further eroding the doctrine of the separation of powers. Over the same period, thirty major laws were enacted making substantive changes in the regulatory framework. The executive, in the form of regulatory agencies, now fills the day after day with explicit evidence that the separation of powers has eroded to such an extent as to constitute a clear and present danger. | |
We are moving toward the kind of society described by de Tocqueville as one advancing toward despotism. That is one, he said, which "covers the surface of society with a network of small, complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate .... The will of men is not shattered but softened, bent and guided." The lines between the three divisions of function in government have become so blurred that one is tempted to long for the over-explicitness of John Adams. | |
Our Constitution says clearly that all bills for raising revenue shall originate in the House of Representatives. It is no secret that since the Budget Act of 1921, the reality is that such bills originate with the executive. A delegate to the Constitutional Convention, who through some miracle might return to earth two centuries later, would be appalled to learn that a federal judge appointed and controlled the principal and teachers of South Boston High School, to say nothing of laboring over maps to lay out bus routes. No matter what the perceived social justification for such actions, they transgress | |
p.47 | the doctrine of the separation of powers and confuse the legislative, judicial, and executive functions. |
We have so fouled our nest that federal agencies of the executive branch issue subpoenas of more than one thousand pages calling for data that must be measured in miles of computer tape. | |
Complex interpretations of law, bizarre as they are, are not the fault of the regulatory agencies. The fault is the direct result of Congress delegating the legislative functions to the executive. The bureaucracy has become so proliferous, its discretion so broad, its rules so unstable, that there is a strong tendency to make this a government of men, not of laws. | |
The area of ignorance, or noncompliance, or both, is not limited to the private sector. Indeed, it flourishes in the public sector. Not only does the public sector have all the problems of trying to find out what the law is, but more confusion arises when one regulatory body attempts to enforce its rules on another. Public bodies often have goals set for them by legislation that is in conflict with the goals of other public bodies set by the same legislature. Everyone in the private sector has to pay attention to even the lowest-ranking member of the bureaucracy lest he have a contract canceled, be subjected to a well-publicized legal threat, or suffer an unfair press leak. Win, lose, or draw, the bureaucracy will remain forever, but the private company may be driven out of business. | |
Federal agencies are not subject to those modern forms of imperial intimidation and tend to ignore other regulators. Why the law is difficult, if not impossible, to enforce in the public sector was spelled out by James Q. Wilson and Patricia Rachal. "Inside government," they wrote, "there is very little sovereignty, only rivals and allies." The private sector cannot deny the authority of the state, but a government agency can and does deny the authority of another agency. | |
Ernesto Angelo, when he was the mayor of Midland, Texas, understood that better than most. When the federal Department of Housing and Urban Development applied for a parking space at the municipal airport, Mayor Angelo returned | |
p.48 | the application with a request for more information. The first requirement, Mr. Angelo told the Feds, was to obtain from the U.S. Government Printing Office, the National Archives, the Library of Congress, or someplace, a supply of application forms COM 1975. Then they were to print three executed copies and fourteen confirmed copies. Next they were asked to submit the make and model of the proposed vehicle, along with certified assurance that everyone connected with the manufacture and service of said vehicle had been paid according to a wage scale that complies with the Davis-Bacon Act. The next requirement was a genealogical table for everyone who would operate the vehicle, so Midland could ascertain that there would be a precisely equal percentage of whites, blacks, and other minorities, as well as women and the elderly, driving the vehicle. HUD may still be filling out the forms. |
The chances of this state of disorder changing is remote, but the reality of the public sector growing is certain. That being so, more and more citizens, even those on the public payroll, will fail to obey the law. When government itself is contemptuous of law, no citizen is likely to respect its authority. | |
James Madison accurately foretold this moment in history when he wrote in the : | |
It will be of little avail to the people that laws are made by men of their choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood . . . or undergo such incessant change that no man who knows what the law is today can guess what it will be tomorrow. | |
Few would dispute that we have now arrived at the point in our national journey that Madison warned us against. It would be a supreme irony if Congress, which talks so much about the citizen's right to know, makes effective knowledge absolutely impossible by passing so many prolix laws. | |
The weight of the vast bureaucracy, created by law and, in turn, creating new laws, is now so oppressively heavy it cannot be ignored. | |
In a voluntary society, reform must start at the local level. Each of us must use our influence and persuasive powers to save our free society. Take a leaf from the book of our forefathers and stand up and be counted. They pledged their lives, their fortunes, and their sacred honor-in short, everything they had-to found this country. Our society is now infinitely more complex, infinitely more dangerous, and inextricably bound up with the rest of the world. Nevertheless, with the bureaucratic balance moving against us, with a rapidly aging industrial plant, with the heavy hand of regulation effectively closing every avenue to free American innovation, capital formation, energy, and skills, the time is growing late. | |
Yet the pendulum does swing, and there is always something each of us can do to help the process. In London, Big Ben once had a tray on its pendulum where stacks of old English pennies were placed to regulate the clock. If there is anyone who thinks he or she may have a few cents to add, I can only suggest that now is a very good time to do it. | |
My own two cents worth is to call for the majority of laws to expire by their own terms, or to make zero-based laws, open at any moment to the query: Why did we need it in the first place? If it was useful then, is it still an imperative necessity? | |
If that movement gathered momentum, it would help, but we need something more. The one law not subject to interpretation or mutation, even by the Supreme Court, is Parkinson's Second Law: Work expands to fill the time available. It used to be that the Congress was in session about three months each year. The rest of the time members were home listening to the people who elected them. Today, Congress meets almost twelve months of the year, with a few recesses, leaving a staff of twenty-five thousand to dream up new laws to bring voluntary compliance to the breaking point. Senator Howard Baker recalls that when his father was elected to Congress in 1950, Congress was in session an average of one hundred and three | |
p.50 | days. The senator does not accept the argument that present problems are so radically different as to require the abandonment of our American tradition of citizen legislators in favor of the elected bureaucracy Congress has now become. |
It seems to me it is time for a more drastic proposal. Let us have a constitutional amendment that would limit the congressional session to six or seven months. Parkinson's law would still work, but with a little luck, we can cut down the number of new laws. Even a slowdown in the rate of increase might buy some time for our voluntary democracy. A shorter session and more contact with the electorate-and less with the staff and the Washington press corps-might restore some sense of perspective to our legislative process. The same result could be achieved by a simple majority vote at the beginning of each new Congress, but that would require a fresh vote each session. | |
That modern Delphic oracle, the public opinion poll, which legislators now rely on instead of actually talking to real live constituents, has diagnosed the syndrome. Over the last decade the polls have indicated that more and more people believe that the part of their personal lives over which they are permitted to exercise some control is rapidly diminishing. We have all become suspicious of authority, at every level. A majority of us must now ignore the law because there is no other viable alternative. Surely this condition is a warning signal for society. | |
It is time to act. It is time to curb the proliferation of laws lest they smother our legal system. To those who say this is too large a task, I would quote Justice Brandeis, who summarized the issue in three sentences: "Those who won our independence were not cowards. They did not fear political change. They did not exalt order at the cost of liberty." | |
If we continue to force an increasing majority of our population to ignore the law, we shall have neither order nor liberty, and we will run the risk that an authoritarian government will fill the void. | |
