Ȃȃȁ Partʺʺ: Politics and PhilosophyşŠŕŘŘ ŎŞśōŐőŞ ŏśşŠş śŒ ŞőœšŘōŠŕśŚ
Costs (and conceivably benefits) of regulatory measures include effects
on the whole social, political, and economic climate and on people’s
attitudes. One example of what I have in mind concerns how even the
vaguest hints about discriminatory enforcement of myriad regulations can
be used to encourage “voluntary” compliance with the wage and price con-
trols decreed by the president, without legal authority, in OctoberȀȈȆȇ.ȁȆ
Another hard-to-fathom cost is the danger (already alluded to in the sec-
tion on “Ļe Courts”) of undermining the rule of law and the law’s objec-
tivity, predictability, and worthiness of respect.
My worries do not hinge on any particular one of the several theories
of regulation that are in circulation.ȁȇI am not, for example, adopting
as the central story the theory that regulated industries “capture” their
regulatory authorities. No doubt some aspects even of the public-interest
theory of regulation enter into the explanation of why we have so much
of it. Numerous pressures, motivations, and governmental decisionmakers
interact.ȁȈ
Ļe issue of regulation falls under the broader question of whether pol-
icy should serve principle or expediency, the latter meaning to act on the
supposed merits of each individual case, narrowly considered. Elements
of an answer to that question argue for framing policy with prime atten-
tion, instead, to the general framework of rules within which persons and
companies can pursue their own goals. (In philosophical terminology, the
argument favors rules-utilitarianism over act-utilitarianism.)
Some types of regulation are even open to objection on ethical grounds.
Notions of human rights properly belong in the discussion, including
rights of people to make open-and-above-board voluntary transactions
ȁȆReferring to this program, one Federal Reserve economist has written as follows:
“Violators are explicitly threatened with bad publicity and loss of government contracts.
Implicitly, possible violators must be aware of potential retaliation by regulatory agencies
not formally incorporated in the wage-price control program.... Due to the magnitude
of discretionary authority possessed by the Internal Revenue Service, Environmental Pro-
tection Agency, Federal Trade Commission, Occupational Safety and Health Adminis-
tration, etc., a large potential for retaliation confronts any business” (WebbȀȈȆȈ, p.Ȁȃn.).
ȁȇSee StiglerȀȈȆȄ; Richard A. PosnerȀȈȆȃ; and Sam PeltzmanȀȈȆȅ.
ȁȈ“More generally, different types of constitutionally empowered agents on the polit-
ical scene—bureaucrats, judges, legislators, and elected executives—each bring distinct
motivations, authorities, and constraints into the process of political exchange that leads
to the final regulatory outcome” (HirshleiferȀȈȆȅ, p.ȁȃȁ).