Administrative law

We like to think we live in a just society. We like to think the political system is a transparent one. For all their faults, we like to think that we elect legislators who enact laws strictly in line with their published party platform, predictably and benevolently. And due to the separation of powers, the executive only acts within the limits set by these laws.

Well, let me clue you into a little-known fact… that ain’t the way it works, buddy!

Legislation, or statutory law, is only a fraction of the rules imposed on us – administrative laws and regulations are the other means by which we are told how to live our lives (comment below please if you know the proportions of regulations vs statutes).

Administrative laws are as binding as statutes, but have come about through extra-legal power, by edict set down upon us not by our benevolent representatives nor by our wise and infallible judges, but by bureaucrats you’ll never meet, who know nothing about you, who neither can nor wish to represent you, and who do not work for your best interests. Anything they do which provides you a positive outcome is coincidental at best.

(This may sound overly cynical, but I assure you the only things that I ought to correct in the preceding paragraph is that our representatives are not benevolent and that our judges are neither wise nor infallible.)

Administrative agencies legislate through rulemaking (issue regulations), adjudication and enforcement of laws. Such agencies include federal executive departments (headed by a Cabinet secretary and analogous to ministries in parliamentary systems), and independent agencies.

Federal executive departments include, for instance, State, Treasury, and Agriculture as well as those which are called by their antonyms, like Justice, Defense, Homeland Security, and Education. Independent agencies include other well-known busybodies, such as: the Federal Reserve System (the Fed), the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) who regulate and the economy and financial markets without a hitch; the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) with their eye on the ball at all times; the National Labor Relations Board (NLRB) who adjudicate labor disputes with uncanny efficiency and no bias; the Social Security Administration (SSA) who run the world’s most effective Ponzi scheme; and how could we forget the Central Intelligence Agency (CIA), who embody the phrase “do no harm” better than anyone around.

But we live in a complicated modern society, you see…

This is why we supposedly need experts to come in and provide their expertise. We can’t expect Congress to legislate everything. Brownie points to those who ask why have them legislate anything at all. But since we’re stuck in this paradigm the important thing to flesh out is that when you put “experts” from industry in the position of rulemakers, adjudicators, and overseers or regulators, you get a predictable steady flow of people moving from industry to government agency and back again – what’s known as the “revolving door” strategy.

Those who start in industry to gain their expertise become regulators, who then find the right loopholes for their friends they left behind in industry. Then, when they move back to industry, they are highly sought after since they are all too familiar with the machinations of the agency.

Those who rise to power through politics are equally, if not more so, likely to go through the revolving door. They reach a high level bureaucratic or government position, awarding huge contracts for some product or service, or they develop relationships with those who can influence such contract awards. Then they get head-hunted to a high position in a company that is a potential recipient of said contracts. Keeping their ties to old friends, making “political contributions” as necessary, they get their employer into the right loophole and in the meantime building their private industry expertise, thereby earning street cred for the next regulatory body to hire them.

The back-and-forth between the SEC, CFTC, and/or Treasury and Goldman Sachs, the to-and-fro between the FDA, NIH, and/or CDC and Big Pharma, the all-to-obvious military-industrial complex… all these and many, many more lead to administrative law becoming, in effect, an oligarchy of the politically well-connected and devastating to the public and to the industry competitors who do not have friends in high places. Furthermore, it leads to regulatory capture, where the agency in question promotes specific industry players’ interests and is beholden to them instead of objectively regulating and overseeing the industry.

But surely the Framers of the Constitution couldn’t have foreseen such rampant abuses…

Clearly, the Founders didn’t foresee the thousands of abuses made in their name and to their document, not least of which, the Commerce Clause and the Necessary and Proper Clause, which have been abused to justify anything from production quotas and price controls to drug prohibition. However, rule through extra-legal power is nothing new. As noted in the enlightening book Is Administrative Law Unlawful?, Philip Hamburger explains the historical origins of administrative law as royal prerogatives and the fact that the US Constitution was actually written with the express purpose of prohibiting it. Further, there has always been someone to claim the necessity of having a body of experts deciding on behalf of the legislators. The burden of proof lies with those who claim it is necessary and to this day none has done so effectively.

So how did this come about and what does it mean?

Administrative law was sold to us on the basis of false claims. That the then-current system was outdated, inefficient, lacking the technical know-how to allow for the fast progress of the modern world. Ratcheted up through every administration, but certainly with its heyday during the New Deal era, administrative law and the creation of alphabet-soup organizations have gained ever increasing influence over our lives.

For breaking these rules, an individual can no longer go to court and face a jury of his peers. He is rendered fines and arbitrary sentences doled out by self-interested bureaucrats. The number of rules and regulations grows exponentially and in most cases, you don’t even know you’re committing a crime. Small companies are in effect “taxed” with the burden of needing to hire expensive lawyers and accountants to see them through the myriad of regulations. And with waivers being dispensed arbitrarily to the politically favored, the rest of us mere mortals get overly severe laws with which we must contend.

Books to pique your interest

What a useless blog post this would be if I don’t mention some books you will find interesting on this topic?

  • Already mentioned was the book Is Administrative Law Unlawful? by Philip Hamburger – a terrific source covering administrative law from all angles.
  • Prophets of War is another great book – not so much on administrative law per se, but William Hartung does delve into the military-industrial complex and gives detailed accounts of revolving doors, regulatory capture and other issues that are direct outcrops of administrative agencies having excessive power and authority.
  • The Kohler Strike takes the story of the dispute between the Kohler Company and the United Automobile Workers Union, the 1954 strike, the violent union tactics, the implicit support the union got from various level of government, and the absolutely atrocious handling of the situation by The National Labor Relations Board (NLRB) – a case in point of how administrative law both created a problem and failed to resolve it.
  • The Tyranny of Good Intentions is a great book where Paul Craig Roberts and Lawrence Stratton take us through the abuses of power, not just of regulators (as is applicable to this blog post) but also of prosecutors and courts, as the justice system gets corrupted and corroded.
  • Finally, I would point out Unmasking Administrative Evil, a book by Guy Adams and Danny Balfour that connects the dots quite well between my previous blog post on how it comes to pass that regular people commit acts of evil, and this blog post where it appears that the emerging structure of the agencies, regulatory bodies, and bureaucracy almost lends itself to misaligned incentives at the higher level and order-following at the lower levels.

Concluding thoughts

With these types of things, over which we have no power and where a clear trend is shown to be well in progress, there is often not much we feel we can do. It’s like a big container ship; it takes a lot of effort and time to steer it off course. What I’ve found to be the best approach is to educate yourself and educate others. By identifying the books above I hope to be productive in your path to educate yourself. After all, sunlight is the best disinfectant. The more people there are who know of this, and the more we can shine a light on it, the better your chances to either disengage or actively work to reverse this course. I wish you well with any method or strategy you choose, as long as it’s peaceful. And as always, thank you for reading!


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