THE BLOG
05/13/2014 09:22 am ET | Updated Jul 13, 2014

Howard's Daily: Good Government Versus Less Government

"The problem with Howard's ideas is that they rest on the naive fiction that there can be such a thing as 'good government.' In fact, the best we can hope for is less government." So ends the critical review by Logan Albright of my new book The Rule of Nobody for the Von Mises Institute.     

Just get rid of government wherever possible. That's the simple narrative that appeals to many conservatives. Government is indeed filled with obsolete programs, such as New Deal farm subsidies. It also smothers freedom with many overbearing regulations. Shutting down children's lemonade stands for want of a vendor's license, for example, is absurd. Moreover, it is hard to find any government program that isn't broken in large part. The Social Security disability program, for example, is rife with abuse. Social Security itself, perhaps the most efficient social program, is on the road to insolvency. 

But the orthodoxy of smaller government doesn't deal with the failures of what remains. Moreover, government has gotten ever bigger, even under Republican presidents, as the country confronted new challenges such as terrorism. Most citizens probably would vote for government oversight for clean restaurants, caring nursing homes, and airworthy planes.  

Instead of wholesale attacks on government, philosopher Roger Scruton argues in a thoughtful essay in the new issue of First Things ("The Good of Government"), conservatives should be more discriminating about where government is needed to enhance the culture of a free society. 

The important question -- addressed by neither conservatives nor liberals -- is why government works so badly. Environmental review shouldn't take a decade. Starting a small business shouldn't require permits from a dozen different agencies. Principals ought to be able to terminate ineffective teachers.   

Government is organized to fail, I argue in my new book, because nobody in modern government is free to make sensible choices. No one can say, "Oh, there's no need for kids to have a vendor's license for a lemonade stand." The president lacks the authority to expedite rebuilding projects. The teacher can't dismiss a disruptive student without risking a drawn-out legal proceeding. Everyone is shackled to detailed rulebooks. Government is run not by accountable officials, but by humans who are told to act like legal robots. Law has become central planning. It is hardly surprising that every encounter with government is an exercise in frustration when nobody -- not the regulator, not the citizen -- is free to adapt to the circumstances.  

A certain conservative orthodoxy, ironically, joins with liberals in demanding a central planning vision for public choices. Better legal shackles than a public official running amok. What if the official is a tyrant? That's why the Nobel laureate Friedrich Hayek concluded in his early writings that "government in all its actions... [should be] bound by rules announced and fixed beforehand."

There are many flaws in this assumption that detailed law enhances freedom. The current system of several billion words of law does not protect against a regulatory tyrant. No one, not even large companies with hundreds of lawyers, can conceivably comply with volumes of detailed rules. When noncompliance is unavoidable, officials have carte blanche to be tyrants: "Sorry, you don't comply with Rule 256 (v)(3) (iii)."

Moreover, our options for a government operating philosophy are not limited to 1) mindless rules or 2) anything goes. The Rule of Law can constrain officials with goals and general principles, while still providing flexibility to act sensibly. Our most important principles of law -- say the "reasonable person" standard -- always require application by reference to social norms. But, to some conservatives, the idea of an official having discretion -- even limited discretion -- is like holding a cross in front of Dracula. 

Here's how Mr. Albright criticized my vision of law that leaves room for human judgment: 

"Howard suggests that an exhaustive list of food standards for nursing home could be simplified to a simple requirement that they provide 'nutritious meals.' This sounds like common sense, but what exactly is a nutritious meal? If the inspector happens to be a vegetarian, what is to stop them for forbidding red meat, when the residents and their families were perfectly happy to have it? Discretion allows the biases of individuals to creep into enforcement, and to pretend that anyone is capable of acting wholly without bias is to deny human nature."

Is requiring "nutritious meals" really an invitation to abuse? There are accepted guidelines for nutritious meals from professional medical societies. No inspector ever has unfettered discretion to demand whatever he wants. If an inspector demanded vegan meals for everyone, or caviar at dinner, the nursing home operator could just say no. To enforce his order the inspector would have to go to court. Who do you think would win?  

General principles of law are not invitations to tyranny but the opposite. "Standards that capture lay intuitions about right behavior," Judge Richard Posner notes, "may produce greater legal certainty than a network of precise...rules."

Principles are enforced according to current social norms. True, they leave room for argument. But so, usually, do precise rules. "Clear law" (with a few exceptions like speed limits and age eligibility) is generally a myth. Ambiguity is inherent in most language. With general principles, the argument focuses on right and wrong: Is this food nutritious? With precise rules, the argument focuses on parsing a legal language. The argument is no longer tethered to lay intuitions of what's right.   

I know conservatives would prefer to have no regulation. But will de-regulated nursing homes pass muster in a democracy? Over 50 percent of nursing home residents suffer from dementia. Can we really rely on market forces? Mr. Albright may not trust government regulators, but I suspect most Americans wouldn't trust nursing home operators either.    

How does it work out when rules permit human judgment? Airplanes are certified to be "airworthy" by FAA experts without detailed guidelines on how many rivets, etc. Would you prefer that market forces decide which planes can fly safely? Or, in the alternative, would you prefer a regime of thousands of rules where plane manufacturers can go to court, over the objections of FAA experts, and get a judge to decide that the plane complies with rules? Personally, I'd like the FAA experts to make the final decision. 

Nursing homes in America, notwithstanding a thousand rules, are generally awful. How do we make them better? Mr. Albright says deregulate. I suggest radically simplified standards for oversight. In the late 1980s Australia abandoned its detailed nursing home rule book and replaced it with 31 general principles that focused on goals, such as requiring "a homelike setting," and respecting the "dignity of the residents." Within a year, nursing homes were materially better, and they've continued to improve over time. The reason? People are empowered to do what they think is right, not act like mindless robots.

Mr. Albright places his faith mainly in markets:

"The market is a sorting mechanism that keeps these people in line in order to preserve their profits, but government is not subject to market pressures. As such, the problem is more fundamental than too much or too little rigidity. Government is fundamentally corrupt, as it rests entirely on the premise of coercive power. Rather than tinkering with the levels of discretionary authority officials possess, we would do better to limit their power."

I too believe in the effectiveness of markets. But markets are not always good at making moral judgments, or protecting against abuse. That's why law is essential to freedom.

Just as unfettered government authority is an evil, so too an unfettered market can lead to evil. The trick is to have the right tension between government and markets, and to have accountability over government. Democracy too should be a kind of market, with people voting their preferences. Instead democracy is out of anyone's control. It doesn't matter much whom we elect, because the law tells everyone what to do. By clinging to the orthodoxy of detailed law, we have unwittingly removed accountability from democracy while trying to guarantee against its abuse. 

At the end of his life, Hayek recanted his demand for mechanical government, saying that he had reconsidered "the supposed greater certainty [when]...all rules of law have been laid down in written and codified form." Law works better, he concluded, when decisions are made "by generally held views of what is just."

Human initiative, not rules, make the world go round. This is what conservatives believe, and they are right. Then why don't they see that the same truism applies to government? Government will never get fixed until humans within it are allowed the flexibility that goes along with taking responsibility. Only then can democracy hold them accountable for the many failings of modern government.

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