31 Jul Laws, Regulations … and Conservative Values; Revisiting Rent Control*
Laws, Regulations … and Conservative Values
Bret Stephens wrote an editorial in the New York Times on July 26th that addressed concerns he has with something he termed “conservative nationalism,” which he defined as nationalism cloaked in the mantle of conservatism. In the editorial, Stephens stated that a core value of “conservatism” is faith in free markets. His point is that the obverse of free markets is insidious government control of markets: “As [Friedrich] Hayek noted, ÔÇÿto think in terms of ÔÇÿour’ industry or resource is only a short step away from demanding that these national assets be directed in the national interest.’ The path from nationalism to nationalization, or from the ÔÇÿnational interest’ to the political interests of the people in power, can be brutally short…. [What] will happen when President Elizabeth Warren invokes nationalism on behalf of her economic agenda?”
Stephens’ re-raises a core conservative challenge to the Federal government bureaucracy’s creeping attempts to centralize control over, and set the rules of conduct for, Americans and American industry. Over-regulation, over-intrusion in the affairs of individuals, and a belief in the ability of central government to “do better” than the free market all are anathema to conservative thinking, and to the economic philosophy of Hayek, the conservative teachings of Bill Buckley, and the way of running government implemented by Ronald Reagan. Stephens’ definition of conservatism incorporates an affirmation of capitalism and of the sort-of Adam Smith individualism to which American democracy and the American economic model owe their success. He refers to the intrusion of government into business and the lives of Americans as “the path from nationalism to nationalization,” which is the path in which “the regulation of everything” has been taking America. “Draining the swamp” of bureaucrats, regulators and unnecessary laws has become the mantra of those who wish to see elimination of unwanted, unnecessary and burdensome government interventions in their lives. American voters have expressed a desire to return America to Americans by cutting out excessive government rules and regulations that make everyday tasks onerous. Eliminate those homogeneous national rules – one-size-fits-all – that restrict Americans’ choices and decisions. These are values that resonate with conservatives …, because, as Stephens notes, they truly are core conservative values.
Stephens makes the point that the actions of government today are not promoting those values. Instead, he states, government today is continuing to overreach by attempting to extend regulatory control over major industries and markets. Whether or not that should be labeled “nationalization,” as Stephens asserts, is an exercise in semantics. At bottom, regulatory excess is counterproductive. Instead of eliminating rules and requirements for rule-making – by the Congressional passage of more focused and less intrusive laws –, laws currently on the books often are simply being enforced differently … and yet stay on the books. They’re reinterpreted … at least for the moment. The consequence is that the jumble of red tape is not being cut and government is not being made smaller or simpler. Bureaucrats are not being stripped of excess power. Rather, government is being made stronger and ever more confusing, as if that were possible and regulators are being delegated more, not less, power and authority. New rules and regulations are replacing old rules and regulations – and newfound ways of rule-making and regulatory enforcement are being utilized. Instead of passing laws that reign-in regulators and regulations for the long-term, out-of-favor Obama-era regulations simply aren’t being enforced, sometimes legally and other times questionably. What will happen, as Stephens speculates, when a Democrat becomes President? Temporary change confuses business and industry … and bleeds America … and, after all, is only temporary.
An example of attempted regulatory overreach and of the absence of practical, core conservative actions by government agencies is how the Federal Trade Commission recently dealt with Facebook Inc.’s violation of privacy laws in its enforcement action relating to the Cambridge Analytica scandal. Facebook reportedly has agreed to pay a $5 billion fine, which seems a large number even for a tech giant. However, that’s not at all what the FTC wanted from Facebook. According to an article in the Washington Post, it wanted tens of billions of dollars in fines, plus structural changes to how Facebook collects data, plus Mark Zuckerberg’s head on a spike for Mark Zuckerberg to admit to personal liability for the scandal and to pay a substantial fine as well. Facebook refused to accept any such additional terms of settlement … and the FTC caved …, presumably for sound legal reasons. Perhaps it recognized that it was engaging in regulatory overreach? Or perhaps it was outgunned? Whatever the reason, in seeking the additional sanctions, the FTC was following a policy approach on which both Republicans and Democrats unfortunately agree – that Facebook and Mark Zuckerberg are bad, they need to be regulated (sorry, I mean more regulated), and that their actions need to be controlled by government regulators who determine between wrong and right without regard to whether Congress has made the necessary distinctions by enacting appropriate laws. Whether one believes in core conservative values or buys into Stephens’ concerns about creeping nationalization, this is not how American democracy is supposed to work. It’s most certainly not the type of legal, bureaucratic cloud under which American industry is supposed to operate either. The FTC is not empowered to enact laws or make national industrial policy. It’s not empowered to effect “structural changes” in how any company operates. It’s empowered to enforce existing laws, not to create new ones. Enacting laws is a task for Congress … and Congress has enacted a lot of them. In doing so, especially recently, it often has delegated to regulators the broad ability to … distinguish between what is “right” from what is “wrong” … though that is not what Congress has done in the case of internet privacy. Congress, in fact, has done nothing and enacted nothing in the internet privacy arena, although both Democrats and Republicans have talked a lot about doing so. The de facto delegation of responsibility undermines the democratic process, undercuts the Rule of Law, creates confusion and over-regulation … and results in a mess.
Both Republicans and Democrats were appalled by the Facebook deal. They apparently agree (a rare thing in these partisan days) that Facebook deserves harsher treatment. But existing laws don’t address the types of concerns raised by the Cambridge Analytica scandal. The laws are out-of-date. And Congress, it seems clear, can only vent and fume about what the laws should say … and leave to a continuingly swampy bureaucracy the power to over-regulate and, potentially, control core American industries. Even when Republicans and Democrats agree, Congress today is unable to enact clear and concise laws that, in the case of Facebook at least, would define a tech giant’s privacy protection obligations and empower the FTC to enforce those laws … rather than attempt to overextend its regulatory reach.
Revisiting Rent Control
The June 28th TLR, “Rent Stabilization/Control is Back,” addressed New York’s new rent control laws and the historical causes of New York City’s housing shortages. The shortage of sufficient housing caused by rent stabilization and rent control, however, is not peculiar to New York City or San Francisco … or to America. Europe is experiencing the same problems for essentially the same reasons. As reported in the July 20th edition of The Economist, well-intentioned (as well as NIMBY-inspired) laws that have limited construction have led to housing shortages in a number of European cities, including Berlin, Barcelona, Paris and Amsterdam. All have been seeking legislative remedies, some of which freeze rents or limit certain types of construction. With the prospect of a continuing flow of immigration to cities (see “The Big Blue Cities” in the July 22nd TLR), those laws are laying a unstable foundation for future urban growth.
Finally (“graffiti” from a good friend)
*┬® Copyright 2019 by William Natbony. All rights reserved.