EFFICIENT AND EFFECTIVE DEREGULATION
The federal bureaucracy is anathema to free enterprise and liberty in no small part because it operates through the use of prior restraints. Prior restraints impose blanket bans on means that frequently are innocuous, lacking an unlawful aspect, but may be a foundational act in what becomes an illegal enterprise. One effective means of liberating the market from burdensome restraints is to prohibit the bureaucracy by statute from using prior restraints and compel federal agencies to resort instead to suits before federal courts in the first instance (whenever seeking to arrest unlawful behavior). That statutory prohibition has the salutary and liberating effect of restricting use of coercive federal power until guilt is established before an impartial judiciary and leaves alone those innocent of wrong-doing who happen to use the same or similar means to achieve lawful ends.
We hear a lot from the Republican candidates about the need to relieve the private sector of regulatory burdens that limit free enterprise. Rick Perry, Ron Paul, Michele Bachmann, and Herman Cain have all expressed a keen interest in reducing the regulatory burden on industry (and with very good reason). Regulations are a particularly insidious form of taxation. They not only prohibit specific means, but they oftentimes force reliance on more costly means, to produce and sell goods. They also compel the hiring of regulatory attorneys, regulatory scientists, and regulatory risk managers. Because employees and consultants are a major expense for business, those outlays add to the costs imposed by our very high corporate income tax to deprive industry of the resources needed to progress, employ, and compete.
What efficient approaches exist to achieve the objective of a reduction in regulatory burden at the earliest possible moment? One is to cause all existing regulations not enacted by congressional statute to be abolished within a year. That forces Congress mindful of the popular will to prioritize and enact only those regulations that members think essential, allowing all other regulations to be obliterated by operation of law. The heads of federal agencies are unelected and largely unaccountable to the courts, the Congress, and the American people. Consequently, month after month they promulgate regulations that serve their own self-interest, advancing the economic standing of certain preferred regulatees and reducing the economic standing of others. American industry is thus dominated by a labyrinth of restrictive rules so complex that no firm of any size dare enter or expand its presence in the market without the help of consultants, particularly lawyers. The tax code is rightfully identified as too complex and rife with pitfalls for the unwary, but it is not the only source of bureaucracy that confounds the mind. Medicare, communications, food and drug, dietary supplement, environmental, occupational health and safety, transportation, banking, insurance, and trade regulations are likewise riddled with traps for the unwary forcing the expenditure of billions of dollars by industry every year simply to achieve and maintain regulatory compliance.
Another complementary move is to place a moratorium on the promulgation of any new regulations. That helps lessen the advance of the regulatory state which encroaches ever more into the operations of business and the lives of Americans. The third complementary approach is to abolish federal administrative courts for the prosecution of those accused of rule violations and to compel resort to Article III federal courts. A fourth complementary approach is to amend the Administrative Procedure Act to change the standard of proof required for agencies to establish a regulatory law violation. At present, agencies can rely on a relatively low level of proof and the courts defer broadly to the findings and legal determinations of the agencies. Instead, consistent with foundational principles in favor of innocence until guilt is established and in favor of due process, Congress could legislatively establish a new, higher standard of clear and convincing evidence as requisite to proof of an administrative law violation and could prohibit any seizure of private property until after a final and binding decision of a court of law. Asset forfeitures would thereby be eliminated. They now result in summary ex parte seizures of, and extraordinary deprivations of, property prior to a finding of guilt in violation of core principles underlying the Fourth, Fifth and Sixth Amendments to the Constitution. A fifth complementary approach is to engage in constitutional deregulation.
Constitutional deregulation requires that rules be eliminated by the political appointees of agencies on constitutional grounds even as agencies richly deserving of abolition are eliminated in their entirety. From my experience in the Reagan Federal Communications Commission and the private communications bar, I learned a lesson taught by the brilliant examples set by FCC Chairmen Mark Fowler and Dennis Patrick. They based certain critical deregulatory initiatives, such as abolition of FCC content controls and of the dreaded fairness doctrine, on constitutional grounds. Rather than simply declare those controls and that doctrine anachronistic, they explained in detail why the rules violated First Amendment editorial freedoms of broadcasters. By grounding deregulation in Constitutional law, they created a major barrier to attempts at reregulation.
They wisely understood that their time in office would be limited and that they needed to leave deep constitutional chasms between the regulator and these regulations, constructing significant barriers to re-regulatory attempts by subsequent administrations. Although imperfect, deregulatory initiatives based on detailed constitutional grounds create a formidable obstacle to reregulation, particularly when upheld by the federal courts.
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The choice of how to achieve deregulation is all important. Frequently Presidents uneducated in administrative law and regulatory behavior call for deregulation only to fail miserably. They fail because, if given wiggle room, the all-powerful heads of bureaucratic agencies backed by career bureaucrats will find new ways to advance old regulatory initiatives, defeating the deregulatory objective. Whoever succeeds in winning the Republican nomination will be judged by the electorate on how wisely and efficiently he or she implements a deregulatory agenda. Americans will want to see prompt and powerful moves that liberate the market from constraints that now tax and constrict freedom of choice. By relying on all of the above approaches, the winning Republican candidate will be best positioned to deregulate successfully if he or she wins the general election.
© 2011 Jonathan W. Emord - All Rights Reserved