Current Events

An argument about regulation

A lot of people a lot of the time underestimate how burdensome, onerous, and intrusive complicated bureaucratic rules and regulations are. They casually treat the only cost of a rule as the cost to bad people of not doing whatever the rule prohibits, which isn’t a cost at all. But in order to have effect, rules have to be enforced; efforts have to be made to detect violations and monitor performance on an ongoing basis. This is a burden on the whole class subject to the rule, not only those who were going to break it. They have to devote themselves, at some margin, not to the thing they’re actually trying to do, but to proving that they’re not doing it in the prohibited way. They have to prove it through paperwork, which either they’re inexpert in compared to the official reviewing it or they have to (expensively) hire professionals to handle; and even people who had no intention of violating the underlying rule are put in perpetual jeopardy of wrongdoing-by-paperwork-mistake. They have to prove it in person to the various spot inspectors, administrative auditors, and other bureaucrats put in charge of monitoring and detection; and even people who had no intention of violating the underlying rule are made to feel like perpetual suspects or distrusted children instead of honest trustworthy adults.

I think that everyone recognizes this about themselves and groups to which they’re sympathetic. Politically we associate this kind of talk with business owners and managers complaining about government regulation, and that’s not a class to which academics are (as an overall pattern) especially warmly inclined– but goodness knows that academics understand these dynamics when it comes to the administrative micromanagement of our own professional lives. Time that we should be spending researching or teaching is instead spent asking for permission to do so, by humbly seeking to prove ourselves innocent of all sorts of potential malfeasance. No, I didn’t buy a glass of wine with that grant money. No, I haven’t given an in-class exam during the two weeks before finals. No, my study of Plato does not involve potential harm to human subjects or laboratory animals. No, I haven’t made up publications to include on my CV for my performance review. Yes, here’s the proof in triplicate.

I think this is a case in which our biases between groups we like and groups we don’t is especially strong. We are mainly honest competent adults trying our best to do what we’re supposed to do, and they keep getting in our way with these insulting burdensome rules; they don’t take seriously the cost to our time and energy of having to prove compliance constantly, both by paperwork and by subordination to the administrative officials who monitor all of us in order to detect wrongdoing by a tiny few. You are basically suspect characters to begin with, and if we let you get away with it you’d all be running wild, and the other ways you were going to spend your time we don’t really like anyways, and we’re dubious enough about you that monitoring you closely is a good idea anyway even if some of you aren’t technically violating the rules, and the moral cost of even one of you getting away with this terrible thing is so great that we simply have to prevent it, and anyway what are you complaining about, if you obey the rules like you supposed to, there’s no harm to you.

The point being, the new farm bill:

USDA will need to ensure that illegal immigrants, lottery winners, college students and the dead cannot receive food stamps and that people cannot collect benefits in multiple states.

Let’s start with the easy case: lottery winners. Let’s be wildly implausibly generous and say that there are five big-money winners per state per week. (Not all states offer lotteries, some lotteries are combined across states, some states offer multiple games, and not all lotteries pay out every week; but only “big money,” since presumably no one thinks that the $10 or $100 payout should affect eligibility.) 250 per week; about 12,000 per year. Say that half of those people were on food stamps to begin with (lottery players are disproportionately poor). Say that a third of those winners were inclined to cheat and keep drawing food stamps for which they’re no longer income-eligible, and to keep doing so for the whole year until their income is assessed again; 2000 would-be cheaters. Food stamps for a family of four max out at about $600 per month. So we’re looking at something like $14 million per year total in fraud prevented, if we can manage to detect 2000 would-be cheaters from a population of 47 million food stamp recipients.

Even the financial costs of any detection and enforcement mechanism serious enough to even try to get these false negatives (people who aren’t caught and thrown out of SNAP) down to 0 will be high; it wouldn’t surprise me for those costs alone to exceed $14 million (and I don’t for a second believe there will be $14 million in savings). As conservatives know when it comes to business, environmental, and health regulation, trying to turn one-in-20,000 events to 0-in-20,000 events is hard and expensive and complicated. Moreover (and as they also know) it generates errors in the other direction. “Zero-tolerance” policies are a plague on the American political and legal climate right now. The effort to make sure that no American child ever brings a narcotic or firearm to school is doomed to fail to begin with, and also results in stupid expulsions of children carrying aspirin or squirt guns. What we have here isn’t a new substantive rule (big-money lottery winners are already income-inelgiible for SNAP) but a zero-tolerance mindset applied to the existing rule, an effort to move from trivially-few to zero offenses; and innocent people will get caught in the net. (Something everyone could stand to remember: the lower frequency an offense is, the worse the ratio is likely to be between the false negatives you’re trying to prevent and the false positives you’re going to create.)

On top of all that: the process of proving one’s innocence all the time is a demoralizing, degrading one that subjects you to inspection, supervision, paperwork, and the will and whim of the enforcers. How can states ensure that no one is collecting food stamps for a dead household member? The answer has to involve paperwork and bureaucratic supervision or in-person monitoring by social workers or, in all likelihood, both. Illegal immigrants? Well, by definition they already lead a life of evading some kinds of bureaucratic surveillance. There’s no way to squeeze them our of the system harder without squeezing everyone else, too. (In a related vein, think of the proposals for drug testing as a condition of receiving welfare. That’s a lot of degradation to put a lot of non-drug-using people through for the sake, not of saving money (the cost of enforcement in this case is clearly higher than the money saved), but for the sake of a zero-tolerance regulatory insistence about welfare recipients not using drugs.)

And so poor people will be subjected to another set of forms, another set of inspections, another set of surveillance and monitoring, another set of insults, another risk of false findings of guilt, for trivial financial savings. Someone gets to posture as having zero tolerance for some unacceptable outcome; that’s what the zero tolerance policies are for. And life for a sixth of the country’s population gets worse, more unfree, more subject to the burdens and intrusions of micromanaging regulation.

This kind of thing is, famously, among Milton Friedman’s reasons for advocating a negative income tax in place of the complex array of partial-coverage welfare policies in America. (It’s also among the reasons called upon today by supporters of basic income guarantees.) I think Friedman understood, not only that regulations are administratively expensive to enforce, but that they’re also sources of unfreedom for the many people who don’t violate them. And the effort to make sure that income support only ever goes to the deserving poor however conceived, to regulate their behavior to stop them from doing whatever it is the undeserving do, is regulation, and requires the same costs, sacrifices, and burdens regulation always requires. The bureaucratic state that governs poor people (or would-be immigrants) is the same bureaucratic state that governs taxpayers and businesses and people holding bank accounts and people travelling in airplanes and so on. The arguments about regulation’s costs for the latter groups are good arguments! But they’re arguments that it’s wicked to selectively forget when it comes to regulating the former groups.

A few of our readers here will say: well, food stamps are already theft, so the people receiving them are already not innocent, so they have nothing to complain about. I’m not here defending the existence of food stamps (though neither are the Republicans making the principled argument against them.) For reasons I discussed here, I think that once states exist they just do act redistributively and that there’s sound responsible reason for them to do so in a way that staves off disastrous material deprivation (e.g. hunger). The new food stamp regulations tilt me some little bit closer toward the negative income tax/ basic income guarantee strategies for how that should be organized. For those who don’t share my views about this, I’ll say: you probably also oppose the existence of public schools. I’ll bet that you additionally recognize the stupidity, indignity, costliness, and loss of freedom involved in the wave of zero-tolerance regulations within them. If so, extend the thought here: as long as the state is doing this thing, it ought to do so in a way that is more rather than less compatible with Hayek’s rule of law, with freedom from supervision and surveillance by the bureaucracy, with the ability to get on with living their lives rather than having to waste them proving their innocence.

Update:
Since a couple of people have pointed this out in this context, I’ll link it here: Milton Friedman argues with William F. Buckley on these questions.

And one more:
This is neither an argument against regulation as such, nor limited to cases of state regulation. Bureaucratization is part of the iron cage and we’re stuck with it, across a variety of institutional settings. But there are very important questions of degree when it comes to monitoring, compliance, and enforcement, and costs associated with the whole enterprise that don’t go away when shifting from a regulated class one likes to a regulated class one doesn’t…

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