Can Killing Government Prevent Special Interest Capture?

In my last post on meat markets and securities markets,   I argued that competitive markets require government oversight to   prevent fraud and monopoly. The post drew a response from Libertarian   friends: didn’t I know that government regulators would immediately be   captured by the regulated industry, resulting in worse fraud and   monopoly?

Industry capture? Yes, I learned about that in 1969, when I went to   work for Ralph Nader in Washington DC. Although Nader began his career   with Unsafe at Any Speed (1965), calling for federal automobile   safety regulation, he was hardly a naïve supporter of regulation. My   project showed how agribusiness had captured the US Department of   Agriculture. Another ongoing project showed how trucking and railroad   interests had captured the US Commerce Commission.

In 1970, I joined a team of twenty “Nader’s Raiders” in a project on Power and Land in California.   We found agribusiness capture everywhere: unnecessary water projects   benefiting giant landholders; government-supported producer cartels like   Sunkist; inadequate regulation of pesticides; special tax breaks for   forest owners like Boise Cascade; or public university research   developing labor-saving machinery, like the tomato harvester, as a   response to unionization. In 1974, I published a piece on the California dairy industry,   showing how excessive health standards—and totally unnecessary price   supports—drove up milk prices and squeezed out small dairy farmers.

So what can we do about capture? A long line of “muckrakers,” from   Upton Sinclair and Ida Tarbell to Ralph Nader, have advocated   traditional “good government” approaches: constraints, openness and   professionalism. Plus a good dose of “eternal vigilance.”

Constraints include bans on bribery, rules against conflict of   interest, and restrictions on industry-government revolving door   employment. Openness includes public hearings on proposed policy, access   to government records as embodied in the Freedom of Information Act,   and of course freedom of the press to expose misconduct without   restrictions or fear of retaliation.

As for professionalism, some 2000 years ago, the Chinese invented   civil service. Government bureaucrats had to pass tough exams, went   through rigorous training, earned good pay and gained great public   respect. At its best, professionalism gives public employees a sense of   mission and a devotion to a broad public interest.

Take my father. A US Naval officer during World War II, he could have   returned to the Borden Cheese Company as a well-paid executive.   Instead, he joined the US Diplomatic Service; I grew up mostly overseas,   in Rumania, France, Australia, Thailand and Yugoslavia. Like so many  of  his generation, my father saw public service as a noble calling,   superior to mere business. After retiring from the Service, he directed   Meridian International, which promotes international cultural  exchanges.

With the Reagan Revolution of the 1980’s—“government is the problem,   not the solution”—the traditional “good government” approaches yielded   to “kill the government”. When my husband and I worked on drug policy   reform in the 1990’s, our Libertarian fellow anti-drug war activists saw   hope only in drastically cutting government.

Like any simplistic solution to a complex problem, “kill the government” collides with the Law of Unintended Consequences.

I described one consequence in an earlier post on Cornered, by Barry Lynn:   since the lapse of anti-trust enforcement in the Reagan era,   international monopolies and oligopolies have exploded. Powerful giants,   like Wal-Mart and Goldman Sachs, can far more effectively capture   government than the associated dairy producers of California.

In addition, as we found in the California study, the lower the staff   and funding of a regulatory agency, the less it can conduct  independent  research on potential problems, and the more it must rely  on industry  expertise and “voluntary compliance”. How could Bernie  Madoff bamboozle  the Securities and Exchange Commission all those  years? Easily!

There’s another more subtle consequence: by denigrating public   service, and demonizing “bureaucrats”, “kill the government” creates a   vicious circle. Ill-paid, ill-regarded public servants become less   concerned about the public interest and more vulnerable to capture.   They’re less likely to blow the whistle on waste or corruption, more   likely to see their work as a stepping stone to a better-paid private   job. For example, earlier this year the Federal Communications   Commission voted 4 to 1 to approve Comcast’s purchase of NBC.   Commissioner Meredith Attwell Baker, who voted yes, then resigned from   the FCC to become a lobbyist for Comcast.

My father understood that, at its best, government is “we the people”,   cooperating for our collective benefit. The contempt and spite  directed  at public servants these days threaten to give us government  at its  worst: unresponsive, paranoid, and captive to narrow interests.