Freeman

BOOK REVIEW

Simple Rules for a Complex World

That Government Is Best Which Governs Least

DECEMBER 01, 1995 by WILLIAM H. PETERSON

America broods over laws and lawyers, as witness:

Q. Why didn’t the shark eat the lawyer?

A. Professional courtesy.

Q. What are 500 lawyers at the bottom of the ocean?

A. A good start.

Q. How can a single lawyer in town without enough to do succeed?

A. Get another lawyer to move into town, and both will thrive.

Witness more. In 1936, at the height of the New Deal, the Federal Register had 2,411 pages of myriad rules and regulations; in 1991 it came to 67,716 turgid fine-print pages, a 28-fold increase, a sort of Full Employment Act for Attorneys. The United States, with a population of 260 million, has some 800,000 lawyers; Japan, with half that population, has 15,000. In the 15-year-span between 1972 and 1987 the number of Washington lawyers increased fourfold, from 11,000 to 45,000.

What gives in this lawyerization of America with its ten million laws trying to emulate the Ten Commandments? Richard A. Epstein, the James Parker Hall Distinguished Service Professor of Law at the University of Chicago and the author of the 1985 classic, Takings: Private Power and the Power of Eminent Domain, rejects the conventional wisdom that so many laws and so many lawyers are but a natural outgrowth of an increasingly complex society. Like a fresh breeze, he harks back to Jefferson-Thoreau: That government is best which governs least.

To Professor Epstein, government works best when it sets the rules of the road, not when it tries to determine the composition of the traffic. He likens the breakdown of numerous forms of U.S. regulation to the breakdown of socialism in Eastern Europe—in both cases public officials can’t overcome disincentives and critical informational gaps. Moreover, many regulators avoid or evade legal rules to “constrain their [own] self-interested behavior,” engaging in “rent-seeking,” catering to special interests. Such becomes a vast shadowy, shoddy business of the modern regulatory state.

Like Henry Thoreau, the Epstein solution is simplify, simplify. His rules include individual autonomy, private property rights, freedom of contract, and protection from aggression or inadvertent harm against person or property. That protection supposedly covers, per the Fifth and Fourteenth Amendments, just compensation for public takings of private property. Supposedly, for that protection has waned since the New Deal.

Waned until recently, as Professor Epstein illustrates in reviewing the seminal case of Lucas v. South Carolina Coastal Council. Developer David Lucas bought two beachfront properties only to find state authorities charging him ex post facto with harming tourism and unobstructed ocean views. They then took away his right to develop his two properties with no compensation whatsoever. In 1992 the U.S. Supreme Court in effect ordered South Carolina to fork over $1,500,000 to Mr. Lucas—and his lawyers. South Carolina thereby took title to the lots, and promptly, and most ironically, resold them for development of single-family beachfront homes.

Professor Epstein hails the resurrected take-but-pay idea. He sees it as a blow for liberty since government demands less when it has to pay more.

Similarly the author applauds the flat tax. He sees a progressive tax allowing the government too much political leeway on the level of taxes and their incidence, especially on “the rich.” Also, rent-seeking special interests pressure lawmakers for concessions on deductions and income exclusions, all adding to complexity and administrative costs. So the 10,000-page Internal Revenue Code hardly stands as a monument to simplicity. Too, progressive rates spur income redistribution and warp incentives to work, save and invest, thus setting back economic growth.

Richard Epstein, like Thomas Jefferson, recognizes that a legal system should be anything but a complete social system. He sees that the private sector under the rule of law can better advance the interests of society without the social engineering in interventionist statutes like the Fair Labor Standards Act of 1938, the Endangered Species Act of 1973, and the Americans with Disabilities Act of 1990. He comments: “Complex rules for a complex world are an invitation for disaster.”

Postscript. Unlike so many attorneys hiding behind circumlocution and legal gobbledygook, this law professor has the added virtue of writing directly and—what else?—simply. []

Dr. Peterson, Heritage Foundation adjunct scholar, is Distinguished Lundy Professor Emeritus of Business Philosophy, Campbell University in North Carolina.

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December 1995

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