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Thursday, April 21, 2011

Imposing Values: An Essay on Liberalism and Regulation

Liberalism comes in two varieties, classical and modern. All liberals support limitations on government power, but modern liberalism favors, while classical liberalism opposes, significant interference with private property rights. N. Scott Arnold’s book on the classical-modern liberal debate focuses on the modern-liberal regulatory agenda, especially employment law (such as collective bargaining rules and antidiscrimination law), health and safety regulation (such as the FDA and OSHA), and federal land-use regulation (such as the Endangered Species Act and wetlands regulation).

Arnold first asks if reasoned agreement between liberals about this agenda could be achieved by some shared principle. Liberals disagree too much about basic rights to provide common ground, but perhaps this ground could be generated by a common principle that the State has some role to play in providing public goods. Some classical liberals, however, accept the legitimacy of State-provided public goods only if they cannot feasibly be provided by nongovernmental means, and if the State does provide them, everyone who benefits must pay his share of the costs. But the goods provided by this regulatory agenda aren’t really public goods (for example, product safety regulations), or could be provided privately (for example, the FDA’s assurance of safe and effective drugs), or are not paid for proportionately by everyone who benefits (for example, land-use regulation’s costs fall almost exclusively on affected landowners).

Finding no common ground between liberals on the modern liberal regulatory agenda, Arnold then discusses conversion arguments, arguments for why classical liberals ought to make exceptions to their principles about the scope of government action. Typically, modern liberals use these arguments by identifying some alleged failure in the market order that would supposedly be solved by government regulation; classical liberals reply that regulation makes things worse than they would be if the programs were dismantled or radically altered. After thoroughly canvassing this debate, Arnold concludes the replies are reasonable, which means reasonable disagreement between liberals persists.

Faced with persisting disagreement about the proper scope of government, Arnold argues that liberals must commit to certain procedural requirements to legitimately impose their values on society: The policies must be established democratically (by the elected branches of government) and be both publicly justified and transparent. By publicly justified, Arnold means that reasons must be given for legislation, which requires taking the views of the other side seriously and not misrepresenting its arguments. By transparency, he means that the beneficiaries and victims of legislation—both intended and unintended—must be identified. While the democracy requirement is, in my view, more contentious than Arnold appreciates, these requirements are quite modest. Public justification requires intellectual respect for opponents’ arguments; transparency requires attention to the costs of the legislation.

Although these requirements are modest, Arnold shows that selected elements of the modern liberal regulatory agenda—the antidiscrimination regulatory regime, OSHA, and the FDA—dismally fail to meet them and thus have been illegitimately imposed. An exception is Title VII of the 1964 Civil Rights Act. In that case, the concern that banning employer discrimination on the basis of race would produce hiring by quotas was taken seriously by the bill’s defenders. That led to clarification that the bill only made intentional discrimination illegal and didn’t affect hiring decisions that had “disparate impact” on different races. (By contrast, proponents of the 1991 Civil Rights bill dismissed opponents’ plausible claim that the bill’s forbiddance of disparate-impact employment decisions—unless necessary for business survival—would lead to employers hiring by quotas to avoid lawsuits.)

As for OSHA the case was based only on anecdotes, which violated the public-justification requirement, as did the refusal to discuss the costs of the legislation. Furthermore, the statute’s aim “to assure as far as possible every working man and woman in the Nation a safe and healthful working condition” was so vague as to violate the transparency requirement.

As an illustration of imposing values, Arnold’s analysis of the sleight of hand behind the mandate that FDA-approved drugs require a doctor’s prescription is particularly devastating. The 1938 Food, Drug, and Cosmetic Act required that drug labels contain directions for use, recommended dosages, and warnings of possible dangers. The FDA’s given rationale was improved self-medication. Afterward, however, the FDA proclaimed the prescription requirement by regulation. A 1951 amendment solidified that requirement, but no justification was offered; indeed, a majority report admitted, “[A]t present the restrictions on dispensing ‘prescription’ drugs are not specifically stated in the [1938] statute.” As Arnold dryly notes, that was “a polite way of saying that the FDA had just made it up.”

Arnold’s book belongs on every liberal’s bookshelf. Quite simply, there is no book like it—a philosophically acute, exhaustive analysis of the classical-modern liberal debate about regulation, which ends up siding, in an original way, with classical liberalism.