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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.

4 comments to Can Killing Government Prevent Special Interest Capture?

  • Possibly the final straw in capturing government, the NYT reported last week that the Government of Canada will now be referred to as The Harper Government, Harper being the Conservative leader/prime minister. Now that the Conservative Party has (finally) won a majority, the gloves have come off. They ARE government in Canada, and department after department is requiring civil servants to refer to it that way.
    Outrageous – and no one is lifting a finger in reply.

  • Harry Pollard

    Jolly good, Polly. Hope you are settled in at 72nd. I’ll be there in spirit.

    I’ve spent the last few weeks embedded in a nest of libertarians. (I am a longtime geolibertarian.) I’ve been having fun attacking their views of the importance of subjective value, and I have also hammered ‘natural rights’ which I think are no more than a listing of goodies without any “entitlement” function. (What’s that, the idiot is confronting everyone from Locke to Rawls!) I replace them with the notion that all rights are contractual. I’ve been surprised at how poor their debating skills are – perhaps the result of rote learning.

    On the other hand, I fear there is a certain amount of rote learning among Georgists (or LVTers) too.

    Anyway, I am at any time wont to throw the cat among the pigeons!

    Harry

  • Polly, enjoyed your bio. Maybe your having done well by people paying taxes is why the schism for you and many others is between pro- and anti-government, instead of between coercion and cooperation. Cooperative gov’t is great. Coercive religion, corporation, government, etc is not. That said, the more you have justice, the less you need government, I think. Don’t you?

  • Jeff, government could be more cooperative and less coercive if there were greater equality–as LVT would bring about. Elinor Ostrom received the Nobel Prize for showing how subsistence societies can and do cooperate to share and manage limited resources, over hundreds of years.