Who's Afraid of the Administrative State?

My new piece in Liberties Journal corrects some bogus history about regulation. Also, a new theory says boosting interest rates STIMULATES economic growth. Who knew?

David Lean’s “Breaking the Sound Barrier,” 1952. Fabulous movie, but from a factual point of view an utter travesty.

Sometime in the next couple of months the Supreme Court will issue a ruling in two cases brought against a federal regulation about commercial fishing vessels. The high court will likely use the occasion to overturn Chevron U.S.A. Inc., v. Natural Resources Defense Council, a 1984 case that directed judges to defer whenever possible to regulatory agencies on the grounds that the regulatory officials possess superior expertise. That was manifestly untrue in the case at issue because the regulatory official in question, who’d left government by the time the case was decided, was President Ronald Reagan’s EPA administrator. Her name was Ann Gorsuch, and she’d been working so blatantly to weaken environmental regulation on behalf of the business lobby that even Reagan eventually realized he had to get rid of her. Still, Chevron established the general principle that whenever the meaning of a statute underlying this or that regulatory decision was less than clear, as it very often is, judges should defer to the administrative state.

Conservatives loved Chevron at first because it kept liberal judges from stopping Reagan’s project of deregulation. But over time the judges got less liberal and conservative jurists rhapsodized less and less about judicial restraint. Today Ann Gorsuch’s son, Neil Gorsuch, is a Supreme Court justice, and he really hates Chevron. In a 2022 decision, Gorsuch wrote, “Rather than say what the law is, we tell those who come before us to go ask a bureaucrat” [italics mine]. Dude, your mother was a bureaucrat! (Gorsuch mère went to her reward in 2004.) Or anyway a political appointee at a regulatory agency. But certainly not an elected official. Then again, federal judges don’t get elected either.

Overturning Chevron, if that’s what the Supreme Court will soon do, is part of the larger project of repealing the New Deal. In the spring issue of Liberties I have an essay (“A Prayer for the Administrative State”) explaining how and why regulatory agencies came into being and why it’s urgently necessary that they be protected from conservative interference if we’re to have any hope of keeping corporate power in check. The problem of business acquiring too much power over society has been recognized since the Gilded Age. This would be an inopportune moment to forget that. The piece is full of history and takes a very brief detour into the works of Auguste Comte (1798-1857). You can read it here.

Also, in today’s New Republic I look at an intriguing theory that Fed Chairman Jerome Powell is stimulating the economy rather than slowing it by keeping interest rates high. According to this theory, if Powell wants to take away the figurative punch bowl and further dampen inflation he should lower interest rates, not keep them high. It’s a little like that great old David Lean movie Breaking the Sound Barrier (see above) where one brave English test pilot after another dies trying to reach Mach One until finally one especially brave English test pilot reverses the controls and breaks the sound barrier. It’s all very dramatic. But

a.) Limeys didn’t break the sound barrier; the West Virginian Chuck Yeager broke it over the high California desert in 1947, and the only reason Lean and his script writer, the distinguished dramatist Terence Rattigan, could get away with pretending otherwise was that the Air Force kept that information top secret for awhile;

and

b.) Yeager didn’t get to Mach One by reversing the controls. That pretty much for sure would have killed him.

Some idiot got the bright idea to invite Yeager to the movie’s premiere in 1952. When it was over an outraged Yeager told the press that “the whole thing was a shuck from start to finish,” according to Tom Wolfe’s The Right Stuff, which bestowed on Yeager a folk-hero status previously confined to the aviation industry. Whether the new theory about interest rates is a shuck I couldn’t tell you. But it’s interesting to think about. You can read my piece here.