Do Regulatory Reform Efforts Inevitably Entrench the Administrative State?

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Administrative Law & Regulation Practice Group, Article I Initiative, and Regulatory Transparency Project Practice Group, was recorded on Wednesday, August 22, 2018 during a live teleforum conference call held exclusively for Federalist Society members.          

 

Micah Wallen:  Welcome to The Federalist Society's teleforum conference call. This afternoon our topic is titled "Do Regulatory Reform Efforts Inevitably Entrench the Administrative State?" My name is Micah Wallen, and I'm the Assistant Director of Practice Groups here at The Federalist Society.

 

      As always, please note that all expressions of opinion are those of the experts on today's call.

 

      Today we are fortunate to have with us J. Kennerly Davis, Jr., who is a Former Deputy Attorney General for the State of Virginia. We also have Professor Thom Lambert, who is a Wall Chair in Corporate Law and Governance and also a Professor of Law at the University of Missouri School of Law.

 

      After our speakers give their opening remarks, we will go to audience Q&A. Thank you for speaking with us. Thom, the floor is yours.

 

Prof. Thom Lambert:  Great. Well, thank you very much, Micah, for hosting this. And thanks to Ken Davis for agreeing to participate. This teleforum came to be because I wrote a book, and then Ken wrote a review of the book, and I wrote a response to his review. And if you're interested, the review that Ken wrote is in the Federalist Society Review from maybe May, I believe, and then my response is on the blog TruthontheMarket.com.

 

      I think that Ken and I agree that the regulatory state is somewhat out of control. But in the course of all this back and forth over my book, it became apparent that we have different perspectives on how best to improve regulation and reign in the administrative state. I think we might be able to label these approaches, our different approaches, an either/or approach or a both/and approach.

 

      So key up the issue, maybe the best way to start is to tell you a little bit about my book. The book has the very titillating title, How to Regulate: A Guide for Policymakers. It's a Cambridge Press book from 2017, and it's available on Amazon, and it makes great gifts. The focus of the book is really on the substance of regulation.

 

      Now, I was motivated to write this book because I've been a law professor in a flagship state law school for about 15 years. I have seen over that time that a number of my students go on to be regulators, largely at the state level, or they take up policymaking jobs. I mean, a lot of them. A surprising percentage of them go into these jobs. And it occurred to me, you know, we really don’t teach in law school the substance of regulation. Now, we teach administrative law, and of course everybody on this call is quite familiar with administrative law. But the focus of a law school administrative law course is really on process. What process must you follow? What hoops my you jump through to ensure that your rule has the force of law?

 

      We also teach classes, often called Leg-Reg. classes—Legislation, Regulation classes. Those courses usually focus on interpretation of legal directives. It's rare that we teach students if you're going to craft a regulatory approach to address some new problem in the world, what should the approach look like? What should be your goal? What are the tools in your toolkit? What works well when? When do the various -- or what are the downsides of the various tools?

 

      So if you think about it, for just about every market failure, there are multiple ways to address that market failure. With information asymmetry, sometimes we engage in licensing. Sometimes we have mandatory disclosure. With externalities, sometimes we have a command-to-control system. An alternative would be pigovian taxes. A third alternative would be some sort of cap-and-trade system. There're different tools that could be used to address each of these market failures, and some work better in some context than others. So the goal of my book was to sort of lay all of that out.

 

      The book is organized around the model of a physician. When a person goes to see a physician, he comes in with symptoms, and the physician doesn't necessarily just immediately treat the system. You know, you got fever, here's some fever-reducing pills. Go on your way. I think that often when we regulate, that's how we regulate. There's a problem that we don’t like in the world, and so the policy response is to ban the outcome that we don’t like. And that's not a very sensible way to do things.

 

      So the analogy that I use in the book is the physician analogy. When you go to see a physician, she'll first assess your symptoms, and then, she diagnoses the disease. What is it that's causing these symptoms to occur? When she's diagnosed the disease, then she'll consider sort of the range of remedies for that disease. These remedies vary in terms of intrusiveness and effectiveness and cost, but she'll lay out the various remedies. Then she considers the side effects of each of the remedies, and ultimately selects the remedy that offers the highest net benefit for the patient.

 

      So that is what I sort of did in the book. I set up that model at the beginning, and then there are six primary chapters of the book. One deals with externalities, second on public goods, agency costs, market power, information asymmetry, and then there's a final chapter on the cognitive and volitional limitations that behavioral economists purport to have discovered.

 

      So for each of these six main chapters, the chapters are organized according to that physician analogy. What symptom do we see here? Then, disease: why is it that the symptom is occurring? And that, of course, is a lot of plain microeconomics. Then we move to the range of remedies, what are the different things that could be done to address this particular market failure? And then, finally, what are the side effects of each of these?

 

      Now, a key theme of my book is that a market failure is a necessary but never a sufficient condition for regulation. We always have to ask, can the government improve upon private ordering. Now, the book is very careful to point out that just as markets can fail in systematic ways, government fails in systematic ways. So two government failures that come up over and over throughout the book are, first of all, what economists would call the Hayekian knowledge problem. F.A. Hayek famously observed in this article, "The Use of Knowledge in Society," that central economic planning is destined to fail because the planners don’t have all the time and space specific information they need in order to allocate resources efficiently. And, if you think about it, regulation is really some form of central planning. So there's always a knowledge requirement on the part of the regulator or the policymaker, and if the policymaker doesn’t have the information he needs, resources can be misallocated. That's always a problem.

 

      A second systematic government failure is what I call in the book, "public choice concerns." The body of economics referred to as public choice, of course, takes the rational choice model of human behavior—people are rational, self-interest maximizers—and observes that people retain that fundamental nature when they go into the government. So government officials are rational, self-interest maximizers. That means that quite often when they make decisions, regulatory decisions, they're not necessarily doing what's best for the public, but instead they're maybe doing what's best for themselves, and that can lead to all sorts of misuses of the regulatory system to get private benefit, sometimes for private business, sometimes for regulators, et cetera.

 

      Now, those two formalities, the knowledge problem and public choice concerns, exist in different degrees for different types of regulatory approaches. And generally, the more restrictive a regulatory approach is, the greater the knowledge problem and the greater public choice concerns there are. So what I typically do in each of these chapters is sort of layout the remedies that are available for each of the market failures on a spectrum of restrictiveness. And then sort of consider how the knowledge problem/public choice concerns play out.

 

      Now, it's important for me to note here that when I talk about regulation, I don't necessarily mean a rule that's promulgated by an agency. We lawyers typically draw a distinction between a regulation and a statute. I don't necessarily mean that. I'm using more of an economic definition of regulation. So when I say regulation I mean any force, that directive that's aimed at correcting some sort of market failure. And that directive could come directly from a legislature, so you could have a statute that I would call a regulation because it's a force-back directive intended to correct a market failure. There's no agency involved. You could have a doctrine that was crafted a court. Many of the antitrust prohibitions are really court-created, but they're regulatory in nature in the sense that they're trying to deal with the market failure of market power.

 

      So what I've tried to provide in this book is a framework for creating regulatory approaches that minimizes the sum of losses from market failure on the one hand and from government failure on the other. What I haven't done is specify which particular governmental entity should craft the rules. So I haven’t said that expert agencies should craft the rules, or that Congress should do so, or that courts should do so. I've instead focused on the substance of regulatory approaches. And I did that largely because lots of other folks have talked extensively about institutional structure. My focus was not really on that. It was really more on what's the end product that we would like to see from whatever structure is in place.

 

      I think that my ideas are consistent with efforts to constrain independent and executive branch agencies. I think you could be a committed constitutionalist that thinks independent agencies are unconstitutional and you want to blow them all up and what not and still find my ideas useful because they're going to be replaced with something else that crafts rules. And my book is really about what the substance of the rules should look like.

 

      So in sum, I don't think we are forced to pursue and either/or approach. Either fix the substance of regulation or pursue structural reform. Instead, I think we should pursue a both/and approach, where we work to educate policymakers on what constitutes good regulation as a substantive matter and we seek to bring out regulatory system into conformity with the governmental structure specified in the Constitution. And with that, I will turn things over to Ken and let him explain why I'm wrong.

 

J. Kennerly Davis, Jr.:  Thank you. And, first, let me add my thanks, in fact, to The Federalist Society for organizing this teleforum and to Thom Lambert for agreeing to participate with me and the rest of us this afternoon. And as Micah notes, the views expressed by both of us certainly may reflect only my personal opinions.

 

      As Thom noted, this process or this teleforum today is actually a culmination of a process that began, my having an opportunity through this Society to review his book. And I must take the opportunity to strongly recommend to everybody on this call and everybody you might speak to strongly recommend Thom Lambert's book. It is a thorough comprehensive, clearly-written discussion of regulation and how the whole system and process might be improved, reformed to be made better and result in better regulation. I think the book would be of particular use to lawyers who feel they're a little short because of their misdirected undergraduate studies a little short of economics. Again, this is a substantive and complete treatment of a lot of fundamental, important economics principles and theories.

 

      It is, the book and this discussion, is about regulatory reform and how to make things better. It's a very important topic. Reform means more than rollbacks and rescissions. It is focused on and involves attempts to identify structural and procedural changes that are more lasting in their nature.

 

      And reform is also, whether it's regulatory reform or any kind of reform, is really a quintessentially American undertaking. I mean, we are a magnificent people. We are strivers, inventors, implementers, explorers, always trying to make things better in one way or another. But as we strive to make regulation better and think about regulation and regulatory reform, I think it's very, very important to have in the back of our minds, and in every discussion, the understanding that better is, of course, a relative term, and it implies -- in fact, it requires some sort of comparison between the current situation and an alternative, and those two states or alternatives measured against some standard, some ideal, some goal that we want to reach. And it's the standard for comparison that I think defines the kind of basis of the different approaches to regulatory reform that Thom and I take.

 

      One approach, and of course, I'm running the risk of oversimplification here, but one approach would be to look at the current system, the current administrative and regulatory system, and try to think of incremental or particular adjustments to the current system that would enable it to run more effectively or more efficiently to function—in that sense, to function better. But if you look at the current system generally—and it might be called the regulatory system or the administrative state—and you're concerned about the extent to which it fundamentally departs from the constitutional system established by our Founders, then you've got to ask yourself whether there's a risk in trying to identify particular incremental steps to make the current system run better, more effectively; whether by doing that, you're strengthening a system that has fundamental problems that should be addressed on a more fundamental basis.

 

      A few years back Philip Hamburger wrote a book that took as its title, the rhetorical question Is the Administrative State Unlawful, and he, at considerable and impressive length and detail, answered that question in the affirmative, reviewing the many ways—discussing and describing and explaining the many ways—in which the current administrative system and administrative state is inconsistent with and contrary to the constitutional system that developed in England; and the concepts of restraint, of arbitrary and discretionary executive power, that system and how it's been undermined and weakened by the development of the administrative state over the last 100 years.

 

      So if you have those concerns, and I certainly do, then you want to take a more fundamentalist, if you will, approach to the reforms that you would try to advance. Now, there're pluses and minuses, or risks, and potential rewards involved in either approach: the, what I'm calling again as an oversimplification, the incremental approach or the fundamental approach. With the incremental approach, you may miss -- you may entrench a system that is fundamentally flawed. But with the fundamental reform approach, you may devote your times and efforts to reforms that because they are so far-reaching and fundamental, stand a very small chance of enactment. And by the devotion of the time and effort, you may miss the opportunity to make an improvement in the current system that is incremental, but it's better than no improvement at all.

 

      But I do advocate for the more fundamental reforms that would focus on the differences between the current system with its consolidated powers and limited accountability and would take the measure of the current system by comparing its features to the constitutional system as established by the Founders with its separation of powers and the confinement of legislative activity in the branch—people by elected representatives—and the Executive Branch being focused on execution and administration and the Judicial Branch on the resolution of disputes.

 

      There's a wonderful description of out historic constitutional system with its separation of powers written by-now Justice Gorsuch in his concurring opinion in the Gutierrez case that was published in August 2016. But the structure, the constitutional structure, of our founding was consciously erected to limit the arbitrary exercise, the discretionary exercise, of executive power. The Founders and colonists, and then Founders, and had a great deal of unpleasant experience with discretionary and arbitrary executive power as exercised by the king, and they sought to limit that and to secure the natural rights of each and every individual and their individual liberty, the natural rights affirmed in the second paragraph of the Declaration.

 

      So much of what concerns people, I think, about the current system: the consolidation of once separate functions within a largely accountable Executive Branch or fourth branch, the constantly changing rules, the rules written to pick winners and losers, the endless maze of permitting, overbearing administration, politicized enforcement, retroactivity, waivers, and over all the abiding uncertainty that results from broadly defined discretionary authority of individual regulators. All of this is directly traceable to the unconstitutionality, if you will, the lawlessness of the current regulatory system.

 

      The essence of the rule of law is the restraint of arbitrary power; whereas the essence of the current regulatory system is the exercise of arbitrary and discretionary power. The rule of law displaced by the rule of the regulator. And so, as we seek to restore a constitutional structure, I think part of that exercise involves, appropriately, a focus on the kind of embedded, underlying, important assumptions and concepts that define the administrative state and its operation. That is beyond the consolidation of power. I mean, Thom Lambert referred to market failure and policymakers, or I call them experts, and the overall aim to increase social welfare through regulation. I am very skeptical and critical of each of those concepts. I think they're contra-constitutional and invalid and don’t justify the exercise of power as we have seen it exercised by regulators. But perhaps we could come back to that. Let me pause and ask Thom if he'd like to respond to any of the things I've said thus far.

 

Prof. Thom Lambert:  Sure. And thank you, Ken. And I want to thank Ken for reviewing the book. It really is a huge amount of work to review a book, and I very much appreciate his doing that and his willingness to talk today.

 

      So there're a couple of things that I think people could criticize about my approach. So I could get criticisms from people that are really kind of hardcore Hayekian. Hayek drew this distinction between law and legislation, and he said, law is discovered and it's emergent, and the common law is something that develops over time, tends to be highly efficient, perhaps independent. And then you have legislation that's designed by people. And it has knowledge problem issues, and it can be manipulated by private interests and whatnot. And regulation that I'm talking about would be legislation in Hayek's view.

 

      So Hayekians might say, "We should get out of this business altogether." And my response to that is, essentially, I think the ship has sailed. I think that we were going to have designed legislation that's designed to correct market failure, so we might as well do it sensibly.

 

      It sounds like Ken's response is not exactly that. Instead, it's more of a constitutional conservative response that says, look, when you talk about substantively good regulation, you use terms like market failure, correcting market failure, enhancing social welfare. You have policymakers that make choices about how best to do that. Those are all sort of progressive concepts that, if you endorse at all, strengthens the administrative state. I think that's Ken's point.

 

      And so I guess I would respond as follows—and this is going to be a response to each of the three concepts that Ken is troubled by. One is the concept of market failure. I think that conservatives and libertarians need to get comfortable talking about market failure. The vast majority of economists believe that markets sometimes fail. And believe me, I think markets are amazing and work well the vast majority of the time. But when the stars align, we can see market failures. So I think we lose credibility if we pretend that those market failures don’t exist.

 

      Now, it's very important for us to emphasize—and this is a key in my book—that market failure is not a sufficient condition for a regulatory fix. It's necessary but insufficient. We've got to look at the way the government systematically fails. But I think that we lose credibility when we pretend that markets don’t fail. So I will go ahead and bite the bullet and say I'm happy talking about market failure in appropriate ways to address it.

 

      With respect to experts, policy experts, I agree that there is danger in having policymakers because policymakers can, as I point out, make mistakes. They're subject to the Hayekian knowledge problem. They can misuse government power for private ends, public choice concerns. So these are definitely problems. So what I think we ought to do is craft regulatory responses to market failures in a way that is sensitive to those problems, that acknowledges, okay, we've got a knowledge problem issue. We've got to make sure that the people making decisions here have the information they need. And when we look at the potential remedies for a market failure, some of them have less of a knowledge problem and create less public choice concern. We ought to select those particular remedies. So I agree with Ken that there are no all-wise and totally neutral government experts. I agree with that. I think we ought to craft policy knowing that that's the case.

 

      Finally, with respect to the issue of social welfare. So my book is very much sort of a welfarist approach, like let's come up with regulatory approaches that maximize social welfare. Ken pointed out in his review, and I agree with him, that society is not a thing that exists apart from the individual members of society. So when I use the term social welfare, I just mean the policies that generally will lead to people living in that society having more happiness than they otherwise would have. I mean, I think we can say, there's greater social welfare in the United States than there is in Venezuela. And it's not that there's a society of United States and a society of Venezuela, but Americans have more wealth and typically more personal fulfilment than people living in the squalid conditions in Venezuela. So that's what I mean by social welfare.

 

      But my last point here is I'm not necessarily arguing for incremental change. I have no problem at all with fundamental change. I mean, I'm pretty thrilled about Brett Kavanaugh being nominated to the Supreme Court because I think we will probably see some pretty major changes in the administrative state. It could happen at least, and I think those are great and salutary developments. But even if we were to have a system where Congress fully writes the rule, it's implemented by the Executive Branch, and the courts to nothing but adjudicate, we still need to have a sense of what is substantively a good rule. I mean, Congress is going to have to write that rule. And the ideas in my book further that end. So I don't actually see any tension here between what I'm doing and what I think Ken would like to do, and in fact, I would like to do it as well, which is restore us to a regulatory system that's more constitutionally constrained.

 

J. Kennerly Davis, Jr.:  Well, one of the great benefits of working with Thom Lambert over the past many weeks to prepare for this program, and I think the listeners can hear this, is that a discovery, at least a discovery on my part, that the differences in our approach are much more a matter of degree and emphasis than they are categorical. My problem with market failure, I guess two problems, is that the people, and not necessarily Professor Lambert, but the people who routinely refer to and rely on the concept of market failure to support their regulatory actions undercount, under credit the extent to which markets, in fact, are an extremely effective mechanism by which to allocate resources. Again, these are a lot of people, not Professor Lambert.

 

      But I also have a problem with the use of the concept because it sort of puts the goal line somewhere -- or the start points somewhere down the field. By looking at a crisis, like the 2008 financial crisis or some other economic crisis, and people say, "well, there's a market failure and there must be a regulatory response," what that often ends up meaning or resulting in is a practical matter. It is simply additional and more complex and more expensive regulation because of the concept of market failure, you know, markets being sort of free markets as an absence of regulation.

 

      And so what we need are to close loopholes or close gaps and regulation, and we've all heard people say this. And when in fact any market, certainly the financial system in 2008, and any other market that might fail, any other economic activity that might result in a suboptimal outcome now, today, in the 21st century, it represents an unsatisfactory economic outcome in a legal context that is so heavily regulated. It's really a misnomer to start the discussion of the problems and what needs to be done to fix them with the concept of, "well, we've had a market failure." I would be happier if we would start every discussion after every financial crisis with a consensus recognition of the need to identify the regulatory failure that led to the undesired outcome.

 

      Experts: I guess I wouldn't say I'm a hardcore Hayek adherent, but I think that his work and writing on the use of knowledge in a society, the appropriate use of it, leads to it, if you will, a constitutional conclusion because he was quite clear that the knowledge of the circumstances of which governance systems must make use never exists effectively in a concentrated or integrated form possessed by a planner or regulator, but they are in existence solely as the dispersed bits of incomplete and frequently contradictory knowledge, which the separate individuals in the society possess.

 

      And this knowledge concept—again, and I'm talking about regulators and not so much Thom Lambert—but the knowledge, the significance of the knowledge, the dispersion of knowledge, leads not to I think a conclusion or doesn’t support a conclusion that current regulatory systems need to be made more effective; they need to collect more data or have better or more complex modeling systems or upgrade their computer systems. No. It confirms the need to devolve power, not concentrated with regulators but devolve it to the regulated. And a system based on the rule of law with limited, mostly prescriptive, rules passed by the Congress comes closer or moves closer towards that system.

 

      And likewise, social welfare, individuals are the best judge of their welfare, not a planner or a regulator.

 

Micah Wallen:  Let's go ahead and open the floor up for audience questions. We have a question lined up, so without further ado, we'll go to our first caller.

 

Mandy Max [sp]:  Hello. [Mandy Max from here]. I'd just like to remark on the idea that society is only the individual. That's really not true because we are a social species. All primary species are social, and we are bound to do certain things, like form hierarchies and feel territorial. So those habits of the individual will always create something, like mainly calling, as a consumer, regulatory failure, I can only think of the almost [silence] of the Sherman Antitrust Act and certain industries, such as the arms industry or the media and nowadays the communication. I've been trying to buy a telephone lately—amazingly difficult. And where is the regulation that shows some sort of balance between the individual of the person in collectivism and huge mega companies?

 

      Another thought, not quite on the topic, but I certainly appreciated what you said about constitutional restrictions and Congress' need or mandate to write for us a regulation. So would you please just say something about how do we talk about market failure when the market is so removed and so run by monopoly?

 

J. Kennerly Davis, Jr.:  Thank you very much for the question. Let me at least start the response by saying a couple of things. Yes, I think when reference is made to individuals, certainly when I do, I'm also very much aware of the fact, the wonderful and important fact, that individuals do, in fact, form a rich and extensive network of associations, voluntary associations, if they're allowed to do so, with their fellows covering all kinds of mutual needs and opportunities for betterment.

 

      And as to the, if I understood the second part of the question correctly, the kind of fact that the markets are populated by, I think you said monopolies, large corporations and everything, how can we address that, or how does the fact of large corporate operations kind of fit in this overall discussion? Well, one thing that I think we see today, one important, unfortunate characteristic of the economy and economic and legal system that we see today is a lot of politicized allocation of resources, cronyism, and rent seeking—that is, people through political and regulatory means seeking to divert some extra income out of the market to them based on that.

 

      And I think part of the problem, I mean, you've always had corporations and economic actors seek to maximize their income and their control over their markets, but the discretion -- the importance of regulation today, and the discretion permitted to individual regulators, and the availability of waivers and exemptions, and the displacement over a period of time over the concept of natural rights with state-created rights, all of those factors kind of stir together to, unfortunately, increase the politicized allocation of resources and rent seeking.

 

      I mean, in 1928, the richest metropolitan area in the United States was in and around Detroit. And 90 years later, in overall terms, the richest metropolitan area in the United States is in and around Washington, and especially its Virginia suburbs. And that reflects these politicized forces that have really transformed the economy, made it less capitalist and more corporatist, crony-corporatist. But, again, I would say that a restoration of limited government and limited proscriptive rules and leaving people otherwise free to act and seek their economic fortunes on a level playing field, you'd see less of these problems.

 

Prof. Thom Lambert:  And I completely agree with you on that, Ken. The caller mentioned the -- in antitrust law, this is a good little example, I think, of why it's so important to have an understanding of what exactly we're trying to do with a regulatory regime. So there is a big debate in antitrust right now on whether we should get rid of the consumer welfare standard that's basically governed U.S. antitrust since the late '70s. Robert Orrick is largely responsible for getting that in place. And it's really based on the sort of thinking that I set forth in my book: let's think about what this body of law is trying to do and let's craft policies, doctrines that further that end.

 

      There's now a move to expand the consumer welfare standard so that antitrust would not just seek to maximize output and minimize prices in markets, which is what it has done for a long time, but instead would further democratic ends and protect small businesses and all of this sort of stuff. And the more we move antitrust in that direction, the more power the antitrust enforcers have. They have a tremendous amount of discretion if they can say, well, the Sherman Act doesn't just seek to enhance the overall market output; it also has all of these other ends. And all of the sudden, the regulator has the authority to block mergers and prohibit business practices and all sorts of things for lots of different reasons. And so there's more power given to the regulator under that sort of an approach; I think approach that's based on the sort of economic understanding that I'm trying to promulgate, you know, make sure that people know, would lead to a more restrained set of antitrust rules.

 

Micah Wallen:  Great. Let's go to our next caller.

 

Caller 2:  Hi. My question is just for the moderator. Would you please direct us, again, to Mr. Davis' review of the book? Thank you.

 

Micah Wallen:  Yes. Mr. Davis, would you like to go into more of the review of the book?

 

J. Kennerly Davis, Jr.:  Or, if I understood the question, or they just were asking where they could find it? The publications link on the Society's website, I think will take you to The Federalist Society Review, which is one of the publications. The review is in Volume 19 and it came out the early part of this year. But I think all you need to find it on the website is The Federalist Society Review, Volume 19.

 

Prof. Thom Lambert:  I think if you Google "regulating under the rule of law," it would pop up. That was the name of the review.

 

Micah Wallen:  And, Thom, I noticed that Ken kind of had the last word in the opening remarks when we went to Q&A. Did you have any additional comments or things you wanted to respond to that you didn't get to before?

 

Prof. Thom Lambert:  Well, just one other brief response. And I'm very sympathetic to Ken's views about the administrative state, and I think he knows that. But one benefit of my approach, which is to focus also on substance, is that we can get sort of immediate reforms. So dismantling the administrative state may take a while. In the meantime, there's lots of things that could be done in the system that we have.

 

      So I'll give you a concrete example. In the book, I make some recommendations about how to handle the net neutrality issue. And it's following sort of the approach of the book. There's sort of three different ways that net neutrality could be addressed. One would be the Title II approach that the FCC did put in place in the Obama administration. One would be a more -- a set of discrete rules, and then one would be to leave this issue to antitrust. And I argue in the book that we should do that.

 

      And I sent that chapter of the book to the FCC chairman, Ajit Pai, when I was drafting it, and he emailed me back. And I printed out the email this morning. He says, "Your argument about the relative merits of preemptive ex-anti-regulation and antitrust based ex post review is exactly the one I've tried to make. Would it be okay to share your work with my staff? I won't share it more broadly without your permission, but I think it would be quite helpful to us as we're thinking through these issues."

     

      I'm not taking credit for what the FCC did, but I think this just does show that we can now work within the system to get sort of a more sensible, less intrusive body of regulation by focusing on the substance of regulation. And that doesn't, at the same time, preclude us from making the broader changes that Ken would like to see, and I would like to see, made.

 

Micah Wallen:  Thank you so much. We don’t have any more pending questions at the moment, so I'll give you both a chance to wrap up with any closing remarks you may have.

 

J. Kennerly Davis, Jr.:  Well, I'll start since Thom started at the very beginning of the call. I think he said in his remarks that maybe looking at different approaches to regulatory reform, it's not either/or, maybe it's both/and, or at least I'll paraphrase it that way in order to make a closing thought. And that is perhaps the way to deal with the potential risks or downside of incrementalist approach or a fundamentalist approach is to, in fact, combine them. Consciously combine them, and let all of your reform efforts be guided by a commitment to constitutionalism and thereby not overlook a specific or incremental improvement that can be made pointed in that direction, or a more fundamental change.

 

      The Society has its Article I project, which is devoted to reinvigoration of the role of Congress and things like the nomination and appointment of constitutional jurists, like Mr. Gorsuch and Mr. Kavanaugh. These are things that are both incremental and every day and ongoing as a process, but they have a longer-term constitutional commitment.

 

      I think every step along the way, if we can always keep in mind, that one important standard by which to judge the validity and soundness of a public policy or proposal is whether or not it strengthens the sovereignty of the individual within the system and helps make them responsible, more responsible, and recognizes their special capabilities for determining their welfare and making decisions and allocating resources. And maybe that is an effective combination of approaches.

 

Micah Wallen:  And, Thom, if you had any closing remarks?

 

Prof. Thom Lambert:  Well, this has been lots of fun to talk about and think about. I guess I would -- I think I would just echo what Ken just said. I think we're really sort of working for the same things but focusing on different aspects. And so, in an ideal world, we would have a system that is faithful to the Constitution, where legislation is a product of Congress, it's enforced by the Executive Branch, and courts adjudicate disputes, and individual rights are protected and all that. I'm very much in favor of that.

 

      In that system, Congress is going to legislate, and one of the things that it's going to do in legislating is come up with policies to address particular market failures. And when it does that, I would hope that it would follow the approach that is set forth in my book, which is really focused on the substance of the policies, and in doing that, it would craft policies that try to address the market failure at issue without creating bigger government failures in the form of knowledge problem losses and public choice concerns. That's what I'm hoping for, that we end up with a system like that.

 

Micah Wallen:  Well, thank you both for joining the call. And on behalf of The Federalist Society, I want to thank both of our experts for the benefit of their time and expertise today. We welcome listener feedback by email at [email protected]. Thank you all for joining us. We are adjourned.

 

Operator:  Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at fedsoc.org/multimedia.