The Daily Caller

The Daily Caller

Yet Another Path to Corporatism …

The Obama Administration continues to blaze new paths to corporatism (the cozy alliance of government with a few big businesses in each industry to the exclusion of smaller players). Last month, it was the Obamacare two-step, in which government so screws up a new policy that it has to throw itself on the mercy of the industry it is trying to control–in this case the insurance industry, called in to save the exchanges.  Obama owes them now–both for technical help with the website and for not jumping ship as expected customers fail to materialize and HHS shifts deadlines and makes other crude fixes on the fly.

This week saw more broadly applicable corporatist variation from the Food and Drug Administration, which is trying to curtail the use of antibiotics in animal feed (where the drugs can produce resistant superbugs). It turns out that America’s formal system of regulation and litigation–outlined in a statute called the Administrative Procedure Act–is so cumbersome and time consuming that the FDA concluded it had a better chance of getting results quickly by simply asking the big boys to comply voluntarily (which they seem to have done). That’s easier to  pull off, of course, when just two companies make over half the products you’re trying to regulate, as is the case with the antibiotics.

Some comments: 

1)  Obama’s gets clear ownership of the first route–call it F**k-Up Corporatism–but he’s not really responsible for the second. The near-breakdown of our overly legalistic Administrative State has been obvious for decades–the FDA is just trying to work with that reality. (The obvious solution, by the way, is for Congress to pass the FDA’s regulations as statutes–then they don’t have to be reviewed in the courts the way non-legislative rules are. Of course you’d probably need more of a parliamentary system to let Congress be that productive. Harry Reid got it exactly backwards–he made it easier for Congress to name life-tenured judges to review regulations as opposed to making it easier for Congress to just pass those regulations and eliminate the need for all the judges.)

 2) There’s an interesting comparison here with Hollywood– a big complex industry in which lawsuits seem to be rare. (If you sue, you’ll “never work in this town again.”) My impression is this anti-litigious culture favors the big boys, who don’t need to sue, over the little players, like writers who are surprised to find out their contracts are not really contracts if they want a career. But it may have some virtues to recommend it.

3) One virtue may be that it avoids wasting too much time and money on lawyers! If that’s true, Obama’s second, FDA-style form of corporatism might ironically pose a serious threat to the Washington economy. After all, if all regulations are hashed out informally around a table between regulators, a few oligopolists and industry trade associations**-well, will we need so many lawyers to litigate rules in formal, quasi-judicial agency proceedings, and then to sue to get them overturned in court? Covington & Burling could lay off half its partners.

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**- In the FDA case, the trade associations seem to be the National Pork Producers Council and National Chicken Council. The whole process is reminiscent of FDR’s ill-fated National Recovery Administration–a corporatist enterprise if there ever was one. Maybe the NRA just arrived 80 years ahead of its time.