Why Government Fails So Often: And How It Can Do Better (46 page)

Agency discretion has also increased, which in turn generates more legal complexity. Although the legal system employs many techniques to constrain and guide discretion—statutory language, judicial review, legislative oversight, public participation, and procedural requirements are examples—the pervasive delegation of discretion to agencies (and to courts) means that the resulting legal regime is almost certain to become more dense, technical, institutionally differentiated, and indeterminate than if the legislature had simply promulgated a rule itself. There are often compelling public interest reasons to confer discretion, even given the risk that it will sometimes be abused. Greater legal complexity, however, should be seen as one more consequence of doing so.

One much-touted move toward legal simplicity and certainty is telling in this respect. The congressionally mandated federal sentencing guidelines established a generally binding grid for judges’ criminal sentencing decisions. Many legal scholars and prominent judges have severely criticized this reform as a misguided attempt to achieve some of the virtues of clear, simple rules—especially horizontal equity—by reducing the largely standardless discretion that sentencing judges previously enjoyed. To these critics, the guidelines represent a more general style of contemporary legal thought in which numerous cases are aggregated and treated uniformly despite their real differences. This critique gained widespread support, and the Supreme Court seemed to agree, restoring judicial discretion in sentencing by ruling that the guidelines are not mandatory but merely advisory.
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This is not to say that all simplifying grids have been rejected; the Social Security disability insurance grid system was challenged and upheld by the Court,
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and there are other examples, as with more categorical payment systems under Medicare. But moves from legal complexity
toward greater simplicity tend to be challenged politically and in the courts.

The subject matter of legal norms
. The administrative state emerged from the effort to regulate areas of activity previously governed primarily by informal or contractual norms, and other areas previously regulated at lower levels of intensity or lower levels of government. It elaborated new bodies of law bearing all of complexity’s hallmarks. Dense norms occupied much of the field of activity. Regulatory law also brought more technicality; specialized lawyering became so essential that the profession had to reorganize along new lines. New institutions—highly differentiated agencies and the diverse structures to which they give rise—proliferated. Although meant to increase certainty, regulation actually reduced it on balance because of its greater ambition and its preservation of much of the common law regime.

Two examples will illustrate the point. Before the reapportionment cases and the Voting Rights Act of 1965, the federal law for voting rights was relatively simple, concerned largely with reapportionment, fraud, and egregious forms of intentional racial discrimination. Today, however, this body of law also involves the detailed federal regulation and review of thousands of state and local election laws involving structures of representation, voting rules, annexations, municipal finance, voter identification, the allocation of legislative business, and much more.
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Bewilderingly complex public law has penetrated even fields that were formerly matters of private law. Employment and benefits law, for example, is now a dense mixture of private contracting, state common law and federal court adjudication, federal and state statutes, detailed agency regulations, and other sources of law.
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The goals of legal norms
. Before the age of statutes, the administrative state, and an avowedly policy-making judiciary, the policy ends invoked by American lawmakers were generally modest. Legislatures’ principal goals were to facilitate private ordering and to establish public policies to buttress that system, while common law courts usually hewed to a formalistic conception of judging that emphasized
(at least at the level of judicial rhetoric) a fidelity to
stare decisis
and legislative intent, rather than an articulated instrumentalism.

The New Deal changed all that, and the change it wrought accelerated in the decades that followed, particularly in the Great Society programs, ushering in the “new system” discussed in
chapter 1
. New legislative goals, largely implemented by administrative agencies, included health and safety, equal opportunity, income redistribution, financial security for the elderly, stabilization of markets, development of infrastructure, governmental reform, and many more. This transformation of public and private law invited judges to abandon even the pretense of formalism. Spurred on by many legal scholars, they openly embraced a conception of role, a style of thought, and a decisional rhetoric that legitimated judicial policy making in various areas.

Once judges adopted an explicitly policy-oriented style, the more complex character of their new course quickly became clear. Leaving the familiar, secure terrain of formalism for the more exhilarating but perilous realm of policy making, a larger number of decision-relevant goals came into view. This multiplicity of goals necessitated new legal doctrines capable of encompassing and harmonizing them. In tort law, for example, the courts pursued cost-internalization and loss-spreading goals, “inventing” the doctrine of enterprise liability in the process. The same imperatives led courts in both private and public law to adopt certain common decision methodologies that vastly complexify the system: for example, interest-balancing, sequential burden shifting, and spasmodic and tactical deference to other institutions. By requiring judges to balance numerous diverse, and inevitably conflicting, policy goals, these doctrines are bound to be both technical and indeterminate. Institutional differentiation only magnifies this complexity, for the doctrines must be applied by agencies to whom the courts accord notoriously ill-defined deference and with whom they share adjudicatory power.

The interpretation of legal norms
. The interpretation of legal texts is an ancient problem, as the Talmud vividly demonstrates. Still, today’s Babel-like cacophony of legal hermeneutics is unprecedented.
For whatever reason—the influence of postmodernist literature theories on legal thought, the related emphasis on interpreting norms contextually, the triumph of realism and instrumentalism over formalism in law, and more general delegitimation of traditional sources of authority—a plethora of competing approaches has thrown the field wide open. No clear winner is likely to emerge anytime soon, as the warring interpretative methodologies of Supreme Court justices Stephen Breyer and Antonin Scalia, not to mention the law professoriate, suggest.
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Meanwhile, the technicality and indeterminacy of statutory norms grow apace.

Remedial infrastructure
. I have primarily discussed the markedly increased complexity of the substantive legal rules that comprise the vast field of public policy. Much the same is true of the quite separate body of law that prescribes the remedies that one can invoke to enforce those rules. Indeed, recent decades have witnessed a remedial revolution, with the elaboration of many new or renovated enforcement techniques: novel injunctive remedies; statutorily created causes of action (i.e., rights to sue); judicially implied causes of action; judicially expanded remedies against government; and other categories. This enlarged remedial infrastructure increases the formal accountability of law to aggrieved parties, but it also expands judicial influence over policy making by multiplying courts’ opportunities to interpret and apply the law.

Is legal complexity a problem?
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If we suppose that legal rules are largely epiphenomenal, merely reflecting the underlying social conditions to which they relate, then a denser, more intricate legal system may be both inevitable and desirable. After all, social interdependencies have increased. Cultures and markets have fragmented and diversified. Transformative technologies have emerged in every corner of life. Public and private bureaucracies have proliferated. Mustn’t law keep pace with this social complexity? Perhaps, but the whole point of exploring law’s inherent limits, as this chapter does, is to understand the inescapable trade-offs between a simpler or more complex
law. In the analysis that follows, I focus on complexity’s effects; simplicity’s effects, of course, are precisely the opposite. I distinguish three of these effects: transaction costs, governance costs, and delegitimation costs.

Transaction costs
. Like friction in mechanics, these costs are ubiquitous and limit the system’s performance. Complex law tends to be more cumbersome to administer, more difficult for lawmakers to formulate and agree upon, and more difficult to reform once established. Administrators and subjects of such law must invest more in order to learn what it means, when, and how it applies, and whether the costs of complying with it are worth incurring. Other costs of administering a complex legal system include those related to bargaining about and around the system’s rules and litigating over them. Thus, legal complexity magnifies transaction costs by generating more uncertainty. Although complexity does not alone generate all of the costs—some would exist even in a simple legal system with simple rules—it is clearly an important source of them. Just how costly legal complexity is depends in part upon our incentives and our capacities to comply, which in turn are shaped by our values, intelligence, technology, and social control mechanisms.

Complexity-induced costs can be both inefficient and unfair. They can impose dead-weight losses, create frustrating delays, consume the energies of talented individuals, breed new and intractable disputes, and discourage compliance. Promoting passivity and entrenching the status quo, legal complexity can stultify a society that often depends of vigorous action to solve problems. Complexity’s costs, moreover, impose disproportionate burdens on the poor by raising prices and necessitating the services of lawyers and other professionals trained in the management of complexity. Complexity alters ours incentives and tests our capacities, straining their limits. Even as complexity increases, the constraints on those capacities—especially social values and intelligence—are relatively fixed, at least in the short run. At some point, complexity’s demands are bound to outstrip our capacities to manage them; and unless the forces that propel complexity can somehow be reversed, this gap will widen.

Even government policies targeted at sophisticated, well-counseled businesses can be defeated by their complexity. A recent
Wall Street Journal
article reports that Congress’s efforts to use targeted tax breaks such as the Work Opportunity Tax Credit to induce companies to hire more workers, boost energy efficiency, buy more equipment, and so forth have utterly failed. They are so confusing, cumbersome, and costly—requiring, among other things, an army of expensive “tax-credit consultants”—that most of the companies forego the subsidies, pay more tax than is legally required, and lose the international competitive advantages that Congress meant to confer.
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Governance costs
. When a rule must be agreed upon by a number of rule makers, its formulation entails costs; the more numerous those whose assents are necessary, the more costly the agreement will be. A complex law multiplies these costs.

The familiar image of a legal landscape constituted by the existing rules and practices helps to show why. As the body of rules grows more dense, the legal landscape becomes more thickly populated and harder to traverse. Concealed declivities, sudden detours, arterial congestions, unexpected cul-de-sacs, puzzling signs, and jarring encounters abound. Because integrating new rules with existing ones is tricky and dangerous, the system must develop another layer of meaning: rules about rules. In this locale, it is no longer enough to know one’s location and destination; one cannot survive without a great deal of local knowledge about when the buses run, whether cabs will venture into certain neighborhoods, which vendors are trustworthy, and where it is safe to walk. People with a choice do not venture out unattended. Experienced guides equipped with maps and special know-how are essential, for only the initiated can lead a newcomer through the honeycomb of enclaves, each with its local patois, exotic cuisine, peculiar customs, and belligerent pride.

A legal landscape this complex engenders several kinds of governance costs that have generally been overlooked. First, those who make legal rules become more risk-averse. Even fervent reformers hesitate to alter a landscape that is so hard to read; they know that in a more polycentric legal world, any change will have ripple effects,
ramifying widely, swiftly, and unpredictably throughout the system’s web. When the risks of error are magnified, rule makers are more likely to adhere to even an unsatisfactory status quo. This increased risk aversion surely contributes to the bleak policy-making deadlock, the sense of drift, that exists today in so many policy fields.

Institutional differentiation spawns legal indeterminacy, another governance cost. The proliferation of policy-making institutions multiplies the sources of innovation, information, and legitimacy—precious resources in any social system. On the other hand, this diversity also encourages conflict and raises decision costs. The only way to reach agreement among institutions may be to adopt open-ended, multifactored, or otherwise indeterminate legal standards. These standards do not really reduce conflict but simply use delegated authority to move the policy conflict from one rule-making locus to others, usually agencies and courts. Patricia Wald, formerly a judge on the U.S. Court of Appeals for the District of Columbia circuit, underscored this point when she defended the ostensibly simple “Chevron test” (for allocating interpretive power between courts and agencies) against those who would prefer a more refined, complex standard: