Government by Waiver
July 19, 2012
One of the great achievements of Western civilization is what we commonly call “the rule of law.” By this we mean the basic principles of fairness and due process that govern the application of power in both the public and the private spheres. The rule of law requires that all disputes — whether among private parties or among the state and private parties — be tried before neutral judges, under rules that are known and articulated in advance. Every party must have notice of the charge against him and an opportunity to be heard in response; each governing rule must be consistent with all the others, so that no person is forced to violate one legal requirement in order to satisfy a second. In the United States, our respect for such principles has made our economy the world’s strongest, and our citizens the world’s freest.
Though we may take it for granted, the rule of law is no easy thing to create and preserve. Dictators and petty despots of all sorts will rebel against these constraints in order to exercise dominion over the lives and fortunes of their subjects. But anyone, of any political persuasion, who thinks of government as the servant of its citizens — not their master — will recognize that compliance with the rule of law sets a minimum condition for a just legal order.
That, however, is precisely where the difficulties begin — for minimum conditions by themselves are not enough. Law is not just an idealized system of rules: It also involves the public administration of those rules by a wide range of elected and appointed officials in an endless array of particular circumstances. For those who would defend a just legal order, the basic challenge is to strike a proper balance — between limiting the discretion of these officials so that they do not undermine the rule of law, while also allowing them enough leeway to perform their essential roles.
Lately in America, we have done a poor job of preserving this balance. In practice — and, increasingly, in legal theory — government officials have been given unprecedented ability to make exceptions to the law, both in enforcing it and in respecting the rights granted under it. Indeed, the past year has seen two of the most enormous pieces of legislation in U.S. history — the Patient Protection and Affordable Care Act and the Wall Street Reform and Consumer Protection Act — make the imbalance far worse. Both laws seek to dramatically transform vast swaths of the American economy; both give enormous power to the government to bring about these transformations. And yet both laws are stunningly silent on exactly how these overhauls are to take place. The vague language of these statutes delegates much blanket authority to government officials who will, effectively, make the rules up as they go along.
As these officials stumble through how to implement these sprawling new laws, they will inevitably come up against unanticipated obstacles (or powerful interests) that will demand exceptions to the statutes’ far-reaching provisions. In some cases, special benefits or permissions releasing companies from government regulations will simply be granted. In others, the releases will be provided only if the regulated parties agree to waive some legal protection to which they would otherwise be entitled.
Neither of these practices — providing waivers or demanding waivers — is necessarily pernicious. Indeed, in some cases, they are part and parcel of the ordinary course of business in the modern administrative state. But both are open to abuse, and that abuse makes for a particularly dangerous form of government power.
After all, people concerned for their freedom and rights are always most alert to threats that arise when governments (or other powerful institutions) force us to do what we don’t want to do. The power of coercion is more easy to define, to identify, and to resist. But we are not sufficiently alert to the flip side of this problem: the risks that come with the power to create exceptions and to grant dispensations. Indeed, this is a much more subtle, insidious assault by government: Rather than setting the state and the private sector against each other in a healthy tension, it fuses them, making the private sphere dependent on the government’s benevolence. And when currying the favor of capricious government officials is required for a person’s well-being or a firm’s very existence, government abuse becomes nearly impossible to oppose.
“Government by waiver” is thus among the most serious challenges to the rule of law in our time.
WAIVERS AND THE MODERN STATE
The issue of government by waiver arises in any system of public administration. But as the size of the state has expanded dramatically, the scope of the problem has grown right along with it.
Under the traditional classical-liberal model of limited government, the state has a few critical, but well-defined, objectives — each directed toward controlling the use of force and facilitating voluntary agreements among private parties. Together, they ensure that the rules of the road are clear and knowable to all individuals, and in turn two felicitous consequences follow: First, individuals who know their rights are able to take easy steps to avoid getting enmeshed with the law; second, clear rules make it easier to monitor the conduct of public officials. Thus, the more limited the scope of government, the fewer difficulties there are in controlling the discretion of its officers.
Prior to the rise of the modern administrative state, the delineation of property rights and the enforcement of contracts were governed primarily by such simple common-law rules. Each person was expected to forbear against any physical invasion of the person or property of another, which meant that simple conformity to a bright-line rule could keep most people out of mischief. That one rule was easy to understand, and its content did not vary with the number of people in society, their personal characteristics, or their levels of wealth. Exchanges between individuals, meanwhile, could be conducted through voluntary agreements, which tended to clarify rights and preserve flexibility. The risk of abuse was low, because everyone could pick the parties with whom he chose to deal and the terms on which he wished to interact. Thus labor contracts were often written “at will,” which meant that an employer could hire and fire as he chose, and a worker could accept employment or quit his job whenever he wanted.
These rules were, of course, subject to exceptions that dealt with duress, fraud, non-disclosure, incompetence, and undue influence. They left open areas such as child labor, in the case of which there can be genuine differences regarding whether legal limits in fact protect children from parental exploitation or deny families the opportunity to work their way out of poverty. But such exceptions wane in importance in any regime that uses voluntary exchange to achieve economic growth.
Most critical to the rule of law, running such a system requires little administrative oversight. When disputes arise, judicial determinations are generally easy to make, because everything turns on readily verifiable public acts. Moreover, the public enforcement of laws — even when it requires some case-by-case discretion — involves relatively modest functions. Issuing building permits, for instance, is limited to straightforward matters of health and safety — touching only such issues as falling objects or traffic interference (as opposed to, say, more vague interests like “neighborhood character,” “economic development,” and “urban renewal”). The constrained range of tasks assigned to government officials thus leaves more decisions in private hands, where individual choice is driven by individual preference or by competitive market conditions (rather than by government command). Under such circumstances, the harmful pressures exerted on the rule of law are very low.
But the modern state does not limit itself to these defined objectives. Ostensibly desirous of assuring the welfare of its citizens, today’s state claims that it must take a far greater role in the life of the nation. This conception of politics comes to see such welfare — measured in terms of material well-being and access to some essential goods like housing, health care, and education — as a right to be guaranteed to the people by their government. Providing for every such right requires resources, which must be obtained by the state through taxation and mandates. Since no regime of positive rights can repeal the iron law of scarcity — which dictates that the provision of goods to some people necessarily imposes correlative burdens on others — a regime of positive rights is a regime of very demanding duties and requirements.
The question, then, is whether these duties and requirements must be enforced in absolutely all circumstances. To any reasonable observer, the answer is surely not: The immense range of circumstances that present themselves in a huge, complex society means that there will always be hard cases calling for exceptions. Sometimes various requirements have to be waived to avoid unreasonable hardship, and sometimes various requirements have to be waived for the system to function at all.
But can such waivers be made compatible with the rule of law?…