Krannawitter’s Elegant Solution to Regulatory Overreach

Thomas Krannawitter
Thomas Krannawitter has a straight-forward but far-reaching proposal for reforming America’s overreaching regulatory state: Turn every federal regulatory agency into an advisory group, with the power to advise Congress but not pass or enforce regulations.

Krannawitter, formerly a professor at Hillsdale College and Colorado Christian University, presented his idea, and the reasons behind it, September 14 at Liberty on the Rocks, Flatirons. He is also working on a book on the topic.

Krannawitter began with a brief history of American governance. The Constitution, he said, is based on “wide, deep, mutual civic trust”—that is, trust in our fellow citizens as they pursue their own rights-respecting affairs—and deep distrust of those who wield government power. Hence, government officials, according to the Founders, should be bound by the “chains of the Constitution.”

By contrast, the regulatory state that arose early in the Twentieth Century was based on the notion that unelected, “scientific” regulators should act unchecked to chain the citizenry. Now government “regulates every aspect of human life conceivable,” Krannawitter said.

Next Krannawitter explained why, in his view, the regulatory state is unconstitutional. The Constitution vests legislative power solely in Congress, he explained, and it does not authorize Congress to delegate that power to any other entity. Although widely rejected today, his view is consistent with the original understanding of the Constitution. As legal scholar Rob Natelson writes in The Original Constitution, the Constitution “did not authorize Congress to delegate its functions to administrative agencies or to anyone else.”

But, as Krannawitter admitted, today many people simply don’t take the Constitution seriously. (I’d say that most people care about aspects of the Constitution but interpret it very loosely to fit their policy goals.) So it is crucially important to emphasize to the American people the practical case for reining in the regulatory state, he suggested.

Krannawitter made a convincing case given the short time he had to make it. (I expect his book will go into much greater detail.) Here I’ll highlight some of his main points:

  • Regulations act on the presumption of guilt. The regulated must continually prove to the regulators that they are in compliance with the regulations, or else they are treated as guilty of violating them.
  • Regulatory agencies overturn the separation of powers, incorporating legislative, executive, and even judicial powers in a single body.
  • Regulations tend to entrench the status quo and cut off innovative approaches to solving problems.
  • Whereas tort law partners responsibility with property rights, regulations often act to shield the regulated from responsibility—because they can give the excuse that they were in “regulatory compliance.”
  • Regulatory agencies tend to emphasize problems that they can “fix” so they can expand their budgets. “They’re not rewarded for success, they’re rewarded for failure,” Krannawitter said.
  • Unlike private business owners, who have a stake in the success or failure of their businesses, regulators have little or no personal stake in the consequences of their actions.

Krannawitter made a few missteps in his presentation. For example, he claimed that “regulations never drive prices down.” Usually regulations act to drive up prices, but not always. Anyway, whether regulations tend to drive prices up or down is peripheral to the question of whether regulations are appropriate. The proper purpose of government is to protect people’s rights, not to enforce or “encourage” (by force) bureaucratically approved price levels.

On the whole, though, Krannawitter did a fine job presenting an enormously complex topic in its essentials. Although his proposal for fixing the problem is politically impossible given the current class of Congressional “leaders,” and although it would not be a panacea even if passed, it is well worth promoting if only to encourage discussion about the many, deep problems of America’s regulatory state. Turn regulatory agencies into advisory committees. It’s a start.