Does interest group theory justify more intrusive judicial review?

• Author: Elhauge, Einer R.

Contents Introduction 32 I. Interest Group Theory and the Proposals to Change Judicial

Review 35 A. Interest Group Theory 35 B. The Proposals to Change Judicial Review 44 II. Interest Group Theory Cannot Demonstrate Process Defects

Independent of Normative Conclusions About the Outcomes 48 A. The Dependence on a Normative Baseline 49 B. The Implications for Justifying Expanded Judicial

Review 59

3. Interest Group Theory Does Not Demonstrate that the

   Litigation Process Is Less Defective than the Political

   Process 66 A. The "Evolutionary" Common Law Process 68 B. Class Actions 72 C. Adversarial Structure 77 D. Political Insulation 80 1. Interest Group Influence Over Judicial Appointments 81 2. Interest Group Theory Does Not Show Political Insulation Is Desirable 83 IV. Interest Group Theory Does Not Demonstrate That More

   Intrusive Judicial Review Will Desirably Increase the

   Transaction Costs of Legal Change 87 A. Two Obstacles? 88 B. Increasing Transaction Costs Can Encourage Interest

   Group Activity 89

   3. Increasing Transaction Costs Can Increase the Relative

   Advantage of Interest Groups 92 D. Discouraging All Legal Change 93 1. Are the Laws Embodied in the Status Quo Preferable to Likely Legal Changes? 93 2. Does the Status Quo Embody a Private Ordering Preferable to Likely Legal Changes? 94 V. Decision Theory Does Not Justify More Intrusive

   Judicial Review Either 101 Conclusion 109 Introduction

   The last few decades have seen an outpouring of literature by economists and political scientists modelling, describing, and analyzing interest group influence over governmental decisionmaking.(1) According to this literature, the government cannot be trusted to regulate in the public interest. Legislators are disproportionately influenced by organized interest groups and thus enact legislation enabling those groups to exact economic rents from others. Agencies tend to be captured by the firms they regulate and thus promulgate regulations to benefit those firms even though the regulations are inefficient and exploit consumers.

   This literature purports to do far more than critique seemingly bad results. It offers an account of the mechanisms by which small groups with few votes can accomplish what seems paradoxical in a democratic system: a systematic bias in lawmaking that benefits small groups, at the expense of large groups with more votes. In particular, the literature explains that the political system allows the exploitation of large diffusely interested majorities because they are less able to police free riding in political effort than smaller, intensely interested groups. Modern interest group theory thus offers a compelling explanation for something we all know is true: our democratic system regularly produces some results that appear contrary to the interests of the general public.

   In the wake of this literature, a wave of articles by legal scholars in various areas of law has argued that interest group theory justifies changing judicial review to make it less deferential to political outcomes. The list of scholars making this argument is long and impressive, including Erwin Chemerinsky, Frank Easterbrook, Richard Epstein, William Eksridge, Jonathan Macey, Jerry Mashaw, Gary Minda, William Page, Martin Shapiro, Bernard Siegan, Cass Sunstein, and John Wiley.(2) Similarly impressive are the range and significance of the legal proposals they advocate. If adopted, their proposals would produce major changes in constitutional review, antitrust law, statutory interpretation.(3)

   My purpose hers is to examine whether these proposals are justified. In particular, I want to address the question whether, if accurate, interest group theory justifies more intrusive judicial review. As I use the term, more intrusive judicial review encompasses not only stricter substantive review but also more aggressive statutory interpretation. Further, my inquiry encompasses proposals for more intrusive judicial review whether such heightened review would apply in the general run of cases or only in cases where interest group influence seems excessive.

   In tackling such a broad topic, it is important to stress at the outset the limits of my inquiry. My focus is solely on whether interest group theory demonstrates that the proposed changes would be desirable. I do not address whether the relevant legal authority permits, or even requires, judges to change their review as proposed.(4) Nor do I consider whether more intrusive judicial review might be justified on grounds other than interest group theory.(5) Further, my analysis is limited to proposals that would make the general stance of the judiciary more intrusive in the ways described above. This Article thus does not address (at least not directly) whether interest group theory justifies selectively changing which aspects of the political process the judiciary accords deference.(6) Nor does it address proposals to alter the political process itself by, for example, limiting campaign contributions, (7) creating authority for line item vetoes,(8) enacting a balanced budget amendment,(9) or reforming the procedural and committee rules of legislatures.(10)

   What I do address are the proposals for more intrusive judicial review, the initial appeal of which seems to follow readily from interest group theory's description of the political process. If the political process does not reflect the will of the people, why should the judiciary defer to it? However, closer examination reveals that these proposals are misguided for three general sets of reasons.

   First, any defects in the political process identified by interest group theory depend on implicit normative baselines and thus do not stand independent of substantive conclusions about the merits of particular political outcomes. Accordingly, expansions of judicial review cannot meaningfully be limited by requiring threshold findings of excessive interest group influence. Further, the use of interest group theory to condemn the political process reflects normative views that are contestable and may not reflect the views of the polity.

   Second, even if interest group theory succeeds in demonstrating defects in the political process, that would not justify the leap to the conclusion that more intrusive judicial review would improve lawmaking. The litigation process cannot be treated as exogenous to interest group theory because that process is also subject to forms of interest group influence that would be exacerbated if judicial review became more intrusive. More generally, when one makes the necessary comparative assessment, interest group theory does not establish (as it must to justify more intrusive review) that the litigation process is, overall, less defective than the political process.

   Finally, despite some arguments that more intrusive judicial review is desirable because it would increase the transaction costs of interest group capture, more intrusive judicial review would have several adverse effects on the transaction costs of legal change. It would sometimes decrease, instead of increase, the transaction costs of promulgating laws favoring interest groups. Moreover, where it did increase transaction costs, this effect could perversely encourage interest group activity, increase the relative advantage of organized interest groups, and retard the promulgation of laws that benefit the general public.

   After describing interest group theory and the legal proposals to change judicial review in Part I, this Article addresses each of these points in turn in Parts II to IV. Part V then extends the analysis to address the claim that decision theory, the other branch of modern economic literature on public choice, also justifies more intrusive judicial review.

1. INTEREST GROUP THEORY AND THE PROPOSALS TO CHANGE JUDICIAL REVIEW

   1. Interest Group Theory

      The defining theme of the interest group theory of lawmaking is its rejection of the presumption that the government endeavors to further the public interest. Rather, under interest group theory, all the participants in the political process act to further self-interest.(11) Legislators seek to maximize their chances of reelection. Voters and interest groups seek to maximize their own well-being at the expense of others. Moreover, regulation is a commodity, subject to supply and demand like any other commodity. Voters and interest groups demand the regulatory results that benefit them, and legislators and agencies supply regulatory results to the highest bidder.(12) The results need not further the public interest.

      Indeed, fundamental distortions in the political process may lead to sysmatic divergences from the public interest. Most economic models focus on "demand side" distortions. Under these models, interest groups influence the political process (and thus exhibit "demand" for legislation) in a variety of ways: by voting or mobilizing voters; by undertaking volunteer work for political candidates; by paying lawmakers in the form of bribes, speaking fees, supportive advertising, campaign contributions, or offers of future employment by pressuring political officials to support or oppose the appointment, promotion, removal, or budget or regulators; and by influencing the information that reaches legislators, regulators, and the voting public.(13)

      All this activity requires resources of time or money. More generally, significant resources must also be expended to surmount the severe information costs of group political action.(14) A group must monitor legislatures and agencies both to determine when the group should participate and to ascertain how the legislator or regulator has acted. Groups must also incur the costs of evaluating the positive and negative consequences of governmental actions for group members. Finally, a group must bear the costs of communicating this information to its voting members, and those voters must bear the costs of absorbing the information and...