Regulation and Public Interests: The Possibility of GOOD Regulatory Government.

• Author: Van Doren, Peter.

Regulation and Public Interests: The Possibility of GOOD Regulatory Government

Steven P. Croley

Princeton, N.J.: Princeton University Press, 2007, 392 pp.

In theory, scientific (positive) and philosophical (normative) inquiry are quite distinct. The former involves the testing of hypotheses through the use of experiments or the estimation of statistical models using data, while the latter utilizes theological or philosophical analysis to conclude how people and institutions should behave.

Normative analysis invariably involves passionate debate because the subject matter includes the big questions: What should one do with one's life? What are one's obligations to others? For what purposes should the coercive power of government be used? Normative analysis is what excites people about going to college: learning about the big thinkers (Rawls and Nozick, for example) and then discussing them at 2 A.M.

Positive analysis, on the other hand, does not stir the emotions. It is simply the honest attempt to discern what causes what. It is about fruit flies, reagents, solvents, controls, coefficients, standard errors, autocorrelation, and heteroskedasticity.

Sometimes this passionate/passionless distinction does not hold. Scientific inquiry stirs the passions if its findings have implications for normative questions or people attempt to use science to settle normative questions. An early example, of course, is whether the earth is stationary or instead rotates as well as orbits around the sun. The answer had implications for the importance of the Catholic Church in answering normative questions. Similarly the study of biological evolution continues to have implications for the supremacy of religious authority over normative questions. In climate science we have a modern example in which scientific inquiry has implications for policymaking. Participants debating the costs and benefits of atmospheric emissions attempt to use science to settle the dispute even though science cannot resolve normative disputes.

While public choice theory is not climate science, it is also not simply dry passionless inquiry using the methodology of microeconomics to explain the behavior of governmental actors and institutions. Just below the surface of public choice discussions about partial derivatives and utility functions is the intense debate over the proper division of labor between markets and government. In addition, there is also struggle over the role of economics in the division of labor in social science. Should economists just study the behavior of firms and consumers in markets or the behavior of people in all settings including politics? And if economists study politics what is left for political scientists to do?

My own academic experience illustrates those controversies. When I was under consideration for appointment to a policy teaching position within a political science department, I was asked by the appointments committee to supply a letter from a member of my dissertation committee certifying that I was not a "public choice zealot." My advisor supplied the letter. I was appointed and accepted the position. But I now realize why my time there was full of turmoil. Public choice is never just the positive examination of political behavior. It is also disguised discussion of the scale and scope of government as well as the imperialistic tendencies of economics within the social sciences.

Steven Croley's book is a critique of public choice as a positive theory of regulatory agency behavior. But it also has a normative message as well: Thank goodness economists are not that powerful because all we would have would be markets and markets sometimes fail to achieve efficient outcomes (market failure). Instead we have regulatory agencies that are in a position to perform good deeds for average people that they would not get under laissez faire. "The administrative process constrains agencies with poor regulatory proposals, as well as empowers agencies to do what is socially beneficial" (p. 267).

Public choice theory is characterized as having four claims (pp. 50-51). Interest groups don't represent broad social interests. Broad social interests are unorganized. Legislators maximize electoral support. And regulatory agencies are controlled by the legislature. In Croley's view this characterization of regulatory policy is inadequate, incomplete, and misleading. Instead, interest groups represent interests other than those of their members; groups representing broad diffuse interests exist; legislators do not seek simply to enact the preferences of narrow interests; and regulatory agencies' behavior is not under the simple mechanistic control of legislators and thus is capable of serving the diffuse interests of the public.

In Croley's theory, which he describes as the Administrative Process Theory of Regulation (p. 72), agencies are more immune to narrow interests than Congress. And agencies increase social welfare under some circumstances by promoting...