Wednesday, April 20, 2005

More thoughts on the Times Magazine article

I thought I had posted a link to this past weekend's New York Times magazine article on the Constitution in Exile. Going back through the archives, it appears I did not. So, if you don't read anything else in the next few days, take the time to print out and read The Unregulated Offensive by Jeffrey Rosen. It's a very clear, very succinct discussion of the current players and status in the so-called Constitution in Exile (CIE) movement.

I re-read it last night and took some notes while reading. When I got done, it occurred to me that the article broadly hints at the reason why, despite certain inclinations I might have in that direction, I can never become a libertarian. Namely, I'm convinced that unregulated markets (or societies) invariably lead to concentrations of power and concentrated power leads to abuse of those without power (i.e. most individuals). The article highlights the fact that proponents of the CIE disagree with this and somehow think that doing away with our current system won't have massive negative effects on people and the environment. The best description of this belief comes on page 11:
If they win -- if, years from now, the Constitution is brought back from its decades of arguable exile -- and federal environmental laws are struck down, the movement's loyalists do not expect the levels of air and water pollution to rise catastrophically. They are confident that local regulations and private contracts between businesses and neighbors will determine the pollution levels that each region demands. Nor do they expect vulnerable workers to be exploited in sweatshops if labor unions are weakened: they anticipate that entrepreneurial workers in a mobile economy will bargain for the working conditions that their talents deserve. Historic districts, as they see it, will not be eviscerated if zoning laws are scaled back, but they do imagine there will be fewer brownstones and more McMansions. In exchange for these trade-offs, they insist, individual liberty -- the indispensable guarantee of self-fulfillment and happiness -- would flourish far more extensively than it does today.

Now, Richard Epstein might be a smart guy, very likely far smarter than me, but does he (and the rest of the movement) really believe that things will just work out? For example, does he really think that businesses and neighbors have enough information and expertise to determine optimum pollution levels? Does he really think that the average working American has sufficient mobility, information and economic wherewithal to find and bargain for job opportunities with big employers? Can he be so obtuse?

Consider for a second the environmental example. Suppose the Clean Air Act, the Clean Water Act, the Clean Drinking Water Act, CERCLA, and RCRA have all been done away with. Suppose, then, that an energy company seeks to build an oil refinery next to a river in a small, economically-depressed town. Without a federal or state regulatory framework, the town council and its citizens will be left to bargain with the corporation to establish acceptible pollution levels. This alone, is problematic, in as much as the chances are basically nil that the town will know what pollutants such plant might release and what effect they might have on the commmunity. In illustration, do you know what an oil refinery releases, how much it releases and how those releases might affect your health or welfare? I certainly don't. The fact is, most towns and localities lack the resources to obtain the sort of information required to make the CIE model work.

The federal government is more than just a regulatory entity these days. The federal government is a neutral information source and a neutral arbiter. Environmentalists, industry and a whole variety of related interest groups may rent-seek through the administrative agencies, but at some basic level the environmental data the government collects is fairly accurate, mostly comprehensive and not open to easy manipulation. Take this resource away, and you're left with an informational vacuum. Where would towns and localities go to get information on pollution and its effects if federal agencies stop collecting it? Non-profits? Funded by whom? Could localities be sure the non-profit data source is neutral or the data accurate? American business has shown great skill at setting up phony advocacy groups and disseminating information that, at its best, omits salient facts. In a fully-deregulated country, I suspect such organizations would multiply, not decline. Likewise, even if environmental groups offered their own information, how would localities know to between many options? Thus, the information barrier to effective local decision making seems quite high. Without the sort of guaranteed information that the federal governmetn provides under our current system, I doubt that towns or localities would be able to identify pollution levels they consider "optimal".

Perhaps more importantly, even if a town can make informed decisions as to the degree of pollution they feel is optimaly, how would they be able to enforce agreements they might reach with a business? Will corporations sign individual contracts with localities? If they do, will normal contract rules apply? Currently, most (all?) states allow courts to negate contracts that violate public policy, but the term "public policy" is vague and courts lack expertise in establishing what the public policy may be in regards to specific pollution levels.

Additionally, there is the question of whether an optimal pollution level can ever be determined through bargaining. Even if a town begins bargaining with full knowledge and the backing of the courts, there remains the fact that the company will bargain as a monopsony. In other words, there is only one business offering to build the plant, but presumably the town is one among many potential sites. In this situation, the company can use its position to bargain down the "optimal" level of pollution. If the target town has an optimal level in mind, the plant can threaten to move to a different town where they may have less information or a different optimal level. This is the classic race to the bottom situation, except there may well be no racing, just the threat.

There are other problems, as well, with this idea of towns and localities contracting for optimal pollution levels: these include the problems posed by cross-boundary pollutants, the potential divergence between economic and environmental optimality, and the risk of backroom political deals. For the sake of brevity (does it matter at this point?), however, I'll stop here.

Ultimately, the issue at hand extends beyond merely environmental concerns. I believe the CIE folk, whether out of a groundless faith in free markets or for some other reason, are trying to create a system in which pre-existing inequities in our society and economy can be exacerbated and exploited by those individuals and entities with the means to do so. The Constitution, as a Supreme Court justice once said (and the right-wing has repeated ad nauseum since 9/11), is not a suicide pact. It may have been written by propertied elites, but it was not intended to be and should not used as a means to centralize economic and political power in the hands of a tiny segment of American society.