The Neo-Brandeisians Are Half Right (Kevin Frazier, 6/13/24, Law & Liberty))

American firms pay upwards of $300 billion a year to comply with the latest rules and regulations. Some firms, though, pay far more than others. The extent of the disparities in compliance costs by the size of the firm requires thinking through how firms actually go about complying with the latest government mandate. More than 90 percent of compliance costs are tied to labor. An accurate assessment of a regulation’s compliance costs, then, should turn on analysis of the labor hours and wages required to toe the new line. Based on that framework, economists estimate firms with around 500 employees incur nearly 50 percent more in compliance costs than smaller firms (fewer than 50 employees), but they also pay almost 20 percent more than large firms (more than 500 employees). By taking a labor-focused approach to analyzing regulations, this disparity might be lessened. This approach should also cause Neo-Brandeisians to pause before rushing ahead with regulations meant to bring down corporate giants that, once implemented, only serve to entrench and expand their bigness.

A more expansive administrative state benefits big businesses that can afford to capture staffers and submit comment after comment in rulemaking processes. A look back at the informal meetings held by EPA staffers from 1994 to 2009 reveals that industry groups were almost always the other attendees—in comparison to public interest outfits, industry groups tallied 170 times more informal communications with the agency. In addition to holding a near monopoly over staffers’ time, industry groups fill up an agency’s record in the rulemaking process by submitting the vast majority of comments during notice and comment periods. When the EPA sought input from the public on an air pollutants rule, industry groups filled the information void—submitting more than 80 percent of the comments received by the agency.

Increased regulation and, consequently, a larger administrative state undermines the democratic ideals that Neo-Brandeisians allegedly seek to advance. Congress alone, per Alexander Hamilton, must “prescribe[] the rules by which the duties and rights of every citizen are to be regulated.” Though Congress is far from a perfect institution—it’s the institution the Framers intended to wield legislative power because its members are directly accountable to the people. Administrative agencies, in stark contrast, cannot claim to operate with the elective consent of the people.

What’s the point of encouraging people to vote and lowering barriers to the ballot if the people’s representatives are simply going to hand their legislative powers to unaccountable bureaucrats?