Sunday, April 5, 2009

The Rule of Law and Heavy Regulation

Back in 2002, law professor Todd Zywicki wrote a very instructive article in which (among other things) he surveys thinking on the rule of law. One valuable insight he emphasizes is that too much law can undermine the rule of law just as surely as too little. Too little law -- or too little of the essential laws, such as a constitution -- can allow certain people or groups to set themselves above the law, to act as "a law unto themselves."

But too much law can also allow certain people to act as a law unto themselves. As Prof. Zywicki explains:

Where there is heavy regulation of economic activity, it is fundamentally impossible to realisitcally comply with all the regulatory requirements and to still engage in any economic activity. . . . At that point an aspiring entrepreneur has two options: either to operate illegally or to bribe the relevant government officials to circumvent the formal processes to illegally qualify the entrepreneur to open the business. If the business operates illegally, of course, this simply means that the business is in constant danger of being shut down by the executive branch. In order to prevent this, it will often be necessary to bribe enforcement officials to allow the business to continue operating. . . . Either way, the sheer weight and intrusiveness of a heavy regulatory scheme leads to corruption and unequal enforcement of the law. It is impossible to satisfy all of the requirements; thus, for economic activity to function, it becomes necessary for some government officials to decide which requirements must be satisfied, which will be waived, and which applicants will be the beneficiaries of these waivers.

In other words, there is a point at which laws (regulations) can become so numerous or so complicated that it is not reasonably possible to comply with them. At that point, those with the power to enforce the law (regulators, prosecutors, etc.) become a law unto themselves, because they can decide when and against whom the uniformly disobeyed laws will be enforced.

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