The dawn of the era of microgovernment

The dawn of the era of microgovernment

Our hypothetical Clean Air Bill of Rights offers not a single one of those protections. Indeed, it regards them as irrelevant or improper. Courts and juries can't target outcomes, because they control only each particular case. There is no big goal, just the million microgoals of justice in a million particular cases. And so, with our imagined Clean Air Bill of Rights, particular justice always trumps regulatory efficiency. The EPA can say, "Air that is clean for 95 percent of the people is clean enough," but no self-respecting court can say to a plaintiff, "Because other people's lungs are clean enough, you're not entitled to clean lungs yourself." Clear rules, known in advance? No such thing; instead, a million court decisions, often conflicting. Cost-effectiveness? The mandate is to do justice, not to count cash, and in any event, courts are neither equipped nor expected to conduct economic analyses of the decisions they reach. Disinterested regulators? The agenda is driven by angry complainants and entrepreneurial lawyers who have everything to gain from finding new behaviors to punish.

On Feb. 12, Americans awoke to read in their newspapers that the U.S. government-settler of the West, vanquisher of totalitarianism, conqueror of the moon-now writes the rules of golf.

Casey Martin is a professional golfer who suffers from Klippel-Trenaunay-Weber syndrome, a congenital circulatory disorder that gives him pain and swelling in his right leg. Because Martin cannot walk the links, a federal judge ruled that he had the right, under the 1990 Americans With Disabilities Act, to play the PGA Tour using a golf cart. "Mr. Martin is entitled to his modification because he is disabled," said Judge Thomas M. Coffin. "It will not alter what's taking place out there on the course."

To Martin and the judge, this was a "reasonable accommodation," fair to Martin and therefore required by law. To the Professional Golfers' Association of America, it was an unreasonable intrusion, unfair to all the players who must wear themselves out trudging picturesquely from hole to hole. One interesting question was whether walking is part of the game of golf. A more interesting question, however, was how the government got into the business of deciding whether walking is part of the game of golf. This was a line of work that the most ambitious New Deal economic planner would find startling.

Today, conservatives denounce law-making courts, communitarians denounce the "rights industry," businesses denounce the litigation explosion. Each critique has some merit, as far as it goes; but this article posits that none of them goes far enough. If you want to understand the full implications of the Casey Martin phenomenon, you need to view it-and the many thousands of other cases in which individuals and their lawyers (or lawyers and their individuals) press rights-based lawsuits-as nothing less than America's third and most extraordinary wave of regulation. Call it microgovernment: a style of regulating based on the premise that each individual is entitled to a safe, clean or, especially, fair personal environment.

Microgovernment is not the same thing as small government-far from it. In fact, it is remarkably expansive government, but its immensity takes the peculiar form of an infinity of microdecisions, each building upon, yet separate from, all the others. In this, it is radically different from earlier periods of regulatory activism. The first two waves of regulation dealt in big, clunky agencies issuing one-size-fits-all rules aimed at making people better off, on the average. Microgovernment comes as a steady drizzle of court decisions, seeping through the pores of civic life. Regulatory agencies, such as the Equal Employment Opportunity Commission, are involved, but mostly as plaintiffs rather than as bureaucratic rule makers. The main regulators are, indeed, not agencies at all, but claimants and lawyers and judges and juries, all working independently to spin, in the fashion of a mass of caterpillars, a cocoon of intricate social regulation that enfolds even the most minute details of everyday life.

"It's basically just an accumulation of micro-outcomes," says Pietro S. Nivola, a political scientist at the Brookings Institution (where I am a writer in residence). "You're not even setting broad targets or goals. You add up a million cases, and that's what you get."

So today, there is nothing unusual about waking up one morning to find the government writing the rules of golf. The New York State Board of Law Examiners is required to give extra time on the bar exam to a woman who claims (contestedly) to have a reading disability. A group of gay municipal workers in Seattle is told it must include a hostile heterosexual man who outspokenly believes in "biblical values." A television production company is ordered to pay a $5 million judgment for refusing to cast a visibly pregnant woman in the role of a seductive vamp. The Supreme Court, in its majesty, decides when a coach may and may not smack a football player on the rump.

This article examines a cluster of familiar, sometimes overfamiliar, goings-on and tries to look at them in a new way: not as artifacts of jurisprudence but as a system of social control. In other words, as regulation-but of a sort that has eluded the scrutiny that regulation ordinarily gets.

Regulation, of course, is necessary, and no system is perfect, and top-down, bureaucratic rule-making has more than its share of problems. But microgovernment is fundamentally different from other regulatory systems: It is less accountable, less rational, and more intrusive than anything the New Deal or the Great Society tried.

The Third Wave

In the standard account of things, there have been two great and distinct waves of regulation in America, one now decrepit, the other still robust. The first was economic regulation, which began a century or so ago, in the days of the robber barons, and lasted through the New Deal; the second was social regulation, which blossomed in the 1960s and 1970s. Each wave had its distinctive theory.

For the economic regulators, the problem was that markets were unstable and prone to manipulation by cartels. The solution was to establish agencies to control prices (passbook interest rates, airfares, farm prices) and regulate entry into markets (banking, communications, peanut-growing). For social regulators, the problem was that markets dump social harms ("externalities") on individuals who can't readily organize to protect themselves. The solution was the creation of agencies to reduce pollution (the Environmental Protection Agency) or to act on behalf of consumers (the Consumer Product Safety Commission), workers (the Occupational Safety and Health Administration), drivers (the National Highway Traffic Safety Administration).

Although the two waves were distinct, they had in common their decision-making style, namely bureaucratic rule-making, otherwise known as red tape. That is where the standard history ends.

It is also where the third wave begins. Like the earlier two, the third is rooted in a theory of market failure: that markets are often unfair or hurtful. Its solution, however, breaks sharply with the earlier two models, by rejecting the bureaucratic model. Instead of looking to the executive branch to issue rules, individuals (or agencies standing in for individuals) have gone to court for redress. Under pressure from activists with regulatory agendas and ordinary people with genuine grievances, the courts have responded. In the 1960s and 1970s, a series of decisions broadened the traditionally narrow tort laws to allow people to collect damages for more harms and for more reasons. The result lies in a peculiar gray zone between a traditional, negligence-based tort system and a randomly enforced right to personal safety. Tillinghast-Towers Perrin, a management consulting firm, reports that, from the mid-1960s to the mid-1980s, tort costs more than doubled as a share of the economy (to more than 2 percent), with lawyers getting about 30 percent of the take and plaintiffs less than half.

In general, the tort system is not so much unreasonable (the horror stories are exceptions) as ambitious. People howled in 1992 when a grandmother named Stella Liebeck spilled hot coffee on herself and won a $2.7 million punitive judgment against McDonald's. In fact, the case was not silly: Liebeck's burns required hospitalization and skin grafts, McDonald's acknowledged having received 700 prior burn complaints, and the punitive judgment was eventually reduced to $480,000.

The larger significance, however, was that juries were colonizing the territory previously reserved for bureaucrats and politicians. A National Restaurant Safety Administration, if it existed, could conduct rule-making to decide whether one burn for every 24 million McDonald's coffees sold is a problem worth worrying about, or whether, in the big scheme of things, other safety problems are more important. In the court case, however, the jury saw just a burned grandmother and an arrogant corporation that had dismissed 700 burns as "trivially different from zero."

"The case prompted McDonald's, and other restaurants, to turn down the heat on the coffeepots," reported The Hartford (Conn.) Courant. America must be the only country in the world where juries regulate the temperature of coffee.

The people who worried that product-liability law was becoming a right to safety were not particularly noticing that, on a separate track, another series of lawsuits was establishing a right to fairness. For instance, the courts waded into a swamp of workplace-harassment litigation and embarked upon what became an astonishingly ambitious regulatory project. The courts construed the 1964 Civil Rights Act, which forbids racial or sexual discrimination in the "compensation, terms, conditions, or privileges of employment," as covering not just hiring and firing and wages but as striking "at the entire spectrum of disparate treatment of men and women in employment." That was a pretty big spectrum, and striking at it required, among other things, that each individual's workplace environment be free of sexual harassment, as defined by juries and judges. Other decisions established a parallel right to be free of other forms of discriminatory harassment, which was left for entrepreneurial plaintiffs and puzzled juries to define. The chart on page 2152 shows the result: Federal anti-discrimination lawsuits have almost tripled in this decade.

By 1998, regulating through the courts had become, in effect, Washington's default mode. Why bother with a new bureaucracy to regulate health maintenance organizations, when you can just pass a "patients' bill of rights," meaning (in some versions) regulating HMOs through private litigation? No need to hire bureaucrats, make painful political choices or spend taxpayers' money; regulation by lawsuit is self-financing and self-propelled. "It's really a shift to off-budget governance," says Nivola. The trouble is that it is off-accountability, too.

Digging a Tunnel

Imagine that, instead of a Clean Air Act, with its endless rules for sulfides and scrubbers, we just had a Clean Air Bill of Rights: "No corporation or business establishment shall impose an unfair, excessive or unreasonable burden of air pollution on any person or group."

Then suppose that, instead of creating an EPA, we granted everybody standing to sue for large sums of money. In effect, we would give every individual the right to a clean set of lungs and leave it to juries to decide what that means. Instead of viewing, say, Los Angeles as a big patch of air containing 10 million people, we would view Los Angeles as 10 million pairs of lungs, each equipped with a lawyer. The government's perspective is inverted: What was seen from the top down, as a large environment with many difficult trade-offs, is instead seen from the bottom up-as 10 million microenvironments, each to be regulated in its own right. It is this inversion of perspective that distinguishes microgovernment from other kinds of regulation, and that accounts for its often-bizarre behavior.

Over the past few decades, economists and good-government types have learned a thing or two about good regulatory hygiene. Some of the basic rules are:

  • Set an overall goal before putting particular rules in place;
  • Target outcomes, not process-success means reducing pollution or reducing on-the-job injuries, not writing rules or levying fines;
  • Look at the big picture; weigh overall social costs and benefits to avoid chasing wild geese (ever since the 1970s, all major federal regulations are subject to cost-benefit review);
  • Propose rules in advance (in the Federal Register), and give all affected interests plenty of time to comment;
  • Write down the finished rules, and make them clear enough to comply with;
  • Don't give bureaucrats a financial stake in their actions-for instance, don't let them pocket the fines they levy, lest they turn regulation into a money-making scheme;
  • Allow for at least arm's-length supervision by politicians, so that Congress and the White House can hold regulators to account.

Through it all, the politicians are relegated to the peanut gallery as commentators, except on the rare occasions when they manage to rewrite a whole law, which is far harder to do than summoning a regulator to testify before an oversight committee. "An agency can be punished in a lot of different ways," says Thomas F. Burke, a political scientist at Wellesley College. "You can intimate that they're not going to get the same budget through Congress next year. It's much harder to discipline courts all across the country, and individuals who are bringing lawsuits all across the country."

So what happens with our proposed Clean Air Bill of Rights? Some juries do sensible things, such as finding for plaintiffs who were exposed to high concentrations of lead. Other juries do weird things, such as finding for plaintiffs who claim that trees pollute. Some courts decide that an "unreasonable burden" means a high likelihood of lung disease, but others decide that "unreasonable burden" means more pollution in one area than in another, or any pollution at all. Over the years, things settle down a little, as precedents accumulate in each old area of litigation, but meanwhile complainants keep opening new areas of litigation. In any case, no one can be sure what the environmental rules are, because no one knows what the next jury may decide, or what the next plaintiff may dream up. The result is what Burke has called a "floating legal crapshoot." Anything could happen.

And anything does.

One-Eyed Regulating

In 1989, the Exxon Valdez spilled more than 10 million gallons of oil into Alaska's Prince William Sound. The ship's captain, Joseph Hazelwood, had been drinking (though a jury cleared him of intoxication) and was known to have sought treatment for an alcohol problem four years before the accident. In 1990, with the Justice Department's encouragement, Exxon established a policy barring employees with histories of drug or alcohol abuse from 1,500 safety-sensitive jobs, "where an accident could have catastrophic consequences"-about 10 percent of the company's positions. For people transferred out of such jobs, the company tries to find positions of comparable rank and pay. Nonetheless, the EEOC is now suing Exxon for discrimination under the Americans With Disabilities Act (ADA).

United Parcel Service requires that its delivery drivers, who pop in and out of city traffic, have sight in both eyes. It, too, is being sued by the EEOC under the disability act. Walter K. Olson, a senior fellow at the Manhattan Institute for Policy Research and the author of The Excuse Factory: How Employment Law Is Paralyzing the American Workplace, points out that this is not exceptional. Omaha paid $200,000 in damages for refusing to rehire a policeman who had lost his sight in one eye and had suffered loss of peripheral vision in another; Northwest Airlines is being sued for declining to hire a woman with monocular vision to drive maintenance trucks between airplanes. Aloha Islandair Inc. is being sued for declining to hire a pilot with vision in only one eye. (If a plane piloted by such a pilot were to crash, the airline could, of course, be sued.)

Maybe one-eyed drivers and alcoholic tanker captains are unsafe on the average, maybe not. But the important thing to note is that the ADA never reaches that question, because it forbids basing policy on averages. A bureaucratic rule might say that if 90 percent of Exxon's jobs are available to recovering alcoholics, that is enough. But all microgovernment "sees" is each job, and each disabled person, and each person's right to accommodation. Microgovernment is one-eyed.

The threat of ADA lawsuits may not create either jobs or goodwill for the disabled. In a recent study, two Massachusetts Institute of Technology economists, Joshua Angrist and Daron Acemoglu, found that the ADA "had a substantial and statistically significant negative effect on the employment of disabled people under 40." But who knows? Given that court decisions are often nebulous or conflicting, that companies respond to those decisions in many different ways, and that lawsuits often chase deep pockets and settlement prospects rather than urgent national problems, microgovernment does not actually know what it is doing, let alone whether it is doing it well.

The question is not whether helping the disabled is a good idea; it is whether letting lawyers do the regulating is the best method. Successful regulatory systems work by paying attention to measurable outcomes and by feeding knowledge about success or failure back into the system. Goals set by bureaucrats and politicians may or may not be wise, but usually it is at least possible to know whether a given regulation succeeds at, say, reducing sulfur emissions or stabilizing freight charges. The microgovernmental model, by contrast, sets no overall goals, measures no outcomes, allows for little or no evaluation of effectiveness or cost vs. benefit, writes few unambiguous rules, allows no formal public comment even in cases with sweeping ramifications, exiles politicians to the fringe of policy-making, and buys us-well, we have no idea what it buys us. If your goal was to design a regulatory regime that violated every standard rule of good regulatory practice, you could hardly do better.

Strip Search

Microgovernment is micro in another sense: not only is it radically decentralized, but it pokes its nose into everything, and no corner of life is too small for it to reach. Its mandate-attaining fairness in every personal environment-acts as a little microlever, prying here and prying there, opening one door after another to the onslaught of legal process.

Ask the PGA. Or ask Bill Clinton, whose sex life was scoured in fine detail by Paula Corbin Jones' lawyers, thus giving an enthusiastic microregulator a taste of his own medicine. Clinton's alleged conduct with Jones was, at least, patently disgusting. In many cases, distinguishing workplace harassment from ordinary flirting is difficult; courts must go to great lengths to do it.

Workplace harassment law was entirely cooked up by the courts, and is entirely driven by the mandate for fairness in particular cases. It therefore serves as a good example of the microgovernmental regulatory style in its purest form. In Oncale vs. Sundowner Offshore Services Inc., the Supreme Court ruled this year that discriminatory same-sex harassment is illegal. What exactly is harassment, and when is it discriminatory, as opposed to merely, say, mean? The court helpfully announced that a male football coach may smack a player on the behind as the player runs onto the field, but may not smack a secretary (male or female) on the behind in the back office. Well, what about the locker room? In case the exact line of demarcation eludes you, the regulators-meaning the court-provided this guidance:

"The real social impact of workplace behavior often depends on a constellation of surrounding circumstances, expectations, and relationships which are not fully captured by a simple recitation of the words used or the physical acts performed. Common sense, and an appropriate sensitivity to social context, will enable courts and juries to distinguish between simple teasing or roughhousing among members of the same sex, and conduct which a reasonable person in the plaintiff's position would find severely hostile or abusive."

This is rather as if the EPA had defined illegal pollution by saying: "We know it when we see it." To decide whether harassment has occurred, the court needs to sort through "a constellation of surrounding circumstances, expectations, and relationships"-in other words, the intricacies of each relationship in each workplace situation in each case. Every joke, every dinner invitation, every friendship becomes a courtroom exhibit, aswarm with lawyers. Who told which dirty joke, how often? Who was friends with whom? What did that dinner invitation signify? In a recent racial-harassment case involving a black plaintiff and an Asian plaintiff suing their former employer in Los Angeles, lawyers busied themselves debating who was more offensive to whom. Remarks to plaintiffs: "You don't sound like you're black." "Why are your people's faces so shiny?" "You know, we bombed you [Japanese] once. We'll do it again." Remarks by plaintiffs: "dumb Polack," "white trash," "crackers," "redneck," "fucking Korean." The jury decided the workplace was hostile and ordered the company to pay $1.9 million.

Given that a microgovernmental lawsuit is often the legal equivalent of a strip search, the prudent employer understandably takes no chances on jokes, teasing, or personal comments around the office. Lately, legal experts are advising employers not to let workers recount stories from the movie There's Something About Mary, a sophomoric comedy whose scenes include, for instance, some business about genitals caught in a zipper. "If you are telling these kind of jokes, no matter where they're coming from, you're exposing yourself to a sexual-harassment claim," Allen Rad, an employment lawyer, told The Dallas Morning News in July. "You're better off just not talking about it."

Subjecting each workplace, each job, each relationship, each joke to exhaustive legal scrutiny can devastate communities that depend on trust. In Seattle, two successive support groups for gay city employees have collapsed under the weight of legal processes launched by a hostile heterosexual man who was determined to attend their meetings. "I was attempting to find out what special privileges they were being given," says Philip Irvin, a city engineer who favors biblical morality and secular laws criminalizing sodomy. When the gays tried to keep him out, he filed discrimination charges, and last year the city's civil rights office found in his favor. The case grinds on through its eighth year of appeals. Exhausted by the wrangling, the group has not met since 1997.

At the end of the day, as the law thrashes about and tries to make every personal environment fair, the results often become simply bizarre. In one notorious recent case, the restaurant chain Hooters, whose calling card is its scantily clad waitresses, paid a $3.75 million settlement (of which almost half went to lawyers) after three men were turned down for waitressing jobs. A bureaucracy looking at the labor market as a whole, with its 370,000 places to eat, might have decided that letting some restaurants specialize in underdressed female servers is not a terrible thing. Microgovernment, however, sees only the unfairness in each particular case. Discrimination in allocating even one serving job is too much.

The law (under Title IX of the 1972 Education Amendments) forbids sex discrimination in education programs. In classic micro style, judges and juries have interpreted this to mean that each particular school needs to spend as much on women's sports as it does on men's; because women are less interested in sports, this has meant achieving equality by shutting down men's college teams across the country. According to a National Collegiate Athletic Association survey, men's gymnastics teams are down to 32, from 133 in 1975. To comply with a legal settlement, California State University (Northridge) dropped baseball, soccer, swimming and volleyball.

Elementary and secondary schools are now getting the same treatment. ABC's 20/20 noted in May that a lawsuit by two softball players, Jennifer and Jessica Daniels, required Merritt Island High School, in Florida, to mothball a concession stand, a scoreboard and bleachers that parents donated for the boys' baseball field unless the same items were also donated for the girls' softball field. When the program asked the girls' lawyer why she was requesting quadruple legal costs, she replied, "Because we put that money into other lawsuits." She is currently suing 10 high schools. Thus the mindless totalism that gives microgovernment its characteristic resemblance to a lawnmower propelling itself through a rose garden.

Termite Attack

No doubt it is intrusive, in some sense, to require steel makers to put scrubbers on their smokestacks, or landowners to preserve wetlands. Yet the relationships interfered with are business relationships, and the requirements are, at bottom, economic. Microgovernment is of a different complexion. "It's us and our personal behavior," says Robert E. Litan, a Brookings Institution economist and former Clinton administration regulator. "This is telling people how they have to behave." For government, policing jokes at work, or ordering colleges to set up as many press interviews for female athletes as for males, or fining the producers of Melrose Place $5 million for refusing to allow a pregnant actress to play a bikini-clad seductress, represents a higher and stranger order of intrusiveness. Never before has the government concerned itself so minutely with the detailed interactions of everyday life.

Moreover, microgovernment creeps toward you like a swarm of subterranean termites, rather than charging you like an angry elephant. There is no city hall to fight, no bureaucrat to argue with. "There is no forum in which you're having a national, public dialogue about these questions," says Nivola. "It's not happening in a legislature. It's taking place in a myriad of courtrooms, and the cumulative effect of it is the regime. It's so decentralized that it doesn't offer a visible target."

No one has any idea how much microgovernment costs. It may well be less expensive than traditional regulation, given the high costs of such old standbys as trade protections and price controls. However, microgovernment's costs are best measured not in money but in government's loss of respect for people, and people's loss of respect for government. If the excesses of 1960s and 1970s regulation destroyed the public's confidence in the bureaucracy, what will the greater and weirder excesses of microgovernment do to the public's confidence in the judiciary? And how much grinding up of personal and professional relationships is required before someone figures out a way to stop the lawnmower?

Eventually, somehow, someone will. But no one has done so yet. Microgovernment is in its gaudy first flowering, protected from the traditional checks on regulatory excess by its moral prestige as a defender of rights. Indeed, few people even realize that it is regulation. President Bush embraced the ultramicro Americans With Disabilities Act, even as his own vice presidential Council on Competitiveness swore to thwart regulation. President Clinton thinks nothing of demanding a patients' bill of rights, even as his own vice president drums away at the importance of holding regulators accountable to results rather than to process.

In time, either there will be reforms-of a sort not yet invented-or microgovernment will simply collapse, as irrational and unaccountable forms of governance eventually do. America's extraordinary experiment in regulation without regulators will fail, and the country will move on. But what will be the condition of the law when that time comes?