The Legal Profession and the Efficacy of Microeconomic Policy

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Trouble at the Bar points out that the legal profession has more influence on public policy than any other profession. It also suggests that its influence on microeconomic policy may be harmful based on circumstantial evidence in my 2021 Brookings book, Gaining Ground: Markets Helping Government, and Yale Law Professor Peter Schuck's 2014 book, Why Government Fails So Often and How It Can Do Better, which documents that pervasive microeconomic policy failures have generated huge costs to American society. Before indicting the legal profession, it is important to consider how government policy failures could be linked to the profession's influence, and, if so, what could be done to make its influence more constructive.

Law and lawyers are essential for formulating and applying public policy, but both have features that sow the seeds of government policy inefficiencies. The strength of law is that it establishes boundaries—that is, identifies illegal behavior—and governs interactions among and between people and firms. Its weakness is that proposed laws that offer constructive change can be vetoed. For example, the Senate and the House of Representatives are veto players because, without their consent, no bill can become a law. The more veto players in a political system—and the United States has an exceptionally high number of them—the more difficult it is to avoid status quo bias and to adopt socially beneficial policy reforms.

Lawyers understand and respect the policymaking process and account for a large share of policymakers, especially in Congress, where 42 per­cent of the seats in the House and 59 percent of the seats in the Senate in the 113th Congress were held by lawyers. However, lawyers, like economists, can be slaves to their training and professional culture. This adversely affects policy. For example, lawyers in government emphasize procedure and advocacy and the prosecutorial style of congressional hearings instead of a systematic, collaborative search for truth.

Lawyers also have a predilection for writing laws and regulations and producing huge volumes that run in the thousands of pages yet nonetheless result in ambiguities and a constant stream of legal challenges, instead of initiating clear and effective policies that help to resolve social problems. Administrative lawyers are especially comfortable with, and, indeed, may welcome, highly detailed regulations and statutes. For example, the Federal Register exceeds 70,000 pages; the Dodd-Frank Act spawned an additional 14,000 pages on top of its initial 2,300 pages; and the Affordable Care Act amounted to 2,700 pages and 1,327 waivers. Some lawyers can be so preoccupied with administering regulations that they neglect to consider whether the regulations are enhanc­ing or harming social welfare.

Phillip Howard's critique of the legal profession argues that law­yers share a philosophy of the correctness of the law, such as compliance with a rule, regardless of the law's actual economic and social effects. For more than three years, the Veterans Benefits Administration intentionally stopped redacting names, Social Security numbers, and other personally identifiable information on third-party individuals in claims records provided to veter­ans. Although people could face substantial harm if their information were misused, the Veterans Affairs' General Counsel's Office said there was legal support for not redacting the data.

Trouble at the Bar argues that the pervasive role of lawyers in all levels of government has had an adverse effect on the efficacy of public policies in general because lawyers' training, career development, and policy perspectives have oc­curred in an inefficient environment shaped by regulations that reduce competition and innovation. In addition, legal training and practice does not encourage policymakers to acknowledge and correct policy inefficiencies by subjecting previous decisions to rigorous retrospective cost-benefit analyses and by subjecting new decisions to rigorous prospective cost-benefit analyses. Precedent is, well, precedent. Period.

To be sure, economists have a comparative advantage in performing quantitative studies, but an economic analysis must usually go through lawyers if it is to have any influence on policy. Often such work is simply ignored or dismissed as "gobbledygook" unless the lawyers participating in the policy process believe its message supports their strongly held views.

For example, the available scholarly empirical evidence does not indicate that antitrust policy and enforcement has benefited consumers by promoting competition and by preventing firms from engaging in anticompetitive behavior. Nonetheless, such evidence is not acknowledged by lawyers Tim Wu and Lina Khan who advocate breaking up Big Tech and abandoning the consumer welfare standard in favor of "leveling the playing field" for any and all competitors. This is troubling because Wu and Khan are likely to have considerable influence on the future direction of antitrust enforcement given that President Biden is supporting their appointments to the National Economic Council and the Federal Trade Commission, respectively. One might hope that leveling the playing field promotes consumer welfare, but that is certainly not a given.

Trouble at the Bar also presents evidence suggesting that policy may be compromised because the government does not attract the most able lawyers graduating from the nation's leading law schools, and when it recruits top lawyers from the private sector for a few years, the effectiveness of those lawyers may be limited by the government's resource constraints. Although access to justice is a problem of most ordinary Americans, those individuals and firms with the resources to have access are likely to have an advantage in the quality of their legal representation when they oppose the government in a policy dispute.

The shortcomings of the legal profession in government policymaking that I have summarized contribute to status quo bias, which is the strongest explanation for government policy failure. Status quo bias inhibits learning and vision about the long-run effects of a policy, enables significant inefficiencies in part of the economy to persist and interact with inefficiencies in other parts of the economy, and makes it extremely difficult for the government to reform inefficient policies by implementing efficient ones.

Importantly, reforms that do occur may make things worse instead of better because of a lack of learning and vision. Society, of course, has other goals besides economic efficiency, but persistent inefficiencies make it much more difficult for society to accomplish those goals.

The deregulatory reforms of the legal profession that I recommended previously to increase access to justice also could help the legal profession's influence in policymaking to be more constructive. First, deregulation that generates more competition and reduces the government earnings penalty should help the government to attract more able lawyers. Second, greater competition among legal service providers that improves the culture of law firms to make them more efficient, innovative, and congenial toward all employees could help government performance if lawyers from those firms impart those values when they take leave from the private sector to work in government.

Finally, the development of new specialized legal education programs, which result from eliminating the ABA's monopoly control over legal education, could greatly im­prove the training of lawyers who pursue specific career paths that lead to long or short-term positions in government. For example, law schools in combination with other university departments could develop programs that blend:

  • Law, economics, political science, and policy analysis for lawyers who want to work in government to help formulate and implement social science-based policies. Such a program would enable lawyers to develop skills to assess and possibly initiate empirical policy analyses that are relevant to their area of responsibility.
  • Law, policy analysis, and STEM disciplines for lawyers who want to advise government officials and judges on policies based on science and engineering.
  • Law and medicine for lawyers who want to work in government on health-related policy issues.

Other programs that could better prepare lawyers who work in government to contribute more effectively to public policy also are likely to be developed.

Lawyers who obtain a broad analytical, multidisciplinary education are likely to be more effective at helping public officials appreciate rigorous policy-based arguments and they may be more likely to advance those arguments when they are able to do so. Lawyers with such an education also are likely to take a less ideological approach to resolving cases; thus, if they become a judge on a lower court or a justice on the Supreme Court, they could help to reduce ideologically based decisions by their own (less ideological) perspective.

Lawyers who oppose deregulating the legal profession reflect status quo bias that benefits a special interest at the expense of society. Those same lawyers, when they occupy influential positions in government, are also likely to enable government policy inefficiencies to persist. If lawyers change their mindset of how they self-regulate the legal profession, they could contribute more effectively to policy reforms that greatly benefit society when they serve in government.

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  1. “For example, the available scholarly empirical evidence does not indicate that antitrust policy and enforcement has benefited consumers by promoting competition and by preventing firms from engaging in anticompetitive behavior.”

    I’d like to see this evidence.

    1. Threats to alter 230 ot break up internet media giants as “too large and powerful” has certainly worked to arm twist them to censor harrassment-oh-and-start-with-our-political-opponent’s-tweets-which-are-harrassing.

      So regulation, working as intended, though usually it’s to get kickbacks to back off the burden a bit.

      I’d like to see this evidence.

      The entire surface of the Earth and all human history. It’s a target rich environment. This is why you go into government, to get in the way.

      1. The entire surface of the Earth and all human history. It’s a target rich environment. This is why you go into government, to get in the way.

        You have a bad habit of answering a request about facts with a stream of ideology instead.

        Your ideologically-driven understanding of the motives of civil servants is pretty twisted, too.

        1. Civil servants are not entrepreneurs; they do not provide a good or service upon a consensual and voluntary basis; they do not create wealth; they do not meet a payroll; they do not have to secure the confidence and trust of an entrepreneur’s patronage; and they are, at bottom, takers.

          1. This is all dogma.

            Take basic research policy for the government. It creates jobs in academia, It assists in the professional development of our highly skilled research workforce. It helps lay the foundations both in terms of our research capacity and the fundamental knowledge needed for the technological breakthroughs of the future.

            And all of it is too risky and with too uncertain an RoI timeline for the market to fund.

            1. You claim my post is “all dogma,” and yet you fail to furnish any proof of the same. Good luck proving that your asseveration is irrefutable.

              1. What, proof that civil servants do not provide a good or service upon a consensual and voluntary basis? Did you even read what I wrote?

                Your main thesis above is that entrepreneurs are King Shit of society and no one else has any value or even virtue doesn’t need much refutation; it’s dogmatic nonsense on it’s face.

                1. Yes, I read your post.

                  You made an assertion and I replied that you did not purvey any evidence to support it. I added that you would have some difficulty in proving that my initial post is “all dogma.”

                  In response, you chose to tautologize.

                  BTW, researchers who are either employed or subsidized the state, do not furnish a good or service upon a voluntary and consensual basis. In order to fill their gravy train, the state takes your money and mine. In my case, it is without my consent.

                  1. I laid out what a certain subset of civil servants do, and how the impact of that is a counterexample to your assertion.

                    That’s not a tautology, it’s an argument, bolstered by asserted facts. If you take issue with my assertions about what basic research managers do, or with the impacts of what they do, then do so.

                    Research in America is done partially via grants. People apply to grants, voluntarily. And then, if selected, do research funded by those grants, on a consensual basis. And the papers they publish serve as a foundation for tech that benefits you and me.

                    1. Researchers who are either subsidized or employed by that do not conduct such research upon a voluntary and consensual basis because they are paid by means of funds filched from others. That can hardly be characterized as “voluntary and consensual.”

                      If a researcher works for an enterprise that receives no federal or state payola, then that would constitute a voluntary and consensual proposition.

                      You took great liberties in construing the meaning of my initial post. There is no way the text of my post could be construed to mean that no one aside from entrepreneurs has any value or virtue.

                    2. That is not what voluntary means. Those individuals chose their job, and their research, and chose to apply for that grant. Whether paid with corporate profits or government taxes has zero to do with voluntarity. You don’t get to redefine words to fit your worldview, that’s a Trotskyite move, and I’d advise you to use vocab everyone understands not libertarian newspeak.

                      Taxes are not stolen from others; this is a republic and those we vote on have set the rate.

                      In your initial post, you list things that a virtuous person does in order to explain why civil servants are not virtuous. And what you listed is all about owning a business. That’s a very pinched understanding of virtue. Making payroll does not mean you’re virtuous, and not doing so has no bearing on your virtue either. And yet you cited to it.

                      It is notable that all your arguments thusfar have been deontological, not utilitarian or functional.

                    3. Mike,
                      “do not conduct such research upon a voluntary and consensual basis because they are paid by means of funds filched from others. ”
                      It seems that you do not understand the meaning of voluntary or of consensual. You provide no evidence whatsoever that decision on grant applications are systemically fraudulent.
                      All you are doing is complaining about paying taxes, yet you want to enjoy the benefits of the innovation and genius of others.

  2. “The more veto players in a political system—and the United States has an exceptionally high number of them—the more difficult it is to avoid status quo bias and to adopt socially beneficial policy reforms.”

    At the federal level, this is a feature not a bug.

    We don’t want the federal govt altering course at every social inequality.

    Federal level changes have to be measured, meaningful, and lasting.

    For example, I think we can all agree that Executive Orders are not the way to adopt socially beneficial policy reforms.

    1. I agree, and I think our resolute and durable policies have really been a boon throughout the 20th century.

      But nowadays, it has become very clear this setup is not without cost. EOs are a symptom, not the problem – a pressure valve against gridlock.

  3. Why should reasons for anti-trust policy be limited to consumer benefits? Why not consider employment benefits? Why not consider political benefits? Why not prefer more diverse decision making likely to flow from a multiplicity of market players instead of from a few dominant ones?

    1. Let’s clarify a few things. There are no employment benefits. The fact that you think there might be is an example of the Broken Window Fallacy. The logic goes like this:
      – Employees exist to do things for their employer. (They may be very nice people with rich hopes and dreams but that’s not why they get hired.)
      – Employers exist to do things for their customers.
      – If a merger lets the employer do more things for their customers at less cost, that’s an unambiguous good.
      – The excess resources, including employees, then get put to some other use – that’s even better for customers.

      To imagine otherwise is to think that we could magically improve the economy with makework projects like breaking windows and repairing, digging holes and filling them, etc.

      Political benefits should not be a consideration because most of us don’t want politics infecting ever aspect of our lives. Government (and by extension, politics) is supposed to be constrained to the few areas where force is required.

      Your last comment about “diverse decision making”, on the other hand, is a valid reason for anti-trust policy. It’s also identical to the “customer benefits” reason.

      1. I don’t entirely disagree. By the same token, however, if people can’t find work because there aren’t enough jobs to go around, that’s not a good thing either, for them, or for society. They are not going to starve to death because they can’t find a legitimate way to make a living.

        At some point, computers and automation may obviate as many as 40% of the current jobs. What happens then?

        1. Just like at every other point in history, they will find new jobs and skills.

          How much call is there for buggy whip manufacturers these days? Do you really want to force us all back to that technology (and the Great Horse Manure Crisis) just to save those jobs? How about textiles? Should we go back to smashing all the looms so tens of thousands of people can employed making cloth by hand again? Shall we break all the steam engines so manual ditch diggers have jobs again? How about we all give up our computers because it’s putting typists out of work? And no internet because that’s threatening print journalists. While we’re at it, we can ban tractors, fertilizers and everything else that allows life above the level of subsistence farming.

          Technological advancement brings temporary social disruption but workers ALWAYS adapt.

      2. I don’t see how having to work for a monopoly is a benefit for employees.

        1. I didn’t say there was. What I said is that there are no employee benefits to anti-trust.

          1. “What I said is that there are no employee benefits to anti-trust.”

            That’s a very odd thing to say. I can’t think of any branch of economics that would oppose the idea that a competitive employment market is vital for workers to receive their due. Anti-trust laws prevent the establishment/perpetuation of uncompetitive monopolies, and that’s true both from consumers’ and workers’ perspectives.

            To give an example, if you’re trained as a duck-whittler, and the entire duck-whittling market is dominated by an abusive trust (such that no other duck-whittling concerns can stay in business) then your only option for employment is the abusive trust, and they can treat you like dirt because there’s nowhere else you can work in the career you’re trained for.

  4. I have worked for both the Pentagon and IBM. In my experience, the issue is not government vs. private, because the corporation I worked for had the same problems government did: Lots of inefficient bureaucracy, lots of being stuck in ruts, lots of overpaid middle managers, lots of instances of the left hand not knowing what the right hand is doing, lots of rules and regulations that got in the way of actually moving things forward.

    Rather, the problem is size, not whether it’s public or private. Any organization with employees in the six digits is going to be bloated and inefficient. That’s life. And it’s easy to stand on the sidelines and find stuff to ridicule.

    But if you look at the successes of both government and the private sector, overall I think we’re far better off with them than we would be without them, and each of them can point to things it has done that have been phenomenally successful. I remember Pittsburgh and Cleveland before the EPA; it wasn’t pretty. So not-pretty, in fact, that some days you could barely breathe. Thanks to government efforts we eradicated smallpox, put a man on the moon, provided universal free public education, greatly reduced both childhood poverty and elder poverty, and made medical care accessible to more people than before. Have there been failures along the way? Of course. That goes back to big and bloated.

    But in your libertarian zeal to point out the flaws, don’t forget the good stuff. It’s there too.

  5. The book lacks the rent seeking theory in its index. The lawyer profession should be seen as a huge criminal enterprise that must be crushed to save the nation. Massive criminal victimization is its most damaging failure, 15 million common law crimes, and 100 million internet and identity crimes. Crime is not going down, it updated, and the lawyer profession is in utter failure. It stinks.. Destruction of $trillions in economic value. Crushing the economic growth rate which should be a steady 10% a year.

    One peaceful remedy is torts, a replacement for violent revenge that is fully justified against these criminals against humanity. End all their self dealt immunities. End judicial and legislative immunities. Tort liability also shrinks and can destroy an enterprise, as the lawyers did to manufacturing. It is a form of unauthorized, out of control industrial policy. It should be applied to the most toxic occupation in the country, 10 times more toxic than organized crime.

    1. source?

      oh i keep forgetting you don’t respond to requests for sources of your absurd contentions.

      Also, not everything you dislike is rent seeking in the same way that not everything that liberals dislike is racism.

  6. The premise of this piece of this absurdity seems to be “having more lawyers will somehow make less law.”

    A non-sequitur if ever there was one. The reason lawyers are the gatekeepers on policy is that it is a risk management issue. “if we do this, will we get sued and will they win”

    That answer doesn’t become “no” because there are 20,000,000 lawyers in the country instead of 1,000,000.

    Also I think it is a flawed premise to state that a large number of qualified people will suddenly enter the legal field if they don’t have to go to law school. more people graduate from law school than there are law jobs. the same people would be lawyers. They might (and it’s only might) have less debt if your reforms are enacted. that’s it. that’s the change.

  7. “…develop programs that blend:”

    How about a course in critical thinking as a pre-law requirement? It would immunize the student against the atavistic, supernatural, fake, made up stuff in 1L. The entire content of that indoctrination session is fake and worthless. Volokh teaches 1L. He should be ashamed, and repent what he is doing to intelligent, ethical, striving young people.

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