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Source:  Government Executive Magazine
http://www.govexec.com/dailyfed/0998/092398t2.htm

September 22, 1998

DAILY BRIEFING

The dawn of the era of microgovernment

By Jonathan Rauch, National Journal

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.

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.

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?
-----------------------
NOTE: In accordance with Title 17 U.S.C. section 107, this material is
distributed without profit or payment to those who have expressed a prior
interest in receiving this information for non-profit research and
educational purposes only. For more information go to:
http://www.law.cornell.edu/uscode/17/107.shtml
-----------------------




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-----------------
Robert A. Hettinga <mailto: rah@philodox.com>
Philodox Financial Technology Evangelism <http://www.philodox.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'