Friday, March 18, 2011

The Death of Common Sense: How Law is Suffocating America

What: The Death of Common Sense: How Law is Suffocating America, by Phillip K. Howard (Random House, 1994).

Why: Legal issues can be some of the most frustrating an entrepreneur encounters. A broader understanding of the context in which these issues arise is useful, although not necessarily liberating.

It happens all too often. An entrepreneur comes up with a great business idea. The business plan is a work of art. Investors are lining up to provide capital. Just a few details to check with the lawyers—and then the details take on a life of their own. We lawyers frequently take the blame, sometimes deservedly so, but more often than not we’re just the messengers. The real problem is a statute, an ordinance or a regulation that provides detailed guidance as to what must be done, but unfortunately what the law requires just makes no sense under the circumstances.

Philip Howard, a practicing lawyer in New York City, recognizes this scenario all too well. In the 15 years since The Death of Common Sense first appeared, he has written two more well-received books pointing out flaws in our legal system and has founded an organization, Common Good, dedicated to restoring common sense to American law. All of this is built on the basic premise that in seeking to legislate fairness for all, we have elevated procedure over substance, replaced sound judgment with mind-numbingly detailed laws, and created “a system of regulation that goes too far while it also does too little.”

Take, as one egregious example, the Occupational Safety and Health Administration. Volumes of regulations set out precise, objective rules meant to advance worker safety. So much law, in fact, that the law no longer offers a clear guide, but is essentially unknowable except in bits and pieces. And those enforcing the bits and pieces exercise no judgment in doing so, which leads to arbitrary enforcement, enforcement that requires that hugely expensive but unnecessary modifications be made, enforcement that misses real problems and focuses on paperwork. The result? “Safety in the American workplace has been largely unaffected by OSHA.”

But government still tries to detail the fix for every problem with absolute precision. That’s how we end up with a Department of Defense that, in 1994, spent “more on procedures for travel reimbursement ($2.2 billion) than on travel ($2 billion).” Does anyone really think things have changed for the better since then?

So where did we go wrong? Howard traces this to the turbulent 1960s, the emerging regulatory state and the rise of legal rationalism—the belief that everything can be figured out in advance and problems avoided through detailed lawmaking—and the glorification of process. We now argue “not about right and wrong, but about whether something was done the right way.”

Howard’s proposed solution could be called “Back to the Future.” Return to a system of law that establishes rules and guidelines that are “subservient to broader principles,” and allow those enforcing the law to use their judgment—their common sense—to make an exception whenever a rule in a particular case leads to a result inconsistent with the principle. Principle, not rules, should control. The focus should be what is right and reasonable, “not the parsing of legal language.”

Reading this against the background of current events, it’s hard not to wonder whether now is an opportune time to implement this idea. On the other hand, it just may be that this is the only time we might be able to do it, and doing it may be critical to rebuilding our economic infrastructure. As they say, some food for thought.

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