The Republican voters and Democratic voters have been put at odds with one another over two issues----GUN CONTROL LAWS----ABORTION RIGHTS. Both sides have refused to give an inch because we all know once we start creating exceptions it seems all the rights inside that policy disappear. We will see both these issues gutted as far-right wing, authoritarian, extreme wealth and extreme poverty does not want A 99% OWNING GUNS OR HAVING A WELL-ARMED MILITIA----nor does it intend to allow women and families have children any time they want----human capital are workers----having children costs money these workers will not have. All of this is far-right wing CLINTON/BUSH/OBAMA and all come with lots of regulations.
Clinton/Obama global Wall Street neo-liberals wrote some of the longest bills in world history when they gave us DODD-FRANK FINANCIAL REFORM and AFFORDABLE CARE ACT. Know why they do that when there is absolutely no intention of regulating either? No one can read 1000 pages of legislation to find here and there the REAL reason for the bill----and it is always tied to GLOBAL CORPORATE RULE TRANS PACIFIC TRADE PACT policy global Wall Street pols do not want people to see. Maryland Assembly does this as well. It allows them to PRETEND this has something to do with the 99% when it has nothing to do with them.
We showed were the earlier regulations around transportation for example did the same thing. Who would legislate policy ending with truckers not able to haul a return trip of products killing profitability? A far-right wing wealth and corporate power pol that is who. Not the left social Democrat. Each time Congress deregulated these few decades its goal was to break down protections against MONOPOLY-----to allow interstate then global corporate structures. This is what killed FREE MARKET IN AMERICA=====it is what allows global corporations to hold WE THE PEOPLE hostage to stagnant job markets---higher prices----
Below we see the most GLOBAL WALL STREET NEO-LIBERAL journal-----THE ECONOMIST -----they only talk neo-liberalism as economics and they write articles always giving the spin that these policies are good for WE THE PEOPLE. So, after 40 years AND MORE OF LAISSEZ-FAIRE going full tilt we can be sure any badly written regulation was done on purpose.
United States' economy
The home of laissez-faire is being suffocated by excessive and badly written regulation
Feb 18th 2012 AMERICANS love to laugh at ridiculous regulations. A Florida law requires vending-machine labels to urge the public to file a report if the label is not there. The Federal Railroad Administration insists that all trains must be painted with an “F” at the front, so you can tell which end is which. Bureaucratic busybodies in Bethesda, Maryland, have shut down children's lemonade stands because the enterprising young moppets did not have trading licences. The list goes hilariously on.
But red tape in America is no laughing matter. The problem is not the rules that are self-evidently absurd. It is the ones that sound reasonable on their own but impose a huge burden collectively. America is meant to be the home of laissez-faire. Unlike Europeans, whose lives have long been circumscribed by meddling governments and diktats from Brussels, Americans are supposed to be free to choose, for better or for worse. Yet for some time America has been straying from this ideal.
Consider the Dodd-Frank law of 2010. Its aim was noble: to prevent another financial crisis. Its strategy was sensible, too: improve transparency, stop banks from taking excessive risks, prevent abusive financial practices and end “too big to fail” by authorising regulators to seize any big, tottering financial firm and wind it down. This newspaper supported these goals at the time, and we still do. But Dodd-Frank is far too complex, and becoming more so. At 848 pages, it is 23 times longer than Glass-Steagall, the reform that followed the Wall Street crash of 1929. Worse, every other page demands that regulators fill in further detail. Some of these clarifications are hundreds of pages long. Just one bit, the “Volcker rule”, which aims to curb risky proprietary trading by banks, includes 383 questions that break down into 1,420 subquestions.
Hardly anyone has actually read Dodd-Frank, besides the Chinese government and our correspondent in New York (see article). Those who have struggle to make sense of it, not least because so much detail has yet to be filled in: of the 400 rules it mandates, only 93 have been finalised. So financial firms in America must prepare to comply with a law that is partly unintelligible and partly unknowable.
Dodd-Frank is part of a wider trend. Governments of both parties keep adding stacks of rules, few of which are ever rescinded. Republicans write rules to thwart terrorists, which make flying in America an ordeal and prompt legions of brainy migrants to move to Canada instead. Democrats write rules to expand the welfare state. Barack Obama's health-care reform of 2010 had many virtues, especially its attempt to make health insurance universal. But it does little to reduce the system's staggering and increasing complexity. Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000. There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis.
Two forces make American laws too complex. One is hubris. Many lawmakers seem to believe that they can lay down rules to govern every eventuality. Examples range from the merely annoying (eg, a proposed code for nurseries in Colorado that specifies how many crayons each box must contain) to the delusional (eg, the conceit of Dodd-Frank that you can anticipate and ban every nasty trick financiers will dream up in the future). Far from preventing abuses, complexity creates loopholes that the shrewd can abuse with impunity.
The other force that makes American laws complex is lobbying. The government's drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors. The health-care bill included tons of favours for the pushy. Congress's last, failed attempt to regulate greenhouse gases was even worse.
Complexity costs money. Sarbanes-Oxley, a law aimed at preventing Enron-style frauds, has made it so difficult to list shares on an American stockmarket that firms increasingly look elsewhere or stay private. America's share of initial public offerings fell from 67% in 2002 (when Sarbox passed) to 16% last year, despite some benign tweaks to the law. A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It's a wonder the jobless rate isn't even higher than it is.
A plea for simplicity
Democrats pay lip service to the need to slim the rulebook—Mr Obama's regulations tsar is supposed to ensure that new rules are cost-effective. But the administration has a bias towards overstating benefits and underestimating costs (see article). Republicans bluster that they will repeal Obamacare and Dodd-Frank and abolish whole government agencies, but give only a sketchy idea of what should replace them.
America needs a smarter approach to regulation. First, all important rules should be subjected to cost-benefit analysis by an independent watchdog. The results should be made public before the rule is enacted. All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.
More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don'ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.
Would this hand too much power to unelected bureaucrats? Not if they are made more accountable. Unreasonable judgments should be subject to swift appeal. Regulators who make bad decisions should be easily sackable. None of this will resolve the inevitable difficulties of regulating a complex modern society. But it would mitigate a real danger: that regulation may crush the life out of America's economy.
Here we have 22,000 pages of regulation for DODD FRANK when there was absolutely no intentions of having any regulations for global banking. Trans Pacific Trade Pact written before this bill had already written that ONE WORLD ONE GOVERNANCE would not allow any sovereign nation to regulate global banks including Wall Street. So, here is DODD FRANK two great big global Wall Street Clinton neo-liberals presenting what was so complicated that today almost none of it was installed---as was the intent. What was installed hit every aspect of banking NOT DEALING WITH GLOBAL WALL STREET. This is what we mean when we say these right wing pols deliberately create these regulation-laden bills----they are hiding the policies no one wants and creating reasons to come back and get rid of all the rest. The only thing needed for financial reform was holding Wall Street banks legally accountable by downsizing them and bringing their assets back to the people---and reinstating Glass Steagall. It would have been a plus to END THE FED----but regulating the FED was needed---none of this occurred with DODD FRANK
Everyone knew this in 2010 when DODD FRANK was released as a whole----it is not left Democrats doing this---it is far-right wing global Wall Street REAGAN/CLINTON neo-liberal economics----WRONG REGULATIONS FOR WE THE PEOPLE.
Dodd-Frank Is Hurting Community Banks Marshall Lux is a senior fellow and Robert Greene is a research associate at the Mossavar-Rahmani Center for Business and Government at Harvard's John F. Kennedy School of Government.
Updated April 14, 2016, 3:20 AM
With more than 22,000 pages of regulations, the destabilizing consequences of the Dodd-Frank Wall Street Reform and Consumer Protection Act are numerous. One notable concern is that the law has forced consolidation of the United States banking system. The number of community banks (those with less than $10 billion in assets) shrank 14 percent between Dodd-Frank’s passage in 2010 and late 2014. Surely, consolidation is driven by many factors, some of which are good. It is also no recent trend, but neither is regulatory growth: between 1997 and 2008, banking regulations grew 18 percent.
The law’s “Wall Street” focus snares small banks in a complex web of rules designed for larger banks, forcing them to divert resources to compliance, or worse, to close their doors.When regulations – not consumers – drive consolidation, banking system risk increases. Dodd-Frank’s “Wall Street” focus snares community banks in an increasingly complex web of rules designed for larger banks. As such, the law forces well-managed institutions to unnecessarily divert resources to compliance (survey data shows community banks are doing just that), or worse, to close their doors. Minneapolis Fed research suggests that adding just two members to the compliance department would make a third of the smallest banks unprofitable.
Regulatory-driven consolidation is particularly concerning because as Fed Gov. Daniel Tarullo noted in a 2009 speech, the importance of traditional financial services – like those provided by community banks – “tends to increase” in times of crisis. In a 2015 working paper we found that while these banks accounted for just 22 percent of outstanding bank loans, they also accounted for over three-quarters of agricultural loans and half of small business loans. While “the financial crisis did not originate in smaller banks,” as Tarullo noted, the post-crisis response jeopardizes their critical role in banking system resiliency.
But is consolidation a necessary consequence of achieving "Wall Street Reform"? Absolutely not. In fact, the financial system will certainly be safer when Main Street banks don’t need a Wall Street lawyer in order to exist.
As the Bank of England’s Andrew Haldane accurately noted in 2012, regulatory simplicity is key to combating risks brought about by increasing financial system complexity. By adding massive layers of rules atop an already convoluted U.S. bank regulatory framework, Dodd-Frank inherently drives consolidation. A costly web of uncoordinated bank regulations crafted around past financial crises distracts U.S. banks from designing and implementing more effective firm-tailored risk management strategies. Simplifying U.S. bank regulation is critical to reducing financial system risk.
We posted yesterday the trucking regulations that a CARTER et al wanted to DEREGULATE----with one regulation dealing with prohibition of return hauling----forcing empty cargo on return trips----now who do you think wrote that regulation? Here is another -----forcing drivers on long hauls to work beyond what everyone knew was a dangerous timeline---medical research and common sense told us this was bad----who wrote this one? BOTH WERE WRITTEN BY RIGHT WING REPUBLICANS. So, yes we have many regulations needing to be changed------as time goes by industries change so too will the regulations.
WE THE PEOPLE must be aware of the damage of MONOPOLY TO FREE MARKET----they killed regulations last century to open industry to MONOPOLY now they are again killing regulations to open the nation to GLOBAL MONOPOLY essentially killing any ability to have free market involving THE 99% OF PEOPLE as business-owners.
Please be aware of how national media deliberately skews these conversations towards global wealth and corporate power. RE-REGULATING to protect what has been US Constitutionally and Federally enforced monopoly and anti-trust law is NUMBER ONE POLICY FOR THE 99%----both Republicans and Democrats should want this.
Return safety to drivers’ control: Fix the 14-hour rule
Gary Carlisle | November 13, 2015
When the 14-hour rule was imposed on the trucking business it totally destroyed the possibility that safety could be achieved through the hours of service. –Owner-operator Gary Carlisle
The following letter came in from Gary Carlisle, owner-operator of Midland, Texas, in part in response to the recent story about consultant and former trucker Jeff Davis’ contention that paydirt lies on the other side an electronic-log mandate’s implementation. Carlisle has “been in business since 1980” as an owner-operator, and he’s also worked as a traffic manager in the Texas oilfield. He spent most of his young life with “Carlisle Trucks out Tulia and Hereford, Texas, hauling feed and livestock. Between 1983 and 1987 I was leased to several different carriers.”
His letter begins with thoughts on the need — also named one of the top hours of service-change priorities by readers in recent polling — for flexibility in the 14-hour rule, which he views as having “destroyed the possibility that safety could be achieved through the hours of service.”
“I have voiced my opinions to [Texas Congressman] Mike Conaway, [Senator] Ted Cruz and other legislators, but never have been given any encouragement that they understood nor were prepared to take any action to help on the issues named below.” Carlisle’s letter follows
I have been following the e-log discussion for the last 10 years. I never see where anyone with any truck sense interjects the issue of the 14-hour rule, which when combined with the e-log issue can might possibly throw this country into another recession. It is possible that no one but a truck driver really understands the 14-hour rule and the insane change it brought to the industry. Let me share with you the view from an old man that has spent a lifetime in the trucking business.
When the 14-hour rule was imposed on the trucking business it totally destroyed the possibility that safety could be achieved through the hours of service. Can you imagine how anyone could come up with such a plan: if you penalize an experienced truck driver for taking a nap, it will make him safer?
Rather, you need to encourage any driver to take a nap if he feels he needs one. No matter what number of hours he has driven, if he feel he needs a nap, by all means take one. That nap, regardless of length, should not subtract or distract from his opportunity to make a living. The mere idea that you can eliminate that need for a nap with dictation of sleep/off-duty patterns is ridiculous.
I challenge you or any esteemed member of our government or its regulators to show me where allowing a driver to take a nap endangers him or others. Be a realist. Explain that the day that the 14-hour rule went into effect, it made a liar out of all those that were trying their damnedest to comply with the previous hours of service. For those that want very little help from others, at least allow a driver to determine his own point of fatigue and need for rest.
As for Jeff Davis and his great speech about forcing shippers to raise rates, it has never worked that way. Rates will only rise when everyone quits working, which is a very precarious point for the economy. And even then, they will only rise until they go back to work. The only way to get rates up significantly is to stop the supply of transportation, and it just won’t happen.
Rates may go up when the e-log is forced on us and forces enough owner-operators and small fleets into bankruptcy. Rates came up after the 2009 depression, but only because a significant number of carriers, large and small, went bankrupt. We all know how valuable bankruptcy is for the economy.
Perhaps it is the fact that Mr. Davis and others like him are drinking their own Kool-aid. Detention, wait time for loading and unloading, is a fact of life. You may be able to bill for it or not, but in the long run the shippers and receivers will dictate the terms that will keep them from paying the bill, or at least reduce their share.
Ask any owner-operator. When faced with detention, the next time you are there they have appointments, receiving hours and delivery requirements installed that cut their exposure. Then comes demands that the carrier be on time, regardless of circumstances, and the carrier pays as much as they do. Get out there and ask those that have gone through that scenario.
If you put a burden on a shipper or receiver, he will come up with his own plan to cut into detention, and usually it takes longer with no extra pay.
Anyone with any knowledge of the past knows that the trucking business just don’t respond like that. If the government and regulators had sense, they would back off regulation for 10 years and leave the new regulation alone. If they did that and cut expenditures 10 percent a year for 10 years, the American economy and American dream could recover.
The serious issue for the American economy is government enabling of the sell-off of the major manufacturing segments to foreign countries, eliminating a large part of the blue collar skilled labor in America. That leaves the transportation business the only one they have failed to be able to export. It appears they are hell bent on regulating it out of business. The redundant part of that is that by the ATA’s own assessment, if all the regulation that is in place and proposed to be in place is forced on the American trucker and it is 100 percent effective, it could save 2 percent of the fatalities on American roads that trucks are accused of being at fault in.
Who would ever propose changing the hours of service to allow the driver to assess his own fatigue and choose his own sleep pattern and comply with a daily flexible hours of service that would be beneficial to all?
It is something of a fallacy to think that large carriers want to drive the owner-operator out of business. They merely want to drive the experienced and independent ones out. They have a constant need for new owner-operators to sell their slightly used trucks to for top dollar, on their own lease plan that gets them what they want with a guy that becomes financially vested to stick around and do their dirty work. If he gets too demanding, cut him loose and get another one. It is an endless cycle.
Large carriers have a percent of the business that is less profitable and they will always need a guy that can take care of that part of the business. They feed him a little of the good with most of the bad and it is best for their business and gives an inexperienced owner operator a chance to get a leg up.
Here is our other global Wall Street neo-liberal journalism outlet next to THE ECONOMIST----BROOKINGS INSTITUTION telling WE THE PEOPLE that deregulating LAWYERS is good for society----that's WE THE PEOPLE. Or, if you are BROOKINGS INSTITUTE you think SOCIETY is the global 1% and their 2% with the 99% simply being human capital. See how these articles skew meaning? Most people understand we no longer have a US Justice Department, state's attorneys enforcing US Rule of Law---we no longer have a pathway to due process and public justice for the 99%----lawyers today only train for international trade and corporate law----the few bones sent down for the 99% resemble SHARIA LAW------common civil suits between citizens. Deregulating lawyers is simply ending all national, state, and, and local control of courts, certifications, and sovereign law enforcement opening global legal firms and their lawyers to operate in US cities deemed Foreign Economic Zones as they do overseas----DEREGULATE SOVEREIGNTY AWAY SAYS BROOKINGS FOR DECADES.
The deregulation occurring early last century allowed the national monopolies that killed our local economies and our ability to keep businesses thriving and people employed. The deregulation during CLINTON/BUSH/OBAMA was all geared towards creating global monopolies killing free market economies inside the US-----today global pols are simply using deregulation to kill any semblance of national sovereignty AND VOILA----ONE WORLD ONE GOVERNANCE GLOBAL CORPORATE TRIBUNAL RULE----
'The reality that deregulation of the market for legal services is socially desirable does not, of course, make it more palatable to the potential losers. And any fundamental change in regulatory policy would have to go through state legislatures or courts, whose sentiments are likely to be aligned with incumbents. But the deregulation of other industries suggests that experimentation offers a possible end run around the opposition'.
Please stop allowing the right wing pretend it is left social democracy writing bad regulations that stifle economic development and stop allowing them to sell ALL REGULATIONS ARE BAD-----the goal of US cities as Foreign Economic Zones is total deregulation of sovereign national laws with the instillation of global corporate tribunal law and yes, no matter how much conservative posing TRUMP does on TPP----he is lying----he will continue to MOVE FORWARD ONE WORLD ONE GOVERNANCE.
Op-EdDeregulate the Lawyers Clifford Winston Monday, April 30, 2012
The widely accepted justification for licensing lawyers is that consumers don’t have the knowledge to distinguish the competent from the incompetent until it is too late. But it has not always been thus. In the 19th century, the standards for admission to the bar in the United States were minimal — the norm was an oral exam, administered under the jurisdiction of a local court without any guidelines. Though he never went to law school, Abe Lincoln served as a bar examiner — and, you may remember, went on to dazzle in the courtroom.
The licensing of lawyers became more restrictive only when the American Bar Association, which was formed in 1878, began to participate in the process. The ABA’s first inroad was its initiative to accredit law schools. In 1921, it adopted a statement of minimum standards of legal education and began publishing a list of schools that complied with those standards. The organization met considerable resistance from state legislators, though. As late as the mid-1950s, only about half of the states had enacted education requirements based on ABA standards.
In his signature tome, Capitalism and Freedom, Milton Friedman suggested that the other states had not gone along because many legislators were graduates of unaccredited law schools. Friedman predicted that as more were trained at accredited schools, the ABA standards would be more broadly accepted. His forecast has proved correct: today, all but a handful of states — the notable exception being California — require bar applicants to be graduates of ABA-accredited law schools. And every state except Wisconsin (which grants free passes to graduates of the state’s two major law schools) then requires them to pass a bar exam.
State governments (and state appellate courts) have also gone along with the ABA’s wish to prohibit businesses from selling legal services unless they are owned and managed by lawyers. And not surprisingly, the group’s definition of the practice of law is expansive, including nearly every conceivable legal service, including the sale of simple standardform wills.
All this deserves a fresh look. In what follows, I draw on my 2011 book with Robert W. Crandall and Vikram Maheshri, First Thing We Do, Let’s Deregulate All the Lawyers, which argues that licensing restrictions for the legal profession cannot be justified on cost-benefit grounds. We would be better off deregulating entry into the legal profession, thereby forcing lawyers to compete more intensely both with other lawyers and other providers of legal services.
In the marketplace we envision, lawyers would still be welcome to attend traditional three-year law schools and to acquire other credentials that signal their competence and quality. At the same time, though, individuals ought to be able to learn what they need to practice law from less expensive and less time-consuming sources. Allowing the lawyers’ trade association to enjoy a monopoly on law school accreditation and forcing lawyers to pass licensing exams generates huge costs, direct and indirect, yet adds little protection against unscrupulous and incompetent providers of legal services.
The market for lawyers
Approximately one million lawyers are currently working in U.S. law firms, government offices and the legal departments of private corporations. This figure may confirm the conventional view that the nation has too many lawyers. But licensing requirements have, in fact, constrained the supply.
As noted, a would-be lawyer must run the gantlet of completing a degree at an accredited law school and passing a state bar examination. (The ABA has yet to consider online law schools and foreign law schools for accreditation.) Since law school applicants are generally required to take the Law School Admissions Test, the numbers who take the test represent a lower bound on the number of people in the United States interested in entering the legal profession.
According to data from the Law School Admission Council (the nonprofit group that administers the LSAT), roughly half of the 800,000 applicants to law school during 1997- 2004 were not admitted anywhere. And since 95 percent of people who enroll in an ABAaccredited law school do eventually pass a state bar examination, the primary factor that limits the supply of lawyers in the United States is plainly the number of available spaces in these law schools. Note here, too, the supply distortion created by the reality that some of the most worthy applicants never attend because they are unwilling or unable to spend three years and as much as $150,000 on tuition and fees.
Yet, even as the supply of lawyers has been artificially constrained, the demand for legal services has experienced continual growth — thanks largely to government policies that compel businesses to retain legal counsel or that encourage them to engage in litigation.
Part of that growth in demand is linked to the promulgation and enforcement of government regulations encouraged by legal lobbies. For instance, attorneys from some 20 law firms met with commissioners from the Commodity Futures Trading Commission to shape the new financial regulations in the Dodd-Frank Wall Street Reform and Consumer Protection Act. And the CFTC is just one of many agencies involved in fleshing out the rules for Dodd-Frank.
Legal lobbies, moreover, are ever vigilant in the pursuit of new regulatory territories to conquer: they managed to block measures in the health care reform law that would limit attorneys’ fees or would impose caps on damages in medical malpractice cases. All told, the nation is spending some $200 billion annually on lawyers — a significant share of which reflects windfall profits or sheer waste.
Desperately seeking surplus
In our book, we offer estimates of the “earnings premiums” for lawyers — the portion of their income exceeding the opportunity cost of their services. The figures fluctuated a bit from year to year for the sample period (1975- 2004). But the premium has clearly increased with time; it hovered around 25 percent during the latter part of the 1970s but has risen to about 50 percent in more recent years.
In 2004, the total premium amounted to $64 billion — or an eye-popping $71,000 per practicing lawyer. We found lawyers at all income levels — not just the highest earners and not just those at the largest firms — were receiving substantial and growing premiums.
Now, this is an unusual market. On the one hand, increasing the supply of legal service providers ought to create competition that eliminates some of the surplus. On the other, adding lawyers to the rolls gives them more collective clout to influence public policy in ways that increase premiums. Indeed, our analysis suggests that, for the moment, the marginal lawyer has a positive effect on these earnings premiums.
The impact of licensing on lawyers’ earnings is magnified by government policies that generate ever-growing demand for legal services by private firms and government agencies even as the supply of lawyers remains constrained. We found that (a) economic and social regulations, as measured by federal non-defense government agency employment, (b) the real costs of the tort system, and (c) the number of patent awards were all associated with increased lawyers’ earnings premiums. In fact, all told, those factors accounted for most of the increase.
Of course, greater demand for lawyers, and higher expenditures on them, could be justified if regulatory, intellectual property and liability policies were actually raising social welfare. But the available evidence indicates that those policies do not have that effect.
Let them be free
The straightforward way to reduce the cost of restrictions on the market for legal services would be to deregulate entry, removing barriers that prevent individuals and/or firms from providing legal services without satisfying occupational licensing or other ABA regulatory requirements. State bar associations would still be free to certify that lawyers had passed competency exams, and the ABA (or any other association) would still be able to award seals of approval to law schools, leaving it to the free market to determine the value of such certification.
Along with driving down the price of legal services toward the cost of providing them, deregulation could be expected to accelerate the adoption of cost-cutting technologies as well as the introduction of new services. The potential benefits of new technologies can already be seen as clients have started to perform many tasks offered by lawyers. For example, large businesses now use sophisticated Web search technology as a substitute for manual document search and selection formerly performed by entry-level lawyers and paralegals in large law firms. Note, too, that new software is enabling many consumers to manage legal tasks with little or no input from legal professionals — and no harm to themselves or others.
Deregulation that reduced the range of tasks requiring the imprimatur of a certified professional would presumably stimulate the introduction of information technology that substituted for legal services altogether. For example, corporations could use IT to ensure that they complied with regulations and to help manage litigation decisions.
It is difficult to predict the change in structure induced by deregulation in any particular industry. But the historical record offers insights: new entrants challenge incumbent firms with both innovative ideas and efficient operating strategies, forcing the incumbents to adapt or perish.
In the case of the legal industry, solo practitioners and traditional law firms could expect new forms of competition from nonlawyers and untraditional service providers along the lines of LegalZoom, which sells do-it-yourself wills, leases and other standard documents online. And different corporate models could emerge to exploit economies of scale and scope — say, large “legal retail” suppliers, Wal- Marts for legal services. Moving up-market, more streamlined low-cost law firms, like Axiom, would compete for corporate clients. Such firms employ lawyers, but charge lower fees (especially for the services of novices) and operate with very low overhead.
Finally, new businesses could compete with incumbents by investing in lawyersaving technology and by packaging legal services with other business services. The potential for such competition is suggested by innovative firms like Novus Law and Clearspire, and by big companies that are increasingly supporting their in-house lawyers’ use of sophisticated information technology.
The abundance of legal service suppliers would also generate demand for information about service quality. Because of resistance from lawyers themselves, strong competition has not yet developed in the market for this information. But that would certainly change in a deregulated market. In addition, legal clinics would help clients find legal practitioners who provide useful, low-cost services.
We estimate that the annual gain in “economic welfare,” the difference between consumers’ benefits and lawyers’ losses from eliminating inflated prices for legal services, would be at least $10 billion. This would also help to address the “justice gap” — the reality that some litigants cannot afford lawyers, yet do not qualify for legal aid or don’t have lawyers assigned to them because of dwindling public budgets. Free entry would enhance the proposal by Stephen Schulhofer of NYU and David Friedman of Santa Clara University for a free market in criminal defense services, which would enable indigent defendants to choose their own legal representation. Surely, many of the currently unrepresented litigants would be better off even if they gained access only to uncredentialed legal advocates.
Deregulation would also spur innovations that reduced costs and resulted in new products. Because the pace and nature of innovation are unpredictable, it is difficult to quantify their prospective benefits. But I believe they could easily amount to billions of dollars.
Consider, too, another source of inefficiency in the regulated system that could be pared by deregulation. There is little doubt that some people who become attorneys would have chosen to work in other occupations — and possibly made greater contributions to society — if they were not attracted to law by the prospect of inflated salaries.
In all likelihood, lawyers’ earnings premiums are shared with law school administrators and faculty members because the premiums enable law schools to raise tuition. Entry deregulation would be likely to reduce law school tuition at some institutions because the demand for traditional three-year law schools would fall as some students shifted to untraditional training.
The arrival of new forms of legal education would also be a constructive response to recent concerns that law schools are not adequately preparing students for actual practice, and would encourage traditional law schools to be more responsive to the interests of prospective students and employers. One would expect legal education to be streamlined, with some colleges offering undergraduate law degrees and some law schools offering one- or two-year courses for students seeking careers in less demanding specialties. At the other end of the spectrum, elite law schools would probably continue three-year programs that produced the highly trained lawyers required for complex litigation in areas ranging from corporate finance to intellectual property protection.
Après deregulation, a déluge of regret?
Most potential objections to deregulation are based on what economists somewhat euphemistically call “distributional” grounds — who wins and who loses. And even those objections probably overstate the downside because they overlook the reality that deregulation would create opportunities for profit as well as cutting salary premiums. Some lawyers could be more productive and innovative if they worked more closely with nonlawyers and corporations, and some law firms could be more profitable if they were managed by nonlawyers and were allowed to raise outside capital.
Recent law school graduates and current law students would presumably object that deregulation would allow new legal service providers to enter the profession at a time that many newly credentialed lawyers are unemployed. Surely, though, legal regulation can’t be justified as a make-work program. As Roger Noll of Stanford quipped in a Washington Post article, the government might just as well outlaw tractors to create more jobs for people working in the fields.
In any case, deregulation would cause demand for legal practitioners to increase and lead to more jobs because the price of legal services would fall. In the short run, established law schools would still try to fill their seats. So the shift in demand for alternative sources of legal training would lower tuition at traditional law schools, and the number of students attending those schools and gaining employment would remain relatively constant. In the long run, established law schools would contract or possibly develop strategies to expand into new programs that made their graduates more employable.
But there are other efficiencyoriented issues here. One reasonable fear is that, without the licensing of lawyers, incidents of incompetence and/or dishonesty would rise.
That fear is based on the assumption that current regulations raise the quality of practitioners. But the American Bar Association’s own Survey on Lawyer Discipline Systems reported that, in 2009, some 125,000 complaints were logged by state disciplinary agencies — one complaint for every eight lawyers practicing in the United States. Note that this figure is a lower bound on client dissatisfaction because it includes only those individuals who took the time to file a complaint.
Although many of those complaints were dismissed, their volume suggests that clients are far from satisfied with the quality of service they are now receiving from the legal profession. Indeed, Deborah Rhode, director of the Stanford Center on the Legal Profession, concluded in her book, Access to Justice, that, on balance, the ABA and state bar associations have done little to discipline lawyers’ conduct or improve the quality of legal service.
Client dissatisfaction may increase or decrease in a deregulated environment; there’s no way to know with certainty. But it is worth remembering that deregulation would increase access to information about lawyers’ quality. Today, lawyers are judged by reputation and licensing requirements — customers do not enjoy the benefits of warranties, industry-sponsored voluntary disclosure, third-party disclosure or even government-mandated disclosure. The American Bar Association has vigorously opposed third-party ratings of law schools, lawyers and law firms. In addition, several states have resisted the initiatives of a leading legalinformation provider, Avvo, threatening lawsuits and not cooperating with Avvo’s requests for information about attorneys’ licensing and disciplinary records.
With deregulation, occupational licensing would no longer create a false sense of security about a lawyer’s quality, and buyers of legal services would be much more inclined to shop around. Legal service providers, especially non-lawyers and firms that employ them, would respond to customers’ wishes by providing extensive and credible information about their capabilities and performance — and perhaps by offering warranties. Thirdparty evaluations of legal practitioners by private firms like Avvo and by law clinics would also drive information disclosure. Finally, all legal practitioners would be subject to general business laws against dishonest practices.
Doubts about whether markets are up to the challenge have been raised in previous debates about regulatory reform. Critics of proposals to deregulate the airline and trucking industries argued that carriers would skimp on maintenance to increase profits, thereby compromising safety. In fact, safety has improved in both industries since deregulation, in part because carriers are no longer protected from competition and can ill afford to have their reputations damaged by accidents.
From here to there
The reality that deregulation of the market for legal services is socially desirable does not, of course, make it more palatable to the potential losers. And any fundamental change in regulatory policy would have to go through state legislatures or courts, whose sentiments are likely to be aligned with incumbents. But the deregulation of other industries suggests that experimentation offers a possible end run around the opposition.
Airline deregulation was spurred by its success in California and Texas — two states large enough to support regional carriers and intrastate routes. One state — perhaps Arizona, whose legislature has declined to re-enact its unauthorized practice statute, or California, whose bar indicated it would not initiate actions under its statute — may realize benefits that build support elsewhere. And perhaps England’s and Australia’s recent efforts to liberalize regulation of their legal services will attract attention here.
No matter how much it is justified, deregulating legal services in a nation whose politics and policy are largely dominated by lawyers seems unlikely on its face. But there were similar grounds for pessimism before the economic regulation of airlines, trucking, railroads and natural gas eroded and finally crumbled in the 1970s and 1980s. It really could happen here, too.