Privatized Lawmaking

You might want to check out a new article by Dru Stevenson at South Texas Law called Costs of Codification. Dru writes the Privatization Blog — don’t confuse it with the Reason Foundation’s Privatization Blog; I think either Dru or Reason should choose a catchier blog name. Here’s the abstract to Dru’s article, from SSRN (paragraph breaks added):

Between the Civil War and World War II, every state and the federal government shifted toward codified versions of their statutes. Academia has so far ignored the systemic effects of this dramatic change. For example, the consensus view in the academic literature about rules and standards has been that precise rules present higher enactment costs for legislatures than would general standards, while vague standards present higher information costs for courts and citizens than do rules. Systematic codification – featuring hierarchical format and numbering, topical arrangement, and cross-references – inverts this relationship, lowering transaction costs for legislatures and increasing information costs for courts and citizens, as statutes proliferate.

This Article takes a first look at this problem. On the legislative side, codification makes it easier for special interest groups to obtain their desired legislation. It facilitates Coasean bargaining between legislators, and encourages legislative borrowing, which diminishes the “laboratories of democracy” phenomenon. For the courts, codification changes how judges interpret statutes, prompting them to focus more on the meaning of individual words than on the overall policy goals of enactment, and to rely more on external sources, such as legislative history. For both legislators and courts, codification functions as a Hartian rule of recognition, signaling legality for enacted rules. For the citizenry, the reduced legislative costs mean increased legislative output, yielding rapid proliferation of statutes and unmanageable legal information costs. More disturbingly, codification also fosters overcriminalization.

While it may not be appropriate to revert to the pre-codified regime now, reexamining the unintended effects of codification can inform present and future choices for our legal system.

Dru adds, from his blog post:

Professor Nils Jansen published an excellent book (discussed in the article above) in 2010 entitled The Making of Legal Authority, in which he demonstrates that most codes throughout history – European, Near Eastern, and American – have been produced by private individuals or entities, not generated by the legislature itself, although many of these private law drafters worked at the behest of a monarch or legislature. This has significant implications for our understanding of legislative enactment costs (a species of transaction costs for governance) and the commonly-held assumption that laws originate as a product of public representatives. In more recent times, the privatization of lawmaking has accelerated with groups like ALEC and other special interests drafting highly partisan, billionaire-sponsored legislation (this occurs on both sides of the political spectrum, but the conservative generators of model acts seem to be more successful at the moment). Codification fosters and abets this trend, making it easier for special interest groups to influence legislation – in fact, to draft the legislation that legislators will want to introduce.

On ALEC, by the way, see my Stanford Law Review article, Privatization and the Law and Economics of Political Advocacy, Section II.E, pp. 1225-31 (PDF pp. 30-36).