Knowledge And Decisions

The most striking aspect of the decade of the 1980s in the United States was that it marked the longest peacetime economic expansion in history.⁶ Despite various attempts to rewrite this history,⁷ standards of living rose in the country at large and government tax receipts rose by hundreds of billions of dollars, even as tax rates were reduced. The enduring significance of this economic boom was that it inspired other governments, of both the political left and right, to make similar institutional changes, such as privatizing government-run enterprises and reducing the degree of government regulation in general. As far away as New Zealand, “Reaganomics” inspired “Rogernomics,” named for finance minister Roger Douglas of the Labour Party, who instituted similar policies there. Many third-world countries which emerged into independence during the 1960s and took socialism as axiomatically both the most efficient and the most humane form of economy were nevertheless later forced, either by their own bitter experience or by the demands of outside lending agencies, to privatize and deregulate their economies.

All this represented a break with the trends discussed in Chapter 8 of this book, toward a movement of economic decisions into governmental institutions. One symptom of the change in the United States was that the steady growth in the size of the Federal Register, which records government regulations, was not only stopped but reversed during the Reagan years. However, the growth in the size of this compendium resumed immediately under Reagan’s successor and political heir, George Bush. Neither the trends set in motion under the Reagan administration nor the opposite pre-Reagan and post-Reagan trends can be simply extrapolated. What is clear is that the trends in the evolution of economic decision-making processes, discussed in Chapter 8, remain as unsettled as they are crucial to the economic well-being of peoples around the world.

TRENDS IN THE LAW

Long-standing legal trends, like long-standing trends in economic decision making, began to be seriously challenged for the first time in the 1980s, often by Reagan administration appointees to the federal bench. However, there were also serious intellectual challenges as well from academic supporters of property rights,⁸ from the “law and economics” school of thought, located in various universities, and from critics of trends in criminal justice, most notably Professor James Q. Wilson.⁹ However, legal developments since 1980 have not been a simple counter-trend by any means, for new leftward movements also developed during this period, including “critical legal studies” and “feminist legal criticism” in academia and further extensions of judicial activism in the courtrooms. Moreover, even conservative judges and Supreme Court justices went along with some of the continuations of the leftward movement in the law, both before and after 1980.

From the standpoint of our concern here with decision-making processes, what is crucial is not whether particular Supreme Court decisions, or even the whole trend of them, has been toward policies favored by the left or the right. What is crucial is how these decisions have changed the locus of decision-making and what that implies. In the case of Griggs v. Duke Power Co., for example, the U.S. Supreme Court in effect transferred the decision as to whether to use mental tests in hiring decisions from employers to the federal courts in general and, ultimately, to itself in particular. The basis for this sweeping transfer of decision-making authority from thousands of highly disparate and complex settings across the country to nine individuals in Washington was the simple plausibility of the idea that the validity of a test depended on its having a “manifest relationship to the employment in question” which could be demonstrated conclusively to third parties. Reasonable as this might seem at first, it presupposes far more knowledge than anyone possesses.