Bad incentives and bad institutions

Georgetown Law Journal, Jul 1998 by Sunstein, Cass R

CASS R. SUNSTEIN*

INTRODUCTION

The Independent Counsel Act1 is a case study in the law of unintended consequences. The Act was designed to increase trust in government. But it actually reduces trust in government, not because of serious misconduct on the part of high-level officials, but because of scandal mongering, and because of the transformation of political disputes into criminal allegations.2 The Act should be allowed to expire in 1999; even better, it should be repealed.

The fundamental problem with the Act is that it imposes harmful incentives on Members of Congress, the media, and the independent counsel itself. An important effect of these harmful incentives is to damage processes of democratic deliberation by deflecting attention from serious issues involving the effects of policy on human lives, and instead focusing people-representatives, media, and citizens alike-on scandals that are often imaginary and that, even if real, usually do not deserve the prominence that the Act gives them.

One of the most central problems of American democracy in its current form consists in its emphasis on sensationalistic anecdotes, eye-catching accusations, and dehumanization of political opponents, accompanied by insufficient focus on the nature of actual problems and how they might be solved. It would be good to devote far more attention to measures to alleviate poverty and far less attention to questions about where, exactly, the Vice President was when he engaged in fund-raising. This problem is especially serious in Congress, which should be less focused on alleged law-breaking and more fundamentally concerned with the effects of existing and proposed laws on citizens. The principal effect of the Independent Counsel Act is to fortify bad tendencies in current practice. In doing so, the Act does a great deal of harm and little good.

I argue in this essay that the Act should be repealed as soon as possible or permitted to expire in 1999.3 Part I sets out the general problem created by the Act-that it encourages scandal-mongering, thereby undermining the Constitution's structural goal of creating deliberative democracy. Part II discusses the motivations underlying the Act and its basic structure. Part III explores the incentives that the Act creates for politicians, the media, and independent counsels themselves. Part IV briefly explores some alternatives designed to remedy the Act's shortcomings, including total repeal of the Act, reliance on political checks, and relocation of investigatory responsibility to a specialized office of the Department of Justice.

I. THE GENERAL PROBLEM

The American constitutional tradition aspires to be a deliberative democracy, in which issues are debated by reference to reasons and principles.4 Officials are supposed to be accountable to the people, but they are also intended to be in a position to reflect and to deliberate on appropriate policies, rather than to implement mechanically some aggregation of pre-existing desires. The institutional safeguards of the original Constitution, including both national representation and checks and balances, were designed to implement this deliberative ideal.5 In particular, the Framers wedded an understanding of likely incentive effects to the basic topic of institutional design, attempting to ensure that institutions would create the appropriate incentives.6 Attention to the relationship between institutions and incentives was, in fact, one of their central preoccupations. The basic goal was to ensure that the structure of the national government would permit representatives to act in a reasoned fashion, above the fray of factions and (misplaced) passions.7 National institutions, for example, would have a comparative advantage over smaller bodies, and the system of checks and balances would permit ambition to check ambition.8

It should not be controversial to say that in current politics, a general and pervasive problem is that deliberation and reason-giving are too frequently absent.9 Many of those concerned with institutional reform have attempted to produce solutions to precisely this problem.10 On the part of the media, many politicians, and numerous interest groups, there is particular pressure toward sensationalism. Real or imagined scandals therefore play a significant role in coverage of political issues. Emphasis on scandals can, of course, be in the political self-interest of elected representatives, who may be able to achieve a large name for themselves by identifying and attacking corruption whether or not it actually exists-particularly if the call is for further or more independent investigation. Emphasis on scandals can also be in the economic self-interest of the media, especially when a basic concern is inevitably to attract viewers, readers, and sponsors.11

Indeed, market pressures often lead away from substance and firmly in the direction of media sensationalism, and thus can produce sensationalism even if journalists, acting as individuals, would seek a better route. In this way, competitive forces often disserve deliberative or democratic ideals. Coverage of this kind may even be consistent with the public-spirited convictions of both representatives and the media, if it is believed that the real or imagined scandals bear on governance, or otherwise contain and produce illumination of one kind or another. But this type of coverage can have an extremely damaging effect on democratic self-government, especially if scandalous charges are frequent. Part of the problem is that sensational coverage tends generally to breed cynicism and distrust, whether or not these are merited.