CHAPTER 12
Asking the Public
Every year, federal agencies issue thousands of new regulations. Whether the issue involves health care or immigration or clean air, federal policy is often made through rule making. Operating in groups, agencies try really hard to compile relevant information. We have noted that OIRA sees much of its responsibility as one of assembling dispersed information, so as to increase the likelihood that the relevant group—people who work for the government itself—is wiser.
But let’s not celebrate too loudly. Public officials face a potentially serious problem—one that Hayek would certainly appreciate. Dedicated followers of Hayek call it the “knowledge problem.” Even if public officials are expert, diverse, and well motivated, they may not know nearly enough. An air pollution regulation might have major effects on companies and on state and local governments all over the United States. The consequences of that regulation for Los Angeles, or for companies in Ohio and Utah and Michigan, might not be visible to regulators. The government may have terrific scientists (actually, it does), but there are a lot of scientists in the nation, and they often have information that government lacks. What can public officials do to obtain what they need to know?
A Little Law and a Big Surprise
Within the federal government, the answer goes by the name of notice-and-comment rule-making. Through this process, federal agencies send out proposed rules for notice and public comment and give people a reasonable period (at least sixty days) to comment. The rules might involve homeland security, air pollution, immigration, or food safety. Among professors of administrative law, there is a widespread cliché—let’s call it the sophisticated view—to the effect that the comment process is a fraud, a charade, a form of kabuki theater. In the sophisticated view, the real work is done behind the scenes. When the proposed rule is presented to the public, it is essentially baked.
As Sunstein learned during his time in government, the sophisticated view turns out to be entirely wrong. On the contrary, the comment period greatly matters, and federal agencies take people’s suggestions and concerns seriously. Such agencies do so for one reason above all: people have information that officials lack, and to get the rules right, officials need to take that information into account. Time and again, proposed rules are changed and significantly improved because of what various members of the public say in comments.
Sometimes the rules are clarified. Sometimes they are scaled back, because they would be too intrusive. Sometimes they are redirected, because the redirection makes them much better. Sometimes they are put on the back burner—and never appear again. The notice-and-comment approach is primarily a process of acquiring information, not of considering the threats of interest groups or playing politics.
This is the shortest chapter in this book, because the central idea is very simple. Drawing on current practice within the national government, we suggest that many other institutions, including private ones, might well benefit from some kind of notice-and-comment process, whether it is formal or informal. Suppose, for example, that a social media company is contemplating a change to its privacy policy. Might it not make sense for the company to take public comment? As one example, Facebook chose exactly this route, posting the following in August 2012:
We are proposing updates to our Data Use Policy and our Statement of Rights and Responsibilities. These two documents tell you about how we collect and use data, and the rules that apply when you choose to use Facebook. Please take a few minutes to read through the changes under the Documents tab, or below, and provide feedback within the next seven days. If your comments lead to more updates, we’ll post those on this page, too.
Of course, Facebook’s privacy policy has not exactly been controversy-free, but an effort to seek public comment can have two benefits. First, it can increase the likelihood that the final decision will be well informed, simply because dispersed information will be collected. Second, it can increase goodwill and sense of legitimacy and fair play. In government, the public comment process gives people a sense that they have had a right to be heard. So long as that right is real, the final outcome is usually more acceptable than it would otherwise be, even if some people do not exactly love it on the merits. (True, face-to-face meetings are often better than a comment process, but such meetings can take a lot of time.) For the private sector, both of these benefits might be exceedingly important.
We can find many examples. The Network Advertising Initiative, a self-regulatory association of digital advertising companies, opted for a period of public comment before revising its code of conduct.1 Similarly, a commercial real estate firm in Las Vegas sought advice from consumers about which kinds of tenants should fill various vacant retail spaces.2 Each vacant unit sported a flyer declaring “Help! We Need Your Opinion!” and containing a unique QR code. Passersby could scan the code with their phones and offer feedback on what type of store would be most useful in that space.3 Guns are not everybody’s cup of tea, but Tracking-Point, a gun manufacturer, solicited public input on what type of firearm it should produce.4 Or suppose a clothing company is considering a new product line. It might well benefit from seeking the dispersed information held by its actual and potential customers.
Certainly for the private sector, seeking public comment should not be the universal practice. There is a big difference between government and private firms. Companies are disciplined by the market, and they find out, pretty quickly, what people like and want to buy. Free markets depend on consumer reactions, and many companies do best to see what people actually choose, not to ask people for their comments in advance. If the goal is to learn whether products sell, actual behavior is a lot better than a survey.
Moreover, a public-comment period can also create risks, including a negative reaction from those whose comments are not ultimately heeded. We have said that public comment can improve the perceived legitimacy of ultimate decisions, but the whole enterprise might backfire.
Here as elsewhere, everything depends on costs and benefits, and the costs of requesting and using comments may exceed the benefits. But whenever an institution fears that its own judgment might be erroneous, it should consider the possibility of seeking feedback in advance. Sometimes that’s the most generous thing to do, and sometimes it’s good business to boot.