Regulatory capture and Obamaphones

[Commentary] Amidst the 24/7 coverage of the government shutdown, 44 Republican representatives attracted a few headlines with a brief letter. The letter, sent to the Federal Communications Commission, takes issue with the Lifeline or “Obamaphone” program. Respectfully, I must disagree -- or must at least quibble -- with the congressmen.

That the program is rife with fraud is well reported. That oversight of the program has been lax is also without much dispute. But I do not believe the Lifeline program is indicative of all that is wrong with DC; rather, it is merely demonstrative of the predictable and seemingly inevitable result of industrial regulation, namely, that it is in the regulator’s self-interest to protect the health of the industry even if such protection does not increase the general welfare. This is a phenomenon often called “regulatory capture.” Through the lens of regulatory capture, it becomes clear that the problem with the Lifeline program is less a problem of an “entitlement culture” than it is a problem of the administrative state. Even under an austere administration, the regulator’s predilection to extend favors to special interests would still exist -- regulated programs grow because encouraging such growth is at the heart of regulation itself.

[Babette Boliek is an associate professor of law at Pepperdine University]