Regulatory Powers and Commonwealth Powers: An Opening Analysis

This post sets out an analytical framework for thinking about regulatory powers and commonwealth powers of government for use in a less general context later.

A large share of political theory and legal theory focuses on the regulatory powers of the state. The state can make certain kinds of conduct illegal and can establish bureaucracies and courts to enforce those laws that prohibit this conduct.

Governments, at all levels (and even beyond to quasi-governmental entities like homeowner's associations), do have regulatory powers which they use. They choose to ban or allow marijuana consumption, apartment building construction in particular neighborhoods, insider trading, and watching videos without the copyright owner's consent. They enforce rights through civil lawsuits between private individuals, through administrative agency action in and out of court, and through law enforcement officers acting through the criminal justice system.

But, in addition to the regulatory powers of government, the government also acts as a "commonwealth". It collects revenues through taxes, users fees, fines and returns on assets it owns directly, and it uses those funds to participate in the economic marketplace on a consensual basis to achieve all manner of public and private ends.  Indeed, a surprising number of governmental bodies have powers that are almost exclusively commonwealth powers, as any regulatory authority that they may have is almost entirely incident to the manner in which they regulate the process by which they spend their money, by which the set rules for the use of property which they own, and by which they induce people to voluntarily enter into contracts with them that govern their behavior.  

Most school districts, public institutions of higher education, and special districts, and a great many federal, state and local agencies operate primarily or entirely via their commonwealth powers, rather than through the police powers of a regulatory state.

Of course, there is certainly an academic literature around public finance, taxation and government budget making. But, the interplay of the commonwealth powers and regulatory powers is still explored less completely than could be desired.

A governmental exercise of commonwealth powers implicates far fewer concerns about government abuse of power than its exercise of regulatory powers.  So, solutions to public policy problems that can be solved with money are often preferable to those that can be solved with regulatory power.

Also, in many cases, we fail to appreciate how the exercise of commonwealth powers, for example, to pay to incarcerate convicted criminals or arrested people awaiting trial, are huge driving considerations in how regulatory powers are exercised.

And, also, we often fail to recognize how reordering responsibilities between private parties, which is a regulatory status quo before the government affirmatively acts to enforce private law at the insistence of private parties, can substitute for a direct exercise of commonwealth powers in many circumstances.