July 07, 2014
Retribution and Administrative Law
Posted by Max Minzner

Erik, thank you for that introduction.  It is a pleasure to join the Conglomerate for a week.  My scholarly interests have recently focused on federal administrative enforcement – enforcement actions by agencies like the SEC, the CFTC, as well as a host of lower profile entities. This is a fascinating area of public law combining two scholarly literatures.  Administrative enforcement actions share much in common with criminal cases.  They are brought by public entities to vindicate public wrongs.  However, the administrative context deeply shapes this type of enforcement.  For example, unlike most prosecutor's offices, administrative enforcement bodies tend to be industry-specific.      

As a result, administrative enforcement can go wrong in two different ways– the “criminal law” way or the “administrative law” way.  Administrative agencies face the challenges of regulatory capture, inadequate or incorrect information, or simply the wrong incentives to engage in appropriate regulatory action.  Criminal enforcement, though, often struggles with procedural fairness as well as the difficult task of assigning the correct level of punishment to different forms of misconduct.

Take, for example, this last issue: the fundamental question of penalty levels. Administrative agencies commonly use financial penalties to punish regulatory violations.  How should these penalties be set?  Which cases require the largest penalties and which only need more modest sanctions? 

Criminal law scholars will recognize this question as an inquiry about theories of punishment.  Speaking broadly, criminal law considers a couple of approaches.  Utilitarian theories of punishment (e.g., deterrence, rehabilitation, incapacitation) seek to punish conduct to produce beneficial social outcomes.  Retributive theories emphasize desert – punishment occurs because the violator deserves punishment, not because it produces a social benefit. 

So what do federal agencies do?  As I argue here, administrative agencies almost uniformly talk about deterrence, but usually engage in retribution.  When setting penalty levels, agencies move penalties up or down in response to facts that justify retributive punishment but do not adjust penalties in the way deterrence requires.  For instance, building on Gary Becker’s justifiably famous work, Crime and Punishment: An Economic Approach, most deterrence theories emphasize the role of the probability of detection in setting penalty levels.  To deter appropriately, penalties need to increase when violations are harder to detect and punish.  In practice, though, administrative agencies place little weight on this issue.  Instead, agencies are deeply concerned with issues like mens rea, a topic far more central to retributive theories of punishment.

Is this retributive bent in administrative enforcement surprising?  Perhaps not.  A large literature suggests that most people are intuitively retributive when making punishment choices.  In social science experiments, study participants set penalties based on retributive concerns, but do not adjust punishment levels in ways that would be required to deter appropriately.  In this way, administrative agencies look like the rest of us.  We mostly care about desert even when we talk about deterrence.  

Administrative Law, Crime and Criminal Law, Law & Economics, Legal Scholarship | Bookmark

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