orgtheory.net

a history of “command and control”, or, thomas schelling is behind every door

I’m working on a paper about the regulatory reform movement of the 1970s. If you’ve read anything at all about regulation, even the newspaper, you’ve probably heard the term “command and control”.

“Command and control” is a common description for government regulation that prescribes what some actor should do. So, for example, the CAFE standards say that the cars produced by car manufacturers must, on average, have a certain level of fuel efficiency. Or the EPA’s air quality standards say that ozone levels cannot exceed a certain number of parts per billion. Or such regulations may simply forbid some things, like the use of asbestos in many types of products.

This is typically contrasted with incentive-based regulation, or market-based regulation, which doesn’t set an absolute standard but imposes a cost on an undesirable behavior, like carbon taxes, or provides some kind of reward for good (usually meaning efficient) performance, as utility regulators often do.

The phrase “command and control” is commonly used in the academic literature, where it is not explicitly pejorative. Yet it’s kind of a loaded term. Who wants to be “commanded” and “controlled”?

So as I started working on this paper, I became more and more curious about the phrase, which only seemed to date back to the late 1970s, as the deregulatory movement really got rolling. Before that, it was a military term.

To the extent that I had thought about it at all, I assumed it was a clever framing coined by some group like the American Enterprise Institute that wanted to draw attention to regulation as a form of government overreach.

So I asked Susana Muñiz Moreno, a terrific graduate student working on policy expertise in Mexico, to look into it. She found newspaper references starting in 1977, when the New York Times references CEA chair Charles Schultze’s argument that “the current ‘command-and-control’ approach to social goals, which establishes specific standards to be met and polices compliance with each standard, is not only inefficient ‘but productive of far more intrusive government than is necessary.’”

Untitled.png

From the Aug. 21, 1977 edition of the New York Times

And sure enough, Schultze’s influential book of that year, The Private Use of Public Interest, uses the phrase a number of times. Which makes sense, as Schultze was instrumental in advancing regulatory reform and plays a key role in my story. But he’s clearly not the AEI type I would have imagined coining such a phrase—before becoming Carter’s CEA chair Schultze was at Brookings, and before that he was LBJ’s budget director.

Nevertheless, given Schultze’s influence and the lack of earlier media use of the term, I figured he probably came up with it and it took off from there.

But I started poking around Google Scholar, mostly because I wondered if some more small-government-oriented reformer of regulation had been using it prior to Schultze. I thought James C. Miller III might be a possibility.

I didn’t find any early uses of the term from Miller, but you know what I did find? An obscure book chapter called “Command and Control” written by Thomas Schelling in 1974.

Sociologists probably best know Schelling from his 1978 book, Micromotives and Macrobehavior, and its tipping point model, which shows how the decisions of agents who prefer that even a relatively small proportion of their neighbors be like them (read: of the same race) can quickly lead to a highly segregated space. Its insights are regularly referenced in the literature on neighborhoods and segregation.

(If you haven’t seen it, you should totally check out this brilliant visualization of the model, “Parable of the Polygons”.)

polygons-2

Economists know him for a broader range of game theoretic work on decision-making and strategy—work that was recognized in 2005 with a Nobel Prize.

Anyway, I just checked out the chapter—and I’m pretty sure this is the original source. Like most of Schelling’s work, it’s written in crystal-clear prose. The chapter itself is only secondarily about government regulation; it’s is in an edited book about the social responsibility of the corporation. It hasn’t been cited often—29 times on Google Scholar, often in the context of business ethics.

Schelling muses on the difficulty of enforcing some behavioral change—like making taxi passengers fasten their seat belts—even for the head of a firm, and considers how organizations try to accomplish such goals: for example, by supporting government requirements that might be more effective than their own policing efforts.

It’s a wandering but fascinating reflection, with a Carnegie-School feel to it. And the “command and control” of the title doesn’t refer to government regulation, but to the difficulties faced by organizational leaders who are trying to command and control.

In fact, if I didn’t know the context I’d think this was a completely coincidental use of the phrase. But the volume, Social Responsibility and the Business Predicament, is part of the same Brookings series, “Studies in the Regulation of Economic Activity,” that published Schultze’s lectures in 1977, and which catalyzed a network of economists studying regulation in the early 1970s.

So while Schultze adapts the phrase for his own needs, and it’s possible that he could have borrowed the military phrase directly, my strong hunch is that he is lifting it from Schelling. Which actually fits my larger story—which highlights how the deregulatory movement built on the work of McNamara’s whiz kids from RAND, a community Schelling was an integral part of—quite well.

I can’t resist ending with one other contribution Schelling made to the use of economics in policy beyond his strategy work: the 1968 essay, “The Life You Save May Be Your Own.” (He was good with titles—this one was borrowed from a Flannery O’Connor story.) This introduced the willingness-to-pay concept as a way to value life—the idea that one could calculate how much people valued their own lives based on how much they had to be paid in order to accept very small risks of death. Controversial at the time, the proposal eventually became the main method policymakers used to place a monetary value on life.

Thomas Schelling. He really got around.

Written by epopp

June 8, 2016 at 3:05 pm

3 Responses

Subscribe to comments with RSS.

  1. It is somewhat ironic that on the first page of the article, Schelling talks about, in 1972, an automobile official accused of falsifying emissions standards — but without the knowledge of the “top officials”.

    For your purposes, though, I think his article “Prices as Regulatory Instruments” might be more germane.

    Like

    michael webster

    June 8, 2016 at 6:44 pm

  2. Thanks for that reference to how policy makers put a monetary value on life. In the New York Times earlier this week there was an analysis of the consequences of neonatal care for infant mortality which concluded with “Assuming a standard value of $7 million per life, it might make sense to spend $7,000 per infant.” (http://www.nytimes.com/2016/06/07/upshot/the-us-is-failing-in-infant-mortality-starting-at-one-month-old.html?_r=0).
    When I read that article I was struck by how casually the author approached the matter – as if it was settled practice to put a monetary value on human life. Although the author of this NYT blog piece doesn’t specify it, the 7 million comes from a 2003 article cited in the original paper he is analysing which puts that exact figure on the value of a statistical life. So it is apparently settled practice among economists to put a monetary value on life (economists, ptui). However, I couldn’t help but think that the commitment to assess the efficacy of healthcare by putting a monetary value on life leads one away from considering access to basic healthcare as a universal right. I think this matters because the European countries to which the US is being compared in these studies all do so, and they produce better infant mortality outcomes. It can’t really be that simple, can it?

    Like

    ijlaln

    June 9, 2016 at 12:05 am

  3. Thanks for the comments. @ijlaln, it has been standard for economists (and most bureaucratic agencies) to place a monetary value on a statistical life for quite a long time, as you can’t really conduct cost-benefit analysis without it, and I don’t think it has been particularly controversial among economists for quite a while. Beyond economists, yes. But at the time Schelling was writing (1968), even for an audience of economists and policy folks it was still controversial. The chapter starts, “This is a treacherous topic, and I must choose a nondescriptive title to avoid misunderstanding. It is not the worth of human life that I shall discuss, but of ‘life-saving,’ of preventing death. And it is not a particular death, but a statistical death.” He addresses the moral side of the debate pretty thoroughly.

    I can see both sides of this debate. On the one hand, we are always going to have to make decisions about what lives to save, and just because you’re not willing to make it explicit that you will spend $X to save a life doesn’t mean you’re not, in effect, using a dollar figure, since there is presumably some upper limit to what we collectively will spend. (Will we abandon all other government functions to extend the life of someone who is 105 by two weeks?)

    On the other, the idea of a universal right is very powerful, and prevents erosion of commitment to providing health care, for example, in a way I think is hard to avoid you decide you are going to focus on tradeoffs and not on universal rights. I would agree this is an unintended consequence of economic policy analysis.

    I could go on and on and on about this, but as the response is already longer than the comment I’ll stop here.

    Like

    epopp

    June 9, 2016 at 1:37 pm


Comments are closed.

%d bloggers like this: