Reforming Environmental Law

In 1971, Ezra Mishan brilliantly satirized the views of a Dr. Pangloss, who argued that a world of largely unregulated pollution was "optimal" because cleanup would involve enormous transaction costs.' Less than 15 years later, Professor Latin uses the same Panglossian argument to rationalize the current regulatory status quo.2 He not only accepts but endorses our extraordinarily crude, costly, litigious and counterproductive system of technology-based environmental controls. Like Mishan's Pangloss, he seems to believe that if it were possible to have a better world, it would exist. Since it does not, the transaction costs involved in regulatory improvement must exceed the benefits. Proposals for basic change accordingly are dismissed as naive utopianism. What explains this celebration of the regulatory status quo? As critics of the present system, we believe this question to be of more than academic interest. The present regulatory system wastes tens of billions of dollars every year, misdirects resources, stifles innovation, and spawns massive and often counterproductive litigation. There is a variety of fundamental but practical changes that could be made to improve its environmental and economic performance. Why have such changes not been adopted? Powerful organized interests have a vested stake in the