{"id":704,"date":"2011-02-03T10:43:35","date_gmt":"2011-02-03T15:43:35","guid":{"rendered":"http:\/\/www3.law.harvard.edu\/journals\/hlpr\/?p=704"},"modified":"2015-10-02T15:58:31","modified_gmt":"2015-10-02T15:58:31","slug":"the-administrative-state-is-still-the-state","status":"publish","type":"post","link":"https:\/\/journals.law.harvard.edu\/lpr\/2011\/02\/03\/the-administrative-state-is-still-the-state\/","title":{"rendered":"The Administrative State is Still The State"},"content":{"rendered":"

Zach Luck<\/em><\/p>\n

In\u00a0the Invention of Money<\/a>, a\u00a0Planet Money<\/a>\u00a0feature on This American Life last month, the reporters peel back the layers on the terrifyingly crazy fiction called money. \u00a0But, in doing so, they are surprisingly quick to uncritically repeat another fiction: the idea that some government agencies somehow aren\u2019t really part of the government.\u00a0 During his intro to this fascinating piece on the Federal Reserve\u2019s response to the financial crisis, Ira Glass explains that \u201cthough the Federal Reserve\u2019s name includes the word \u2018Federal\u2019 it is not actually part of the Federal government. \u00a0It is an independent institution.\u201d<\/p>\n

I\u2019m not the only one who picked up on this theme. \u00a0Over at a Ron Paul fan site, a\u00a0blogger\u00a0<\/a>took away that the show \u201cexplains what the Fed is, not related to the Federal Gov, etc.\u201d \u00a0A commenter on this post concluded \u201c3) the Fed is not part of the government.\u201d \u00a0This is, of course, not really true.<\/p>\n

<\/p>\n

The Federal Reserve is part of the federal government. \u00a0It is an \u201cindependent institution\u201d primarily in the way that many other federal independent agencies are independent \u2014 the heads of the agency can\u2019t be fired at will by the President and the agency has some additional forms of insulation from political forces like a protected revenue source. \u00a0(Some<\/a>\u00a0helpful<\/a>\u00a0background<\/a>). \u00a0 The Fed does have a more complicated, and perhaps more effective, insulation structure than many other agencies but that shouldn\u2019t lead to the conclusion that it isn\u2019t part of the government.<\/p>\n

The Fed itself says it is an \u201cindependent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government.\u201d \u00a0The Fed explains further, \u201c[T]he Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as \u2018independent\u00a0within\u00a0<\/em>the government.\u2019\u201d (My emphasis).<\/p>\n

I\u2019m bothered that the Planet Money team would repeat this myth uncritically in part because their show often\u00a0thoughtfully tackles<\/a>\u00a0the legal and economic fictions which make up our economy.\u00a0 But more important than intellectual consistency, there is danger in perpetuating the myth that the Fed is an unaccountable, boundless force totally apart from government. \u00a0Congress and the President made the Federal Reserve in 1913, and Congress and the President could unmake the Federal Reserve tomorrow. \u00a0How do I know that? \u00a0Because the Fed has authority to act in the name of the United States and make U.S. money only because a law says so. (This one<\/a>.)<\/p>\n

Unlike the Ron Paul fans seizing on the idea of a Fed beyond all government control, I don\u2019t actually want Congress to make the Fed disappear. \u00a0There are good reasons to insulate some monetary decisions from day-to-day and year-to-year political influences. \u00a0But at the same time, as citizens we have to remember that the Fed is, and can only be, as \u201cindependent\u201d as our elected representatives allow.<\/p>\n","protected":false},"excerpt":{"rendered":"

Zach Luck In\u00a0the Invention of Money, a\u00a0Planet Money\u00a0feature on This American Life last month, the reporters peel back the layers […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-704","post","type-post","status-publish","format-standard","hentry","category-blog"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/peZQka-bm","_links":{"self":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts\/704","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/comments?post=704"}],"version-history":[{"count":0,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts\/704\/revisions"}],"wp:attachment":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/media?parent=704"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/categories?post=704"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/tags?post=704"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}