When Good Laws Go Bad
The Rise of Ratchet Statutes
Laws fail all the time. Everyone in Washington knows that most attempts at reform will fall short. Mapping the complexity of the world onto a bill is a tall order at any point, let alone on the first attempt. Lawmakers learn from their mistakes, refine their approach, and (hopefully) eventually get it right. Democracy muddles through.
But there’s a particular species of failure that's far more troubling. Sometimes laws don't fizzle, they transform into something their authors never intended, or even sought to avoid. The history of the Davis-Bacon Act illustrates this process.
In 1931, Congress faced a problem. Federal contractors were importing cheap labor from other states, undercutting local workers on government projects. The solution seemed simple: require contractors to pay "prevailing wages" based on local standards. To implement the solution, President Hoover signed the Davis-Bacon Act, only two pages long when it was passed.
Congress wrote two pages. The bureaucrats wrote the rest.
Davis-Bacon is what I call a "ratchet statute," a law that turns in only one direction. Like a mechanical ratchet, it can tighten but never loosen. It can add requirements but never subtract them. It can complexify but never simplify. These statues are choking our political system, and the history of Davis-Bacon reveals how.
To implement the bill, the Department of Labor first had to answer the question: what exactly is a prevailing wage? To find out, it had to survey wages for every trade in every locality. Carpenters in Cleveland, electricians in El Paso, plumbers in Peoria–reasonable enough. But administrative tribunals–the internal judicial systems for executive agencies–ruled that these surveys needed more detail, and so the ratchet tightened. "Power equipment operator" was too vague. New classifications like "power equipment operator – heavy and highways," "power equipment operator – paving and incidental grading," and "power equipment operator – sewer, gas and water line" proliferated.1 With each designation came an additional wage determination.
Then came the compliance requirements. Contractors had to file weekly payroll reports. Workers had to be interviewed to verify their jobs matched their classifications. Disputes went to hearing officers. Appeals created precedents. Each precedent added procedures, and the ratchet tightened further.
Today, that two-page law has metastasized into hundreds of pages of rules. The Department of Labor maintains hundreds of different work classifications across thousands of locales. Contractors hire consultants just to navigate the paperwork. A recent study found that Davis-Bacon compliance adds roughly 7 percent to federal construction costs due to mismeasurement of wages alone. That’s $21 billion annually in extra expenses that buy nothing but paperwork. Defenders of this complexity are scarce. Ask union members privately, and they'll admit the system is absurd. Ask contractors, and they'll show you binders of meaningless forms. Ask government officials, and they'll acknowledge that many classifications make no sense. Only a few individuals in each category benefit from the system, but for those few it provides their entire livelihood. And so the machine grinds on.
Davis-Bacon is only one example of a class of terrible laws. Most ratchet statutes start similarly. Congress passes a law with good intentions. But then courts interpret it, adding requirements based on vague language. Agencies implement those requirements, creating procedures to avoid lawsuits. Interest groups defend their piece of the complexity. Soon, entire industries exist just to manage compliance. Reform becomes impossible because too many people profit from the system.
50 years of nearly flat energy consumption hid the scale of the problem. But as America races to develop artificial intelligence, we're discovering that these laws have broken our ability to build. A procurement system designed for buying typewriters now controls who can sell quantum computers to the government. Personnel rules created for filing clerks determine who can build neural networks for federal agencies. Environmental reviews meant for interstate highways delay data centres for years. The Davis-Bacon Act itself now requires "prevailing wage" determinations for job categories that barely existed five years ago.
Our competitors face no such constraints. While American contractors spend months determining whether an AI technician counts as "Telecommunications Technician" or "Electrician – Inside Wireman," China builds. The gap between what American technology can do and what the American government can actually buy grows wider every day.
Over the coming months, I will examine these ratchet statutes to understand how they work, why they persist, and what we can do about them. I'll highlight four areas: permitting (how we approve projects), procurement (how we buy things), personnel (how we hire people), and rule-making (how we create regulations).
For each statute, I'll invert the analysis. Instead of asking what the law tries to achieve, I'll examine the incentives it actually creates.
For each statute, I will answer five questions:
What problem were lawmakers trying to solve?
How did courts and agencies transform the original intent?
What perverse incentives emerged from those transformations?
What new problems have these incentives created?
How can we fix the original problem and the later mess?
Next week, I'll begin with a precise definition of what makes a statute ratchet as seen through the National Environmental Policy Act (NEPA). We'll see why some laws worsen with time while others remain manageable, and what that teaches us about handling the AI future.
These are just the main categories; each has at least five subgroups with their own prevailing wage rates.