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Obama regulatory czar Cass Sunstein's new book Going to Extremes explains how solutions can arise from the messy marketplace of ideas

Going To Extremes:

How Like Minds Unite and Divide

By Cass R. Sunstein

Oxford University Press; 199 pp.; $21.95

Cass R. Sunstein is an amazingly prolific and influential legal scholar. The subjects of his hundreds of articles and more than 15 books range from constitutional law to animal rights. "If you look at what he's written and done, he should be 900 years old," says Scott H. Segal, partner at Bracewell & Giuliani, a law and lobbying firm. In fact, the longtime University of Chicago law professor (who moved to Harvard in 2008) is an affable 54-year-old with a killer drop shot on the tennis court.

But the biggest reason to hang on Sunstein's words is his new post in the Obama Administration. When confirmed as director of the Office of Information & Regulatory Affairs (OIRA) in the Office of Management & Budget, Sunstein will sit in judgment of government regulations. That turns his latest book, Going to Extremes: How Like Minds Unite and Divide, from a mere thought-provoking (if occasionally turgid) academic treatise into a glimpse into the mind and philosophy of the nation's new regulatory czar.

What jumps out from the book is Sunstein's mistrust of human judgment in everything from politics to business, especially when people band together. There's little wisdom of crowds here—and not many knowledgeable individuals, either. In many cases, "people suffer from a 'crippled epistemology,' in the sense that they know very few things, and what they know is wrong," Sunstein laments.

This wrongheadedness just gets worse when people put their heads together. Like-minded folk tend to aggregate into groups, causing their views to grow more extreme, Sunstein argues. Think Rush Limbaugh's most rabid dittoheads. "Very bad things can happen," Sunstein warns. This "group polarization" helps explain Islamic terrorism, the Enron fiasco, even U.S. governments gone astray, he writes. "In the presidency of George W. Bush, many failures occurred because of an unfortunate culture that encouraged, rather than combated, group polarization."

Don't flatter yourself that you're immune to the pernicious power of the group. Among the evidence Sunstein cites (which includes some of his own research) is the infamous Stanford Prison Experiment. A number of students randomly chosen to be "guards" ended up brutalizing those who were their "prisoners." "Perhaps all of us, under certain circumstances, could commit atrocities," concludes Sunstein. Certainly, he suggests, all of us are capable of being irrational. Even direct appeals to reason can be a waste of time. In what Sunstein calls "an especially disturbing finding," people's false beliefs can actually be strengthened when they're shown the error of their ways.

It's a pretty grim view, one that helps explain why dictators so often make colossally bad decisions, why hysterias and crazes spread, why markets don't work as well in practice as in theory, and why companies stumble. Yet Going to Extremes shows Sunstein's optimistic side, too. For one thing, the extreme views of groups aren't always bad or wrong. "When people are seeking their rights, group polarization can be highly desirable," Sunstein points out. "It helped the abolitionist movement in the U.S. It also helped lead to the downfall of both apartheid and communism."

Sunstein also believes wrongheaded views can be kept in check. Part of the answer is putting people with humility, curiosity, and openness in power. Another part lies in the facts about costs and benefits. The "bitter debates over occupational safety, disability rights, national security, and affirmative action...might well be rendered somewhat less hot with a better understanding of the consequences of one approach or other," he argues.

So as regulatory czar, Sunstein will likely adopt a disciplined approach grounded in cost-benefit analysis instead of an ideological aversion to—or fondness for—regulation. Take climate change, "where so many questions remain open," he writes. A dispassionate consideration of what's known "suggests, for example, that global inaction is quite indefensible, and also that there are limits to how aggressively we should cut emissions in the near future."

For society at large, Sunstein has a touching faith in democracy and diversity. In other words, the U.S. benefits both from its Bill O'Reillys and from its Keith Olbermanns. "Extremism will enrich society's 'argument pool' and thus promote sensible solutions," writes Sunstein.

There's a whiff of elitism in Sunstein's apparent call for enlightened experts (like himself) to gently correct the cockeyed masses. "Liberal paternalism" is the term he has used for his governing philosophy elsewhere. There's also a boiling debate over whether the cost-benefit approach (Sunstein's favorite) is able to assess either costs, which often drop once new regulations spur innovations, or the risks of complex threats. But unless Sunstein willfully ignores his own prescriptions from Going to Extremes, the nation's regulatory makeup is going to get a serious makeover.

Business Exchange: Read, save, and add content on BW's new Web 2.0 topic network

Rules, Rules, Rules

Regulations.gov, a government Web site that features the slogan "Your voice in federal decision-making," lets you browse—and offer your two cents on—rules in the making at 62 agencies and departments. Knock yourself out.

For more: http://bx.businessweek.com/obamas-economic-policy/reference

Carey is a senior correspondent for BusinessWeek in Washington.

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