• Shortcuts : 'n' next unread feed - 'p' previous unread feed • Styles : 1 2

» Publishers, Monetize your RSS feeds with FeedShow:  More infos  (Show/Hide Ads)


Date: Tuesday, 15 Apr 2014 11:30
By Michael Dorf

Last week brought news that doctors receiving very large Medicare reimbursements made very large campaign contributions to Democratic campaigns and PACs, and that in turn they may have received special consideration to avoid punishment. I haven't checked out the rightwingoverse reaction to the story, but it wouldn't surprise me if it went something like this: Aha! This sort of thing shows that government-funded health insurance is rife with fraud and therefore people (like those left-wing crazies at Dorf on Law) who argue for Medicare for All would simply drive up the price of health care.

Well, okay, they probably aren't mentioning DoL expressly, but I would be surprised if that's not the general reaction. Here I want to take it seriously.

My first reaction is that this is chiefly a corruption problem, rather than a government spending program. Supreme Court decisions like Citizens United, and now McCutcheon, hold that wealthy individuals and corporations have a First Amendment right to use their wealth to influence government policy--including government policy that enables these individuals and corporations to accumulate greater (or to protect existing) wealth. I don't know whether the doctors discussed in the Times article broke any laws, but if they did, that was probably due to ineptitude rather than necessity: Our system of campaign finance permits just about anything short of an express quid pro quo, so that a well-advised donor can purchase just about all of the influence he or it wants to purchase without breaking the law.

But wait. Some small-government conservatives say that the opportunities for corruption are chiefly a product of big government. According to this argument, if we had merely a watchman state, there would be little to be gained in the way of government contracts or regulation avoidance by bribery, legal or illegal.

Although frequently offered as an axiom, that's actually an empirical claim that we can test rather easily by comparing data about social spending and corruption. And when we do so, it turns out that the claim is false.

Consider that Denmark had the second highest social spending per capita as a fraction of GDP and tied for the lowest level of corruption.  In general, high rates of (public) social spending tend to correspond with low corruption, and vice-versa--although the relation is hardly linear. Culture, politics, and other factors appear to be the main determinants of corruption.

So the data confirm my initial reaction. The corruption story (assuming that's what it is) certainly does not indict single-payer health insurance. The Supreme Court is a more likely suspect.
Author: "noreply@blogger.com (Michael C. Dorf)"
Send by mail Print  Save  Delicious 
Date: Monday, 14 Apr 2014 12:00
By Michael Dorf

The latest issue of the New York Review of Books includes a review by Cass Sunstein of the new book, Would You Kill the Fat Man? The Trolley Probelm and What Your Answer Tells Us About Right and Wrong, by David Edmonds. (Only the very beginning of the review is available for free online. The rest is behind a subscription paywall, so if you're not a NYR subscriber, you'll have to trust me for my description.) The title of the book refers to a famous hypothetical scenario in moral philosophy, a variant of the so-called "trolley problem." In this post, I'll very briefly explain the problem, and then suggest that Sunstein's otherwise fair-minded review omits (express) discussion of an important feature of moral reasoning.

A) In the classic trolley problem, you see a trolley hurtling out of control towards five people tied to the track. You stand by a switch. If you throw the switch, you can divert the trolley to a second track, but there is one person tied to the second track. Do you throw the switch, resulting in the death of the one but the sparing of the five?

B) In the fat-man variant of the trolley problem, you are standing on a footbridge overlooking a track, where you see a trolley hurtling out of control towards five people tied to the track. Next to you is a (very) fat man. If you push him off the footbridge, his mass will block the trolley before it can run over the five. Do you push the fat man, resulting in his death but the sparing of the five?

People have various moral intuitions in the two cases. Act-utilitarians think it morally permissible or even obligatory to throw the switch and to push the fat man, because in both cases, the action leads to a better result: the death of only one, rather than five. Some act/omission deontologists think it morally impermissible to throw the switch or to push the fat man because in each case, they would be deliberately acting in a way that causes a death, rather than merely failing to act to save five lives. Most interestingly, many people (including me) think that it is morally permissible to throw the switch but morally impermissible to push the fat man. The book, the review, and the substantial literature on "trolleyology" explore the reasons for these intuitions (and others regarding still more variants), in order to discern either what morality really entails or, as in Sunstein's case, to question whether this whole method of inquiry is likely to lead to moral truth.

I'll come to what I think Sunstein omits shortly, but first, I should give the standard explanation for what I called the most interesting pair of intuitions--that it's permissible to throw the switch but not to push the fat man. The explanation goes under the heading of a doctrine--originally traceable to Catholic theology but now part of the general philosophical discussion--called "double effect." The doctrine allows that it is sometimes morally permissible to intentionally take an action that has as its aim averting one evil, even though it will also cause some other evil.

Real-world applications of the double-effect doctrine include pain medication that has the side effect of killing the patient (which is distinguished from taking an overdose for the express purpose of suicide), causing "collateral" deaths of civilians in wartime (so long as the use of force targets military combatants and collateral deaths are not disproportionate), and more controversially, abortion.

In trolleyology, throwing the switch is an instance of double effect, because the person who throws the switch intends thereby to divert the train in order to save the five, even though doing so will have the regrettable side-effect of killing the one. Pushing the fat man is not an instance of double effect, because the fat man's death is not a side-effect of saving the five; it is the means of doing so.

As I said, Sunstein's review is generally fair, although he himself appears to be a rule-utilitarian. He thinks that if there is a moral distinction between throwing the switch and pushing the fat man, it is one that has to do with following general rules that, in the aggregate lead to the greatest good for the greatest number, even if, in particular cases, following such rules leads to bad results. Thus, he acknowledges that there is overall utility in following a rule that one should not push people off of bridges into the path of hurtling trolleys, and that perhaps the benefits of following that rule, as a rule, outweigh the costs of occasionally forgoing the greater good of saving trolley passengers.

But Sunstein ends on a note of skepticism. The moral intuitions we have, he says, are heuristics that developed in ordinary circumstances. They may be "misfiring" in odd cases like the fat-man problem. Put differently, perhaps the rule that a rule-utilitarian ought really to be following is not "don't push people off of footbridges in front of trolleys" but "don't push people off of footbridges in front of trolleys unless doing so will avert a greater harm." The fat-man problem, in this view, shows that our intuitions do not perfectly map onto the right rule-utilitarian rules.

Yet Sunstein's skeptical account of trolleyology omits any express discussion of what is usually a key feature of deontological reasoning and indeed, of moral reasoning more generally. Deontologists do not typically say that each of our moral intuitions generalizes into a true moral principle. After all, our intuitions sometimes tug in different directions. Thinking about Jim Crow may lead one to think that legal distinctions based on race are wrong, but then thinking about race-based affirmative action in public universities may lead one to modify that principle to say something like race-based legal distinctions that subordinate traditionally disadvantaged minorities are generally wrong, but that ameliorative race-based distinctions are more often acceptable. Or not. One might conclude that color-blindness is the right principle after all.

My point here is not to argue for any particular principle, but to note that trolleyology is not just about exploring our intuitions; it's about trying to find principles that reconcile our intuitions, and then, if that cannot be done, abandoning some of our intuitions in favor of more deeply held ones. It aims at reflective equilibrium, not naked intuitionism. Thus, the title of the post: We want to reflect on the fat man, not simply react to his case.

Sunstein titles his review "How Do We Know What's Moral?", and he implies in it that the method of interrogating our intuitions is not a reliable means of finding out. But he comes up short in two ways: First, his contention that our pre-reflective moral intuitions can be wrong is not an indictment of deontology, because deontology is not committed to the correctness of pre-reflective moral intuitions.

Second, to the extent that Sunstein's argument is more radical--i.e., to the extent that he thinks that our moral intuitions have nothing to do with moral truth but are simply heuristics that conferred survival value on groups of humans--Sunstein undermines not simply deontology but all of morality, including all forms of utilitarianism. After all, the claim that morality consists of maximizing utility is itself an appeal to moral intuition--a kind of meta-heuristic. If the intuition that it is wrong to push the fat man is simply a misfiring of a hard-wired rule that conferred evolutionary advantage, then so is the intuition that it is wrong to abstain from simple actions that could save more lives than they sacrifice.

The reduction of morality to heuristics is a kind of global moral skepticism that swallows all morality, not just deontology. Sunstein's (implicit) argument against double effect and deontology thus throws out the baby with the bathwater. If he really is a moral skeptic, then he would have no moral problem with throwing out a baby, but I don't read him to embrace moral skepticism, except perhaps inadvertently.
Author: "noreply@blogger.com (Michael C. Dorf)"
Send by mail Print  Save  Delicious 
Date: Friday, 11 Apr 2014 14:31
-- Posted by Neil H. Buchanan

Yesterday, in my Verdict column and here on Dorf on Law, I argued that now is the time to push for a single-payer national health care plan, one version of which is Medicare for All, which would simply expand the covered population of the popular Medicare program from over-65-year-olds to everyone, regardless of age.

The first-year enrollment numbers in the ACA's new health care exchanges -- the much-touted 7.1 million, which met and exceeded the (somewhat arbitrary) 7 million target -- were significant because that was the last moment at which the system could have simply failed on its own terms.  That is, we have already seen the implementation of certain aspects of the law, such as the (very, very popular) inclusion of children up to age 26 on their parents' policies.  Such features could have been repealed, as a technical matter, without destroying the law itself.

The only question would have been the politics: If Republicans had decided not to "repeal Obamacare," buy instead had tried to repeal certain features of the law, would the public have let them do it?  Almost certainly not.  There is a reason that Republicans continued to talk about the law in the abstract, and focused on things like the "mandate."  They were getting no political traction for undoing the substance of what the law was trying to do.

If the early enrollments had been too low, however, that would have changed everything.  Something like a death spiral would have begun, with insurance companies needing to increase their rates and reduce their offerings, which would have caused some people to drop out and others not to sign up, which would have led to still higher rates, and so on.  We now know that the system reached critical mass.  There are still plenty of things that can go wrong, and plenty of poison pills that the Republicans could try to sneak through.  But this is a "live birth," and the wrangling that will follow is mostly about details.

One fly in that ointment is a case called Halbig v. Sebelius, which was recently argued before the DC Circuit.  There, a Koch-backed legal team is trying to exploit a supposed gap in the statute that purportedly makes it illegal for the government to offer subsidies to people who buy their insurance through exchanges that the federal government has set up.  Because the federal government only sets up exchanges after a state (with a Republican governor) refuses to do so, this case could hang on (among other things) whether the appellate court -- and ultimately the Supremes -- interprets the law such that federally-built exchanges can be deemed surrogate action on behalf of the state governments.  A ruling against the Administration could effectively negate a large number of enrollments, and thus put us back in danger of a death spiral.

Of course, no such challenge could have been possible, had we adopted national single-payer.  This lawsuit, like the other major challenges to the ACA, is possible entirely because the law has so many unnecessary moving parts, which can be challenged from many different angles.  For example, the famed NFIB v. Sebelius case, under which C.J. Roberts allowed the "mandate" under Congress's taxing power, would not have happened had there been no mandate to challenge.  And the mandate itself was necessary to allow a system built around private insurance companies to provide nearly-universal coverage.

Similarly, the Hobby Lobby case, which challenges Congress's authority to order corporations to provide health care with features that upset the corporations' major shareholders (such as the ACA's requirement that all policies provide birth control without a co-pay), has constitutional resonance only because the ACA continues to be built around employer-provided health insurance.  (This historical accident might be the "original sin" of our health care system, because it creates "job lock" and other unnecessary problems.)

It is tempting, therefore, to think that an additional "cost" of going for a half-measure like the ACA, rather than going for national single-payer in 2010, has been that we have been left to deal with these unnecessary nuisance suits.  Medicare is hitting its 50th birthday, and it is not open to Constitutional challenge.  Yes, as some readers discussed in the Comments on my post yesterday, culture wars politics would affect Congress's decisions about what to include in expanded medical coverage.  That would be a matter of pure politics, and some of it might not go well, but it is arguably better to hash that out in Congress rather than through this series of ridiculous lawsuits.

Or so I wanted to think.  Honestly, however, it is hard to imagine that the people who have been pushing these anti-ACA lawsuits would have said, "Oh well, I guess there's nothing we can do about single-payer.  Medicare is bulletproof."  I mean, consider just how absurd the activity/inactivity distinction was -- not just to liberals, but to conservative legal scholars as well -- when it was first raised in NFIB.

If these people could imagine getting five justices to sign onto that incoherent mess, why would they not imagine that other legal doctrines could be invented to declare that, say, Medicare is a violation of property rights, or that payroll taxes are theft?  There is already a strong contingent of people, some of whom were put on the federal bench by George W. Bush, who want to revive the Lochner era's expansive version of freedom of contract.  Why would they not use expanded Medicare as the wedge to push that agenda?

So, even though the economic costs of the ACA, relative to single-payer, are unbelievably high, I no longer think that the parade of bad constitutional challenges was an additional cost of adopting the go-it-slow strategy.  Motivated, well-funded people with friends on high courts will always try to use whatever raw material is available.
Author: "noreply@blogger.com (Neil H. Buchanan)"
Send by mail Print  Save  Delicious 
Date: Thursday, 10 Apr 2014 15:00
-- Posted by Neil H. Buchanan

Although I have occasionally mentioned single-payer health care, and done so quite approvingly, I am not sure if I have ever directly and simply said that I support it.  Whether or not I have done it before, I did so quite explicitly today in my Verdict column.  To the extent that I am doing something in that column beyond merely stating the obvious (that I have been in favor of single-payer all along), the timing of the column is probably what matters most, for reasons that I will explain in this post.

The big news in the last few weeks on the health care front has been the surprising success of the Obama Administration in getting more than 7 million people to sign up for coverage on the new health care exchanges.  This is big news, because it undermines the only real plank of the Republicans' 2014 electoral platform.  (Sorry, but "Obama the imperial president" is just not going to fly.)  Seven months before the mid-term elections, the Republicans are finding that their deeply held belief that the Affordable Care Act will surely be a horrible failure is turning out to be wrong.

One way to respond to that news is to argue with the facts.  As they did with unfavorable polls before the 2012 elections, and as they still do with climate science, and as they still do with evolution, Republicans have been denying reality -- frantically claiming that the signups for the ACA have been inflated, or that they are not "new enrollees," or whatever.  Even Jon Stewart, bizarrely, gave Republicans some aid and comfort when he expressed sketpicism that the announced number was 7.1 million, as against a goal of 7 million -- or, as he put it with eyebrow arched, only 1.4% above the target.  It is hard to know why anyone would find it strange or suspicious that people who have achieved a goal made a big push that would get them just over the finish line, but "haters gonna hate," I guess.

In any event, none of the attacks on the facts are holding up to scrutiny.  And, honestly, even if the enrollments had totaled only 6.9 million -- and do you think that anyone on the right (or on Comedy Central, for that matter) would be saying that it was no big deal to have fallen only 1.4% short? -- the important point was that the enrollments needed simply to be big enough and diverse enough (by age, health status, and so on) to allow the system to be actuarially sound, keeping the private insurance companies from losing money.  And that is the big news.  The 7 million target was the best guess of what it would take to comfortably conclude that "nationalized Romneycare" would succeed.  At this point, we have every reason to believe that it will.  For Republicans, and especially their Senate candidates, that is bad news.  For everyone else, that is a huge step forward.

Short of trying to deny reality, the Republicans only other possible response is to propose an actual alternative to the ACA.  They have never done so, because there is no alternative to the ACA that preserves the private insurance companies AND allows Congress to require those companies to cover people with pre-existing conditions, which is the one goal that nearly everyone agreed upon from the beginning.  As Paul Krugman pointed out on his blog earlier this week, some Republican staffers are finally admitting that there is no conservative alternative to the ACA, because the ACA is the conservative alternative to single-payer national health care.

All of which brings us back to the question of why the timing matters, in terms of endorsing the single-payer "Medicare for All" alternative.  Why now?  It might seem counter-intuitive to argue that Democrats should immediately try to undermine what is arguably their greatest social accomplishment in more than a generation.  Why not let it work for awhile, and see how it goes?  Let us at least enjoy the reality that many people who would have died too soon, or who would have been financially devastated by medical care costs, or both, will see a better future than would have awaited them had the health care system continued on its previous course.  Right?

There is no doubt that things are better now than they were before.  The danger all along, however, was merely a specific example of the classic liberal-versus-radical, incrementalist-or-absolutist conundrum.  Yes, we have improved matters considerably by taking the cautious Obaman approach.  But doing so inevitably becomes (especially for people like Obama's advisors) not an argument to take the next step, but to settle all-but-permanently for less.  (See, e.g., the inadequate fiscal stimulus program of 2009-10.)

Do we really lose much by settling for less, especially if we have achieved the important goal of meaningfully improving people's physical, mental, and financial health?  The answer is yes, we really do lose a lot by waiting to switch to a single-payer system.  Under other circumstances, I might have devoted some time in my Verdict column to rebutting specific arguments against single-payer plans ("You'll have to wait in long lines, just like in Canada!!" and all that), but here is where being a macroeconomist is helpful.

As I pose the question toward the end of my column, do we really want to spend an extra $1 trillion per year, "rising every year in perpetuity" (projected to reach $1.5 trillion in 2023, and continuing to rise), to keep private insurance companies in business?  To put this in perspective, the gross domestic product last year was about $17 trillion, of which we spent almost 18%, or $3 trillion, on health care.  More than one trillion dollars of that was the extra cost for having a non-single-payer system.  The ACA is slightly more expensive overall than the system is replaces -- although it reduces the federal deficit, due to its dedicated taxes -- precisely because it covers more people.  But under either alternative to single-payer, the country throws away about $1 for every $3 it devotes to health care.

Maybe a more vivid way to think about it is this: The "gross state products" of Tennessee, Iowa, Kansas, Minnesota, Missouri, Nebraska, and both Dakotas -- or just the entire economy of Texas -- currently add up to the same extra amount that we needlessly spend on keeping the current duct-tape-and-bailing-wire health care ecosystem afloat.  I know that people on the coasts like to ignore "flyover country," but we actually benefit from their economies!

In some ways, the enormity of the waste in both the pre- and post-ACA private health care systems becomes its own argument not to do anything.  It seems impossible to imagine that one out of every seventeen workers is doing something pointless and unnecessary (and, in many cases, counter-productive).  And it certainly seems too good to be true that we could really save one third of our health care costs.  The fact is, however, that some countries do even better.  For example, the Brits and the Swedes both spend 2% of GDP less than France, which is the basis that I have used for the comparison of the U.S. with the next-most-expensive country.  If anything, the estimate that $1 out of every $3 is wasted is too low.

I note in my column a study by a UMass economist, Gerald Friedman, which forecasts the potential savings going forward of a specific proposal to expand Medicare, H.R. 676.  Importantly, Friedman also devotes a fair amount of effort showing how the expansion could be financed, in a progressive way.  This is important, because the current Medicare system is underfunded only in the sense that the specific tax that is supposed to support the whole system has turned out to be too small, not in the sense that the economy could not afford to support it from general tax revenues.  Too many people have misused the financing projections for the current Medicare system to say that we cannot afford to expand the system to other Americans.

The larger point, however, is that we cannot afford not to do so.  The "third way" types running the show in the White House (and in Hillary Clinton's nascent campaign) will surely counsel caution and prudence, saying that we must wait.  Waiting, however, is hardly a "cautious" move, unless one considers it prudent to waste the equivalent of the output of eight states in the middle of the country.
Author: "noreply@blogger.com (Neil H. Buchanan)"
Send by mail Print  Save  Delicious 
Date: Wednesday, 09 Apr 2014 11:00
By Michael Dorf

Flash Boys: A Wall Street Revolt, is the latest book by Michael Lewis, and like his other work--e.g., Liar's Poker; Moneyball; The Blind Side; The Big Short--it's a great read. Flash Boys was previewed in last week's NY Times Magazine, and has been all over the news, so I will only summarize it very briefly here, before coming to my two main points.

Flash Boys tells how, mostly since the onset of the Great Recession, stock trading has become systematically rigged so as to take money out of the pockets of investors and put it into the pockets of "high frequency traders" (HFTs) and the proliferating exchanges and big banks that (literally) rewired the trading rules so as to advantage HFTs.  Lewis explains that the HFTs use superfast computers and connections to deploy various arbitrage schemes that add no value to the market. The scheme that gets the most attention in Flash Boys is electronic front-running.

Here's how it works. Let's say that a big institutional investor places an order for 100,000 shares of Microsoft stock at $40/share. The broker will route the order to multiple exchanges, ostensibly so that the investor gets the best prices, but really so that the HFT algorithms can "see" the order first on one exchange (or in a "dark pool" run by one of the Wall Street banks) and then, using their lightning speed, zip around to the other exchanges to buy stock at $40/share (or less) before the institutional investor gets there, then sell it to the institutional investor at a higher price, such as $40.01 or whatever. By doing this sort of thing constantly, the HFTs are able to exact a small "tax" on just about every large transaction, and thus siphon off billions of dollars annually.

Flash Boys recounts how Brad Katsuyama of Royal Bank of Canada began to notice that something was awry in the markets and eventually traced the problem to HFTs. He then assembled a team of traders and technologists to create a new exchange, IEX, that is designed so as to deny HFTs the opportunity to extract rents from investors. Joe Nocera noted recently in the NY Times that Katsuyama wasn't the first person to try this and that Lewis wasn't the first to write about it, but it's fair to say that the spotlight that the new book shines is considerably brighter than the attention previously paid to the issue by the mainstream media.

Now, on to my observations.

(1) The Unsuccessful HFT Counterattack on Flash Boys

Flash Boys has barely been in print for a week, but predictably, the backlash against Lewis has already begun. I have no deep knowledge of this subject matter, but I did talk to people who know a lot more than I do, and they confirmed my basic impressions. Based on the obvious flaws in what his critics are saying, it looks to me like Lewis is right and his Wall Street/HFT critics are wrong. I've scoured the internet for the responses of the HFT industry, and found that the main talking points of the defenders of HFT are weak.  (For a good summary with links to other sources, I recommend this Bloomberg Businessweek article.) Here are the main points, followed by my analsysis.

--High-frequency trading has dramatically reduced costs to investors compared to the old method of filling orders by hand.

This claim is ubiquitous but it conflates two very different phenomena: computerization and high-frequency trading. Lewis is not against computerization, nor are the heroes of Flash Boys. IEX itself is a fully computerized exchange. The claim of Flash Boys is that most of the HFT activity in the electronic exchanges serves no legitimate investment purpose, and can only be seen as a way of exploiting microsecond-or-shorter-length information advantages so as to extract rents from investors. Lewis and IEX can grant that today's investors keep more of their money than investors on the old manual exchanges did, but their point is that they are now unnecessarily giving up a chunk of cash to HFTs.

--High-frequency trading increases market liquidity.

The book pretty clearly demolishes this claim. Microsecond-by-microsecond buying and selling does not add liquidity. In lots of other circumstances, middlemen serve a very valuable economic function by bringing together sellers and buyers who otherwise would not have found each other. Flash Boys allows that daytraders and the like could serve that function in a stock market that is otherwise illiquid. But he also explains how the vast majority of HFT activity does not add liquidity; insofar as it increases bid/ask spreads, in fact it prevents some trades that would have occurred in its absence. The closest thing I could find to an attempt to rebut this among the Lewis critics was stuff like this from a Financial Times review:

--"Lewis counters [the claim of liquidity enhancement by saying] that HFT creates volatility and a mind-bending amount of activity, not liquidity. But he carries the reader so firmly toward this conclusion that one ends up feeling a bit manipulated, and wondering whether his paean for IEX, the new exchange, is really justified."

Did you see what the reviewer did there? He doesn't actually offer any reasons or evidence against Lewis's view. He just says he feels manipulated by the strength of the narrative.

--High-frequency trading is not as lucrative as Lewis contends.

I came across three versions of this claim. One is that Lewis's numbers are wrong. I don't have the expertise to judge this, so I'll just note that if that's true, then it's hard to see why the people whose business is threatened would feel so threatened. The second version states that, even before IEX opened, HFTs were making less money than they did just a few years ago. Assuming this is true, that may be because the banks have figured out how to capture some of the rents that were formerly going to HFTs or because the competition among HFTs is so fierce that they incur high costs (such as the cost of ever-faster hardware and straighter electronic paths between exchanges). If so, that would not mean that the rents extracted from investors have diminished. The third version of this claim compares the total amount of money made by big Wall Street players to the amounts made by HFTs, and notes that the former is a substantially larger number. At best, this means that the HFTs are effective parasites, extracting enough from the investor hosts to feed themselves but not so much as to kill the hosts.

--Flash Boys and IEX (for example, in this admittedly weird video on its website) give the misleading impression that HFTs prey on mom and pop investors but tactics like front-running only work against large orders.

Oh come on. Most small-time investors who own stock do so through large funds, such as retirement funds, that are the prey for HFTs.

--A good Michael Lewis story involves a virtuous outsider (Billy Beane; Brad Katsuyama) challenging the conventional wisdom of the complacent insiders (baseball scouts;  HFTs and the Wall Street banks) but the HFTs are themselves outsiders, not insiders.

Lewis acknowledges that HFTs are not Wall Street insiders, but in any event, so what? The HFTs can be both outsiders and villains.

Accordingly, the Wall Street rebuttal of Flash Boys strikes me as quite weak.


(2) The Real Problem with Flash Boys

Flash Boys is thus an entertaining read and largely impervious to the criticisms from HFTs and Wall Street. But it is nonetheless problematic in a very different sort of way.  Buried within Flash Boys is a strongly anti-regulatory bias.

Flash Boys ends in a state of uncertainty. IEX is open for business and drawing serious customers, including, for a few days at least, Goldman Sachs, but its future is not guaranteed. The Wall Street banks (including Goldman) could still freeze IEX out. If Katsuyama and IEX fail, the book implies, then that will be that.

But doesn't this overlook an obvious alternative? Surely the SEC or Congress could change the rules so that publicly traded companies must be traded on transparent exchanges that use rules like the ones that IEX uses. And indeed, some industry insiders are already worried that state and federal regulators will will move under existing laws--spurred on by the pressure generated from the media blitz around Flash Boys.

Yet in Flash Boys itself, the government appears chiefly as a malign force. A sub-plot that is only tangentially related to the IEX story involves the federal (and then state) prosecution of Sergey Aleynikov, a Russian programmer who innocuously took some largely useless code with him after he left Goldman Sachs but was inexplicably tried and convicted for doing so. It's not clear what the Aleynikov story is even doing in Flash Boys, except to show that a bunch of ignorant jerks run the government. The SEC makes a brief appearance in the book when Katsuyama visits, but despite the interest from a few old-timers, the younger SEC staff side with the HFTs--and Lewis explains their position by surmising that they plan to go through the revolving door to work for HFTs after their brief government stints are over.

Indeed, even if the government wanted to do the right thing, Lewis seems to think it simply can't. The world of HFTs itself was launched by a 2005 reg that responded to earlier shenanigans, which in turn exploited opportunities created by an earlier set of regulator interventions, and so on, back to the earliest days of financial regulation. As Lewis sees things, any time the government intervenes to cure one problem, it creates opportunities for the better-resourced financial community to do even more damage.

Is that a sensible view of the world? Sometimes it is.  The late great tax law scholar Marty Ginsburg once wrote that "every stick crafted" by the IRS "to beat on the head of a taxpayer will, sooner or later, metamorphose into a large green snake and bite the Commissioner on the hind part." Financial regulation is a similar domain, where firms and individuals with a lot of money at stake will do their darndest to exploit whatever openings the law leaves.

But Marty was exaggerating to make a point. Some regulations are harder to evade than others. And the possibility of perverse consequences hardly counts as a reason for regulators to throw up their hands and invite anarchy. Unless, that is, you are an economic libertarian.

Despite his willingness to go after Wall Street, Lewis does seem to be an economic libertarian. In Flash Boys, he says that salvation will come, if at all, from market forces let loose by Katsuyama and IEX. In Boomerang, a travelogue sequel to The Big Short, Lewis more or less endorses the Tea Party view of what went wrong in the leadup to the financial crisis--casting profligate Greek borrowers and American municipalities as the chief villains in a morality play that doesn't exactly let the banks off the hook, but sees their worst sin as one of stupidity and short-term thinking.

That's also the main story line of The Big Short: The morons tasked with running the big Wall Street banks were too shortsighted to see that their proprietary portfolios were full of worthless CDOs and synthetic CDOs that would come a cropper as soon as the real estate bubble popped, while a handful of clear-eyed outsiders had the foresight to find ways to short the market, even when a looming depression created the risk that a successful bet might go unpaid for want of solvent counter-parties. That was a great story, but it overlooked the role of deregulation--especially the repeal of Glass Steagall--in turning mega-banks into the sorts of institutions in which people could get rich by issuing crap loans, even as they thereby imperiled the broader economy and the banks themselves.

Conversely, if Lewis didn't have so much faith in the beneficence of the market (if only it would work its magic as God intended), then he might regard the "toll" that HFTs extract from transactions as a kind of private Tobin tax on financial transactions that discourages constant trading and encourages buy-and-hold or "value" investing. I wouldn't endorse this view myself. If it's a good idea to impose a tax on financial transactions, then I'd prefer to see the proceeds go to more socially beneficial purposes, but it's telling that Lewis never even considers the possibiilty that the "investors" who are being ripped off by HFTs are themselves not exactly adding value by allocating capital to those who can profit the most from it.

Don't get me wrong.  Michael Lewis is a wonderful writer and he has a knack for finding people whose individual stories provide a window on larger events. But that window tends to open on a particular view of the world in which the government as regulator is either absent or part of the problem. Such stories exist, of course, but so do stories of successful regulation. I hope Lewis sees fit to tell one of those one day.
Author: "noreply@blogger.com (Michael C. Dorf)"
Send by mail Print  Save  Delicious 
Date: Tuesday, 08 Apr 2014 12:00
by Sherry F. Colb

First, the good news.  The New York Times ran a prominent story about the company "Beyond Meat," and the story highlighted the fact that the flavor and texture of the company's plant-based chicken strips are indistinguishable from the taste of the charred flesh of an actual slaughtered bird.  This is progress.  So what's the bad news?  The bad news is that the person tasked with writing the story is plainly neither vegan nor favorably inclined towards veganism,, and she therefore presents the story in a way that treats "real" chicken as the gold standard.  And by "real" chicken, I mean the actual muscle tissue of what was once a living and breathing animal before she or he was slaughtered at the age of seven weeks old, at which time birds still make the "cheep cheep" sound of baby chicks, because they are, in fact baby chicks.

How do I know that the reporter is neither vegan nor even apparently open to veganism and the many compelling reasons for it?

First, she says nothing in the article about the fact that "Beyond Meat" is a vegan company or the fact that its chicken-free strips are vegan -- they contain no animal ingredients, as opposed to "vegetarian" (which, in today's usage, typically refers to "lacto-ovo vegetarian," a word that actually means "animal-free except for the ovulatory and lacteal secretions that it contains").  Indeed, most strangely for an article describing a vegan item, the article nowhere even uses the word "vegan."  It is difficult to know whether the reporter has simply never heard of veganism or whether she prefers not to use the word, for some reason, but either way, it is misleading to speak about a vegan company like Beyond Meat and a nonvegan company like Morningstar Farms as though they are relevantly equivalent.

Second, the story begins with a plainly slanted account of a mix-up in some Whole Foods stores.  Some of the retailer's kitchens had accidentally reversed the labeling of its two curried chicken salads, one of which had "real" and one of which contained "fake" chicken.  As a result, customers would have been led by the labels into purchasing the wrong item.  Does the reporter note that customers seeking to avoid animal flesh might have been  upset to learn that they had consumed a bird's corpse due to the erroneous labeling?  No.  The article completely ignores this problem and mentions only the plight of people with allergies mistakenly consuming the vegetarian chicken salad.

Third, the reporter not only calls the vegan strips "fake" meat but defends her choice to do so in the following way:  "[p]roducers hate the term ["fake" meat] but have not come up with a catchy alternative to 'plant-based protein,'" adding that prior to such convincing "fake" meats, "desiccated and flavorless veggie burgers were virtually the only option for noncarnivores."  Note again the invisibility of vegans in this account -- there are carnivores and noncarnivores, and virtually the "only option" for people who refrained from slaughterhouse-sourced foods were disgusting veggie burgers (rather than, say, delicious fruits, vegetables, nuts, breads, pasta, rice, and greens, accented with plentiful herbs and spices).

I'm not sure what enables the reporter to decide what qualifies as a catchy name, but I know of no vegans who believe that "fake meat" meets the "catchiness" test.  Many of us refer to vegan meat (also known as "plant-based meat") as animal-free meat, slaughter-free meat, nut-based meat, grain meat, etc.  And none of these foods is  "fake."  All are made out of real ingredients that happen to come from the plant kingdom (which requires no use of slaughterhouses) rather than from the animal kingdom.
'
If one were truly going to be exposing fraud in the use of language, we might point to the peaceful pretense in packages of animal parts called "chicken," which give no hint of the violence behind the packaging.  We could note that saying "chicken," implies some undifferentiated substance from which we may partake, rather than "chickens," a term that highlights the fact that we are consuming the body parts of individual animals whose lives mattered to them and were taken from them when they were babies.

Incidentally, the word "meat" originally referred to the edible part of something (rather than its shell), which is why we can coherently speak of "coconut meat."  We can therefore honestly call vegan meats what they are -- real food made without using a slaughterhouse.

Fourth, the reporter seems to have little sense of what motivates an increasing number of consumers to become vegan and thus to choose to consume only animal-free, vegan products.  She states that "[d]emand for meat alternatives is growing, fueled by trends  as varied as increased vegetarianism and concerns over the impact of industrial-scale animal husbandry on the environment."  To attribute the demand for animal-free products to vegetarianism, however, is, uninformative -- it says that people are demanding animal free products because there is a trend in people consuming animal-free products.  She then refers to concerns about the impact of industrial-scale animal agriculture on the environment, while ignoring that the environmental impact of animal agriculture is not specific to factory farming but is true of all animal agriculture.

Later in the article, quoting someone talking about why younger people are consuming vegan products, the reporter says that "'younger consumers ... seek foods that fit an overall lifestyle, be it for health reasons or personal ethics.'"   The phrase "personal ethics" implies that the vegan movement for non-violence is just a personal matter.  I like nonviolence, but you prefer violence, and both preferences are equally valid.  But ethical vegans take the position that the violence against animals solicited by consumers who purchase animal ingredients is unjust and wrong, not just "wrong for me," but wrong, period.  Similarly, sex discrimination is not just illegal and opposed to my "personal ethics" but immoral.  People who ordinarily believe in right and wrong seem to become moral relativists only when faced with the prospect of changing the way they eat.

I promised in the title to talk about Miranda warnings, and I shall do so now.  People have long puzzled over why suspects in custody who hear the Miranda warnings so frequently give up their right to remain silent and ultimately tell the police self-incriminating information.  One theory is that the suspect is not really "free" to remain silent, but while this may play a role in the decision to speak, I think the answer may be far simpler.  As Yale Kamisar has explained, when the person telling you that you have the right to remain silent is someone with a vested interest in your giving up that right to remain silent, then he or she will manage -- in delivering the message -- to make silence sound undesirable and unnecessary, much like the ads for medications that quietly and with soothing background music "warn" the viewer or listener about potentially fatal side-effects associated with the medication, do.

This is ultimately what is wrong with having someone who is neither vegan nor even open to veganism write a story about a delicious new vegan meat.  She will (and does) make it sound undesirable, fake, and inexplicable, when it is anything but.
Author: "noreply@blogger.com (Sherry F. Colb)"
Send by mail Print  Save  Delicious 
Date: Monday, 07 Apr 2014 11:06
By Michael Dorf

My latest Verdict column criticizes McCutcheon v. FEC, last week's SCOTUS ruling that invalidated the federal aggregate campaign contribution limits. I use the Netflix series House of Cards as a vehicle for exploring the benighted view of politics held by a majority of the Roberts Court. Here I want to focus on two lines that appear in the plurality opinion, but before coming to the lines in question, let me put them in context.

In McCutcheon, the plurality repeats and reinforces a view that has been expressed in prior cases as well--that the only government interest that can provide sufficient ground for overcoming the free speech rights of donors to political campaigns is the interest in avoiding quid pro quo corruption or the appearance thereof. As I explain in the column, and as Justice Breyer argues at length in dissent, even accepting the premise, the McCutcheon plurality applies an overly narrow view of what constitutes quid pro quo corruption or its appearance, but one might also think that the premise is false. One might take the view that the government has a powerful interest in ensuring that the inequalities in the distribution of material resources that result from capitalism should not be permitted to result in gross inequalities in the political realm. Various political and legal theorists have thus argued that "leveling down" is a permissible goal in this area--although the Supreme Court (including liberals on the Court) has generally rejected this goal.

The rejection of the equality rationale for campaign finance regulation is pithily summarized in a line from Buckley v. Valeo that was quoted in the McCutcheon plurality: “the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment.” This line gets quoted even by Justices who are otherwise critical of Buckley. But is it sound?

The theory behind the "wholly foreign" line is not entirely clear from Buckley itself, which follows that line with generic quotations and citations of seemingly irrelevant cases that say that the First Amendment aims to ensure the "widest possible dissemination of information from diverse and antagonistic sources." But that's not really very responsive to a supporter of the equality rationale who worries that the best-funded sources drown out the voices of the poorly-funded ones. I think the most that could be said for the "wholly foreign" claim would instead be that speech is not a zero-sum game, a point that is probably more true today (as a consequence of the internet) than it was in 1976 when Buckley was decided. In any event, whether or not true, this idea is pretty well-embedded in free speech doctrine, as seen, for example, in Justice Brandeis's famous concurrence in Whitney v. California: "the fitting remedy for evil counsels is good ones."

Even assuming that speech is not, in general, a zero-sum game, however, one might think that political influence is a zero-sum game. A candidate who takes a position in favor of some bill because he thinks that doing so will result in more campaign contributions than if he opposes it is making a zero-sum choice: Either he votes for the bill or he votes against it, and if the prospect of large donations leads him towards one choice, then it leads him against the other. Thus, the equality rationale for campaign finance regulation does not aim to equalize speech for its own sake; it aims to equalize access to, and influence over, politicians. The Brandeisian "more speech" response isn't responsive to this argument.

In this area of the law, as in so many others, repeated recitation of a catchy line--here, "the concept . . . is wholly foreign to the First Amendment"--tends to operate as a substitute for any sustained argument, but occasionally the Court offers a glimpse of the thinking that may lie behind the catchphrase. And so it was in McCutcheon that after repeating the proposition that the only legitimate goal of campaign finance regulation is to attack quid pro quo corruption or its appearance, the plurality added an argument in seeming justification thereof. Quoting another of his dreadful opinions invalidating campaign finance regulation (the dreadfulness of which I explained here), CJ Roberts wrote in McCutcheon:
Campaign finance restrictions that pursue other objectives, we have explained, impermissibly inject the Government “into the debate over who should govern.” Bennett. And those who govern should be the last people to help decide who should govern.
There is a certain logic to this claim, I'll concede. Having Congress decide the rules about how Congress itself is selected does appear to run the risk of self-dealing. And there are contexts in which this sort of logic informs constitutional doctrine. For example, the fact that constitutional amendments are sometimes enacted for the purpose of overruling Supreme Court decisions counts as a reason for treating the question whether a constitutional amendment was validly enacted as a non-justiciable political question.

That is not to say that the Supreme Court consistently applies this anti-self-dealing logic. One might think, after all, that those who sit on the Supreme Court should be the last people to help decide who should be in a position to decide who sits on the Supreme Court. But somehow that argument didn't prevail in Bush v. Gore. Go figure.

But even if we put aside questions of consistency, the anti-self-dealing argument does not work in the campaign finance context. Like so many other punchy slogans to emerge from the pen of CJ Roberts--see, e.g., Parents Involved in Community Schools v. Seattle School Dist. No. 1 ("the way to stop discrimination on the basis of race is to stop discriminating on the basis of race")--so too here, upon close examination, there is less than first meets the eye.

Simply put, the idea that Congress can't play a role in making the rules governing how members of Congress are chosen contradicts the Constitution. Article I, Sec. 2 charges Congress with the task of defining the manner in which the census is taken, even though census numbers have a large bearing on elections; Article I, Sec. 4 gives Congress the power to alter state rules governing the procedure by which Senators and House members are chosen; and Article I, Sec. 5 designates each house of Congress as "the Judge of the Elections, Returns and Qualifications of its own Members." So the Chief Justice has it exactly backwards when he says that members of Congress "should be the last people to help decide who should govern." According to the Constitution, they are the first.
Author: "noreply@blogger.com (Michael C. Dorf)"
Send by mail Print  Save  Delicious 
Date: Friday, 04 Apr 2014 14:59
-- Posted by Neil H. Buchanan

In my Verdict column and Dorf on Law post earlier this week, I expressed a decidedly negative view of university administrators.  In my telling, they are engaged in a relentless campaign to destroy higher education, thus undermining the modern university's role as a pillar of the Enlightenment.  Although there is all too much evidence that my description accurately captures the trend among university administrators, many of whom are intensifying efforts that have been ongoing for decades, my comments should definitely not be read to say that it is easy to run a university well, or that all administrators are acting in bad faith.

For those administrators who understand the importance of university stewardship (and there are many, many such administrators), the challenges of making universities work is never an easy one.  I have enough self-awareness to know that deans, provosts, chancellors, and presidents are doing jobs that I would absolutely hate to take on.  I respect those who try, but I do not truly understand why anyone would put herself or himself on that firing line.  Even in the best of times, it is a grueling job.  In tough economic times, it is harder still.

At my law school, we are in the midst of a search for a new dean.  Our interim dean, Professor Gregory Maggs, has continued to do a fantastic job of serving our community on a temporary basis, but he evidently (I have not spoken with him about this) has the same overall view that I have about being a professor, because he did not put his name in for the permanent position as dean.  He has been willing to sacrifice two out of the last three years to serve our law school in times of need, but he has chosen to go back to being a professor.  Who could blame him?

As we are considering various candidates who have expressed a willingness to serve as our next permanent dean, one obvious set of questions revolves around how each potential dean views the role of faculty in governance, how she or he would deal with the university's central administration, and so on.  To the extent that one can assess good faith in the interview process, the news is good for us.  All of our potential deans seem to be committed to maintaining the values of legal education, and of higher education in general, that have made the American system so successful for so long.  We face an embarrassment of riches, with our choice to be made from among a list of people who would be "good administrators" in the broadest sense, leaving us to base our decisions on an unquantifiable mixture of other criteria.

One question that I have been asking, and not just of the potential future deans, has to do with the classic economic problem of dealing with tradeoffs in allocating resources.  No matter whether the overall budgetary picture is flush or tight, so long as resources are finite, the commitment of a school's resources must involve difficult choices.  A dollar spent on one priority cannot be spent on anything else.  (The less charitable among my readers might be saying, "Well, duh!")

In the case of GW Law, however, we present a somewhat extreme version of a classic sub-question regarding tradeoffs in resource allocation: When your institution has great strengths as well as glaring weaknesses, should you build on the strengths or shore up the weaknesses?  Yes, you can do a little bit of both, but splitting the difference is itself a choice that needs to be justified and calibrated.  What I find interesting is the more general conundrum of how to choose between directing resources toward areas of strength or weakness.

There is no reason to be abstract about this, so let us look at specific examples.  GW Law's many strengths most obviously include government contracts law, international and comparative law, intellectual property law, and constitutional law.  (Obviously, I do not mean to diminish other strong areas by highlighting this short list.)  Its current weaknesses include environmental law and tax law.

The weaknesses that I am describing, of course, are not based on particular personnel being weak (present company excluded).  Our tax faculty was never large, but it is now down to two people (including me, and I am not really a classic tax scholar).  Our environmental faculty, and our community as a whole, suffered a huge loss a few years ago when one of our colleagues died of a rare disease at a young age.  What I am describing as weakness, therefore, is not a matter of poor performers, but of strong performers without enough disciplinary colleagues.  If the problem were that current personnel were underperforming, that would raise a wholly different set of issues.  But for us, the only way to get better in tax and environmental law is to increase our ranks.

Prior to the financial crisis in 2008, we had a third tax law professor on our faculty, and the then-dean had committed to hiring a fourth tax scholar.  Even that, however, would have left us in a relatively weak position in tax.  Although it is an admittedly crude metric, I asked my research assistants at the time to gather data on the students-per-tax-professor ratios at the top law schools.  (The result did not meaningfully differ when we looked at different sample sizes: top 20, top 40, top tier, and so on.)  We discovered that, to be in the middle of the distribution, a school of GW's size would need six full-time tenured or tenure-track tax professors.

Moreover, as several of our prospective deans have noted, when I told them about our weakness in tax, "But you're in DC!!  How in the world is GW not a heavyweight in tax law?"  Yes, Georgetown runs a well-respected Tax LL.M. program, but there is more than enough oxygen here to support two large tax faculties, even if GW were to revive its own LL.M. program.  Short of that, there is no reason why we could not be expanding our tax footprint.  Certainly, the "but you're in DC" argument would also apply to environmental law (and health law, and ...).

I am all too aware, in other words, of the arguments in favor of using the law school's resources to shore up our tax program.  I make them all the time.  Those arguments, however, are often based on the assumption that there is some reason why a law school has to be equally good at everything.  Or, to put it less politely, it assumes that a law school should be willing to settle for less than greatness in some areas, in order to level out the allocation of resources.  But why not instead simply put the pedal to the metal on government contracts law, achieving transcendant greatness, even if that means leaving the tax program in a minimalist state?

As an important aside, I should emphasize that we continue (barely) to be able to put together a tax curriculum that is adequate for any J.D.'s needs.  Law schools that have only one tax professor, even with a smaller student body, simply cannot do what we do -- especially given our access to great adjuncts -- and I think that those schools, unlike GW, have crossed a line that should not be crossed.  Others may disagree.

The more specific framing of the core question, then, is this: Assuming that a law school has a minimally-adequate program in all of the major areas of law, how should it decided between building on strength and shoring up weakness?  One analogy that resonated with me is the famous problem of tennis players' arms.  Because of the nature of that game, players' racket-swinging arms naturally grow stronger.  And if one were to put extra effort into building up strength, competitive advantage comes from further building up the racket-swinging arm.  Tennis players who want to have two equally-muscled arms must actually be vigilant and do extra work to bring up the non-racket-holding arm to the stronger arm's level.  See, for example, this photo of the current #1 men's tennis player in the world, Rafael Nadal.  Even with work, his "off" arm is strikingly smaller than his other arm.

When I first thought about tennis players' arms, I imagined the analogy as part of an argument that said, "Well, you'd never want to have such inequality in arm size, would you?  Would you?!!"  But of course, you might.  For example, if you want to be great at tennis, it makes sense to accept the reality that your arms will be of unequal size.  If you have the time and resources to shore up the weak arm, more power to you.  Former top player Roger Federer apparently refused even to work out his non-swinging arm.  Why bother?  That simply did not matter to him.  His off arm was hardly withered or vestigial.  It only looked weak by comparison to the great strength in his racket-swinging arm.

On the other hand (pun intended), maybe tennis is not your game.  Maybe you are a decathlete, or some other athlete who must have a variety of strengths.  (Even most decathletes actually rely on being especially good at a few events, to make up for weaknesses in others.)  In other words, the tennis analogy, and sports analogies more generally, can cut either way here.  We are left with the question of what a new dean, and her or his faculty, should decide with regard to GW Law's strengths and weaknesses.  I can make a full-throated argument in favor of turning tax from a weakness into a strength (or at least a non-weakness), but I confess that I can see how someone would conclude that our game is not best played by trying to be equally-almost-great in every aspect of law.  If we chose inequality, some specialties will be less equal than others.  That fate might await tax law at GW.

Leading a university, or any of its constituent parts, is not easy.  I would not want to be the person to make final decisions about whether we should aim for equality or inequality, or to choose who will be favored and disfavored.  Although it is true that many university administrators are pursuing an agenda that is damaging to the future, even the good administrators will often have to make excruciatingly difficult choices.  It's a tough job, and I am glad that other people are willing to do it.
Author: "noreply@blogger.com (Neil H. Buchanan)"
Send by mail Print  Save  Delicious 
Date: Thursday, 03 Apr 2014 14:55
-- Posted by Neil H. Buchanan

My latest Verdict column, "Destroying Our Universities By Turning Us Against Ourselves," is a response to the recently escalating attacks on higher education, focusing on the divide-and-conquer tactics that university administrators have been using to advance their agendas.  The general idea, of course, is for the people with real decision-making power to turn the various constituencies within the university against each other, fighting over crumbs.  If you can get the students, faculty, staff, and alumnae/i bickering amongst themselves, life as an administrator becomes a lot less difficult.

Two years ago, I criticized (in a Verdict column and a Dorf on Law post) an op-ed by a former chancellor at the New School, who attempted to convince his readers that elite faculty should abandon the fight to protect tenure for anyone but themselves.  If that strategy were successful, the people with the most leverage in a university setting (the "star" professors) would no longer use their clout to join in solidarity with the non-stars.  That would dilute even further any remaining efforts by (the depleted ranks of) tenured faculty to protect the rights of nontenured faculty -- not just junior faculty, but adjuncts and others in tenuous contract positions.

The problem from the administrators' side is obvious: How can we load extra work onto the powerless workers without being resisted by the powerful workers?  The answer: Get the powerful people to think that the powerless "others" are unworthy.  (Sound like the strategy of a major American political party?  It should.  What is the academic equivalent of the "makers vs. takers" divide?)

I then noted a more recent example of divide-and-conquer tactics, which had been reported in GW's undergraduate student newspaper.  I should note that the GW administration now disputes The Hatchet's version of events, and there is a story with a much different hue available from GW Today (which describes itself as "GW's official online news source").  Readers can judge for themselves whether the two versions are mutually exclusive, but the particulars of that incident are hardly the point of my column.  Examples abound across the country of university administrators using the weak economy to justify disastrous challenges to what it even means to be a modern university.

Most recently, for example, the University of Southern Maine announced layoffs of faculty (including tenured faculty), on top of recent and impending staff cuts.  It certainly appears that the financial excuses are pretextual, with the university's president claiming that the system must "evolve from a liberal arts college to a 'metropolitan university' that is closely connected with businesses, residents and governments."  Yes, it is all about neoliberalism, with the goal of creating "results-oriented" universities being the new excuse to shut up dissent.

Beyond my argument about divide-and-conquer tactics, the more central point of my most recent Verdict column was to provide an aggressive argument in favor of tenure.  Students are sold the idea that cosseted tenured faculty are the problem (and, I should add, faculty are then told that spoiled students -- the results of helicopter parenting and soccer-games-without-keeping score emotional pampering -- are the problem).  Alumnae/i believe that both faculty and students are selfish.  Staff are encouraged to blame everyone (except the administrators).

It is not just that administrators are trying to divide the constituencies of the university, which is bad enough.  The specific attacks on tenured faculty have consequences that go far beyond the immediate battles over resources.  Tenured faculty, as I put it in my column, are almost by design a "mouthy bunch" who, in a healthy university environment, will use their job security for good purposes.  Being malcontents with employment protections, we can do things that others cannot do.  I know of at least one example of a school where the tenured faculty led the fight against a top administrator who was mistreating staff.  The tenured faculty had nothing to gain for themselves, but if they did not fight for the at-will staff members, no one else could.

In any such defense of tenure, one must take a moment to concede that, yes, there are plenty of examples of tenure-protected faculty who are problematic.  I offer such a paragraph in my Verdict column, but it is important not to concede too much.  There are people who stop writing.  There are people for whom one might wish that tenure was more easily revocable, for ideological reasons (Ward Churchill being a former example from one side of the ideological divide, John Yoo on the other).  But the benefits far outweigh the costs of deliberately cultivating and maintaining a group of mouthy malcontents, even if too few of them use their blessings as fully as we might hope.

There is, however, one "cost" of tenure that has always concerned me, and which merits special mention.  In every economics department and law faculty on which I have served, everyone told me that the smart thing for nontenured people to do was not to make waves, both in terms of our scholarship and in internal governance.  (For that matter, even tenured people who have not yet been promoted to full professor are advised not to rock the boat.)  This is well-meaning advice, and younger people are arguably wise to take it to heart.  The promise, after all, is that the day will come when they can unleash all of that pent-up independence and write what they want, say what they want in faculty meetings and in the larger university, and do what they want in the public square.

As many others have noted, however, timidity becomes not just a habit, but a personality trait.  When tenure is finally granted, far too many people who might have been fiercely independent have simply become accustomed to holding their tongues.  They might not even have to hold them anymore, because they have succeeded in stopping themselves from thinking unwelcome thoughts.  Some might overcome this, but there are too many examples of "broken spirits" to pretend that this is not a common phenomenon.

Even this, however, merely argues in favor of encouraging those faculty who are willing to speak up to do so.  The system winnows down the group of people who might speak truth to power (both inside and outside the university), but that is certainly not a reason to suppress, ignore, or reduce the power of those who do.
Author: "noreply@blogger.com (Neil H. Buchanan)"
Send by mail Print  Save  Delicious 
Date: Wednesday, 02 Apr 2014 11:30
by Sherry F. Colb

In my Verdict column this week, I take up the dilemma of the "Agunah," a traditionally observant Jewish woman whose ex-husband refuses to grant her a religious ritual divorce, known as a "get."  A woman in this situation is "chained" to her prior marriage, unable -- within the Orthodox or Conservative Jewish communities -- to enter into another marriage without violating the religious proscription against adultery.  In the column, I discuss the gender inequity at the heart of this dilemma and the consequences for the Agunah as well as for her offspring.

In this post, I want to explore an issue that arises out of the one of the "Agunah" stories in the news to which I refer in the column.  In this story, a group of men offered their services to agunot (plural of agunah) to force recalcitrant ex-husbands to grant their ex-wives a get through kidnapping and torture techniques, including the use of what are frequently called "cattle prods" but which I would instead call "torture devices that use electric shocks against sentient animals to force them to go to their unnecessary deaths."  In the case of the get-seeker, torture would be inflicted as a means of motivating ex-husbands to do what they should have done on their own:  release an ex-wife from being religiously bound to a man to whom she no longer wishes to be in a relationship.

Is torture in this situation wrong?  I (and I suspect most people) would take the position that it is.  Yet I also understand why a woman might be desperate enough to resort to it.  If a woman lives within an Orthodox community and believes herself to be prohibited from dating or marrying a new man without a get, then her ex-husband's inexcusable recalcitrance keeps her from forming new romantic connections, from marrying again, and from having children without they and their own descendents having to bear the stigma of mamzerim (loosely translated as bastards) who are similarly barred from marrying within this community. Most people within the relevant communities themselves believe that it is outrageous (and a form of domestic abuse) for a man to refuse to grant his ex-wife a get, but traditional Jewish law appears to provide no substitute for the man choosing to do the right thing, if shaming and efforts at moral persuasion and other non-violent methods do not work.

When a man's behavior is acknowledged by almost everyone to be inexcusable and abusive, which is the case for the refusal to grant a get, then it is easy to understand (even if we still reject) the drive to use torture to compel the man to do the right thing.  This is probably the drive that has led some police officers who are certain that they have a guilty suspect in custody to use physical force and threats to produce the confession that they regard as rightfully theirs.

When police torture a suspect, of course, this is different from torture-for-a-get in a variety of respects, including the fact that (1) our Constitution and the ethics that motivated its creation and ratification grant a person the right to refuse to confess, notwithstanding her guilt, and (2) police who coerce a confession ordinarily cannot really "know" that the suspect is guilty, and thus torture can result -- and has resulted -- in false confessions by tormented suspects.  By contrast, (1) Jewish law does not recognize a "right" to withhold a get from one's ex-wife (though it does give a man this power over a woman to whom he was married), and (2) there are virtually no situations in which a tormented man might grant a woman the get that she seeks when she is not truly entitled to the get.

Yet despite the fact that the man has no right to withhold a get and the corresponding fact that virtually no man who grants the get under torture will have given up something to which he has any rightful claim, most of us would consider torture in these circumstances to be immoral.  Indeed, the very fact that people are driven to commit acts of torture to obtain a get represents a good argument for revisiting the get requirement.  One possibility that occurs to me is that perhaps whenever people have a Jewish wedding ceremony, a new custom emerge that requires the man to sign a get and deliver it to the rabbi who marries the couple (or to a community safety box) for safekeeping.  Then, if and when the two people divorce, the trustee of the get can deliver it on the ex-husband's behalf.

To the extent that we believe torture is wrong in these circumstances, though, why is that, if it is intended  to compel what is truly obligatory behavior?

One general answer that I discuss in more detail in an article entitled Why Is Torture "Different" and How "Different" Is It?, published in the Cardozo Law Review in 2009, is that torture is an extreme form of violence that should be permissible, if at all, in only a very narrow category of situations.  One such legitimate category, I argued, is self-defense, in which torture (though not usually thought of in this way) is already lawful.  Consider the following scenario.

A man, Doe, is holding a pillow over a child's face, suffocating the child.  The man's much weaker roommate, Koe, notices what is going on and screams at Doe to stop what he is doing.  Doe refuses to stop, even when Koe ineffectually tries to pull Doe's hands off the pillow.  Desperate for a means of saving the child, Koe grabs a pair of scissors and cuts into Doe's arm.  Doe shrieks in pain but continues holding down the pillow.  Koe then takes the scissors and  jams then as hard as he can into Doe's back.  Now in excruciating pain, Doe lets go of the pillow, which Koe quickly removes from the child's face, thereby saving the boy's life.

In the above scenario, Koe uses pain to disable Doe from carrying out his act of violence; he uses the infliction of torments -- or torture -- as a means of stopping Doe from carrying out a murder.  Absent viable alternatives, I think most of us would regard Koe's actions as justified in defense of others.  Instead of killing Doe to save the boy's life -- which Koe could legitimately have done, if necessary -- Koe tortured Doe to do the same thing.

How is the Doe & Koe scenario different from the sort of torture about which our debates ordinarily center -- torture of terrorist suspects, for example, in an effort to obtain actionable intelligence?  One important way in which the two scenarios differ is that in Koe's case, Koe is using torture to stop an action in progress, while in the case of the terrorist suspect, the interrogator is using torture to motivate an inactive person to do something.  This difference turns out to be important for several reasons that I explore in greater detail in my Cardozo article.  One of the main distinctions is that when we torture an inactive person to motivate him to act, we could well be torturing the wrong person -- that is, we torture a terrorist suspect who could turn out to be innocent and thus ignorant of whatever it is that interrogators hope to learn from him.

If the torturer is wrong about what the suspect knows, then the one who is being tortured actually has no effective way to make the torture stop, by contrast to Doe, who can make his own torture stop simply by letting go of the pillow he is using to suffocate the child.  This is why a subject of instrumental torture may endure much more pain than the torturer originally intended to inflict -- it takes quite a bit of torture (perhaps enough to kill the subject) to satisfy an interrogator that the subject truly cannot meet the torturer's demands. Escalation is almost inevitable when the torturer has erred in selecting the subject, thus leading to the greatest suffering for those who are innocent and unable to do what is asked of them.

How does the torturer who attempts to obtain a get for an agunah fare in this analysis?  Such a torturer is plainly attempting to motivate someone (a recalcitrant ex-husband) to do something he has been refusing to do rather than to stop doing something he has already done:  the action in question is granting his ex-wife a get. This fact would seem to place the "get" torturer in the category of interrogators who torture terrorism suspects (and criminal suspects) for information or evidence, the sort of torturer about whom we should be most wary and to which absolutist opposition arises.

On the other hand, in the case of the recalcitrant ex-husband, unlike the case of a terrorist suspect, there is much less of a worry that the torturer may end up inflicting torments upon the "wrong" person.  Say the "get" torturer, Knuckles, enters the wrong home and tells the man he finds there, Earnest, to sign a get for Jane Roe or be tortured. Earnest says "I am not married to Jane Roe."  If Knuckles does not believe Earnest , then Knuckles might say "just sign it" or I will start hurting you.  At this point, Earnest can sign the document, and Knuckles will go away with the document.  The would-be torture victim, in other words, can complete the task requested of him even if he is the wrong person.  For a terrorism suspect, this is not true.

Whether this distinction is sufficient to move the "get" torturer closer to the category of legitimate self-defense/defense-of-others torture is unclear.  However, another factor that suggests that torture is wrong when used to obtain a get is the possible disproportion between the harm to be prevented -- the inability of the woman to marry -- versus the excruciating pain to be inflicted on the recalcitrant ex-husband.  Unlike an actual kidnapping or attempted murder, the ex-husband is arguably doing something substantially less threatening and harmful and is accordingly less deserving of harsh methods of intervention.

From the point of view of an agunah, however, placing her in a kind of excommunicated state -- where no man in the community would be willing to marry her and where her children with any man who is willing may suffer their own stigma of excommunication -- is a very serious matter indeed.  And as I concluded in my column, I will conclude here:  there has to be a way to solve this problem other than torture or relying on the good faith of men who are, by definition, acting in bad faith.  Giving people the power to do harm without remedy virtually invites self-help.
Author: "noreply@blogger.com (Sherry F. Colb)"
Send by mail Print  Save  Delicious 
Date: Tuesday, 01 Apr 2014 10:00
By Michael Dorf

The sunny skies of Orange County, CA have thus far failed to lift the dark mood of the faculty and students at UC Irvine School of Law, who awoke yesterday to the disconcerting news that founding dean and noted constitutional scholar Erwin Chemerinsky was leaving, effective immediately, to start yet another new California public law school, to be called "UC Erwin."  In a press release, Chemerinsky announced:
I am very proud of what we built together at UC Irvine since we admitted our first class way back in the fall of 2009. But that was nearly five years ago, which, in this rapidly changing environment, is an eternity.  What was innovative then is now stodgy.  At UC Erwin, I plan to not just reinvent legal education, but to reinvent the reinvention of legal education--every day.
The new law school will be located in the unincorporated community of Irwin, California, in Merced County just 20 miles south of Modesto.  Approval of the change of the spelling of the community from "Irwin" to "Erwin" is expected before UC Erwin School of Law opens its doors in August. Said Merced County Supervisor Dorothea Rodriguez about the name change: "This was too good an opportunity for us to turn down."

Still, some skeptics have raised questions about whether California needs another law school right now. Dean Kevin Johnson of the UC Davis School of Law told DoL that "notwithstanding Erwin's gifts, it's just not clear to me that we should be building new law schools, rather than redefining the mission of existing law schools." Fair enough: UC Erwin can be expected to be in direct competition with UC Davis--although you wouldn't guess it from what Chemerinsky told Above the Law. He reportedly said:
I see UC Erwin as revolutionizing legal education, indeed, as revolutionizing knowledge itself. My competition is not so much UC Davis or Berkeley or even Stanford Law School.  UC Erwin will be a completely different sort of institution.  When future generations look back on the history of UC Erwin, I hope they will compare its world-historical impact with Plato's Academy, not something as transitory as Yale Law School.
What's so revolutionary about Chemerinsky's new law school?  Reached for comment in between arguing a Supreme Court case and appearing on MSNBC, Dean Chemerinsky told DoL that UC Erwin would be unique in three ways.  Here is his list:
Number one: Faculty.  At Irvine we had problems retaining the faculty we recruited from other law schools.  Some of them went back to the schools we recruited them from because they never fully bought into the vision. At [UC] Erwin, all of our faculty will continue to have their primary attachment to wherever they are now. We'll just list them on our website.  If they never leave, they can never go back. 
Number two: Pedagogy. We have been using the Langdellian Socratic method for a century and a half. Today's students need to learn by doing. They'll be out in the field from day one.  No classrooms. No books. No classes. Just real life lessons.
Number three: Students. I get it. There aren't enough jobs for all of the students law schools enroll as it is. UC Erwin will not contribute to that problem. We won't have any students who don't already have law jobs when they arrive. In fact, for the first three years, I'll be the only student.
When I read Chemerinsky's revolutionary plan to Harvard Law School Dean Martha Minow, she coughed nervously. When pressed, Minow said that Chemerinsky's plan would vault UC Erwin to the top of the USNews rankings.  "It's devilishly clever," Minow added.  "100% placement rate; perfect LSATs; top grades. The only thing that could stop him is reputation but Erwin has such a great brand, so he's got that covered too."

Less than an hour after I got off the phone with Minow, I received a mass email from the Harvard Law School alumni office boasting that "HLS is the original UC Erwin." It noted that "the University is located in Cambridge [MA], and the law school's nerve center is in Griswold hall, named for long-serving HLS Dean Erwin Griswold." (Bold letters in original.)

Harvard does not appear to be the only law school jumping on this particular bandwagon. In a move that he described as having been "in the works for some time," late yesterday Duke Law School Dean David Levi announced that his institution had changed its official name to Chemerinsky Law School, claiming that that the move was in honor of Kimberly Chemerinsky, a 2007 graduate of the Duke Law School (and Erwin Chemerinsky's daughter-in-law). Levi said that "Kim was a really terrific student here, who is already making a name for herself in practice." He added that the change was in no way an effort to capitalize on Erwin Chemerinsky's name recognition. "Erwin Chemerinsky?" Levi asked.  "Never heard of him."
Author: "noreply@blogger.com (Michael C. Dorf)"
Send by mail Print  Save  Delicious 
Date: Monday, 31 Mar 2014 11:30
By Michael Dorf


[N.B. 1: In advance of the oral argument in Hobby Lobby last week, I was on MSNBC. Video available here.  Note that at the very end of the segment I appear distracted. That's because the MSNBC engineer cut my audio while the host was still speaking, so I thought the line had gone dead.  The hazards of live tv!

NB 2: In addition to my twice-to-thrice weekly posts here on DoL and my bi-weekly columns on Verdict, I now have authoring privileges on the Huffington Post, where I shall, from time to time, write short essays for a somewhat more general audience than my general readership.  My first such essay is now available there.  I am also reproducing it below:]
-----------------------------------------------------
More than half a century ago, a young Yale law professor named Robert Bork wrote in The New Republic that requiring private business owners to open their doors to all members of the public regardless of race or sex would enact into law a "principle of unsurpassed ugliness." Congress disagreed and passed the landmark 1964 Civil Rights Act.
Bork went on to have a distinguished, but controversial, career. His academic work provided the theory for curtailing antitrust enforcement. As President Nixon's Solicitor General, Bork executed the Saturday Night Massacre. He wrote many important decisions as a judge on the U.S. Court of Appeals for the D.C. Circuit. And, most famously, President Reagan's 1987 nomination of Bork to the Supreme Court yielded a national conversation about how to construe the Constitution and federal laws.
Bork was neither a racist nor a sexist, even in 1963. As he explained during his confirmation hearing, his original opposition to public accommodations laws was based on free-market libertarianism. He said that he came to regard even that earlier view as mistaken for failing to acknowledge that the good done by civil rights laws far outweighs the infringement on economic liberty.
Bork died in late 2012, but he remains a hero on the right. Unfortunately, however, many of his fellow conservatives do not appear to have followed Bork's lead when it comes to valuing social goods other than individual liberty.
Increasingly, contemporary conservatives elevate even far-fetched claims of liberty over the greater good. For example, in cases currently before the U.S. Supreme Court, corporate plaintiffs claim a religious right to deny contraception coverage to employees. In a case from New Mexico, a for-profit wedding photographer claims a free speech right to refuse her company's services to a same-sex couple. And last month Arizona made headlines when it nearly enacted a law that would have expanded the rights of business owners to religious exceptions from public accommodations laws.
To be sure, the context has shifted. In the foregoing examples, the claimants seek exceptions based on speech and religion, rather than general libertarian grounds. But that shift appears opportunistic rather than fundamental. After all, the right continues to attack the Affordable Care Act's obligation to purchase health insurance on full-throated libertarian grounds having nothing to do with speech or religion.
In explaining his change of heart on public accommodations, Judge Bork portrayed his earlier libertarianism as a product of a view of the free market in which systematic discrimination could not occur because it would be unprofitable. As he gained more experience with the real world, Bork said, he came to understand that social interactions are more complicated.
Put differently, Bork grew up. He recognized that as important as individual liberty is, it must sometimes yield to the greater good. Thus, while the government cannot punish anyone for expressing racist, sexist or homophobic views, it can condition participation in the market on opening the doors of a business to all people, regardless of race, sex or sexual orientation.
That is a hardly a principle of unsurpassed ugliness. On the contrary, seen from the vantage point of a half century of civil rights law, it looks quite beautiful.
Author: "noreply@blogger.com (Michael C. Dorf)"
Send by mail Print  Save  Delicious 
Date: Friday, 28 Mar 2014 14:55
-- Posted by Neil H. Buchanan

Earlier this week, a regional director of the National Labor Relations Board (NLRB) issued a decision that could be the turning point in the relationship between universities and the athletes who represent them on football fields.  The director concluded that football players at Northwestern University (one of fourteen current members of the Big 10 conference) are employees of the university, and thus are eligible to hold a vote to form a union.  Although there are many miles to go in this legal marathon, this decision could end up changing everything in college sports.

There are, of course, a daunting array of legal questions that follow from this decision.  Some have straightforward answers, such as whether this decision (if ultimately upheld) would apply to athletes at state universities.  (No.)  Others are generating excited discussion among various groups of legal analysts.  My colleagues in tax law, for example, are already having a field day (no pun intended) discussing the many questions raised by the potential taxation of employee-athletes.

I might end up weighing in on a number of those legal issues in future posts.  For now, however, I want to think aloud about some of the implications, both positive and negative, of allowing college athletes to unionize.

Regular readers of Dorf on Law might recall that I have at various times expressed great skepticism about calls to pay cash compensation to college athletes.  Most recently, I wrote last December about the disturbing tendency among most observers to treat full-ride scholarships, including free room and board at top universities, as somehow worthless.  (Links to all of my earlier posts and columns about college sports can be found at the beginning of that December 5 Dorf on Law post.)

I also have criticized the overwrought claims about a "plantation mentality," and other inapt imagery, that others have used to attack the National Collegiate Athletic Association (NCAA) and its current policies regarding student-athletes.  That is not to say that I am in any way a fan of the NCAA.  Its procedures are often arbitrary and capricious, and it has if anything allowed far too much cheating to go unpunished in the interest of maximizing revenues.  (Star athletes get special treatment from the NCAA, when TV ratings are threatened.)

I am, in fact, overall rather optimistic about the possible effects of unionizing college football players and allowing them to bargain collectively with their universities.  A union could, and should, focus less on immediate big-money payoffs and more on matters that could actually improve the lives of all college athletes, especially later in their lives.  The Northwestern players' two main concerns "were better health care and limited practice hours."  If players were allowed to unionize, and if those two issues are what the new union puts front and center, that could be great news.  Despite my skepticism about other issues, I have always agreed that the players deserve to be provided with better health care and (especially) disability insurance, and that they should not lose their scholarships if they become injured (or leave the team for other legitimate reasons).

More importantly, the essence of my objections to pay-for-play have been predicated on the idea that athletes should actually be allowed to be students, rather than being encouraged to go for short-term cash.  Even though the evidence shows pretty convincingly that college is still a very good deal for scholarship athletes (with Northwestern itself leading the way with a 97% graduation rate), there is no doubt that too many college athletes -- almost certainly a small minority, but not a trivial one -- are not benefiting from the educations that they are supposedly receiving.

Of course, there is a possible paradox.  If a union succeeds in forcing universities to allow their athletes to become real students, then they might no longer be eligible to be unionized.  The director's ruling, notably, is based on the conclusion that the players are not "primarily students."  If they become students again, they would presumably be subject to earlier NLRB rulings that have prevented students from unionizing.

But we can put that aside for now.  A more pertinent question is whether a union would actually follow through on an agenda to reduce practice time and improve health care.  It sounds good now, but would a union really leave all of that money on the table, when the highest-profile athletes would be clamoring for million-dollar paydays while still in college?  Actually, I think that they might.

The best place comparison, of course, is the union that represents players in professional football, the National Football League Players' Association (NFLPA).  Although the NFLPA is much smaller (representing only 50-60 players on each of 32 teams, as opposed to the 90 or more college players on each of hundreds of teams), and its players are professional, there are plenty of similarities.  For one thing, the average professional career lasts only three seasons, meaning that the NFL (which some players say is an acronym for "Not For Long") employs its typical employees for shorter terms than do colleges.  Colleges do not have 14-year veterans, of course, but those guys are true outliers in the NFL, too.

And the good news is that the NFLPA, despite its many disadvantages vis-a-vis a league that holds an antitrust exemption, is fighting the good fight.  Most importantly, perhaps, the NFLPA is the reason that the league still has a 16-game season.  The owners have been trying for years to move to an 18-game schedule, but the players' union has resolutely refused.  Given that the NCAA has allowed colleges to go from 11- to 12-game seasons, and to add conference championship games, and now is adding a layer of playoffs (along with oddities like allowing teams that schedule games at the University of Hawai'i to schedule a 13th regular-season game), it is important to have a counterbalance against the economic pressure to physically exploit the players even more than they are already being exploited.

Moreover, the NFLPA has been the driving force in trying to get the league to deal with head injuries, fighting the causes and consequences of concussions and the dementia that has become epidemic recently among retired players of the 1970's and 1980's era.  Early indications from medical studies suggest that the head injury problem starts at the college level (and even before), and there is plenty of evidence that NCAA schools are not taking this seriously enough.  If the players' union pushes hard on that issue, it would have earned everyone's respect.

Note also that having an outside entity (in this case, the players' union) forcing all teams to adjust their practice times downward (and to protect players better than they do now) would have the effect of benefiting players without compromising competition.  That is, every individual team currently has an incentive to push its players harder, to try to gain a competitive advantage.  This inevitably pushes up the demands on the young athletes.  The union would solve that group action problem, allowing everyone to dial it back without fear of losing an edge.  (There are always temptations to cheat, of course, but the new norm would surely center around less practice time.)

So, there are some reasons to think that unionizing college football players could have some very good consequences, significantly improving the lives of the players, and potentially forcing universities to act more like universities than Fortune 500 corporations.  I have already noted one reason for pessimism, which is that the union could instead try to simply turn college football into a pay-for-play semi-pro league, with health concerns and education left behind.

Even if that were not to happen, however, there are other reasons for concern.  Although the reduction in practice times, and the increased attention to head injuries and other health issues, would be a plus for players without being costly to the universities, other goals of a players' union could end up inadvertently harming players, because of their inherent costs.  My preference, for example, would be that a football scholarship be irrevocable (other than for obvious reasons like flunking out) for four years, and that the players whose playing careers forced them to reduce their class schedules would have their scholarships extended for one or two years to allow them to graduate.

That requirement, along with other player-friendly initiatives (especially university-paid disability insurance) would increase the per-player cost of running a football program.  This could have the unfortunate effect of contracting the size of football squads, which could then have the effect of causing fewer players to play more minutes (and to be forced to play even when badly injured).  The high-profile playing positions have recently become even more injury-laden, of course, with situations like the University of Florida Gators having to play their 4th-string quarterback last season, when the three young men ahead of him suffered season-ending (and potentially career-ending) injuries.

Some of the most brutal play, however, is seen on special teams, especially kickoffs, where little-used players try to prove their mettle by taking insane risks that end up injuring themselves and their opponents (and sometimes even their teammates).  The injury potential is so extreme that the NFL has even considered eliminating kickoffs entirely.  It is at least possible that, as a result of the reforms that I support, college teams could reduce their rosters to the point where the special teams players suffer more debilitating injuries, because there are fewer bodies available to share the punishment of the games' worst plays.

I do not view this concern as a reason to abandon the non-salary goals of the college players' union.  I offer this example as merely one possible side-effect of changing the economics of the game, of which there are surely others.  Although I have been skeptical of the idea that players should be paid in cash, rather than scholarships, it is abundantly clear that the players deserve to have the rules changed in ways that would redirect economic resources away from athletic departments and toward the athletes.  The side-effects need to be managed, of course, but they are not a reason to abandon reform.
Author: "noreply@blogger.com (Neil H. Buchanan)"
Send by mail Print  Save  Delicious 
Date: Thursday, 27 Mar 2014 14:58
-- Posted by Neil H. Buchanan

Did you know that economic scientists occasionally must force themselves to be more than just scientists, and instead to base their arguments on political philosophy?  Gasp!  That is the "dirty little secret" that conservative economist Greg Mankiw revealed in his column in last Sunday's New York Times Business Section.  Of course, framing the non-revelation in that way was very much designed to reassure people that economists are scientists in the first place, patiently offering "our understanding of how the world works", but who face the "necessity" of stepping outside of their scientific comfort zone -- because, you know, economic policies might actually harm some people.

Mankiw's writing is often difficult to take seriously, and this column appeared to be yet another example of why orthodox economists should not reveal in public how truly narrow they are.  He has, after all, spent the last year or so explicitly "defending the one percent," using a version of "just deserts" philosophy that simply assumes that rich people are rich because they are more productive than the rest of us.  (Why assume such a thing?  Why not?  Orthodox economic models are based on that assumption, too.  No need to question the orthodoxy, after all.)  As prominent as he is, his arguments are usually so flimsy that they do not merit even a moment's attention.

The column this past Sunday was different for three reasons.  First, as I noted at the top of this post, it was such a good example of orthodox economists' self-important pose as Scientists.  Economists like to pat themselves on the back for their "rigor" and "seriousness," to separate themselves from mere sociologists, political scientists, and so on.  The intensity of their commitment to proclaiming economics a science is matched only by the weakness of their claim to being actual scientists, as the balance of Mankiw's column so amply demonstrates.

Second, I could not help but laugh at the thinly veiled swipe at Paul Krugman that Mankiw delivers in the middle of the column.  Having admitted that "economic science is still a primitive body of knowledge," where "unintended consequences are the norm," he argues that economists should take a "big dose of humility."  And "if an economist is always confident in his judgments, or if he demonizes those who reach opposite conclusions, you know that he is not to be trusted."

Reportedly, the Times has a policy forbidding columnists from calling each other out by name.  (Probably a good policy, overall.)  Here, therefore, Mankiw is simply blowing a dog whistle for his conservative readers, all of whom have decided that Krugman is just a big meanie.  Supposedly, Krugman "demonizes" people with whom he disagrees, by pointing out that their policy prescriptions have been spectacularly wrong for years, while Krugman's have been notably and repeatedly proved right.  But that is just so rude for Krugman to say that people are being harmed by policies that are demonstrably wrong.  And, ya know, Krugman has been wrong, too!  (OK, not on any of the big issues since at least 2007, but you can bet he's been wrong.)  Of course, Krugman has readily admitted error, and refused to admit error where there was none.  But, per Mankiw, we should not trust someone who says things that turn out to be correct, and who points out when others have said things that were incorrect.

Krugman can defend himself just fine, but I found it amusing that Mankiw would feel the need to feed his base by saying oh-so-subtly that people like Krugman should be ignored because they are not humble enough.

I would not have devoted today's post to this topic, however, were it not for the third problem with Mankiw's column.  That is, he provides a wonderful case study in how conservative economists manipulate "the baseline problem" in making their policy arguments.  Conservative economists (and, to be clear, many liberal economists who buy into the basic framework of modern economics) take for granted the body of laws that allow a modern economy to function.  When criticizing a policy as "inefficient," the unstated assumption is that the other laws and policies are the baseline from which we can measure deviations from efficiency.

A stunningly clear example of this style of bad reasoning came up a few weeks ago, when a government report predicted that the Affordable Care Act would reduce labor supply in the future.  As I discussed in one of several posts on that subject, a prominent conservative economist became quite angry when people argued that reduced labor supply might be a good thing.  He had spent all that time trying to show that the ACA was inefficient, and people were not standing up to salute.

This was not, moreover, an example of the classic "efficiency versus equity debate," where soft-hearted people supposedly decide to allow the economy to operate below efficient levels, in the name of being "fair."  My point was that there is nothing about the pre-ACA labor supply that should be privileged in policy debate, such that deviations from it should be used to label the ACA an inefficient policy.  The laws of contract, collective bargaining, employment discrimination, antitrust, corporate governance, and so on all contribute to people's labor supply decisions.  Why should we assume that those laws, as currently constituted, should be the basis on which to determine whether the current economy is more efficient than an economy that would exist under some other combination of those and other laws?

Mankiw's column highlights this point by claiming that the "humility" that economists should adopt before offering policy advice requires them to respect the possibility that they can be wrong, so that they should strongly presume that "when people have voluntarily agreed upon an economic arrangement to their mutual benefit, that arrangement should be respected."  See?  The point is that we should not disturb the "free" choices that people have made in private contracts, because anything that we might do as a matter of policy could be wrong.

Those choices, however, are inextricably based on the existing web of laws and policies.  Therefore, it is meaningless to say that we should modestly step back, hoping at least to "do no harm" by not injecting the government into private decisions best left to the preferences of free men.  The government -- even a stripped-down "night watchman" state -- has made countless policy choices that restrict and define the choices that people make.  It cannot be otherwise.

Mankiw's two examples are especially (if inadvertently) helpful.  He counsels against increasing the minimum wage, because doing so "would disrupt some deals that workers and employers have made voluntarily."  Not being able to miss out on the chance to join his conservative brethren in attacking the ACA, he then says that "[t]he Affordable Care Act has disrupted many insurance arrangements that were acceptable to both the insurance company and the insured; these policies were canceled because they deviated from lawmakers’ notion of the ideal."

On both of these subjects, the very idea that there is a "no government" -- or even a "less government" -- baseline is simply absurd.  Even if we leave aside the rather notable omission of the effects that the policy choices might have on people who are not parties to the private deals that have been made (for example, children who live in poverty, because their parents are not offered jobs in private deals that pay a living wage), it is simply not logical to conclude that we must leave the current labor market or the current health insurance market alone.

The point is not that I have a better baseline, or that anyone does.  The unstated claim underlying Mankiw's supposed modesty is about as immodest as one can imagine: "We should assume that the laws governing economic activity in the absence of this policy were going to result in economic activity that can meaningfully be called efficient."

If anything, the labor market and health care markets happen to be among the best examples to explicate the idea that the underlying laws are entirely contingent.  Do we have "at will" employment, or not?  Do we say that unpaid overtime was merely a "voluntary" renegotiation of terms, or was it a violation of the original contract (or maybe outright theft)?  Should health insurance be subsidized?  Should it even be something that is negotiated by employers, rather than by individuals?

None of these questions can be answered as a matter of "doing no harm."  They are entirely contingent on what one counts as harm in the first place.  If we saw two people making a transaction, knowing that one of them was going to pay for the transaction with stolen money, there would be no reason to respect that private transaction.  Different sets of laws, however, will lead to different conclusions about what even constitutes stolen money.

Respecting a transaction, because it is the transaction that people would make under the current set of laws, is not modest.  It simply assumes away the problem, and removes the possibility of questioning laws that undergird the privileges of the people whom conservative economists defend.
Author: "noreply@blogger.com (Neil H. Buchanan)"
Send by mail Print  Save  Delicious 
Date: Wednesday, 26 Mar 2014 04:12
By Mike Dorf

My latest Verdict column asks why the argument for religious exceptions was mostly advanced by liberals in 1990 in Employment Division v. Smith but is mostly advanced by conservatives in the Hobby Lobby/Conestoga Wood case. I offer five factors that bear on the question. Here I want to add one brief thought on an issue that arose during the oral argument.

Consider an exchange between Justice Alito and SG Verrilli. Justice Alito posed a hypothetical question in which Congress bans kosher and halal slaughter on grounds that it is cruel. Would kosher and halal butchers that were organized as corporations be able to complain about such a law? SG Verrilli said that they might be able to, because such a law would single out religion, and thus fall outside of the "neutral" category of Smith and RFRA, triggering heightened scrutiny under the Free Exercise Clause. That in turn led Justice Alito to change the hypo to a law that requires that animals be stunned before slaughtering, a practice that would not target religion at all, but that (under standard interpretations of kashrut and halal) would forbid kosher and halal slaughter.

Putting aside my objection to all slaughter, and also putting aside SG Verrilli's answer to the revised hypothetical, I want to note here the seeming oddity of Verrilli's initial reply: His theory of the case appears to be that a business corporation does not have a religion for RFRA purposes when confronted with a law of general applicability, but that it does have a religion for Free Exercise purposes when confronted with a law that targets religion. But if a corporation can't have a religion, then why does it matter that the government is targeting the religion the corporation lacks, rather than incidentally burdening that non-existent religion?

One possibility might be that SG Verrilli thinks that the religious rights of corporations are broader than statutory rights under RFRA. After all, the targeting example arises under the Free Exercise Clause, not (just) RFRA. But that seems backwards. RFRA uses the word "person", which, as the plaintiffs' lawyer Paul Clement argues, at least presumptively covers corporations, pursuant to the Dictionary Act. The constitutional language does not more clearly point to religious rights for (business) corporations.

Maybe the better answer would be that laws that target religion for special burdens violate the Establishment Clause, which is a structural principle. In this view, a corporation that suffers a business detriment incurs an Article III injury, and then it can sue because anybody injured by a law that violates the Establishment Clause has standing to vindicate its structural principle.

I actually like that answer quite a lot because I share the SG's intuition that the corporate kosher or halal butcher should be able to object to the targeted law, even if, per RFRA, a corporate kosher or halal butcher has a weaker basis for objecting to the incidental effect of the mandatory stunning law. But adopting this position does lead to the anomaly that it essentially reads the Free Exercise Clause out of the Constitution.  Per Smith, non-targeted burdens do not implicate the Free Exercise Clause, while per my reconstructed reading of SG Verrilli's argument, targeted burdens violate the Establishment Clause, so any violation of the Free Exercise Clause is redundant. So we're left with a puzzle.
Author: "noreply@blogger.com (Michael C. Dorf)"
Send by mail Print  Save  Delicious 
Date: Tuesday, 25 Mar 2014 12:00
by Mike Dorf

As I noted in my Verdict column on First Amendment exceptions two weeks ago, claims for such exceptions have been much in the news lately--prompting a veritable mountain of commentary, including a fair bit from yours truly. Here I want to add a few more shovels of dirt to that mountain, but first, a couple of pieces of shameless self-promotion.

First, during the 10-11 am hour today, I'll be on MSNBC, talking about the Hobby Lobby cases, while the oral argument is going on in the courtroom. You know, in case you don't have anything better to do.

Second, pretty much as I anticipated in yesterday's post, during our discussion of Elane Photography, Professor Epstein mostly criticized public accommodations laws as such, largely agreeing with me that it's difficult to find free speech exceptions to such laws without undermining the laws themselves. Here I want to follow up that discussion with a point I might have made had the discussion taken a different turn.

I have in mind a distributive feature of exceptions for commercial actors from general laws. I think that for me, and perhaps for other liberals, part of the resistance to free speech and free exercise exceptions for commercial actors is that recognizing such exceptions would benefit business owners but not people who work for others for a living. I'll focus on speech but some of what I have to say will be relevant to religion as well, and thus a propos of Hobby Lobby.

Suppose two Albuquerque bakers: Elane and Jane. Elane owns her own bakery, whereas Jane works for the ABC Cake Shop (so-named, apparently so that it appears first in the Yellow Pages!). Elane and Jane are both opposed to same-sex marriage. Bill and Ted go to Elane Bakery and ask if Elane will bake them a wedding cake with the words "Blessed Marital Bliss for Bill and Ted". Elane says that, notwithstanding New Mexico's public accommodations law, she won't, because to do so would express a view--that same-sex marriages are "blessed"--with which she disagrees. Bill and Ted file a complaint with the New Mexico Human Rights Commission, but they know that such complaints can take a while to adjudicate and, in the meantime, they need a wedding cake.

So Bill and Ted go to ABC Cake Shop, where the owner, Alice B. Chittendon (okay, I made that name up), tells Bill and Ted that she would be delighted to have their business. She takes their order and then asks her employee, Jane, to bake the cake. Jane tells Alice that she, Jane, doesn't want to bake the cake because she disagrees with the view that a same-sex marriage can be blessed. Alice tells Jane that she can't have her employees deciding on a cake-by-cake basis whose business to accept, and that if she doesn't bake and decorate the cake for Bill and Ted, Jane will be fired.

Jane pretty clearly does not have any kind of First Amendment claim that she is entitled to keep her job as a baker. Why not? Because the First Amendment, like nearly all of the rest of the Constitution, only applies to the government, and here it is Jane's private employer, not the government, who has told her to bake the offending cake. There's no state action, and thus no unconstitutional state action.

Juxtapose that result with the result sought by the critics of the New Mexico Supreme Court decision in Elane Photography. They say that (the real and presumably my hypothetical version of) Elane is entitled to a free speech exception, even though the burden on (the actual) Elane--a declaratory judgment and attorney fees--is substantially less than the burden on Jane--loss of her job. Put differently, to say that there are free speech exceptions from public accommodations laws means that there are such exceptions for employers, but not for employees.

Now, it might be objected that I've gilded the lily here, because we can produce lots of seeming anomalies by juxtaposing results from domains in which there is state action with results from domains in which there isn't. And that would be a fair objection were it not for the fact that even when the First Amendment does apply, it affords employees very little protection.

Suppose that Sam, who is also opposed to same-sex marriage, bakes for a cafeteria at the University of New Mexico, which is a state actor. Let's suppose that Hillary and Gloria are UNM alumni and that they are having their wedding and reception on campus, and that the cafeteria is baking and decorating a cake with the inscription "Blessed Marital Bliss for Hillary and Gloria." Sam is told by his government boss to bake and decorate the cake. Sam declines on free speech grounds. Here there's state action, but Sam loses anyway, pursuant to the employee speech doctrine. As the SCOTUS summarized the doctrine in 2006, in Garcetti v. Ceballos, government employees cannot be disciplined for voicing their opinions, as citizens, on matters of public concern, but that right does not extend to speech within the scope of the employee's official duties--as decorating a wedding cake surely would be for a baker.

It might still be objected that all I have done here is to show that people with more money get to exercise their rights more effectively than people with less money. The First Amendment isn't offended when a billionaire pays for political speech that I can't afford to pay for, and so, according to this objection, it's likewise not offended when Elane is given an exception that Jane and Sam do not get. In this view, the law doesn't give Elane an advantage; her money does; if Jane and Sam had the capital and know-how to start their own bakeries (or photography businesses), they would be on an equal footing with Elane.

I think there is something to that objection, but that it misses a big piece of what's going on in the employee speech cases. Those cases do not, after all, rest on the public/private distinction, because both Elane and Sam are having their freedom restricted by the government. Rather, the employee speech doctrine rests on the premise that when one enters the realm of the market, one has less expressive freedom than one enjoys when speaking (or otherwise acting) simply as a citizen. At least where, as here, we are trying to decide whether to extend free speech protection to a new class of claimants, I don't see a very good reason to extend it to business owners, given the (much more substantial) restrictions we tolerate for employees.


Postscript: In one of the examples above, the setting is a public university. Readers may wonder whether I mean to suggest by this example that the same employee speech rules apply throughout the public university--e.g., whether I mean that a biology professor or a poli sci professor with unorthodox views would have no stronger claim than the baker. The answer is no. I mean to express no view whatsoever on the relation between academic freedom and the First Amendment, at least not today.
Author: "noreply@blogger.com (Michael C. Dorf)"
Send by mail Print  Save  Delicious 
Date: Monday, 24 Mar 2014 13:30
By Mike Dorf

(Updated at 10:12 am Eastern Time and again at 1:54 pm Eastern Time)

Later this morning, I'll be recording a discussion of the Elane Photography case for a National Constitution Center (NCC) podcast to be posted soon. By the time you read this post, the Supreme Court will likely have made an announcement either granting or denying cert in the case, so the discussion should be timely. (Update 1: The SCOTUS took no action on the case today, so a cert decision will come later.)

The discussion will be moderated by NCC President (and GW Law Prof) Jeff Rosen, and will include both me and U Chicago Law Professor Richard Epstein. Once it's ready, I'll post a link to the audio in an update to this post and, depending on how the discussion goes, I may have a follow-up post. (Update 2: Audio now available here.)  Here I want to address an issue that I've been pondering in thinking about the discussion.

The format for the NCC program is a discussion, rather than a debate, but it's fair to say that Professor Epstein and I will have different views.  My view, which I expressed in an amicus brief before the New Mexico Supreme Court, in a Verdict column, and in a prior post, is that, in general, commercial enterprises are not entitled to free speech exceptions to anti-discrimination laws that target discrimination, even though that means that in order to offer their services in the marketplace, business owners and their employees will sometimes need to engage in actions that communicate messages that they do not believe.

I simply don't see a good way to exempt wedding photographers opposed to same-sex marriage from a public accommodations law without thereby also entitling bakers, florists, invitation printers, bartenders, clothiers, and virtually all other service providers from such a law. Elane Photography's own reply brief seems to make this point unwittingly, offering "print shop professionals"--read, owners of Kinko's franchises--as an example of the sort of people who will face censorship if the New Mexico Supreme Court decision is allowed to stand. In an era when everything from toast to pencil sharpening can be called "artisanal", there is no principled way to hold the line at photographers. Indeed, the application of ordinary right-not-to-speak and right-not-to-associate case law to commercial public accommodations could give even non-artisanal service and product providers an exemption from anti-discrimination law, as they could argue that the required act of association itself compels them to "express" the repugnant view that they do not find such association objectionable.

To my mind, there are at least three possible doctrinal routes to the result that I favor.  One would be to say that public accommodations laws, as applied to commercial enterprises, are narrowly tailored to advance a compelling interest in equality, and so that even assuming that such laws should be subject to the strict scrutiny that applies to full-on infringements on free speech, the infringement is justified. This was more or less what the Supreme Court said in the association context in Roberts v. United States Jaycees, when it upheld a sex discrimination ban as applied to a private association. Concurring in that case, Justice O'Connor offered a somewhat different view, arguing that the right of expressive (non)association is greatly diminished in the commercial context, and that approach could be extended to cases in which the objection is not to the message expressed by the compelled association itself but to the message expressed by the service or product provider's service or product. In one variant of this O'Connor approach, the fairly forgiving O'Brien test would apply.  In another, there would be no free speech scrutiny at all, as the infringement would be deemed completely incidental. Either way, the application of the public accommodations law would be upheld.

Professor Epstein believes and has written that laws forbidding employment discrimination are wrongheaded. His views about public accommodations are more complex. In the book to which I just linked, he says that the original 1964 Civil Rights Act was justified in including a provision forbidding race discrimination in public accommodations because, he says, Jim Crow was a system of racial segregation that was entrenched through law and coercive social practices. Federal law was thus necessary, he says, to disentrench it. But in the absence of the sort of systemic public/private/social pro-discrimination partnership that was Jim Crow, his view about public accommodations appears to be more or less the same as his view of anti-discrimination law more generally: Namely, that law is unnecessary to combat discrimination because market forces will address it; an employer who does not discriminate based on race, sex, etc., will be able to draw from a larger pool of talent than one who does, and thus will enjoy an advantage in the marketplace. Likewise, a business that does not discriminate against customers based on illicit grounds will have more customers.

Although I disagree with his conclusion, I think that Epstein's market analysis is partly correct. But even accepting his framework, there are two important limits to the upshot of his argument.

First, in small homogeneous communities, there may be sufficiently few minorities and the majority "taste" for discrimination may be sufficiently large that members of protected groups really cannot find any service providers. The Volokh/Cato/Carpenter amicus brief in Elane Photography notes that there are over 100 wedding photographers in the Abuquerque Yellow Pages and asserts that "most wedding photographers would likely be happy to take the money of anyone who comes to them." I'm willing to concede that this is probably true, but Albuquerque is a city of over half a million people. The rest of New Mexico's over 2 million citizens live in towns and cities that are substantially smaller.  The second largest city in New Mexico has less than a fifth of the population of Albuquerque. (NM population 2010 census data here.) The options for same-sex couples in the rest of New Mexico may be substantially more constrained.

Second, the point of public accommodations law is not just to ensure that everyone can find some service provider who doesn't turn him or her away based on forbidden grounds. After all, African Americans in the Jim Crow South could typically find some restaurants and motels that would take their money--but only at facilities that were segregated by race. Likewise, even in the heyday of the closet, LGBT Americans could go to specifically "gay bars" and the like. But that hardly excuses the racist or homophobic restaurateur or bar owner from operating a whites-only or straights-only business.

In short, one central feature of public accommodations law is to ensure that any citizen can get service at any business. Public accommodations laws serve to create and protect a form of economic citizenship, and not merely the kind of second-class economic citizenship that a regime of segregation affirms. For this reason, a legal regime in which exceptions to public accommodations laws are granted to expressive businesses would undermine such laws at their core, not their periphery.
Author: "noreply@blogger.com (Michael C. Dorf)"
Send by mail Print  Save  Delicious 
Date: Friday, 21 Mar 2014 15:05
-- Posted by Neil H. Buchanan

In a post here on Dorf on Law a few weeks ago, I returned to the question of whether there is any coherent meaning to the concept of economic efficiency.  There isn't.  A few years ago, after having spent many years trying to get people to stop calling things efficient or inefficient, because the terms have no content, I gave a talk at a conference in which I announced a change of strategy.  Specifically, I told people to call everything that they like efficient and everything that they dislike inefficient.

This suggestion, although admittedly cheeky, was based on two ideas.  First, this is what orthodox economists do all the time, apparently in most cases without being aware that they are doing so.  And second, a person who takes my advice would always be right (even though she would also always be wrong).  That is, there are defensible assumptions and baselines that can make any situation or policy appear to be efficient or inefficient.  If I call Policy A efficient, I am thus both right and wrong.  So why be a pessimist?!  If it can be right to call something I like efficient, then why not do it?

This would, I hope, have the additional benefit of devaluing the word efficiency, so that perhaps over time people would stop using it, because it would no longer communicate anything useful.  Kind of like "freedom," "hero," and "ideas guy."  Orwell would be proud.

As I discussed in that recent post, my anti-efficiency argument proceeds from the same premise that motivated the now-famous Murphy/Nagel argument about taxes.  Because there is no economy without a government to define and enforce the laws of property, contract, and so on, and because different (completely legitimate) choices about what those laws might entail lead to wholly different social and economic outcomes: (1) It is logically incoherent to talk about a "before-tax" amount of income, meaning that no one (not the individual, not the society, not the government) owns before-tax income, because there is no such thing as before-tax income, and (2) There is no single, meaningful baseline from which to measure efficency.  Point (1) is the Murphy/Nagel point (versions of which others have made).  Point (2) is my point (versions of which others have made).

One possible objection to my point (and possibly to Murphy and Nagel as well) is that I am being too demanding.  Even if there are different hypothetical worlds in which we could live, each of which could lead to different conclusions about what is efficient or not, we only live in one world.  Can we not define efficiency in a meaningful and unique way in the here and now?  The answer is no, for two reasons.  First, taking current endowments, laws, and so on as the proper baseline simply locks in the very rules that we are supposed to be debating and considering changing.  If we define efficiency against a baseline that takes current distributions as presumptively correct, then of course any deviations from that baseline (most obviously, redistributive fiscal policy) will necessarily be inefficient.

More fundamentally, the second reason that we cannot simply take "today's real world" as the proper baseline is that doing so requires deciding which parts of today's reality are up for debate, and which are not.  Unless we simply rule out any changes at all, in a Panglossian everything-is-for-the-best sense, then we have to have some decision rule to say that some property laws can be changed, while others cannot, or that antitrust enforcement will be aggressive or not, and so on.  Economic theory provides no such decision rule, and the economists who make grand pronouncements about the inefficiency of government policies (like the guy who was upset about the ACA's effect on labor supply decisions, whose arguments I ridiculed in my earlier post) simply make unspoken choices about what is changeable and what is not.  That is not science.  It is merely opportunistic advocacy hiding behind a pretense of objectivity.

Perhaps, however, there is an even more stripped-down version of efficiency that could be available.  Rather than obsessing over baseline endowments of laws, talents, opportunities, inherited wealth, and so on, maybe there is a way to compare two policies, or two choices that an individual might make, such that one could say that one choice is more efficient than the other.  That is, even if it is not meaningful to say that A is efficient and B is inefficient, maybe it could be meaningful to say that A is more efficient than B, without getting into the whole baseline mess.

For example, people often think of efficiency in the colloquial sense rather than the economic sense.  A person can say, “My car is using its gasoline efficiently” without making assumptions about underlying tort laws or international treaties, for example.  Of course, even in this example, the speaker is making background assumptions, such as how many miles her car—or perhaps cars in general—can travel on a mile of gasoline.  But as a friend recently put it to me: "Sure, we can’t say whether a Prius is efficient in an absolute sense, but we can say that a Prius is more efficient than a Hummer."

Actually, we cannot even say that.  Or, more precisely, the sense in which we can say that is true only under a different use of the word efficiency.  In orthodox economic theory, there is an important distinction between "technical efficiency" and "economic efficiency."  Technical efficiency means using available technology in the way that gets the most output from the least input.  If, for example, it is possible to securely seal food cans using 3 ml of molten metal, then using 4 ml is technically inefficient.  A Prius is more efficient than a Hummer in that sense, which means that you can get from Point A to Point B using fewer gallons of gasoline.

The problem is that these stylized comparisons only work, even on their own terms, if we have already agreed that the only thing we care about is the amount of gasoline burned per mile traveled, for that particular task.  A Hummer can be more efficient, even on technical grounds, if the task is different, e.g., not just getting a person from point A to point B, but for getting a huge load of material from A to B.  It depends on what you are trying to accomplish.  Still, one could object that it is possible in each of those discrete situations to describe one choice as more efficient than the other.  For moving one person, a Prius is more efficient than a Hummer, whereas for moving a load of iron ingots the same distance, a Hummer is more efficient than a Prius.  Even that, however, does not save the notion of economic efficiency.

As I described in a Dorf on Law post last August, one can describe something that is much more expensive as being more efficient, if one cares about a different set of criteria.  In an example that I noted there, it is possible that the (very expensive) traditional military academies are more efficient than Officer-and-a-Gentleman-style officer training schools, if one believes that the academies provide a different product.  Which is more efficient?  It is not enough to say that one is more efficient for one purpose, and the other is more efficient for another purpose, because you have to agree on the purpose to decide whether you want to continue to support the more expensive option.  Certainly, it is not meaningful (even in the narrow economic sense) to describe the academies as inefficient -- or even less efficient -- merely because of their price tag.  The Prius/Hummer example at least allowed us to say, "If I know the technical facts, I can tell you which one will use less gas for the task at hand."

Even in the military academies example, one could make a similar move: "Well, one training system is more efficient for one set of goals, and the other is more efficient for the other set of goals."  But that is precisely the difference between technical efficiency and economic efficiency.  Economic efficiency means that one chooses from among the technically efficient options to maximize net social welfare.  Comparative efficiency means choosing between the options under consideration based on which option would have higher net social welfare.  But measuring net social welfare in a consistent way requires an agreement about what to include in our measure of social welfare.  And then we are back to the baseline problem.

Another way to put this is that it is possible that choosing between two policies can be misleading, because one can choose a policy on the basis of an incomplete understanding of the full implications of that policy.  For example, I have argued in the past that the U.S. should increase infrastructure spending.  What if that spending is used to build more roads?  Is that more efficient than not spending at all, or not?  Is it more efficient than using it to build better public transportation?  Than using it to allow more people to work from home?

I think that I could make defensible arguments about whether and how to spend infrastructure dollars, but that is only because I know my prior commitments.  But the point is that I could plausibly say, as a comparative matter, that we should spend more on roads rather than spending nothing, only to find that I have moved the economy in the wrong direction, increasing pollution and sprawl, reducing the usage of existing public transportation, and so on.

Yes, there are situations in which it will seem easy or obvious to compare and choose between a limited number of options.  Those situations, however, will be easy or obvious only because we will have (probably unconsciously) decided that the full consequences of those decisions -- the spillover effects -- are unimportant or are likely to be insubstantial.  And we might be right.  But this kind of atheoretical move is not really a matter of saying that one policy is more economically efficient than another.  It says only that we can sometimes agree to close our eyes and hope that we are not making matters worse.

Efficiency in an economic sense is, therefore, not even meaningful as a comparative term.
Author: "noreply@blogger.com (Neil H. Buchanan)"
Send by mail Print  Save  Delicious 
Date: Thursday, 20 Mar 2014 15:06
-- Posted by Neil H. Buchanan

One of the pleasures of teaching the same course many times is that one occasionally sees issues from an unexpected perspective.  Often, this happens in response to an out-of-left-field question from a student, or sometimes it is just a matter of seeing something as if for the first time.  No matter the reason, I had such an experience this week in my Federal Income Taxation class.

On Tuesday, we discussed Eisner v. Macomber, the famous 1920 case in which the U.S. Supreme Court decided, 5-4, that it violates the Sixteenth Amendment for Congress to tax income that has not been "severed" from its original source, for a taxpayer's "separate use, benefit and disposal."  It is an utterly confused opinion, which has been roundly repudiated by scholars and courts, with the Supreme Court itself distinguishing Macomber effectively out of existence in 1940's Helvering v. Bruun decision.  Even so, most tax professors still teach Macomber because of its historical significance, and because it is a way to introduce the fundamental concept of "realization," which is when taxpayers turn appreciated (or depreciated) property into cash.  (There are some other ways to realize gains or losses, but cash sales are the paradigm case.)

Eric Segall's guest Dorf on Law post earlier this week discussed a recent conference in which various leading legal lights argued the relative merits of originalism and the theory of "living constitutionalism."  As I went over the Macomber case in class later that day, I took special notice of the dissent that Justice Holmes filed in the case.  (The other dissent was written by Justice Brandeis.  As I tell my students each semester, it is obviously not a sure thing that Holmes and Brandeis are right, but it should not be surprising if the 5-justice majority that opposes them turns out to be confused.)  In order to understand Holmes's dissent, a bit of technical background is necessary.

The government had assessed a tax liability on a part of the "gain" received by Ms. Macomber when Standard Oil of California issued a "stock dividend."  Although not technically identical, a stock dividend can usefully be thought of as a "stock split."  In this instance, every shareholder in the company exchanged 2 old shares for 3 new shares of the company.  Measured at a benchmark price called "par value," which in this case was $100 per share, it therefore appeared that Ms. Macomber and every other shareholder were 50% richer than before.  Ms. Macomber's 1100 additional shares (after turning 2200 shares into 3300 shares) thus seemed to make her $110,000 richer.

Of course, as a matter of economic reality, no shareholder was richer than before.  This is logically equivalent to cutting a pie into 6 slices, where two people own 3 slices each rather than the 2 each that they would have owned had the pie been cut into 4 slices.  The pie's size does not change, so if you own half of the shares, you own half of the pizza.

This makes the government's position in the case appear to be quite stupid.  Why would the IRS assess tax on an illusory $110,000 gain (reduced to just under $20,000 for reasons not germane here), when everyone knew that Ms. Macomber's net worth (like those of other SoCal shareholders) had been unaffected by the issuance of the stock dividend?

The answer is simple.  The IRS was -- as so often happens -- blamed for faithfully applying a nonsensical law that Congress had written.  Specifically, as the majority opinion in Macomber notes, the Revenue Act of 1916 (the updated version of the original income tax act passed in 1913, after the adoption of the Sixteenth Amendment) stated that "stock dividend[s] shall be considered income."  That is, Congress did not merely write the tax law in a sloppy way that happened to sweep some non-income into the definition of income.  It wrote the law unambiguously to say that income includes the illusory gains from the issuance of a stock dividend.

Enter Holmes.  In his brief dissent, he essentially takes an originalist view: "I think that the word 'incomes' in the Sixteenth Amendment should be read in 'a sense most obvious to the common understanding at the time of its adoption.' ...  I cannot doubt that most people not lawyers would suppose when they voted for it that they put a question like the present one to rest.  I am of the opinion that the Amendment justifies the tax."

Note that this decision was issued in 1920, only seven years after the adoption of the Sixteenth Amendment.  I have not checked whether the relevant language in the 1916 Revenue Act existed in the 1913 Act; but even if it did not, the people in Congress who defined stock dividends as income were overwhelmingly the same people -- not just the same constitutional body, but the same human beings -- who passed the amendment allowing an unapportioned tax on incomes.  Holmes's point, that most people would have thought that stock dividends were income (even though they would be incorrect, as a matter of economic reality) thus applies not merely to the "not lawyers" who voted for the amendment, but to the Congress as a whole that then turned the amendment into legislation.

So, Holmes's simple point is that, as a U.S. Senator put it more recently in a different context, "The people have the right to be wrong."  There are various ways in which to define income, and if we want to know which definition was in the minds of the framers of the Sixteenth Amendment, the language of their revenue acts is pretty darned good evidence of what they thought about stock dividends.

In this view, Congress was thus not required to include stock dividends in gross income in the tax code, but it was not prohibited from doing so by the Sixteenth Amendment.  This, presumably, is the same point that people like Justices Scalia and Thomas make when they say that, for example, we cannot replace the framers' understanding of "cruel and unusual punishment" with a more modern understanding.

Can Congress be counted on to fix the statute, to reflect what we now view as economic reality?  Although the law has been changed such that stock dividends are no longer taxed, there is plenty of evidence that economic reality means nothing to most members of Congress.  (Compare, e.g., the bipartisan ignorance regarding budget deficits and federal debt.)  Holmes's point would be that there is simply nothing, other than the political process, stopping a Congress from taxing what we might think is not really income.

How would the "living" version of this story be different?  The question would presumably be whether it is acceptable for a court to define "income" for Sixteenth Amendment purposes to exclude what is really not income.  Given that an income tax is, by definition, supposed to determine citizens' respective tax responsibilities by measuring their incomes, and especially given that Congress has from the beginning set up the tax system to be progressive (exempting entirely all but the most wealthy people from the federal income tax, in the early years), one could make an ability-to-pay argument for what the word income means, in a living sense.

That is, it is possible -- and probably desirable -- for courts to have the ability to say that the amendment's framers' purpose was to tax income in a substantial sense, not in a formal sense.  If our understanding of what is and is not income changes over time, then the Sixteenth Amendment's coverage would change.  Similarly, in NFIB v. Sebelius (the ACA case from 2012), the Chief Justice's controlling opinion held that it does not matter what Congress calls something (or, presumably, what Congress thinks it is doing), because if it looks and acts like a tax, then it is a tax for Constitutional purposes.

To be sure, one can get to that same living constitution result using "new" or "semantic" originalism.  In this view, widely held by academics who call themselves originalists, the framers of the Sixteenth Amendment enacted a text -- "income" -- that invokes a particular concept, and it is the concept itself, not their subjective beliefs about the concrete applications of the text, that is fixed as the constitutional meaning.  So I am describing a contrast between living constitutionalism and the "old" intentions-and-expectations originalism that still plays a prominent role in the practice of self-described originalist judges and in the rhetoric of conservative politicians.

What is interesting is that the living constitutionalists' view as I have described it here would limit Congress's powers, whereas a Holmesian originalist view would give Congress more power to tax non-income under the powers granted by an amendment that was supposed to be limited to taxing income.  I am sure that there are plenty of other examples of such a role reversal, but given the centrality of the income tax to the development of the modern federal government, I find this irony to be particularly provocative.
Author: "noreply@blogger.com (Neil H. Buchanan)"
Send by mail Print  Save  Delicious 
Date: Wednesday, 19 Mar 2014 11:30
by Sherry F. Colb

In my Verdict column for this week, I discuss the case of Burrage v. United States, in which the U.S. Supreme Court held that for a defendant's heroin distribution to have "resulted" in a death, it has to be the case that the heroin customer would not have died "but for" his use of the heroin in question.  I use the Court's decision as an occasion to consider the central role that "causing harm" has played in assessments of culpability and punishment.  Since differing outcomes (and thus the causal relationship between defendants' actions and those differing outcomes) are so often outside the hands of the defendants, I examine the legitimacy of punishing identically situated defendants differently on the basis of a fortuity, on the basis -- in other words -- of "moral luck."

Moral luck refers generally to the assessment of moral judgment against someone for things that lie beyond that person's control.  Treating a successfully completed crime such as murder more harshly than an inchoate crime such as attempted murder represents one example.  As I discuss in my column, and as others have discussed far more elaborately, we do in fact assess blame in ways that can turn significantly on matters that lie outside the culpable individual's control.  I offer a limited account of why that might be understandable or acceptable.  Others have suggested that it may indeed be unavoidable.

In this post, I want to explore another sort of luck that seems to carry moral implications in our blaming practices and in the law:  the luck involved in receiving (or being endowed with) goods and qualities without having earned those items.  One might make (and some have made) an argument that all criminal activity is a matter of moral luck, because the life experiences and characteristics that we have that lead some of us to commit crimes and others of us to refrain from doing so are entirely matters of our privileged birth, our inborn characteristics, and our environment growing up and beyond.  But in referencing the luck that determines our goods and qualities, I refer more narrowly to our "right" to have the things that we have been given, including our bodies.

Consider our bodies.  The most fundamental right we have against interference by the government and by private parties is the right to our own bodily integrity.  If the government wishes to take your blood, for example, to test for its blood/alcohol concentration, it needs to first have a warrant certifying probable cause to believe that you have been engaged in some illegal activity of which blood/alcohol content would provide evidence, such as driving while intoxicated.  If instead, the government (or a private party) wishes to take your blood to give it to someone else who needs a blood transfusion, it may not do so without your consent. And this is true despite the fact that the other person might die without your blood, and you probably have enough blood to spare some without experiencing any ill effects.

From a cost/benefit perspective, it would seem that there ought to be a redistribution of blood from people who have more than they need (and can rapidly manufacture more, once they donate) to people who desperately need a transfusion.  Yet there is not even a movement called "Occupy Healthy Veins."  We have blood drives, at which people may voluntarily donate blood for those who need transfusions.  But no one is required to donate, and a forcible donation would represent an assault and battery and -- if performed by the government -- a Fourth Amendment violation as well.

What does this have to do with luck?  Well, the person who loses blood because he was run over by a car or because he has hemophilia or was the victim of a violent attack did nothing culpable or wrongful that would have given him any less of an ex ante entitlement to having enough blood than you or I have.  Yet through a misfortune that happened to visit him and not you or me, he needs something that we have, and he needs to get it far more than we need to retain it.  Yet, in the face of (and because of) his misfortune in losing blood and our fortune in having it, we are entitled to say "I don't feel like donating blood to you" and to have that wish respected, even if the result is the other person's death.  And not only is this the law, but most of us would be extremely uncomfortable with a system of government that forcibly extracted blood from people to serve the one in need.

Even more dramatically, a person who chooses not to donate his or her organs at death (or, in the United States, who fails to affirmatively choose to be an organ donor) can insist on having those organs buried or cremated rather than being taken and given to someone who will die without them.  Just as you or I might easily be able to spare a pint of blood for donation, a dead body to be buried or cremated can certainly spare a heart or other organ, since organs do not perform any function and simply die if kept inside the body of a person who has already died.  Yet through the fortuities of life and death, the dead person happens to have a functioning organ and a living person who needs such an organ happens not to have one, and the law keeps it that way, absent consent to donate.

In behavioral economics, the experience we have of more highly valuing something we already own than we would value the very same thing if we did not own it is sometimes called "the endowment effect" (although variants on it fall under the rubric of "loss aversion").  For example, people in experimental settings are typically willing to pay more to keep something that they have already received than they are to purchase the same thing that they do not yet have.

I see a version of this phenomenon in my children.  If they want something, they are not as attached to the idea of having it as they become once they have been given that same thing (until a week later, when they have completely lost interest in the same thing).  A candy bar on the grocer's shelf is worth pleading for, but a candy bar that I just purchased for them but then took away (because, for instance, the recipient began gloating to her sister about having a candy bar) is much more likely to elicit tears.  From a strictly rational perspective, not receiving the candy bar should be the equivalent of receiving it and then, one second later, having it taken away.  Yet people rapidly come to view a thing as "theirs" and feel very upset at the prospect of losing it, as though they lost more than they would have failed to gain, had they not received the item in the first place.

It seems apparent that the reward systems in our brains respond differently to the prospect of having or not having a thing that is not yet ours versus keeping (or not keeping) a thing that we already have in our possession.  In some deep sense, then, we have a shared, biologically-based intuition that when something becomes "ours," that status has real content, and it becomes more "unfair" (as one of my daughters would say, if I took back a candy bar) to have it taken away than it would have been not to have received it in the first place.  I believe that our intuitions about our rights to our property and to our blood and to our bodies emerge from this same sort of effect:  one who already has something has a greater entitlement to it (even if he did nothing to "earn" it) than someone who does not yet have it.

As a thought experiment, I imagine how I would feel about a situation in which a person, [A], donated a kidney to another person, [B].  Prior to the donation, my intuition (and others' too, I suspect) is that [A] has the right to refuse to part with a kidney, even though [B] may need the kidney to survive, and [A] can part with it and survive.  If I imagine, however, that a year after [A] donates a kidney to [B], [A]'s one remaining kidney fails, and [A] needs a transplant, things change.  At this point, the kidney that originally belonged to [A] now belongs to [B], and my intuition is that [B] gets to keep it, and [A] must attempt to get a new kidney elsewhere.  This is despite the fact that it was originally  [A]'s kidney that [B] now has and that [B] might be dead right now and [A] in perfect health, if [A] had not generously made the donation in the first place.

Though my intuitions here are strong, I do find them somewhat perplexing.  They make me wonder, for example, whether such intuitions exist to reduce the amount of violence and chaos in life, a result when society shares the view that -- at least when it comes to body parts, blood, and other similarly intimate matters -- we each have sovereignty over what we have, regardless of how unearned and perhaps undeserved the allocation might be. There is perhaps a purely utilitarian explanation for the status-quo preference that seems, on occasion, to violate the principal of utility (such as when the person receiving the blood would benefit more from its forcible extraction than the person losing the blood would lose from it).

I find disturbing the notion that what appears to be a deontological moral intuition (that each individual is entitled to bodily integrity) may rest on fortuities and may also simply reflect an evolutionary cost/benefit analysis that says that if people could easily appropriate others' "stuff," then there would be great and constant violence and chaos.  But in this case, I find it hard to otherwise explain my strong intuition that those lucky enough to have enough blood should be able to refuse to share that blood with those without similar fortune.  And my theoretical discomfort with this strong intuition may help account for my feeling far less of an intuition that the riches people happen -- either entirely or primarily through luck -- to own should remain with them, regardless of others' need.

The accepted legitimacy of income taxes may thus testify to the limited reach of the moral intuition that what is mine should remain mine and what is yours should remain yours.  In a community, we sometimes legitimately require sharing and redistribution, in part because of the role of chance in the initial allocation.  But there are limits to that legitimacy, and bodily integrity seems a good place to draw the line.
Author: "noreply@blogger.com (Sherry F. Colb)"
Send by mail Print  Save  Delicious 
Next page
» You can also retrieve older items : Read
» © All content and copyrights belong to their respective authors.«
» © FeedShow - Online RSS Feeds Reader