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Saturday, June 20, 2009

White House says Obama Health Care Promises Should Not Be Taken Literally.

After President Obama’s big speech on health care, I was among the first to note that I couldn't see how he could possibly keep his promises. Now, according to the Associated Press, the White House has backed off Obama’s promises made just last Monday.

Here is part of my post last Monday:

In President Obama’s speech to the AMA, he made firm promises that I don’t think he can keep if his plan were to be enacted:

So let me begin by saying this: I know that there are millions of Americans who are content with their health care coverage - they like their plan and they value their relationship with their doctor. And that means that no matter how we reform health care, we will keep this promise: If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what. . . .

If you don’t like your health coverage or don’t have any insurance, you will have a chance to take part in what we’re calling a Health Insurance Exchange. . . .

If this goes through, many employers will do little different than they are today. But if the Obama plan is enacted, a substantial portion of employers will cut their health subsidies — raising their employees’ share of contributions to the company plan — in order to drive some of the employees into the government exchange and the public option. Other employers may drop their plans altogether — after all, workers could buy their own coverage in the government exchange — or simply fund part of their workers’ participation in the exchange.

These changes, which would be the direct results of the implementation of the Obama plan, would make it virtually impossible for Obama to keep these promises: “If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

Here is Mike Gonzalez at Heritage on Friday:

Less than 24 hours after Heritage Foundation President Ed Feulner questioned the veracity of President Obama’s persistent claim that, under his health care proposals, “if you like your insurance package you can keep it”, the White House has begun to walk the President’s claim back. Turns out he didn’t really mean it.

According to the Associated Press, “White House officials suggest the president’s rhetoric shouldn’t be taken literally: What Obama really means is that government isn’t about to barge in and force people to change insurance.” How’s that for change you can believe in?

Depending on how the public plan is designed in Congress, millions of Americans would lose their existing coverage. By opening the public plan to all employees and using Medicare rates, the Lewin Group, a nationally prominent econometrics firm, has said that the public plan could result in 119.1 million Americans being transitioned out of private coverage, including employer based coverage, into a public plan. With employers making the key decision, millions of Americans could lose their private coverage, regardless of their personal preferences in this matter.

In other words, if you believed something closer to the opposite of what Obama promised, that would be closer to the truth. When Obama said he “will keep this promise”:

If you like your doctor, you will be able to keep your doctor. Period.

he actually meant:

If you like your doctor, many of you will NOT be able to keep your doctor. Period.

And when Obama said he “will keep this promise”:

If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.

Obama really meant:

If you like your health care plan, many – perhaps most – of you will NOT be able to keep your health care plan. Period. Someone – perhaps your employer – may take it away. It all depends on how things work out.

Related Posts (on one page):

  1. White House says Obama Health Care Promises Should Not Be Taken Literally.
  2. Can Obama Keep His Most Emphatic Promises on Health Care?

Amos Guiora on the Israeli Administrative Detention Model:

Over at the international law blog Opinio Juris, Professor Amos Guiora has been offering a set of very interesting guest posts on the Israeli administrative detention model. Professor Guiora was an Israeli JAG officer for 19 years, and has a fascinating discussion going in the series. VC readers might find it interesting - certainly I do, and I raise a question to Professor Guiora at the end (to which he replies, here), what are the differences between the judicial role in Israel and the US, and how might they affect the applicability of such a model here. Given the important discussions being had by the administration and many others over Guantanamo, detention, national security courts, etc., this is an important body of interventions, and I recommend it to you. Go here and then scroll up to see all the various posts.

Update: I'm pleased to add that Harvard Law School professor Gabriella Blum has provided Opinio Juris with a substantive comment on the question of the judiciary in Israel and its role in counterterrorism, and comparisons with the United States. Very interesting comment sent by Professor Blum from Tel Aviv.

2 Comments

Let Marianne, Goddess of Liberty

smile upon the protestors. But like you, I have grave fears.

(Update: This op-ed by Jim Hoagland at the Washington Post captures my own overall view pretty well.)

I have no special expertise on Iran and so am only able to add my deep concern, sympathy, and support to the brave people in the streets seeking change in Iran. I also do understand that, from the US government's point of view, it all looks ... complicated. As indeed it is; I am far from indifferent to the concerns of realism and unanticpated consequences of events in places we barely understand.

Still, at this moment, I would hope that the United States government would not only support the specific rights of the protestors to peaceful assembly and free expression - but that it would say unequivocally that the United States stands for liberty and with those who seek it. Is that really so controversial or so hard?

Unable to sleep last night, I found myself picking up two books. The first is a now nearly forgotten Hungarian novel - yet one of the most compelling on the events of the European 20th century, George Konrad's The Loser (1982). I found myself reading the chapters on the Hungarian Revolution, its failure and the aftermath. But of course, the core of the Hungarian Revolution, as the chapter notes, is that it was a revolt less against one's own regime than against an outside imperial power, the Soviet Union.

The second is a book of poetry - short epigrams, passages, sketches from a journal - to which I have often returned in my life, Rene Char's Leaves of Hypnos (1946), his private journal from his years as a Resistance fighter in the Second World War. When I say Resistance fighter, I don't mean one of the "brave" French writers of those years, risking a 'no' from the censor, I mean someone who fought for years, rising to become the commander in charge of reconnaissance of that zone of southern France at the time of D-Day. (The translation to which I have linked at Amazon is by the very fine American poet, Cid Corman.) I found myself drawn to this passage, No. 22:

TO THE PRUDENT: It is snowing on the maquis and there's a perpetual chase after us. You whose house does not weep, with whom avarice crushes love, in the succession of hot days, your fire is only a male nurse. Too late. Your cancer has spoken. The country of your birth has no more powers.

The original French, sorry for the lack of diacritical marks:

AUX PRUDENTS: Il neige sur le maquis et c'est contre nous chasse perpetuelle. Vous dont la maison ne pleure pas, chez qui l'avarice ecrase l'amour, dans la succession des journees chaudes, votre feu n'est qu'un garde-malade. Trop tard. Votre cancer a parle. Le pays natal n'a plus de pouvoirs.

Let Marianne, the goddess of liberty, smile upon the protestors. Yet I hope I will not find myself going back to another passage from Char's poems, one of the justly most famous:

Bitter future, bitter future, a dance amongst the rosebushes ....

Update: Scrolling through the comments, it seems I wasn't sufficiently clear on a couple of points. First, I do take the realist concerns entirely seriously; that's why I raised the Hungarian revolution, and The Loser in particular, which has much discussion of the costs of failing. However, I am not convinced that raising liberty as something the United States supports as such is inconsistent with prudent realism. I do not think that general value is addressed by raising specific freedoms such as assembly or expression, as President Obama has done.

Second, I do not suggest that the administration acts in bad faith in making these difficult judgment calls between realism and idealism; I might well make them differently, but that's what presidents have to do. It is a function of being president, one might recall, however, that applied, or ought to have applied, equally to Bush, Clinton, and those who came before.

Third, if this is not the moment for the President to speak forthrightly on a general American commitment to liberty in the aspirations of oppressed people in the world - and I agree, it might not be, or at least that is a judgment an administration could certainly make in good faith - still, I should want to know under what conditions, if any, it would be appropriate for the President of the United States to express such a sentiment. I do not mean by this a merely general expression of support for liberty as a universal value, but rather that the United States is and has been committed to liberty as a value, and that it should be. If now is not the moment, as it possibly might not be - it would nonetheless be helpful to have some idea of the baseline for when it would be.

60 Comments

Some caution about Census data on same-sex couples:

Yesterday I posted some results from a new Census study comparing married same-sex couples and married opposite-sex couples, and comparing both to unmarried same-sex couples. The study concluded that in many significant ways — including likelihood to be raising children, income, home ownership, education, and race — gay and straight married couples were very similar, and unlike unmarried gay couples. The study also furnished evidence for some surprises, like the possibility that lesbian couples might be less likely to get married (or consider themselves married) than gay male couples.

But there's a potential problem in at least some of the Census numbers, which are inconsistent with some of the work done by demographers who have studied same-sex couples. Gary Gates, a noted demographer and researcher at UCLA (and a gay-marriage supporter), writes in an email to me:

One of the take-aways from the [Census] report is that married same-sex couples look quite a bit like their different-sex counterparts. That may very well be true, but one reason for the similarity is that it's quite possible that a very large portion of the married same-sex couples are, in fact, different-sex married couples who miscoded their sex. I've attached a paper (presented at the same session of the Population Association of America conference as the Census paper) that describes the difficulties in interpreting the married same-sex couple data.

From other work I've done, we know that married same-sex couples are 2-to-1 female and that women are more likely than men to be in a partnership. This isn't very consistent with the Census findings. Our analyses suggest that the sex miscoding problem among married different-sex couples creates more male same-sex couple miscodes than female. That could explain the Census findings.

There are several other findings that are not consistent with information we have about differences between cohabiting same-sex couples who are or are not in legally recognized relationships. For example, in a paper I published recently in Demography (with Christopher Carpenter), we show that those in registered domestic partnerships (in CA) ["RDPs"] have higher income and education levels and are more likely to be white than those who are not registered. These are the same patterns we see among heterosexual couples (comparing married v. unmarried) and contradict the Census findings. We also find no evidence of higher rates of child-rearing for those in RDPs in men and modest evidence of differences among women. Granted, RDP and marriage are not the same, but folks should be very cautious in interpreting the Census findings.

I think it's a very positive step that the Census released an analysis of the same-sex spouses. But it's just a first step. Much more work is needed to better understand who the married same-sex couples are and how many are miscodes.

If Gates is right about the coding problems, the miscoding would have skewed the results in favor of similarities since opposite-sex couples would have been included in the "same-sex" data. So gay and straight couples may be alike in many of the ways the Census Bureau suggested, but the new Census data do not necessarily support that hypothesis. A lot more work is needed, including more work based on the 2010 Census itself. In the meantime, modesty and caution about this new Census data are in order — more modesty and caution than I used yesterday.

UPDATE: For some interesting historical background on an especially noxious Census error, see here.

Related Posts (on one page):

  1. Some caution about Census data on same-sex couples:
  2. New Census study comparing gay and straight married couples:
6 Comments

American Universities and the Nazis:

Inside Higher Ed has a story about controversy surrounding what strikes me as a curious book, The Third Reich and the Ivory Tower. I only glanced at the book, but according to the story, the book documents the fact that American universities maintained cordial ties with German universities and in some cases the German government until Kristallnacht in 1938.

What I find curious about this book is that while Germany from 1933 through 1938 treated Jews very badly, it wasn't until Kristallnacht that one could say that Germany was more vicious in its treatment of minorities than, say, Mississippi. American universities certainly weren't boycotting Mississippi, so it strikes me as an obvious issue of hindsight bias to argue that American universities that were exceedingly tolerant of domestic racism should be specifically excoriated for paying little attention to foreign anti-Semitism, just because in historical retrospect we know that German anti-Semitism led to the Holocaust. Not to mention that universities have generally (and usually properly) tried to stay out of political causes, absent extreme circumstances.

Of course, to the extent individuals in universities were sympathetic to the Nazis and their aims, and the book apparently discusses such individuals, they deserve individual condemnation, as do the likely much greater number of Stalinists who populated American academia. But substitute Communist for Nazi and Russian for German in the following sentence, and you will likely accused of promoting McCarthyism and anti-Communist hysteria, even though Stalin had killed far (far!) more people by 1938 than had Hitler: "but what is most alarming about the case is the administration's indifference to having an all-[Communist] [Russian] department at NJC, and the Rutgers' trustees' obvious hostility to committed opponents of [Communism]."

According to IHE, the author "criticizes American Catholic universities for keeping up friendly relations with Benito Mussolini's Fascist government, and also for their support of the Fascist General Francisco Franco in Spain." So universities are never supposed to have any relationships with dictatorships? Shall we cancel the visas of the thousands of Chinese students currently in the U.S.? What should we do about the many Latin American Studies professors, indeed populating entire departments, who are favorably inclined toward Castro? (BTW, given that the Spanish Republicans murdered around 7,000 priests and nuns, it's not surprising that Catholic universities, run by priests, preferred Franco.)

So, to sum up, I think (1) it's a curious feature of the U.S. that we like to focus on how Americans dealt with evil foreigners while we are much more reluctant to discuss how dealt with our own evils; (2) Nazi Germany had proven itself quite evil before 1938, but few people, including even many Nazis, anticipated what was to come, and it's unfair to treat people's reactions to Nazi Germany circa 1935 as if it they knew what Nazi Germany was going to be doing circa 1943--there's a big difference between various forms of official anti-Semitic harassment (though that was bad enough), which many, including many German Jews, thought or hoped was a passing phase as the Nazis consolidated power, and genocide. Fascist Italy and Franco's Spain were rather unremarkable dictatorships, and to argue that universities should have cut ties with them would mean that universities should cut ties with any dictatorship; and (3) it remains true that in most intellectual circles, even a whiff of cooperation with the Nazis identifies one as a bad person, but overt Stalinists are not only forgiven but often celebrated. (See, e.g., Paul Robeson, I.F. Stone, the Hollywood Ten. Bard College still has a professorship named for Stalinist Soviet spy Alger Hiss!)

198 Comments

Friday, June 19, 2009

"D.C. Expands List Of Allowed Guns To Avert Lawsuit,"

reports the Washington Post. "[Alan] Gura [who won the D.C. v. Heller case] filed another lawsuit in federal court in March on behalf of three individuals who wanted a handgun that wasn't on the District's list. To avoid that litigation, Attorney General Peter Nickles said the city decided to expand its list of legal weapons to include those listed on Maryland's and Massachusetts's "safe gun rosters."

59 Comments

Global Governance or Governmental Network Coordination for Global Financial Regulation?

Peter Mandelson, currently Business Secretary in the UK government of Gordon Brown and formerly EU trade commissioner, has an op-ed in today's WSJ (June 19, 2009), "We Need More Global Governance: The Crisis Reveals the Weakness of Nation-Based Regulation," (might be behind subscriber wall). (Reader warning: this goes on for a while.)

This piece offers a striking example of the intersection of substantive views of monetary policy affecting one’s policy views of what regulatory reform (in this case global regulatory reform) should mean. The explanatory gap I point out below in the piece goes beyond criticism about both the weakness of ideas of global governance, or the careful exploitation of strategic ambiguities in what the term is supposed to mean (one thing to me to get me on board, another thing to you to get you on board). It points in the direction that Ilya raised in his last post on this, to say that if you have one substantive economic view of the crisis, then you can propose that public governance bureaucracies can improve the situation; but if you have another, you have reasons to reach exactly the opposite conclusion.

Mandelson starts by offering a carefully phrased account of how the global financial crisis, next global recession, came about. He liberally spreads around the blame, without putting any of it on identifiable actors, all very diplomatically. However, his assessment of What Went Wrong finally lands on a very specific contention:

[W]hat enabled the banking crisis to happen was a structural imbalance in the growth model of the global economy over the last two decades.

That model has produced unprecedented global growth, but it also developed a serious weakness at its center. Unless we address that weakness, any other counter-recessionary strategy is palliative at best. The risk is that as the global economy slowly returns to growth, the urgency to address this fundamental problem will recede.

Reduced to its crudest form the problem was this: Credit was too cheap in the developed world. It was kept cheap by a number of factors. The commitment of China to an export-led growth model, matched by a willingness from rich-world consumers to keep spending, created persistent surpluses in China in particular.

Those surpluses were invested in developed-world debt, particularly the U.S., pushing down interest rates. That encouraged investors to look for riskier and riskier investments to increase their yield. It also encouraged people to buy houses they couldn't afford with the help of people who probably shouldn't have lent them the money in the first place. That debt was sold around the world. The end of the housing bubble revealed the risk in the system.

Note that the article signally fails to mention the policy of central bank policy, and in particular Fed policy, under Greenspan and later Bernanke, having allowed the money supply to rise too high and allowing interest rates to remain too low. When I first read the piece, I assumed that this was mere diplomacy on Mandelson's part. But, as it happens, the final substantive interpretation that Mandelson gives for ultimate causes takes an unequivocal position in the sharp debate over the role that monetary policy and central bank policy played in allowing the bubble to develop, and that in turn impacts his policy views. And in ways that draw in Ilya’s central contention from his last post directly.

(show)

8 Comments

New Census study comparing gay and straight married couples:

Gay and straight married couples are demographically very similar in terms of likelihood to be raising children, age, income, race, whether they own or rent a home together, education levels, and employment. And both are unlike unmarried same-sex partners (and, I suspect, unmarried straight couples), who skew younger, more educated, more wealthy, are much less likely to be raising children, and are much less likely to have invested in a home together.

That's what the Census Bureau has concluded based on a sample of same-sex couples who live together and self-report as married, although the Census Bureau does not verify whether couples (gay or straight) are legally married.

Here's the Census Bureau chart, which you can enlarge by clicking on it:

If you can't see it well above, you can find it here.

There are many fascinating results here, only a couple of which I want to highlight now.

The data about child-raising is especially significant since one common argument in the SSM debate is that marriage is centrally about providing a stable environment for children. Straight married couples are somewhat more likely to be raising children (43%) than are lesbian married couples (38%) or gay-male married couples (32%). But the difference is not huge, and separates all three categories from unmarried couples, gay and straight, who are far more likely to be childless. And while lesbian married couples are more likely to be raising children, the difference between them and gay-male couples is not nearly as large as commonly thought.

Also, a higher proportion of gay male couples are married (or consider themselves married) than are lesbian couples (52% of gay male couples v. 42% of lesbian couples). Among other things, this means proportionately more lesbian than gay male couples are raising children outside of marriage (20% v. 8%).

The debate over gay marriage is moving from the abstract to the empirical. That's especially true as more states gain more experience with actual gay marriages. Unfortunately, the Census Bureau has resisted including gay married couples in the decennial census, arguing that DOMA forbids it. I'm not sure that's right, though of course the existence of DOMA didn't stop the Census Bureau from collecting this data. (UPDATE: The Wall Street Journal says the White House has now abandoned that interpretation of DOMA and is directing the Census Bureau to find ways to include same-sex married couples in the 2010 census.)

None of this demographic information proves that gay marriage "caused" anything in particular. Among other things, it seems likely that gay couples who fit a traditional profile (have children, own a home) are more likely to get married than those who don't. And of course it doesn't resolve the debate over whether states should permit gay couples to marry.

But it does fill in some important missing information about what gay families and gay marriages look like. And it turns out that, in some significant respects at least, they look a lot like traditional ones.

(HT: iMAPP)

UPDATE: Some caution about this Census data, here.

Related Posts (on one page):

  1. Some caution about Census data on same-sex couples:
  2. New Census study comparing gay and straight married couples:
92 Comments

A Constitutional History Danger:

Legal scholars and historians frequently make sweeping conclusions about the Supreme Court and its individual Justices based on votes in particular cases. The problem is that until relatively recently, the norms on the Supreme Court discouraged dissent, and the Justices may at certain times have had additional reasons beyond those norms for joining a majority opinion they disagreed with.

I've been working on chapter 4 of my book-in-progress, Rehabilitating Lochner. This chapter deals with protective labor laws for women, and liberty of contract challenges to such laws. In 1923, the Supreme Court invalidated a minimum wage for women in a 5-4 vote (Adkins v. Children's Hospital), but a year later the Court unanimously upheld a ban on night work by women (Radice v. New York).

The apparent inconsistency in these cases has led scholars to explain the discrepancy in a variety of ways, none of them complimentary to the Justices. One obvious but generally overlooked possible explanation is that in the night work case, the Court felt bound by a 1908 precedent (Muller v. Oregon) upholding a maximum hours law for women on the grounds that women are physically weaker than men, a rationale that simply did not apply to the minimum wage law.

But I just stumbled across something another interesting explanation. According to Felix Frankfurter's notes of a conversation he had with Justice Louis Brandeis, Brandeis told him that Radice almost came out the other way, but Justice George Sutherland, who had written the Adkins opinion, switched his vote at the last minute after agonizing over the case for some time. The other Justices still thought the night work ban unconstitutional, but with the Supreme Court under attack (most notably by future Progressive Party candidate Robert LaFollette and Senator William Borah) for issuing controversial 5-4 opinions, and with Sutherland having jumped ship, the other Justices chose not to issue a dissent.

Assuming that Frankfurter's notes accurately describe what went on, instead of a 5-3 vote (with Brandeis recused) split on women's protective laws turning a year later into a nine to zero vote, the 5-3 (plus Brandeis) split was apparently turned into a 5-4 split the other way, with the deciding Justice on the fence in the second case until the last minute.

So, for example, the view expressed by some scholars that the Court invalidated the minimum wage law but not the night work ban because the former allowed corporations to exploit workers through underpayment but the latter did not could only be justified if one could show that this was Justice Sutherland's rationale. But this would be a caricature of Sutherland, who believed in liberty of contract, and was a strong advocate of women's rights, but had an occasional soft spot for what he considered public-spirited regulation, as evidence by his majority opinion upholding zoning laws in Euclid v. Ambler Realty.

In short, if you want to do good constitutional history, don't extrapolate wildly from the reported votes of old Supreme Court cases.

23 Comments

Left/Right Bloggers in accord on grades for Obama WH staff, but not for his Econ. and Nat. Security Teams:

This week's National Journal poll of top political bloggers asked for performance grades thus far for various components of the Obama team. Regarding the White House staff, the Left/Right gap was fairly small, with the Left collectively assigning a B-, while the Right gave a C. I gave the staff a B, and wrote: "Although it's hard to tell from the outside, the staff seems to be working together well in managing the administration."

Bloggers were also asked to grade the Economic Team and the National Security Team. The Left gave the Econ Team a C+, and the National Security Team a B-. The Right gave an F in Econ, and a D in National Security. I voted for a D in both, and wrote: "Out-of-control spending, with massive debt financed by a radical expansion in the money supply. Timid on Iran, aggressive against Israel, self-deluded on the Palestinian desire for peace, and miserable handling of relationships with European governments."

50 Comments

If You Don't Want An Annoying But Extremely Catchy

theme song going through your head all day, don't watch the Pajanimals with your kids.

11 Comments

No, Not That David Bernstein:

I received a voice mail and email message asking me, "Are you the David Bernstein who is involved with the Moroccan clementine market?"

No.

30 Comments

Consumer Reports Rates Digital Cameras.

In its July issue, Consumer Reports (subscription required for full content) updated its online ratings of digital cameras.

From the site Product Reviews and Bargains, here is a list of some of the top choices :

For advanced Single Lens Reflex cameras (SLRs), [Consumer Reports] recommends the

Nikon D300,

Canon EOS 40D, and

Olympus E-3.

Most of the recommended point-and-shoot models are Canon PowerShots:

Among the recommended models in various categories of point-and-shoot cameras are the

Canon PowerShot SD1200 IS,

Canon PowerShot A470,

Canon PowerShot G10,

Canon PowerShot SX10 IS,

Samsung HZ10W, and

Fujifilm FinePix F200EXR.


Thursday, June 18, 2009

Rare (Partial) Victory in Second Amendment Case:

A federal court holds that someone being prosecuted for possessing a gun after having been convicted of a domestic violence misdemeanor is constitutionally entitled to present an affirmative defense "that he posed no prospective risk of violence" (which I take it must mean no prospective risk of violence beyond that posed by the average person). The jury would thus be instructed that, if it agrees with the defendant that he posed no prospective risk of violence, it should acquit despite the flat prohibition imposed by the statute.

Here is the meat of the opinion, U.S. v. Engstrum (Stewart, D.J.) (June 15, 2009):

This matter is before the Court on Defendant's Motion for Jury Instruction regarding his possession of a firearm. The Court previously denied Defendant's Motion to Dismiss Indictment, in which Defendant argued that the Second Amendment to the U.S. Constitution protected his right to have a firearm in his house for home and self defense. In its April 17, 2009 Order, the Court found that strict scrutiny was required to justify a deprivation of an individual's Second Amendment right to keep and bear arms. The Court also found that 18 U.S.C. § 922(g)(9), which prohibits the possession of firearms by those previously convicted of a domestic violence misdemeanor, passed strict scrutiny. Finally, the Court found that § 922(g)(9) was, therefore, presumptively lawful, but that the presumption could be rebutted by a showing that the individual charged under § 922(g)(9) posed no prospective risk of violence. With regard to the Defendant, the Court found that it could not say, as a matter of law, that the Defendant posed no prospective risk of violence.

Defendant concedes that he is a restricted person, otherwise covered by § 922(g)(9). In May 2008, Defendant and his girlfriend (the "Girlfriend") were residing at a home in West Valley City, Utah (the "Residence"). On May 9, 2008, Defendant and the Girlfriend got into an argument and the Girlfriend left the Residence. On May 10, 2008, the Girlfriend returned with the police to retrieve her personal belongings, accompanied by a friend, who waited outside the Residence while the Girlfriend entered to retrieve her belongings. Defendant refused to return her things, and an argument ensued. During that argument, Defendant grabbed the Girlfriend's arm, and the Girlfriend claims she feared for her safety. The Girlfriend attempted to use pepper spray on the Defendant, but the canister did not work. Defendant took the pepper spray away from the Girlfriend and was successful in using it on her. The Girlfriend then left the Residence and called the police.

When police arrived at the Residence, the Girlfriend informed them that Defendant kept a gun in his bedroom, although the gun was never used or displayed in any way by the Defendant prior to the police arriving. Defendant allowed the police to enter the Residence, where one officer noticed an unspent round on the floor of the Residence. When officers inquired about the gun, Defendant advised them that it was in his bedroom dresser drawer, and that he had unloaded it when he learned that law enforcement would be arriving at the Residence. The officers found the unloaded gun from the bedroom dresser drawer. The gun was not taken from the Residence at that time.

On May 22, 2008, West Valley Police contacted Defendant and inquired about the gun. Defendant indicated that he owned the gun and that it was a gift from his father. There is no evidence to indicate that Defendant had ever used the firearm. However, Defendant was advised that he could not have a gun due to a prior misdemeanor domestic violence conviction. Defendant indicated to police that he would surrender the gun and ammunition. Police arrived at the Residence later that day and Defendant signed a consent to search form and surrendered the gun and ammunition....

The Court finds that Defendant may raise, as an affirmative defense, that the charged offense may not be applied to him because he posed no prospective risk of violence. Such a defense is in keeping with the law stated in the Court's April 17, 2009 Order. The Court also finds that the affirmative defense raised by Defendant does not negate any element of the offense charged. Therefore, while the government must prove every element of the charged offense beyond a reasonable doubt, if Defendant chooses to argue that he posed no prospective risk of violence, Defendant will bear the burden of proving his defense to the jury by a preponderance of the evidence. However, the defense must be supported by sufficient evidence. Therefore, the Court will only instruct the jury on Defendant's defense if the Court finds that, during the course of trial, Defendant has presented sufficient evidence to convince a reasonable jury that he does not pose a prospective risk of violence. In the event that Defendant meets that burden, the Court will instruct the jury regarding Defendant's proposed Second Amendment defense in the following terms:

The Second Amendment to the United States Constitution guarantees the fundamental right of individuals to keep and bear arms. That right may only be infringed when the restriction is narrowly tailored to meet a compelling government interest. You are instructed that 18 U.S.C. § 922(g)(9), the crime for which Defendant is charged, is, as a matter of law, a lawful and constitutional restriction of the Second Amendment rights of those who pose a prospective, or future, risk of violence.

If you find that the government has proved beyond a reasonable doubt the elements of the charge against him, as set forth in Jury Instruction Number ____, regarding Count I, you are instructed that Defendant is presumed to pose a prospective risk of violence. However, Defendant is entitled to offer evidence to rebut that presumption and show that he did not pose a prospective risk of violence. It is the burden of the Defendant to prove to you, by a preponderance of the evidence, that he did not pose a prospective risk of violence.

Therefore, if you find that the Defendant did not pose a prospective risk of violence, he may not be deprived of his Second Amendment rights, and you must find him not guilty. However, if you find that the government has proved beyond a reasonable doubt the elements of the charge against him, and that the Defendant has not proved, by a preponderance of the evidence, that he posed no prospective risk of violence, you must find the Defendant guilty.

By the way, all I could find from Pacer about Engstrum's past domestic violence misdemeanor conviction was that it was a "domestic violence assault" that had happened in "Midvale Justice Court in 2007." (The statement of facts above describes only the conduct that led to the discovery of the gun, but it was the 2007 conviction that caused Engstrum to be prosecuted for "possession of firearms by those previously convicted of a domestic violence misdemeanor.") Presumably the jury would be told about the circumstances of this past conviction, as well as about other things, in determining whether Engstrum indeed "pose[d] a prospective risk of violence" at the time of possessing the gun.

223 Comments

What Happens in a Multipolar World?

The Chicago Journal of International Law has a new symposium issue coming online soon on the topic of a multipolar world. I have a piece in it, so does my co-blogger Chris Borgen of Opinio Juris, John Yoo, and some others - I'll post a link to the issue when it appears. My own piece is titled, United Nations Collective Security and the United States Security Guarantee in a Multipolar World: The Security Council as the Talking Shop of the Nations.

It's a pretty self-explanatory title. The one thing I'd add to the abstract is that there is a discussion of NATO and a Hymn to one of my Intellectual Heroes, Raymond Aron, in the middle of the essay that begins (the editors were slightly taken aback): "Be wary, O Europe, and consider carefully what Aron would say of an America that does not assert, rudely and brusquely and vulgarly, its own interests first ..." Mighty pretty speechifying, no?

In shameless self-promotion mode, you can get it from SSRN at the link; here is the abstract:

(show)

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Court Strikes Down Random Drug Test Policy for All Public School Employees:

From Jones v. Graham County Bd. of Educ. (N.C. Ct. App. June 2) (some paragraph breaks added), an interesting discussion of the issue:

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Ban on Divorced Father's "Exposing the Children to His Homosexual Partners and Friends":

A Georgia trial court imposed such a ban in 2007; the Georgia Supreme Court just set it aside on Monday, in Mongerson v. Mongerson:

There is no evidence in the record before us that any member of the excluded community has engaged in inappropriate conduct in the presence of the children or that the children would be adversely affected by exposure to any member of that community. The prohibition against contact with any gay or lesbian person acquainted with Husband assumes, without evidentiary support, that the children will suffer harm from any such contact. Such an arbitrary classification based on sexual orientation flies in the face of our public policy that encourages divorced parents to participate in the raising of their children, and constitutes an abuse of discretion. See Turman v. Boleman, 235 Ga. App. 243, 244 (1998) (abuse of discretion to refuse to permit mother to exercise visitation rights with child in the presence of any African-American male); In the Interest of R.E.W., 220 Ga. App. 861 (1996) (abuse of discretion to refuse father unsupervised visitation with child based on father’s purported “immoral conduct” without evidence the child was or would be exposed to undesirable conduct and had or would be adversely affected thereby). In the absence of evidence that exposure to any member of the gay and lesbian community acquainted with Husband will have an adverse effect on the best interests of the children, the trial court abused its discretion when it imposed such a restriction on Husband’s visitation rights.

Two justices (Melton and Carley) "write separately to emphasize" that the quoted passage above "should only be read to stand for the well-settled proposition that, absent evidence of harm to the best interests of the children through their exposure to certain individuals, a trial court abuses its discretion by prohibiting a parent from exercising their visitation rights while in the presence of such individuals (in this instance, Husband’s homosexual partners and friends)."

By the way, here's an extract from the 1998 Turman case, which I hadn't heard of it until now:

Turman and Boleman were divorced on November 13, 1996. Their settlement agreement, which was incorporated into the final judgment and decree, provided that Boleman would have custody of their minor child. The agreement gave Turman certain specified visitation rights away from the father's residence “on the condition [that] at no time shall [the child] be in the presence of William ‘Larry’ Little or any other African-American male except that [Turman] shall not be in contempt of court if she has casual contact with any African-American male other than William ‘Larry’ Little.” After Turman married Kenneth Turman, an African-American male, Boleman refused to allow Turman to visit with the child away from Boleman's residence. Turman moved to hold Boleman in contempt for refusing to allow her to exercise her visitation rights. At the hearing on the contempt motion, Turman argued that the provision in the settlement agreement conditioning her visitation rights upon the child's having no contact with any African-American male was unenforceable.

The trial court improperly upheld the validity of the visitation provision which prohibited the child's contact with any African-American males. This provision is unenforceable as against public policy.... The visitation provision here violated the express public policy against racial classification and the public policy encouraging a child's contact with his noncustodial parent.

The trial court held that the provision was enforceable because it was a matter of private contract. However, after that private agreement was incorporated into the trial court's order, enforcing the private agreement became state action.... The courts of this State cannot sanction such blatant racial prejudice, especially where it also interferes with the rights of a child in the parent/child relationship.

The agreement between the parties clearly violated the State's public policy to promote the best interests of the child. “It is the express policy of this state to encourage that a minor child has continuing contact with parents and grandparents who have shown the ability to act in the best interest of the child and to encourage parents to share in the rights and responsibilities of raising their children after such parents have separated or dissolved their marriage.” Contrary to this policy, the agreement prevents the child from having contact with his natural mother solely on the basis of an arbitrary racial classification. Although a court may validly provide, under appropriate circumstances, that a child is to have no contact with particular individuals who are deemed harmful to the child, such provision cannot be based solely upon racial considerations, as such ruling violates the public policy of the State of Georgia.

Monday's Mongerson, with which I began the post, apparently doesn't have this extra twist of an initial agreement by the parties; the father seemingly either never agreed to the "[no] exposing the children to ... homosexual partners and friends" condition, or agreed to it only because the trial court "express[ed] its opinion that, but for the agreement, the trial court would not have permitted Husband the limited contact to which the parties agreed" (and then promptly appealed the trial court order).

Thanks to How Appealing for the pointer.

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Godfather and the Law:

From U.S. v. Kincannon (7th Cir.):

The government’s closing argument came next, during which the prosecutor made an analogy to an Academy-Award-winning movie: The Godfather. Recounting a pivotal scene where the director simultaneously presented assassinations orchestrated by the protagonist, Michael Corleone, the prosecutor explained that he, like the movie’s director, would attempt to seamlessly tell the “story of what happened” in this case....

Kincannon ... argues, for the first time on appeal, that the prosecutor inflamed the passions of the jury, rendering the trial unfair, by referring in closing argument to The Godfather ....

The prosecutor’s reference to The Godfather does not approach impropriety. It would be one thing if the government compared Kincannon to Michael Corleone, an organized crime kingpin responsible for murders and a whole host of other criminal activity. Such an analogy would be utterly unmoored from the record, which is probably why the government made no such connection. It was not Corleone’s criminality, but Francis Ford Coppola’s direction that was at the heart of the prosecutor’s closing remarks. The prosecutor alluded to the pivotal point in the movie where Corleone attends his godchild’s christening. Coppola cuts to various scenes of assassinations orchestrated by Corleone as a priest dubbed him the child’s godfather. The poetic implication is that the murders, like the priest’s liturgy, made Michael the godfather of the Corleone crime family. As the prosecutor said, “[n]ow that is how you present events that occur simultaneously in a movie so the viewer can understand it very easily.” We agree, as did the Academy of Motion Picture Arts and Sciences, who nominated Coppola for an Oscar for best director. [Footnote: In an upset along the lines 2 of the 2009 Kentucky Derby win by Mine That Bird, the 1972 Oscar went to Bob Fosse (for Cabaret) rather than Coppola.] The prosecutor explained to the jury that he would try to do orally what Coppola did in his film — that is, tie together the events that occurred during the two controlled buys into one seamless story. To do so as eloquently as Coppola is a tall task, but there is certainly nothing improper about the attempt.

An interesting fact about the case, from the start of the opinion, "At 77 years old, James Kincannon makes for an unlikely methamphetamine dealer. But looks can be deceiving." And from later on, "Kincannon was in his fifties when his criminal record started and days away from his 73rd birthday when he was last released from prison after being popped for distributing drugs."

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Plural and Singular Forms of "You":

In modern English, second-person pronouns have the same form in the singular and the plural -- "you," for instance, can mean either one person or a group. (I set aside the now almost entirely archaic "thou," and the regional "y'all.") The same is true in some other languages, at least as to the formal second-person singular. (The informal second-person singular, equivalent to the archaic English "thou," survives in at least some of those languages.)

But what second-person pronoun form is actually different in the singular and in the plural? It might be obvious to most of you, but I just thought about it a few days ago, when talking to my 5-year-old, and realized that I'd never consciously noticed the difference before (though I'm pretty sure I always use both forms correctly).

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A Flaw in George Soros' Case for Increased Government Regulation of the Financial System:

I am no expert on finance. Therefore, I cannot tell whether George Soros' proposals for increased regulation of the financial system have merit or not. Soros has probably forgotten more about finance than I ever knew to begin with. However, Soros' position has at least one serious weakness that is common to many arguments for increased government intervention in society: it fails to give adequate consideration to the shortcomings of the political process. Strangely, Soros admits that government is likely to do an even worse job in this area than he believes the private sector has; yet he still ends up supporting increased regulation.

Soros argues that speculative bubbles are a form of market failure that can cause great harm to the economy when the bubbles pop. He therefore concludes that we need government intervention to prevent bubbles from forming. However, he concedes that government regulators are unlikely to do any better at predicting dangerous bubbles than the market does:

[S]ince markets are bubble-prone, regulators must accept responsibility for preventing bubbles from growing too big. Alan Greenspan, the former chairman of the Federal Reserve, and others have expressly refused that responsibility. If markets cannot recognise bubbles, they argued, neither can regulators. They were right and yet the authorities must accept the assignment, even knowing that they are bound to be wrong. They will, however, have the benefit of feedback from the markets so they can and must continually re-calibrate to correct their mistakes. [Emphasis added]

If, as Soros believes, government regulators will be just as bad or worse at predicting bubbles than market participants, it's not clear why he expects government intervention in this area to improve things. "Feedback from markets" certainly doesn't create any comparative advantage for government regulators; after all, the private sector can use feedback from markets as well.

Soros' argument could still work if government financial regulation were costless. If that were so, the regulators might occasionally prevent a dangerous bubble from forming, while not causing any harm in the many cases where they are "bound to be wrong." However, as Soros himself points out, government financial regulation isn't costless because "While markets are imperfect, regulators are even more so. Not only are they human, they are also bureaucratic and subject to political influences." Unfortunately, he doesn't do enough to consider the likely impact of these "political influences." The rest of his argument for increased regulation proceeds as if government were a "benevolent despot," willing and able to implement the right kind of regulation so long as he gets the right advice from experts like Soros.

Common systematic shortcomings of government suggest that Soros' "political influences" might cause even more harm in the field of financial regulation than elsewhere. As I discussed in this post, government intervention typically suffers from three major shortcomings: inadequate knowledge on the part of government officials, widespread political ignorance among the electorate, and the power of interest groups who can "capture" the political process and use it to benefit themselves at the expense of the general public.

All three of these problems are likely to be especially severe in the field of financial regulation. Even those who worry less about political ignorance than I do would be hard-pressed to argue that the voters have a good understanding of complex finance policy issues. It's telling that some 25% of the public is so ignorant that they blame "the Jews" for the financial crisis. Such widespread ignorance suggests that voters will do a poor job of monitoring the performance of regulators, and also creates the danger that public ignorance will push the government to adopt severely flawed policies that seem attractive to voters with little understanding of the financial system.

It is also clear that there are interest groups in the finance industry who will lobby regulators to try to "capture" them and use government power to benefit themselves at the expense of the general public. Banks and large institutional investors are obvious examples. There are few other sectors of the economy with so many powerful, concentrated interest groups. The danger of special interest lobbying is, of course, exacerbated by widespread political ignorance. Ignorant voters can easily be fooled into believing that policies pushed by special interests will actually benefit the general public. This is especially likely in a crisis atmosphere like the present.

Finally, as Soros himself points out, government financial regulators suffer from inadequate knowledge and are likely to make mistakes as a result. The same complex nature of the financial system that ensures widespread public ignorance also makes it difficult for regulators to gather sufficient information to know when they should act. If regulators act on poor information, they might engage in interventions that create serious harm - as the Federal Reserve discovered on several occasions in its history, including the Great Depression.

Does all this necessarily prove that increased regulation of the financial system is undesirable? No, it doesn't. But it does suggest that justifying increased regulation requires a much stronger argument than that given by Soros. It isn't enough to prove that a market failure exists, even a very serious one. We also need proof that government regulators have the knowledge and incentives needed to improve on market outcomes without causing harm that outweighs any benefits they might create. Even if Soros is right about the alleged failures of the market, he hasn't shown that government intervention will be better. Indeed, for reasons he himself hints at, it might be much worse.

UPDATE: It's possible that Soros wants the new regulation to be conducted by experts insulated from the pressures of the democratic process. If so, that would partly (though by no means entirely) protect against the dangers of public ignorance and interest group lobbying. Unfortunately, the "rule of experts" solution to political ignorance has serious flaws of its own, which I discussed in detail here.

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A Crime for a High School Teacher to Have Sex with a 20-Year-Old Student?

That's the law in Arkansas (§ 5-14-125(a)(6)(B)), and a proposed law in Louisiana. (Right now, Louisiana makes it a crime to have sex with under-19-year-old students, but the bill, which unanimously passed both chambers of the legislature, would change that to sex with under-21-year-olds. The crime is a misdemeanor for the first offense in Louisiana, and a felony in Arkansas.) This might well be unprofessional conduct that would justify firing the teacher, but sending the teacher to prison?

The "abuse of a position of power" rationale doesn't work here, I think; the teacher has no more power over the student than the typical employer, or police officer, or many other people. Yet we deal with the extraction of sexual favors through threats in those contexts by requiring proof of abuse (whether in a civil case or a criminal extortion case), not by just presuming it.

Nor does the psychotherapist analogy work. To my knowledge, psychotherapist-patient sex isn't a felony, though it may lead to professional sanctions, and in any event the teacher-student relationship strikes me as quite different from the psychotherapist-patient relationship.

Related Posts (on one page):

  1. Washington State Makes it a Felony for School Employees to Have Sex with Up-to-21-Year-Old Students,
  2. A Crime for a High School Teacher to Have Sex with a 20-Year-Old Student?
72 Comments

Bryan Caplan's Advice on Social Intelligence:

George Mason economist Bryan Caplan has some excellent advice on how to increase your "social intelligence." As a teenager and for years thereafter, I had many of the same problems as Bryan and partially overcame them in much the same way. As Bryan puts it, I "at least managed to claw my way up to mediocrity" in this important aspect of life. If you have similar shortcomings (and I suspect many intellectually oriented people do), his advice is well worth considering:

My social intelligence is a lot higher than it used to be. I still wouldn't say that I'm "good with people." But in my youth, I was truly inept. In junior high, I had one real friend, and many overt enemies. Since then, I've at least managed to claw my way up to mediocrity.

A lot of social intelligence is in details and practice. If I could travel back in time and spend five minutes advising myself, though, here are the principles I would try to teach myself.

1. Good conversation is an exchange. The most basic form of social ineptitude is to say what's on your mind, even though you have no reason to believe your listeners are interested. Even more cloddish: Saying what's on your mind, even though you know that your listeners are not interested.

In a useful conversation, in contrast, there is a double coincidence of wants. You have to be interested in what I have to say; I have to be interested in what you have to say....

2. Be friendly. It's not just good advice for libertarians; it's good advice for people. A strong presumption in favor of kindness and respect almost never hurts you, and often helps you. Note that I say "presumption." Don't "wait and see" if people deserve friendly treatment. Hand it out first, no questions asked. You will make friends (very good), avoid making enemies (good), and occasionally show undeserved kindness and respect (only mildly bad).

3. Keeping friends is more important than getting your way. You should think twice before asking anyone for help. If you still think it's a good idea, try to make your request easy to refuse. "How would you feel about..." is much better than "Please, please just do me this one favor!" In the short-run, of course, the pushy approach is often effective. But life is a repeated game, pushing leads to resentment, and your relationships are more valuable than almost any specific victory.

There is a complication, of course. Part of the reason why young intellectuals make these mistakes is that they often don't realize they are doing so. But another part is often the result of having a strong preference for expressing your own ideas and little interest in the things other people want to talk about - especially social chitchat and small talk. If you place a really high value on "hearing yourself talk" and a relatively low value on social popularity, it could be rational to reject Bryan's advice. But if your goal in expressing your ideas is to persuade other people that you are right (or at least worth taking seriously), following the above advice will still be useful. Thought it may be irrational to do so, people tend to discount your ideas if you act like a jerk and give them more credence if you seem friendly and personable. Even if you are the kind of deep thinker who doesn't care much about making friends, you should still make nice if you want to influence people.

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Congratulations to Greg and Deborah Mankiw

on their twenty-five years of marriage, this just past Tuesday.

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Wednesday, June 17, 2009

The least he could do:

In a brief and perfunctory prepared statement, read carefully from a script, President Obama just signed an order a presidential memorandum directing federal departments to grant some benefits to employees' same-sex partners requesting federal departments to review over the next 90 days whether they can grant some benefits to employees' same-sex partners under federal law. The presidential memorandum itself is here. The new benefits would include things like sick leave for partners, the use of medical facilities, access to long-term care benefits, and instruction in foreign languages, if such benefits are otherwise available to spouses.

Federal law (5 USC 8901) blocks the Office of Personnel Management from granting same-sex couples the most important things — like health benefits. Broader relief will come only through the repeal of DOMA or, for federal employees specifically, through the proposed Domestic Partners Benefits and Obligations Act. Obama reiterated that he supports both goals. He also promised that he will work "tirelessly" in the "days and years to come" to achieve them. A few days ago, Obama's liaison to the gay community said that action on anything significant is a long way off.

Interestingly, Obama's rhetoric was at odds with his own Justice Department's brief, filed late last week, defending the constitutionality of DOMA. Obama called DOMA "discriminatory," though he never said on what grounds he thinks it's discriminatory. His DOJ last week maintained that DOMA doesn't discriminate based on sexual orientation or sex, the two most obvious ways in which one might think it discriminatory. I may have missed it, but Obama never used the words "gay" or "lesbian" or "gay couples/families," only the more neutral and palatable "same-sex partners" and the esoteric "LGBT."

Obama also asserted that DOMA "interferes with states' rights," presumably because it changes the historical rule that federal benefits to spouses are available based on a state's own definition of marriage. This allowed states to define marriage for themselves, even if other states define it differently. But last week, the DOJ remarkably asserted that when it comes to same-sex marriages — and such marriages alone — the usual federal presumption means that objecting states would be forced to subsidize gay unions in other states. In other words, the DOJ argued that respecting "states' rights" means not recognizing gay marriages under state law.

The DOJ brief has been subjected to intense criticism over the past few days. But Obama made no mention of that squalid document in his statement today. Will it be withdrawn or modified?

With his back-pedalling on DADT, no action on DOMA, nothing done to lift the HIV travel ban, nothing ventured to allow same-sex partners to immigrate, and employment protection and even a useless hate crimes bill stalled in an overwhelmingly Democratic Congress, lots of Obama's strong gay-rights supporters are becoming restive. Obama has been neither the moral nor the political leader they expected. It's still early and he's had a lot on his plate. But presidents always have more pressing matters to attend. And if history is any guide, he's now at the height of his political power. Today's action was, it seems, the least he could do.

UPDATE: Nan Hunter has a typically smart post on the president's action today. It's basically a bare-bones instruction to executive departments to take action in the future. Could have been issued months ago, but it's timed to throw a sop to some upset supporters.

Related Posts (on one page):

  1. The least he could do:
  2. Fierce advocacy:
128 Comments

Soros on Principles of Financial Regulation and Efficient Market Hypothesis:

George Soros has a very interesting opinion piece in the Financial Times, June 17, 2009 (might be behind subscriber wall at the FT, but I received it by email from his office, so I'll quote some bits from there). The essay outlines in short form his principles for reform of financial regulation. I am still absorbing this, so I won't comment here, but I put them out for your thoughts. I will try to post up some other stuff on the financial regulation reform proposals coming from the Obama administration over the next couple of days. (As ever, however, I am always eager to learn from what co-blogger Zywicki has to say about this stuff, and particularly the bankruptcy questions of Chrysler, GM, and Delphi - I am no expert by any stretch on sale v reorganization, or anything else, re bankruptcy. See Todd's earlier post comparing Chrysler, GM and the secured creditor treatment in each.)

So, Soros starts out with a general comment on the comparative disadvantages of un-regulation and government regulators:

I am not an advocate of too much regulation. Having gone too far in deregulating - which contributed to the current crisis - we must resist the temptation to go too far in the opposite direction. While markets are imperfect, regulators are even more so. Not only are they human, they are also bureaucratic and subject to political influences, therefore regulations should be kept to a minimum.

He then goes on to propose three guiding principles for regulatory reform. The first is that regulators must accept responsibility for not allowing bubbles to get out of control. This is framed within the inherent contradiction, Soros suggests, that regulators are no better than markets at identifying what's a bubble and what's not.

[S]ince markets are bubble-prone, regulators must accept responsibility for preventing bubbles from growing too big. Alan Greenspan, the former chairman of the Federal Reserve, and others have expressly refused that responsibility. If markets cannot recognise bubbles, they argued, neither can regulators. They were right and yet the authorities must accept the assignment, even knowing that they are bound to be wrong. They will, however, have the benefit of feedback from the markets so they can and must continually re-calibrate to correct their mistakes.

The implicit assumption here - correct, in my view - is that we have a problem of too-big-to-fail in these bubbles, systemic risk, and the loss of the threat of moral hazard: the Greenspan and next the Bernanke put. It is therefore not a sufficient answer for regulators to refuse to take on the burden of bubble-popping. This seems to me quite persuasive.

Second, Soros goes on, the problem is not merely the money supply, though that is a factor, it is also the availability of credit and then leverage off of it:

Second, to control asset bubbles it is not enough to control the money supply; we must also control the availability of credit. This cannot be done with monetary tools alone - we must also use credit controls such as margin requirements and minimum capital requirements. Currently these tend to be fixed irrespective of the market's mood. Part of the authorities' job is to counteract these moods. Margin and minimum capital requirements should be adjusted to suit market conditions. Regulators should vary the loan-to-value ratio on commercial and residential mortgages for risk-weighting purposes to forestall real estate bubbles.

Again, I think this is broadly persuasive. I say this despite being a big fan of John Taylor's new, short book from the Hoover Institution Press, Getting Off Track. The strong version of Taylor's argument, Steve Krasner noted to me in conversation last week at Stanford, is that if the Fed had simply followed the Taylor rule regarding the money supply, then the bubble would not have developed. On the strong version of Taylor's argument in the book, whatever the failures of regulation or, responding to Greenspan's reply to Taylor, the global savings glut, it doesn't matter - the money supply was the problem. Soros is implicitly saying that money supply alone is not the issue; credit and leverage matter on their own, and so does regulation directly going to credit, e.g., margin and capital requirements. Again, I am a big fan of Taylor's book - but I am content to read the argument more weakly, so to understand that the crisis is overdetermined, and that money supply, credit and leverage, political temptations in regulation, etc., all play a role. I think most financial commentators would go with the weaker position of overdetermination of causes. And on the credit question - more precisely, the leverage question - Soros is right, I think.

Soros finally - third - says that financial regulation must take up the question of efficient market theory. On this, he is most controversial. He has addressed much criticism toward the EMH over the years - and the arguments are not always the same, nor of the same level of breadth or generality. On the one hand, the latest edition of Bratton's Corporate Finance textbook, which I am about to use in the Fall semester for the first time in a couple of years and which begins with a discussion of efficient markets, expresses much greater caution, consistent with most academic commentators. Certainly that is my feeling, particularly with regard to credit markets and instruments. On the other hand, I was dismayed by how thoroughly my law students last year dismissed market efficiency as having any value at all and the very idea of quantitative valuation (of course, this would save them the trouble of doing the present value arithmetic ...). So what is Soros's formulation of the critique of EMH and how conceptually global is it in this iteration?

Third, we must reconceptualise the meaning of market risk. The efficient market hypothesis postulates that markets tend towards equilibrium and deviations occur in a random fashion; moreover, markets are supposed to function without any discontinuity in the sequence of prices. Under these conditions market risks can be equated with the risks affecting individual market participants. As long as they manage their risks properly, regulators ought to be happy.

But the efficient market hypothesis is unrealistic. Markets are subject to imbalances that individual participants may ignore if they think they can liquidate their positions. Regulators cannot ignore these imbalances. If too many participants are on the same side, positions cannot be liquidated without causing a discontinuity or, worse, a collapse. In that case the authorities may have to come to the rescue. That means that there is systemic risk in the market in addition to the risks most market participants perceived prior to the crisis.

The securitisation of mortgages added a new dimension of systemic risk. Financial engineers claimed they were reducing risks through geographic diversification: in fact they were increasing them by creating an agency problem. The agents were more interested in maximising fee income than in protecting the interests of bondholders. That is the verity that was ignored by regulators and market participants alike.

The critique of efficient market theory here is agent-failure. No argument there - the agency problems go deep into the heart of the financial services institutions themselves, to include the fundamental problem of what Steve Schwarcz has described as secondary agent failures - misalignments of both duty of care and duty of loyalty. AT bottom, Soros is pointing to information uncertainties in two directions: one, as between managers and financial agents and, two, between compensation in the present on uncertain future payoffs, without an effective mechanism of clawback to correct results after the fact or an effective discounting mechanism to address potential future failure. But at bottom the critique in this piece of EMH is an agent-principal critique. One can add other critiques; some stronger and some weaker, but Soros has identified the one most amenable to regulatory reform, I reckon.

Given the agent-centered critique, it is no surprise that Soros favors a "skin in the game" approach - and he says that the 5% retention by originators in securitizations is too small:

To avert a repetition, the agents must have "skin in the game" but the five per cent proposed by the administration is more symbolic than substantive. I would consider ten per cent as the minimum requirement. To allow for possible discontinuities in markets securities held by banks should carry a higher risk rating than they do under the Basel Accords. Banks should pay for the implicit guarantee they enjoy by using less leverage and accepting restrictions on how they invest depositors' money; they should not be allowed to speculate for their own account with other people's money.

It is probably impractical to separate investment banking from commercial banking as the US did with the Glass Steagull Act of 1933. But there has to be an internal firewall that separates proprietary trading from commercial banking. Proprietary trading ought to be financed out of a bank's own capital. If a bank is too big to fail, regulators must go even further to protect its capital from undue risk. They must regulate the compensation packages of proprietary traders so that risks and rewards are properly aligned. This may push proprietary trading out of banks into hedge funds. That is where it properly belongs.

Again, little argument from me that proprietary trading conceptually at least belongs in the hedge funds and private equity funds, whether that is practical today or not. Proprietary trading is not the only problem. I ordinarily teach a private equity course each year; it covers the industry as a whole, including venture capital, buy out funds of various kinds, etc., and I throw in little bit on hedge funds as they aren't really covered elsewhere in our curriculum. But I was troubled when last I taught the class in spring 2008 at a quote in a Henry Kaufmann article in the WSJ - I always talked as an academic about private equity serving to bring managerial efficiencies to public companies via buyouts and all sorts of jolly stuff. Whereas Kaufmann quoted a LBO fund manager as shrugging and saying, in paraphrase, we're just part of the big mechanism that takes money from the Fed and pours it into the housing markets and take a cut along the way. Ouch, ouch, double ouch.

And finally ... derivatives. Do not fail to note Soros's blunt comment on credit default swaps (italics added below). I am not sure I would have focused on CDSs, once having put them onto public exchanges and regularized and made public the counterparty relationships. Nor do I think that the underlying securitizations are themselves the problem. I grant the agency issues that Soros raises and of course there is a huge, huge problem with insurance that turns out to be a license to kill. The problem is more than just license to kill. It is also what we might call a "license to be indifferent" - arising from what has been talked about as the "phantom" creditor problem - formally holding debt the risks of which have already, but non-publicly or transparently, been counter-partied away, leaving one with an incentive to indifference or something more toxic. Moreover, the mere existence of an insurance market in CDSs does not, by itself alone, solve the valuation problem of the underlying assets or the insurance. Still, I think I probably would have instead focused on the derivatives built to leverage the securitizations themselves as being the most dangerous and toxic assets in all of this:

Finally, I have strong views on the regulation of derivatives. The prevailing opinion is that they ought to be traded on regulated exchanges. That is not enough. The issuance and trading of derivatives ought to be as strictly regulated as stocks. Regulators ought to insist that derivatives be homogenous, standardised and transparent.

Custom made derivatives only serve to improve the profit margin of the financial engineers designing them. In fact, some derivatives ought not to be traded at all. I have in mind credit default swaps. Consider the recent bankruptcy of AbitibiBowater and thatof General Motors. In both cases, some bondholders owned CDS and stood to gain more by bankruptcy than by reorganisation. It is like buying life insurance on someone else's life and owning a licence to kill him. CDS are instruments of destruction that ought to be outlawed.

Whether one agrees with Soros on each item, or the strength he assigns each item, this is an outstanding short essay on reform agendas. As I remarked in my note on the passing of Peter Bernstein, Soros on these issues of finance and political finance is in a category of senior, seasoned observer who is both at home with the analysis of risk but also very clear as to its limits, and rooted in the practical world of markets first and theory second. You can, as I do, think that Soros's funding for things like Moveon.org and other bitterly partisan political ventures a very bad thing - and I mean a very bad thing, and a very bad thing including for the Democratic Party, but that's a whole different discussion - while seeing the value in this kind of informed intervention. The financial crisis is a matter, unlike a range of others, that fits Soros's very considerable public talents hand to glove.

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UPDATE -- The White House Provides Further Detail On Walpin Firing And Confirms Interpretation Of IG Act:

Because of growing controversy over the firing of AmeriCorps IG Gerald Walpin, the White House has proffered additional reasons (some might say "reasons") why the President had lost confidence in him.

After Senator Claire McCaskill (D. Mo.) expressed concern that President Obama's Thursday letter saying that he had lost confidence in Walpin did not satisfy the requirements of the Inspector General Reform Act that the President provide "reasons" for the firing, presidential aide Norm Eisen (who reportedly told Walpin to resign or be fired) sent a letter to Senators Joe Lieberman and Susan Collins, the Chairman and ranking minority member on the Senate Homeland Security and Governmental Affairs Committee (with a copy to McCaskill), outlining a number of reasons Walpin was let go. It read:

Mr. Walpin was removed after a review was unanimously requested by the bi-partisan Board of the Corporation. The Board's action was precipitated by a May 20, 2009 Board meeting at which Mr. Walpin was confused, disoriented, unable to answer questions and exhibited other behavior that led the Board to question his capacity to serve. Upon our review, we also determined that the Acting United States Attorney for the Eastern District of California, a career prosecutor who was appointed to his post during the Bush Administration, had filed a complaint about Mr. Walpin's conduct with the oversight body for Inspectors General, including for failing to disclose exculpatory evidence. We further learned that Mr. Walpin had been absent from the Corporation's headquarters, insisting upon working from his home in New York over the objections of the Corporation's Board; that he had exhibited a lack of candor in providing material information to decision makers; and that he has engaged in other troubling and inappropriate conduct. Mr. Walpin had become unduly disruptive to agency operations, impairing his effectiveness and, for the reasons stated above, losing the confidence of the Board and the agency. It was for these reasons that Mr. Walpin was removed.

The Eisen letter defended the earlier, spare statement of reasons the President sent last Thursday, saying it was consistent with past practice and, as I suggested in my earlier post, consistent with the Executive Branch's reading of the statute:

We of course recognize your view of the requirements for the formal notice letter which we submitted to Congress last week. That letter was prepared based on long practice with respect to the form of such letters and the Administration's view of the statute.

Walpin denies it all, saying that the White House is "grasping at nonexistent straws" to justify his termination.

In other news, based on the description of Walpin as "confused [and] disoriented," he has been asked to take Ron Wood's spot playing guitar for the upcoming Rolling Stones tour. Although in the interests of accuracy I should that I just now made that up. (And before you start sending me vitriol-filled emails, note I'm a huge Stones and Woody fan from way back.)

UPDATE TO THE UPDATE (Wednesday night). Senator Grassley, apparently not satisfied by Mr. Eisen's proffered explanation for the firing, responded with a new letter to Counsel Gregory Craig setting forth 12 questions. Those included "Did the CNCS Board communicate its concerns about Mr. Walpin to the White House in writing?," "Was the communication about the Board’s concerns on or about May 20, 2009 the first instance of any communications with White House personnel regarding the possibility of removing Mr. Walpin?," several questions about whether Walpin was asked for his response to the Acting U.S. Attorney's allegations or his version of events on May 20, "If Mr. Walpin’s telecommuting arrangements since the beginning of this year were a major concern, then why was Mr. Walpin not simply asked to stop telecommuting?," and perhaps most pointedly, "If the initial and primary concern had to do with Mr. Walpin’s capacity to serve for potential health reasons, why was he only given one hour to decide whether to resign or be fired?"

Senator McCaskill, meanwhile, seems more satisfied by the Eisen letter, which, she said, "now puts the White House in full compliance with the notice requirement in the [IG Act].” She said the reasons were "substantial and the decision to remove Walpin appears well founded," although she added that “[t]he next step for Congress is to use the 30 days provided by the notice [before the termination becomes effective under the IG Reform Act of 2008] to seek further information and undertake any further review that might be necessary.”

Related Posts (on one page):

  1. UPDATE -- The White House Provides Further Detail On Walpin Firing And Confirms Interpretation Of IG Act:
  2. AmeriCorps Inspector General Walpin Fired -- Some Preliminary Observations:
248 Comments

Michigan Supreme Court Adopts Rule Barring Veils on Testifying Witnesses:

That's how I read the proposed amendment to Michigan Rule of Evidence 611 that was apparently adopted today:

The court shall exercise reasonable control over the appearance of parties and witnesses so as to (1) ensure that the demeanor of such persons may be observed and assessed by the fact-finder, and (2) to ensure the accurate identification of such persons.

Note, though, that the Detroit News reports that "The Michigan Supreme Court today adopted a court rule that allows judges to prohibit witnesses from wearing veils in court." Perhaps the adopted rule was different from the proposed rule I quoted. But if it's the same as the proposed rule, then it sounds like judges must prohibit veils for testifying witnesses, since the rule says "[t]he court shall exercise reasonable control ... so as to ... ensure that the demeanor of such persons may be observed and assessed" (emphasis added).

I should note that there's a lot of controversy among experts about whether observing a person's demeanor really does help laymen assess the person's credibility. I have seen claims (I haven't researched this closely myself) that in fact observation is completely useless except to those who are trained in certain ways. But the importance of demeanor evidence has long been assumed by our legal system, whether rightly or wrongly, and this decision seems consistent with that assumption. It may even be necessary if that assumption is accepted, unless letting the witness testify veiled but discounting the testimony is somehow made to work as an option (and it's not clear to me that it can be).

Thanks to Rob McEachern for the pointer.

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e e cummings Goes to Court:

Craigslist's Motion to Dismiss in Gibson v. Craigslist, Inc. struck me as quite good. But I noticed a particular usage choice that I thought might have been unwise, and I wanted to think what others thought of it.

Craigslist appears to consistently identify itself as craiglist, uncapitalized, and the motion does the same, with paragraphs such as:

craigslist has great sympathy for the situation and injuries of the plaintiff alleged by the Complaint. craigslist condemns gun violence and the illegal purchase and sale of firearms. Users who post advertisements on the craigslist website are required to accept terms of use that expressly prohibit advertisements for the sale of illegal goods and for the sale of weapons, including firearms.

But that strikes me as quite jarring to the reader. Having a business name be uncapitalized in the middle of the sentence ("on the craigslist website") is odd enough, but having the first word of a sentence uncapitalized ("craigslist has great sympathy," "craigslist condemns") is even more unusual and therefore likely to be distracting and annoying.

Of course, I'm sure a judge or a law clerk won't deliberately rule against Craigslist for unusual capitalization. But my sense is that this sort of departure from otherwise rigid linguistic norms is likely to put some readers in a slightly worse mood, and make them slightly less receptive to the substantive argument (if only because they're distracted from it by the capitalization choice).

Nor can one say that somehow this capitalization choice is required in English to accurately reproduce the company's name (which is why, for instance, we'd use 3M to refer to 3M even though names that start with numbers are highly unusual in English). Even if that might justify leaving "craigslist" uncapitalized in the middle of a sentence (which I doubt), it provides no explanation for having "craigslist" be uncapitalized as the first word of a sentence. After all, normal English words that are generally uncapitalized are capitalized at the start of a sentence; why should "craigslist" be any different?

My sense is that when in court, you should do as the judges do. Law is generally a methodologically and procedurally conservative field, and judges are more likely to be annoyed than pleased by flashes of nonconformity, whether they consist of the lawyer's personal grooming choices (say, mohawks) or of the company's choice to depart from English usage conventions, especially ones as consistent as capitalization at the start of sentences. And would craigslist, or craig, or any of the rest of the craigslist crew, really be so offended if the lawyer wrote Craigslist instead?

But perhaps I'm wrong, and perhaps no judge or clerk would be even slightly and subconsciously soured on the motion by this sort of usage choice. So I'd like to know what you folks think about it.

UPDATE: Some commenters suggested that having a lower-case "craigslist" follows the standard usage for proper names, which supposedly never change their capitalization, even when they start a sentence.

But I'm skeptical that this is a standard exception to the "always capitalize the first word of a sentence" rule. There are, of course, relatively few names as to which such a standard exception could even develop, since most proper names begin with a capital letter. Yet, unless I'm mistaken, the great majority of such names are names in which there's a lower-case particle that begins what is generally seen in English as the last name: Hernando de Soto, Jacobus tenBroek, Luiz Inácio Lula da Silva, and the like. And I'm pretty sure that one would capitalize those last names (when used in English as last names) when the name started a sentence. Thus,

President Luiz Inacio "Lula" da Silva had vetoed 19 provisions of the law that authorizes the zones, including a core provision that would have given companies operating in them five years of tax immunity. Da Silva argued that these provisions would have violated Brazil's World Trade Organization obligations.
would be normal, and
President Luiz Inacio "Lula" da Silva had vetoed 19 provisions of the law that authorizes the zones, including a core provision that would have given companies operating in them five years of tax immunity. da Silva argued that these provisions would have violated Brazil's World Trade Organization obligations.
would not be. Perhaps I'm mistaken on that, but I'm pretty sure I'm not.

So it seems to me that capitalizing the first letter of a sentence is a very powerful norm in English, even when the first letter is a usually uncapitalized part of a proper name. Perhaps there are a few rare exceptions for e e cummings and a few other people who are trying to make a statement with their nonconformism, but they are quite rare. So departing from the rule, it seems to me, is both (1) not clearly mandated by some well-established exceptions, and (2) likely to be jarring to readers who expect to see the rule being followed.

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CraigsList Not Liable for Shooting That Used a Gun Sold Via a Craigslist Ad:

That's the conclusion of Monday's Gibson v. Craigslist, Inc. (S.D.N.Y.), applying the service provider immunity of 47 U.S.C. § 230: Craigslist isn't liable for the ad, even if the ad itself is tortious:

Plaintiff seeks to hold [Craigslist] liable for its alleged failure to block, screen, or otherwise prevent the dissemination of a third party's content, i.e., the gun advertisement in question, alleging, among other things, that Defendant "failed to monitor, regulate, properly maintain and police the merchandise being bought and sold on its ... website" and "is either unable or unwilling to allocate the necessary resources to monitor, police, maintain and properly supervise the good and services sold on its ... website." It is clear that Plaintiff's claims are directed toward Craigslist as a "publisher" of third party content and "Section 230 specifically proscribes liability in such circumstances."

I don't think that Craigslist should be liable even under normal state tort law: I don't think it's negligent for Craigslist not to police its ads, given the high costs of reading each ad and then trying to figure out whether it offers an illegal transaction or is likely to lead to injury. What's more, while I couldn't find a quote of the ad itself -- if any of you can point me to it, I'd love to see it -- the plaintiff's own motion (p. 7) says that "the content of the ad placed upon defendant's website was not, in itself, objectionable," and that it didn't say things like "'Illegal handguns for sale' or 'Shoot your neighbor.'" The plaintiff's argument therefore seems to be not just that Craigslist should look at every ad (or perhaps at all ads that contain certain keywords), but that it should further investigate the circumstances of the ad to see whether the proposed transaction is illegal (or poses unreasonable dangers) even when the illegality or unreasonable danger is not obvious from the ad's face.

But negligence law is quite mushy and unpredictable in many ways, and even if it doesn't lead to liability, it can lead to a long and very expensive legal fight. 47 U.S.C. § 230, as interpreted by courts, has been considerably more clear and protective, and can often be used to throw out lawsuits very early in the process. So I'm particularly happy (but not at all surprised, given the text of the statute and past caselaw interpreting it) that the court decided the case on § 230 grounds.

Special bonus from reading the plaintiff's opposition to the motion to dismiss (p. 3): "[Craigslist's] only concern is the bottom line, the public be darned." Never quite heard that way of putting it (though I can see why the lawyer didn't want to say "damned").

The next sentence, on the other hand, is less amusing: "For public policy concerns, [Craigslist] must be immediately regulated or shut down." It's also probably a poor way of arguing the case, given that the whole premise of 47 U.S.C. § 230 is that service providers shouldn't be "regulated" or "shut down" by fear of liability; if you're arguing that § 230 doesn't apply, you should probably argue that you're calling for a very modest and narrow sort of liability -- for instance, the liability imposed on newspapers, which one would hardly call "regulat[ing]" or "shut[ting] down" the newspaper -- rather than for regulation or shutdown.

Thanks to Prof. Michael Krauss for the pointer. As I noted above, if any of you can point me to the text of the ad, which I couldn't find in any of the Pacer-accessible documents (the Complaint, for some reason, isn't on Pacer), that would be great -- it's not relevant under the court's 47 U.S.C. § 230 approach, but it might nonetheless be helpful for discussing the broader issues.

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Inflation Hedging Strategy:

Let's say you believe that the massive, unprecedented increase in the money supply in the U.S. is inevitably going to lead to significant inflation. Other than TIPS, what do you invest in? Canadian CDs? International mining companies like BHP? Companies like Coca-Cola that get most of their profits in foreign currencies?

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Securd Creditors in GM v. Chrysler:

As I understand the situation, as things stand now, secured creditors in the GM bankruptcy case are slated to get paid in full on their claims. In Chrysler they got about 30 cents on the dollar.

Does anyone know why secured creditors are getting paid in full in one but not the other? Whatever the legal theory in Chrysler (which is not exactly clear), it seems like it would be valid in GM. Whatever the policy or bankruptcy reason for refusing to pay secured creditors in full in Chrysler, it seems the same in GM.

One possible explanation is that the Obama Administration decided as a prudential matter that it went too far in Chrysler and that to do Chrysler again would spook investors too much. A second explanation is that, as I understand it, a much higher percentage of the debt in Chrysler was secured, so it was a bigger liability, so worth pushing more. A third possibility is that the Administration simply thought they could get away with it easier in Chrysler--that the urgency of the case made it less likely that judges would intervene to stop the sale. Fourth, it is possible that there is some different in how the law would process the two cases, but I have not read any distinction. Fifth, perhaps there is some key factual difference that I have overlooked or misunderstood.

Anyway, I'm genuinely asking here--has the Administration provided any explanation for the difference in treatment in the two cases or does any reader have any explanation? This is a question I've been asked a couple of times by reporters now and I haven't really been able to figure out a good answer. AT this point my hunch is that it is a combination of prudential reasons--even if the Administration could do it again it doesn't want to, it isn't as important, and it is less likely that they would get away with it without a more difficult challenge--rather than that there is some difference in the law or economics of the two cases.

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Tuesday, June 16, 2009

Eduardo Penalver's Defense of Sotomayor's Didden decision:

Eduardo Penalver, a prominent property scholar, has written an interesting, but I think ultimately unsuccessful defense of Judge Sonia Sotomayor's ruling in the Didden case, which I described and criticized here, here, and here. As readers will recall, Didden involved a case where two businessmen's property was condemned because they refused to pay $800,000 to Gregg Wasser, a developer designated by the Village of Port Chester, NY as the primary redeveloper of its "redevelopment area" under a 1999 agreement.

Here is Penalver's argument:

At first glance, the facts of the case sound like Kelo redux, except with a developer on the receiving end of the condemnation instead of elderly homeowners. But there is a wrinkle. Language in Kelo left the door open for challenges to condemnations where the stated reason for the condemnation (in this case, economic redevelopment) is not the actual reason for the exercise of eminent domain — a sort of pretext challenge to condemnations. The plaintiffs in this case alleged that, after Port Chester had authorized the condemnation of land within the redevelopment district but prior to the actual condemnation of their parcel, the designated developer demanded an $800,000 payment from the developer/landowner to walk away from his power to condemn the parcel....

While I think there are some significant problems with the trial court's opinion, and while I disagree with the Second Circuit's use of a summary order, the case does not seem to me to be such a clear slam dunk for the plaintiffs that it should cause Sotomayor any serious trouble. The Liptak story [in the NY Times] made a great deal of the demand for the $800,000 payment, and rightly so. But the fact may be less obviously damning than initially appears to be the case.

The demand for the payment was made, as I understand the facts, by the developer granted by Port Chester the exclusive power to carry out redevelopment within the designated redevelopment area. That area included the plaintiffs' parcel. Now, I take it that the redeveloper agreed to take on his role because he stood to make a tidy profit from redeveloping the land within the redevelpoment area pursuant to the comprehensive plan and empowered with the ability to assemble parcels through the use of eminent domain. But the redeveloper certainly looked at the economics of the entire plan, and the profit to be earned from the plan as a whole. That profit would not come from every parcel or every individual element of the overall plan, but on the accomplishment of the redevelopment plan as a whole.

In the redeveloper's negotiations with the plaintiffs, the plaintiffs indicated that they wanted to redevelop their parcel within the redevelopment area (as part of a project that would have included some land they owned outside the redevelopment area) themselves, keeping the profits from that project for themselves as well. It appears to have been in the context of these negotiations that the redeveloper asked for the $800,000 payment in order to forgo condemnation and as his condition for allowing plaintiffs to, in effect, remove their parcel from the larger redevelopment area.

The plaintiff quoted in the story called this extortion. But it's not obvious to me that this is the best way to characterize the dynamics of the situation. If the redevelopment of the plaintiffs' parcel was one of the elements on which the redeveloper stood to make a substantial profit, foregoing his own monopoly right to redevelop that parcel (a right given to him by the city when it designated him the developer for the redevelopment project) would have altered (from his perspective) the economics of the larger project as a whole. In other words, if I'm reading the facts correctly... to earn the profits from that parcel would have represented a significant opportunity cost to the redeveloper, and, as such, his demand for some compensation for walking away strikes me as less sinister.

The key problem with Penalver's rationale is that the redevelopment agreement only gave Wasser the power to condemn property for the purposes of advancing the goals of the redevelopment plan, which the district court decision (available here) quoted as "to revitalize and beautify the Village’s long neglected waterfront, eliminate a deteriorating downtown urban blighted area, bring sorely needed jobs to the Village, add to the Village’s tax base, and importantly, bring the public back to the Village’s downtown and waterfront." It did not give him the power to condemn property solely because the current owners refused to pay him money or grant other concessions in exchange for his forbearance. Had the agreement done so, it would have been a clear violation of federal constitutional restrictions on "pretextual" takings intended to benefit a private party (reaffirmed even in Kelo v. City of New London, as Penalver notes), and possibly also a violation of New York state law.

Penalver in effect suggests that, even if this taking wasn't needed to promote the redevelopment of Port Chester, it was constitutionally permissible because the owners' property helped to pay Wasser for his services in redeveloping the area. However, neither Kelo nor any other federal decision has ever held that the government can condemn the property of one individual in order to compensate some other private party for performing a public service. A program to pay public officials by condemning private property and transferring ownership to them would surely be unconstitutional. That conclusion is even more clear if the property is transferred to a private individual who isn't a government employee.

Penalver also argues that the Sotomayor panel's decision was justified by the fact that the owners had not filed their claims in time under the statute of limitations. As I noted in an earlier post, this point ignores the fact that Sotomayor's opinion decided the substantive constitutional issue as well. Even if Sotomayor was right about the statute of limitations question, she commmited a grave error in her extremely cursory resolution of the constitutional issue. The latter, of course, is vastly more important than the former and is the reason why the case has attracted so much attention.

Moreover, as I explained in this amicus brief (pp. 14-16) coauthored with several other property scholars, the Second Circuit's resolution of the statute of limitations issue was in fact inseparable from its resolution of the substantive question. The court had ruled that the three year statute of limitations expired in 2002, three years after the declaration of the 1999 redevelopment plan. However, this simply ignores the fact that the owners were challenging not the declaration of the plan as such, but rather Wasser's pretextual use of it in November 2003 as leverage for extorting money from them. Our amicus brief explains more fully why Kelo and other Supreme Court precedents allow owners to challenge pretextual takings even in cases where they occur within a redevelopment area. Indeed, as we explain there (pp. 11-12) the Kelo majority actually cited a 2001 case where a taking within a redevelopment area was invalidated as an example of the kind of pretextual condemnation that they believed to be unconstitutional.

89 Comments

Obscenity Conviction for Adult-to-Adult Noncommercial E-mail About (Fantasy) Sex With Children:

I blogged last December about the Fourth Circuit opinion (U.S. v. Whorley) upholding this conviction; yesterday, the Fourth Circuit denied rehearing en banc, with only one vote in favor of en banc review -- that of Judge Gregory, who dissented from the panel opinion. Here's most of his dissent from the denial of rehearing; I think the majority have the better view of the matter under existing First Amendment precedents, and I doubt that the Supreme Court will agree to hear the case to revisit or limit those precedents, but I thought the argument was nonetheless worth noting:

Dwight Whorley was convicted on twenty counts of violating [the federal ban on transporting obscenity in interstate commerce] for communicating by e-mail with consenting adults about their personal and private fantasies. The offending e-mails were purely textual and did not include any images. They implicated no commercial interest and, although the e-mails described fantasies about sexual conduct involving children, the children referred to were imagined, not real. It is undisputed that the e-mails did not involve any victimization or exploitation of actual children....

This is a difficult case. The e-mails were admittedly transmitted and received through channels of interstate commerce and were found by a jury to be obscene under the obscenity test laid out in Miller v. California (1973). One might say that this absolves us of the need to look any further into the potential constitutional harms inflicted by the application of 18 U.S.C. § 1462 to Whorley's conduct. Haven't we long said, after all, that the First Amendment does not protect obscenity? Yet, "First Amendment freedoms are most in danger when the government seeks to control thought or to justify its laws for that impermissible end." Ashcroft v. Free Speech Coalition (2002). I am hard-pressed to think of a better modern day example of government regulation of private thoughts than what we have before us in this case: convicting a man for the victimless "crime" of privately communicating his personal fantasies to other consenting adults.

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Chinese woman resists rape, is criminally convicted, then released:

Deng Yujiao, the hotel waitress whose case became a cause celebre in China, was released today. The Badong County People's Court had found her guilty of causing "injury with intent" because she fatally stabbed one local Communist official and injured another.

Ms. Deng explained that she used a fruit knife in self-defense when the men attempted to sexually assault her. The original police report said that the men asked for "special services," which is popular euphemism for sex. Later reports claimed that the men only asked for "bathing service," which is a legitimate service offered at hotels like the one Deng worked at.

In any case, Ms. Deng repeatedly told the men that she was a waitress and did not work in the bathhouse section of the hotel. The official report omits the fact that Deng Guida, the decedent, is accused of beating the victim after being refused sex, calling her a prostitute and threatening to kill her. Finally, the most recent report, released a few days before the 20th anniversary of the Tiananmen Square massacre on June 4, downplayed Deng Yujiao's "guilt" and seemed calibrated to appease the growing numbers of Chinese clamoring for justice.

Even when releasing Ms. Deng, the court claimed that her self-defense was "excessive." That claim seems incorrect. Article 20, Clause 3 of the Chinese Criminal Law states:

Where a defence is conducted to an immediate violent crime of committing physical assault, committing homicide, robbery, rape, kidnapping, and other crimes seriously endangering the security of a person, and it causes bodily injury or death to the unlawful infringer, such an act shall not be defence that exceeds the limits of necessity, and criminal responsibility shall not be borne for such an act.
Nevertheless, the court pointed to two grounds in favor of releasing her. First, she had reported the incident to the police. Second, she supposedly had diminished responsibility because she is manic-depressive. Her former lawyers, however, dispute the manic-depressive assertion. Some commentators believe the mental health allegation, initially made at the outset of the investigation, was originally fabricated to discredit her; later, it became a handy tool to have her released without the government needing to openly account for the Communist Party officials' crimes.

Deng Yujiao's release is very good news; but it is less a victory for the rule of law--she was found guilty after all--and more a political response to the widespread public support she received and an attempt to head off further public discussion of violent abuses by Communists Party officials.

Thanks to Epoch Times, a newspaper which is outlawed in China, but which is distributed in the U.S. and other nations, and which reports frequently on human rights abuses in China. Also thanks to Independence Institute summer associate Dave Heal, who researched this story and co-wrote this post.

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Unusual State-Level Hunting and Animal Killing Rules:

My colleagues at Mayer Brown LLP and I are working on a pro bono amicus brief in the U.S. v. Stevens case — arguing in favor of striking down the speech restriction — and I wanted to ask readers who know about state hunting regulation for some help.

The law being challenged is 18 U.S.C. § 48, which says:

(a) Whoever knowingly creates, sells, or possesses a depiction of animal cruelty with the intention of placing that depiction in interstate or foreign commerce for commercial gain, shall be fined under this title or imprisoned not more than 5 years, or both.

(b) Subsection (a) does not apply to any depiction that has serious religious, political, scientific, educational, journalistic, historical, or artistic value.

(c) In this section --
(1) the term “depiction of animal cruelty” means any visual or auditory depiction, including any photograph, motion-picture film, video recording, electronic image, or sound recording of conduct in which a living animal is intentionally maimed, mutilated, tortured, wounded, or killed, if such conduct is illegal under Federal law or the law of the State in which the creation, sale, or possession takes place, regardless of whether the maiming, mutilation, torture, wounding, or killing took place in the State; and
(2) the term “State” means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and any other commonwealth, territory, or possession of the United States.

As you can see, the law applies (among other things) to depictions of conduct that is legal where it took place but illegal where it was distributed. Thus, for instance, if bullfights are illegal in California but legal in Spain, commercially distributing in California photos of a Spanish bullfight would be a federal felony, unless the depictions have "serious value."

I'm looking for examples of

  1. "conduct in which a living animal is intentionally maimed, mutilated, tortured, wounded, or killed"
  2. that is likely not to seem particularly outrageous to most Justices, and
  3. that (unlike bullfighting bans) is legal in many states but banned in a few (or even in quite a few).
Say, for instance, that hunting with bows and arrows is banned in only a few places, say New Jersey, and legal in many others, such as Montana. (I'm just pulling a hypothetical out of the air; I don't know whether it's real, but I just wanted to concretely illustrate my query.) This would mean that photos of a hunter wounding or killing a deer with an arrow in Montana couldn't be commercially distributed nationwide — including via the Internet — because any distribution in New Jersey would be a federal felony, unless the New Jersey jury concludes the photos have serious value (something that may often be quite hard to be sure about up front). That would be the very sort of example I'd like to see.

Other good examples would be if only a few states ban the killing of some animal, or ban some methods of killing, or ban the killing of female game animals but not males, or ban the taking of fish that are smaller than some size, while many other states allow this. Naturally, this is just a small part of what we're likely to argue in the brief. But I was hoping I might have readers' help with this. If you can point me to some such laws, I'd be much obliged.

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Off to Montana -- Then Back to Columbus:

I'm off to Bozeman, Montana early tomorrow for a few talks and a conference, so there will be light blogging ahead.

I'll be back next week in time to give a talk before the Columbus Lawyers' Chapter of the Federalist Society on Thursday, June 25 on "Judge Sotomayor, the Confirmation Process, and the Future of the Supreme Court." The talk is at noon at the Athletic Club of Columbus, 136 East Broad Street. RSVP Info below the fold.


Goldstein on Sotomayor and Race Cases (Again):

SCOTUSBlog's Tom Goldstein has an op-ed in today's NYT on how Sonia Sotomayor has handled cases involving race on the U.S. Court of Appeals for the Second Circuit. Given my high opinion of Goldstein's work, I found the article disappointing.

Goldstein frames the article as a response to the charges that Sotomayor is biased or, worse, a "racist." As I've blogged previously, the racist charge is outrageous and unjustified. In this context it is also something of a straw man.

Substantively, the op-ed largely rehashes his conclusions from this SCOTUSBlog post. As a consequence, the essay is subject to the same criticisms I made here and David Stras made on SCOTUSBlog. Among other things, insofar as the analysis fails to compare Judge Sotomayor's pattern of deciding cases with those of her colleagues, it does not tell us very much about whether Judge Sotomayor is more or less likely to let her own preferences with regard to racial matters influence her judging than other judges. I recognize that such an analysis would likely require more time and energy than a practitioner in Goldstein's position has available, but such an analysis is necessary if one really wants to be able to make sweeping claims based on the numbers.

As has been pointed out time and again, including by President Obama, any competent, reasonably conscentious appellate judge will reach the same conclusion as his or her colleagues in the vast majority of cases. In most such cases, the relevant law and precedent are sufficiently clear. [As an aside, this would even be true of a competent-yet-"racist" judge, as racial bigotry would not necessarily lead a judge to be ignore precendent, text, and the like.] A judge's "biases" or predisipositions are only likely to come into play in that small handful of cases -- five percent by the President's estimation -- in which the law is sufficiently unclear that there is room for a judge to indulge his or her preferences. This fact, and institutional pressures for unanimity, mean that the vast majority of appellate panel decisions are unanimous. As I don't think there is any question that Judge Sotomayor is a highly competent and conscientious judge, noting that she agreed with her colleagues in the vast majority of cases does not tell us anything that we did not already know.

If we really want to know whether and how Judge Sotomayor's legal and policy preferences are likely to affect her decisions in race-related cases on the Supreme Court, we have to look at that small percentage of cases in which the law was unclear or where she and her colleagues diverged. There are only a handful of such cases, but focusing on these opinions is likely to tell us more than Goldstein's superficial analysis. Ricci is relevant here -- both because of how it was handled procedurally and because the Obama Administration has asked the Supreme Court to reverse and remand the case -- as are some other cases like Brown v. City of Oneanta (an equal protection challenge to police conduct I discussed here), Gant v. Wallingford Board of Education (involving a claim that demoting a black elementary school student was racially discriminatory), and Hayden v. Pataki (a disparate impact challenge to felon disenfranchisement).

Looking at the race-related cases in which Judge Sotomayor has disagreed with her colleagues leads me to the following conclusion (although it does not convince me to oppose her nomination). Compared to the other judges on her Cirucit, Judge Sotomayor appears more inclined to accept aggressive and innovative use of equal protection arguments in race-related cases and seems to be more accepting of the use of race to achieve diversity in the workplace. This does not make her an "extremist," and it certainly does not make her a "racist," but it does suggest she would fit comfortably on the "liberal" side of the current court on such issues, and is consistent with the inference one could draw from her speeches. Insofar as one disagrees with this approach to race-related cases, this could be cause for concern. [Conversely, insofar as one believes the current Court is too timid on race-related issues, it could be cause for cheer.]

I recognize that space limitations likely prevented Goldstein from presenting a more nuanced picture of Judge Sotomayor's record in this area, and almost certainly precluded a more detailed discussion of Ricci and other cases. But I also think that it is mistaken to claim that Goldstein's review of the cases somehow proves that Judge Sotomayor would be particularly moderate or restrained on race-related issues or is somehow immune to allowing her biases to influence her resolution of close cases.

Related Posts (on one page):

  1. Goldstein on Sotomayor and Race Cases (Again):
  2. Brown v. City of Oneonta:
  3. Judge Sotomayor & Race Cases:
21 Comments

Gay Rights Group Planning to Publicly Out Signers of Referendum Petition:

The Spokane Spokesman reports:

Petitions were being printed Tuesday for Referendum 71, which asks Washington voters to overturn a new law granting same-sex domestic partners many of the rights of spouses.

But those who sign the petitions may be in for a surprise. Some R-71 opponents have put up a Web site -– www.whosigned.org -– where they intend to post the names of all the required 120,577 signers.

Washington law apparently makes the names of petition signers publicly available, and if that's so then those who disagree with the petition certainly have a First Amendment right to publicize those names. To be sure, such public identification of people's political actions can deter people from exercising their political rights, and might even be intended to have that effect. (But the use of speech to pressure people through threat of social ostracism is constitutionally protected. And this is so even if the speech may have the effect of stimulating illegal discrimination against people -- Washington law prohibits employers from discriminating against employees based on their political activities -- and conceivably even violence.

(The site organizers are quoted as saying that “We think that it will help neighbors talk to each other,” and the site also says that the publicity can help people verify the accuracy of the petitions. But I'm pretty sure that these won't be the main effects of the site's operation, and I suspect that they weren't the sole reasons for the site to be put up.)

Yet the rise in such outing tactics -- especially now that people can use the Internet to easily turn formally public records that are practically inaccessible into records that are truly available to everyone in seconds -- raises the question of just what records the government should make public, especially in unrestricted ways. Even if the government wants to let challengers check the validity of petition signatures, it can do so in ways that reveal less information, for instance by revealing only small but statistically valid samples, or (possibly) by requiring people who access the information to promise not to redistribute it (see, e.g., Seattle Times Co. v. Rhinehart, upholding such a protective order as to information released for purposes of litigation).

So my questions: Should referendum, initiative, recall, and candidate nomination signatures be treated more like voters' ballots, which are expected to be kept secret? Or should they be treated more like legislators' votes for proposed bills, which are expected to be made public? For that matter, how should we treat other political information, such as voters' party registration and the record of people's large campaign contributions, which is generally made public now? And what should be our ethical judgment about people's publicizing others' low-level political activity of this sort?

175 Comments

"Coriander Crusted Ahi Tuna with Cucumber Slaw and Wasabi Vinaigrette":

From my friend Kristina Johnson (Former Chef). Yum. And even if you won't want to make it, check out the photos — beautiful; here's one:

23 Comments

Legal Ethics Question:

Is it ethical to try to admit a document you know is inadmissible, hoping either that the other side will fail to object, or that the judge will rule incorrectly? Is it ethical to try to remove a case to federal court that you know is not removable, hoping that the other players will be asleep at the switch?

Drug and Device Law blog wants to know.

My own view, putting aside the formal rules of professional conduct, is that attorneys' first obligation should be to the integrity of the legal system, and not to their clients' interests. Even so, I'm not sure I'd say "no" to either question, given that a yes answer means that incompetent attorneys who don't realize they are violating the rules would have an advantage over competent attorneys. [And beyond that, with regard to question 1, from a purely evidence law perspective, I'm not sure you can really say that there is such a thing as inadmissible evidence until there is an objection.]

I remember being conflicted when I heard after I left my firm that my clients had won a motion based on an argument I came up with. I told the partner in charge of the case that my argument "should be a loser, but it's the best we can do, and maybe the judge will buy it." The judge did. I was proud of my forensic skills, and happy that I helped my client, but disturbed that the legally "wrong" side won. I suppose that's why I'm better suited to professoring.

112 Comments

Rosen on Sotomayor, Part IV - The Liberal Dissenter:

Jeff Rosen will have another article on Judge Sonia Sotomayor in the July 1 TNR. This article focuses on her dissenting opinions and concludes that Sotomayor is, in fact, quite liberal, and could help push the Court to the left in economic and criminal law cases. Here's a taste of the article:

If Sotomayor's majority opinions are often hard to distinguish from those of her fellow appellate judges, perhaps that's not surprising in a genre so heavily constrained by legal precedents. It's often in dissents that appellate judges can express their true selves--their passions, judicial philosophies, and unique views of the law. And Sotomayor's little-noticed dissents are clearly the opinions in which she has the greatest personal investment. Unlike her majority opinions, her dissents sometimes show flashes of civil-libertarian passion or indignation, even as they remain closely grounded in facts and precedents. Most important, they are substantively bold, staking out unequivocal liberal positions--from a broad reading of the Americans with Disabilities Act to sympathy for the due-process rights of a mentally ill defendant.

Sotomayor, who published 226 majority opinions on the merits during her more than ten years on the appellate court, published only 21 dissents--a rate slightly below average for appellate judges. Although not always ideologically predictable, they are far more liberal than her majority opinions: According to Stefanie A. Lindquist of the University of Texas, Austin, 63 percent of her dissents can be characterized as liberal, as opposed to 38 percent of her majority opinions. (Only five of the 21 dissents are clearly conservative.) It's in these dissents that a different view of Sotomayor emerges: a judge who can be both crusading and open-minded. . . .

Even if Sotomayor may not turn out to be a master of internal court politics in the style of Obama's judicial hero, Earl Warren, her dissenting opinions suggest that she could play a different but still useful role: a strong voice for civil liberties, and economic and social justice--sometimes in the majority, sometimes in dissent. The fact that the Roberts Court currently has no liberal justice who consistently plays this role is all the more reason to welcome the addition of her voice. As Frank Cross puts it: "She may not have been my first choice, but she's a good choice. Her dissenting opinions look liberal but not knee-jerk, and she goes against the grain sometimes; she issued a few significant conservative decisions." And the politics of her appointment are so overwhelming that they're difficult to resist. For these reasons, conservatives will have a hard time attacking her as judicial ideologue, and Democrats can vote for her with hope and expectation.

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AmeriCorps Inspector General Walpin Fired -- Some Preliminary Observations:

So President Obama has given notice that he's firing Gerald Walpin, the Inspector General of the Corporation for National and Community Service, which operates "AmeriCorps." Walpin, in the midst of a "noisy departure" from his post, alleges that he was fired for sniffing out wrongdoing of a politically connected former NBA player who has gone on to become mayor of Sacramento. The acting U.S. Attorney for the Eastern District of California, meanwhile, reportedly found that Walpin's conclusions seemed overstated and did not accurately reflect all the information gathered in the investigation. He reportedly has referred Walpin to the President's Counsel on Integrity and Efficiency (PCIE), a body established by executive orders 12301 and 12805 to handle investigations into the conduct of Inspectors General themselves.

Norm Eisen, Special Counsel to the President for Ethics and Government Reform, reportedly told Walpin last Wednesday that it was "time to move on" and he would be fired if he didn't resign. When Walpin refused to resign, the President fired him, presumably effective 30 days hence. The Inspector General Reform Act of 2008 provides that ‘‘[i]f an Inspector General is removed from office or is transferred to another position or location within an establishment, the President shall communicate in writing the reasons for any such removal or transfer to both Houses of Congress, not later than 30 days before the removal or transfer." (Before the 2008 amendment, the IG Act of 1978 merely required notice of the reasons, not advance notice.)

In his letter to Speaker Pelosi and President of the Senate Joe Biden sent last Thursday, President Obama stated that "[i]t is vital that I have the fullest confidence in the appointees serving as inspectors general." The letter continued, "[t]hat is longer the case with regard to this inspector general." (I have not yet been able to find a PDF of the letter.) After Senator Grassley fired off a letter demanding information, Counsel to the President Gregory Craig responded that "We are aware of the circumstances leading to that [PCIE] referral and of Mr. Walpin's conduct throughout his tenure and can assure you that the president's decision was carefully considered."

The allegations of a politically motivated firing are getting all the attention, but being a Law Nerd, I wanted to focus briefly on, well, some of the nerdier aspects of the imbroglio. Some commentators have pointed to the bare statement of reasons in President Obama's letter as (1) an indication that he is hiding something, as though he could not give good reasons for the firing; and (2) questioned whether that spare statement of reasons complied with the terms of the Inspector General Reform Act of 2008, which Senator Obama cosponsored.

I suspect that a significant reason the President was very spare in his letter was to avoid setting the precedent of giving Congress detail about firing decisions. They may not admit it, but Presidents, Democratic and Republican, seek to safeguard the prerogatives of the office. They do not want Congress to expect detailed reasons for firing an IG, even if they have them. (Of course, it sometimes is advantageous as a practical matter to "keep your powder dry" so you don't have to walk back from previously proffered statements of reasons.)

Whether stating the IG lacks the President's confidence is a sufficient statement of the "reasons" for the firing is an interesting question. The Executive Branch undoubtedly construes the requirement narrowly to give the President maximum freedom of action, and so would not read the statute to require specificity in the absence of an explicit textual requirement. It would say that even a stripper statement of "reasons" such as apparently provided here gives some degree of confidence that the firing meets whatever minimal constitutional standards that govern such a decision and wasn't for a prohibited reason (race, sex, etc.). At the same time, the President's letter does not state the reasons he lacked confidence in Walpin. And saying only that the President doesn't have confidence in the official is almost tautological, because presumably the President has confidence in those officials he retains.

Related Posts (on one page):

  1. UPDATE -- The White House Provides Further Detail On Walpin Firing And Confirms Interpretation Of IG Act:
  2. AmeriCorps Inspector General Walpin Fired -- Some Preliminary Observations:
48 Comments

Divide and conquer!

Republican divide and conquer the American public. Obama divides and conquers American Jews. Republican congressmen divide and conquer Democrats on cap-and trade. Chrysler and GM divide and conquer automobile dealerships. Interior designers divide and conquer small rooms to create an impression of more space. Marines are not dividing and conquering in Afghanistan. All of this dividing and conquering in just the last few weeks, according to a google news search.

Does “divide and conquer” mean anything at all? Or has it become an all-purpose term of abuse? Find out here; an abstract is below.


Divide and Conquer

Eric A. Posner, Kathryn Spier & Adrian Vermeule

The maxim “divide and conquer” (divide et impera) is invoked frequently in law, history, and politics, but often in a loose or undertheorized way. We suggest that the maxim is a placeholder for a complex of ideas related by a family resemblance, but differing in their details, mechanisms and implications. We provide an analytic taxonomy of divide and conquer mechanisms in the settings of a Stag Hunt Game and an indefinitely-repeated Prisoners’ Dilemma. A number of applications are considered, including labor law, bankruptcy, constitutional design and the separation of powers, imperialism and race relations, international law, litigation and settlement, and antitrust law. Conditions under which divide and conquer strategies reduce or enhance social welfare, and techniques that policy makers can use to combat divide and conquer tactics, are also discussed.

12 Comments

Risk Shifting that Might Turn Out Not to Shift Risk?

The WSJ money and finance page had a story on Monday, June 15, 2009, about the return of an old financial product in new clothing for the municipal bond market. That market has suffered as concerns about municipal and state finances grows while concerns about the guarantors, explicit and implicit, by banks and financial institutions, has grown even faster. The problem has always been one of borrowers wanting to borrow for the long term but paying short term rates:

Much like auction-rate, variable-rate, and corporate floating-rate debt, the new tax-free "Windows" or "X-tender" securities offer municipalities the ability to borrow for the long term while paying only short-term interest rates.

This model proved dangerous during the credit crisis. Banks and bond insurers -- who offered both express and tacit guarantees to backstop the debt -- failed to live up to some of their promises. These securities became untradeable and dropped in value, leaving money-market funds in jeopardy of "breaking the buck." Borrowers like municipalities, nonprofit institutions and student-lending companies faced penalizing interest rates well over 10% for months.

Let me say that the idea that money-market funds could actually be riskier than federally insured depositary accounts certainly gave me pause - though obviously it should not have, since every statement for my money market fund said explicitly not insured by the FDIC, but I treated it as all interchangeable, risk-wise, and the Federal government quickly stepped up to the plate and covered my exercise in moral hazard, and yours. The lesson that Wall Street seems to have absorbed is that the banks and bond-insurers didn't pay off as planned, or were at risk of doing so, and therein lies the source of potential trouble. So the new (old) instruments shift the risk onto the municipal issuers directly:

Like auction-rate securities and other variable-rate debt, the new instruments have an interest rate that resets every week, but this one is based on a short-term municipal debt index. The securities act like short-term debt and are appealing to money market funds that need to be able to sell their investments quickly.

This time, though, the banks removed some of the weak links from auction-rate securities and variable-rate demand bonds. Instead of banks or bond insurers acting as a guarantor or buyer of last resort at the auctions -- which they were increasingly forced to do last year -- the borrower itself promises to accelerate repayment. The borrower has seven months to repay.

The question, of course, is whether this structure is stronger or weaker than the one it replaces. It addresses institutions that failed, or were at plain risk of failing, to meet their promises explicit and implicit. But does anyone think that the true problem for investors is solved by putting the burden onto municipal issuers? This is so obvious a point that I wonder if there is not a political, rather than economic, motivation behind it - the assumption that the Federal government serve as the guarantor of last resort if or when local governments and states begin defaulting:

That structure puts greater risks on the back of the borrower, which needs to come up with the money to repay bonds. The risks also flow to money-market funds, which must be able to easily sell holdings in order to keep each share at $1 at all times.

Despite the risks, the Securities and Exchange Commission blessed the instruments, allowing money-market funds to buy the debt.

Banks are also taking advantage of pent-up demand from municipalities that need money. Outstanding issuance of variable-rate debt has shrunk by approximately $100 billion in 2008 -- a 20% drop, according to Municipal Market Advisors. The banks are now estimating as much as $10 billion in such "Windows" deals could hit the market over the next six months. So far, at least two municipalities have sold the debt and another deal is close to completion.

Some fund managers aren't convinced. Steven Permut, senior vice president at American Century Investments, which has a pair of tax-free money-market funds, said he was "uncomfortable" with the product as proposed, because it would expose his funds directly to the risk that an issuer didn't have adequate cash to refinance in difficult market conditions.

I'm with Permut on the risks here. It's not just California; it's all those local government entities, too, in places you've never heard of. But given the demand for municipal financing, the increased expense of bank bond guarantees and the questions about them, but also the mounds of cash sitting in the funds in a world of super-low short term rates:

"The money funds are being forced into being more aggressive," said MMA managing director Matt Fabian.

With short-term interest rates at historical lows, funds are reaching to riskier products for higher yields. "They've become increasingly liberal in the structures they will accept because they're sitting on so much cash," said Mr. Fabian.

9 Comments

Human Rights Watch Goes to Saudi Arabia:

A delegation from Human Rights Watch was recently in Saudi Arabia. To investigate the mistreatment of women under Saudi Law? To campaign for the rights of homosexuals, subject to the death penalty in Saudi Arabia? To protest the lack of religious freedom in the Saudi Kingdom? To issue a report on Saudi political prisoners?

No, no, no, and no. The delegation arrived to raise money from wealthy Saudis by highlighting HRW's demonization of Israel. An HRW spokesperson, Sarah Leah Whitson [who Volokh readers have encountered before], highlighted HRW's battles with "pro-Israel pressure groups in the US, the European Union and the United Nations." (Was Ms. Whitson required to wear a burkha, or are exceptions made for visiting anti-Israel "human rights" activists"? Driving a car, no doubt, was out of the question.)

Apparently, Ms. Whitson found no time to criticize Saudi Arabia's abysmal human rights record. But never fear, HRW "recently called on the Kingdom to do more to protect the human rights of domestic workers."

H/T: NGO Monitor

UPDATE: Nothing wrong with a human rights organization worrying about maltreatment of domestic workers. But there is something wrong when a human rights organization goes to one of the worst countries in the world for human rights to raise money to wage lawfare against Israel, and says not a word during the trip about the status of human rights in that country. In fact, it's a virtual certainty that everyone in Whitson's audience employs domestic servants, giving her a perfect, untaken opportunity to boast about HRW's work in improving the servants' status. But Whitson wasn't raising money for human rights, she was raising money for HRW's propaganda campaign against Israel.

And in the comments, someone who claims to have worked for HRW writes, "I can tell you that the people on the research and policy side of the organization have little, if any, contacts with people on the donor side." If that's true, apparently this is yet another exception HRW makes for Israel: Ms. Whitson, who gave the presentation to potential Saudi donors, is director of HRW’s Middle East and North Africa Division.

Also, a comment by a Nathan Wagner from a post at OpinionJuris criticizing yours truly:

Surely there is a moral difference between raising funds in free nations through appeals to ideals of universal human rights and raising money in repressive nations through appeals highlighting pressure brought against their enemies.

[Moreover], the former type of fundraising does not imperil the organization's mission, but fundraising Bernstein highlights does, since any significan reliance on such funds will necessarily mute criticism of the repressive government.

Finally, some would defend HRW by pointing it that it has criticized Saudi Arabia's human rights record rather severely in the past. The point of my post, though, is not that HRW is pro-Saudi, but that it is maniacally anti-Israel. The most recent manifestation is that its officers see nothing unseemly about raising funds among the elite of one of the most totalitarian nations on earth, with a pitch about how the money is needed to fight "pro-Israel forces," without the felt need to discuss any of the Saudis' manifold human rights violations, and without apparent concern that becoming dependent on funds emanating from a brutal dictatorship leaves you vulnerable to that brutal dictatorship later cutting off the flow of funds, if you don't "behave."

87 Comments

Snuffing Out Tobacco Ads:

The NYT reports that provisions of the new tobacco legislation likely to be signed by President Obama this week is certain to face a First Amendment challenge in federal court. While bill sponsor Rep. Henry Waxman claims it was "carefully drafted" to survive court scrutiny, the legislation contains provisions virtually identical to some struck down by the Supreme Court in Lorillard v. Reilly in 2001. Other provisions that purport to limit tobacco companies ability to inform consumers about the nature and existence of FDA regulation could also be problematic.

One interesting question touched on in the story is who will challenge the law. Philip Morris, the nation's largest cigarette manufacturer, supported the bill. But other tobacco companies, such as R.J. Reynolds, and advertising firms are potential plaintiffs. Civil liberties groups like the ACLU oppose some of the advertising restrictions, but might have difficulty demonstrating standing to mount a legal challenge.

Related Posts (on one page):

  1. Snuffing Out Tobacco Ads:
  2. Tobacco Regulations and Norms:
13 Comments

Obama on the Iranian Election:

As Jim relates below:

My understanding is, is that the Iranian government says that they are going to look into irregularities that have taken place. We weren't on the ground, we did not have observers there, we did not have international observers on hand, so I can't state definitively one way or another what happened with respect to the election.

But what I can say is that there appears to be a sense on the part of people who were so hopeful and so engaged and so committed to democracy who now feel betrayed. And I think it's important that, moving forward, whatever investigations take place are done in a way that is not resulting in bloodshed and is not resulting in people being stifled in expressing their views.

When I got to the language quoted above, especially when Obama seems to have confidence that the Iranian government is really looking into irregularities, and points out our lack of international observers, I swear I thought Jim was going to reveal at the end that this was an exceedingly clever parody of President Obama. Sadly, no.

The special irony is the widespread reports that the Obama Administration would like to bring down Netanyahu's government in Israel. I suppose we can't expect Obama to say "that we in the United States do not want to make any decisions for the [Israelis], but we do believe that the [Israeli] people and their voices should be heard and respected."

UPDATE: What should Obama have said, without providing the bad guys with anti-American ammunition? Just for example, a simple "America is always on the side of free elections, freedom of expression, and individual liberty" without further comment would have sufficed. And to clarify, of course I recognize that the U.S. is in a very different position with Israel than with Iran. But you don't want to get to a point where foreign leaders think that the best way to immunize yourself from American criticism is to become America's sworn enemy, and the worst way is to be great friends.

Related Posts (on one page):

  1. Obama on the Iranian Election:
  2. The leader of the free world speaks on Iran.--

The leader of the free world speaks on Iran.--

The leader of the free world has now spoken on Iran (text via L.A. Times blog):

Remarks on Iran by President Obama during a White House photo op, June 15, 2009

Obviously all of us have been watching the news from Iran. And I want to start off by being very clear that it is up to Iranians to make decisions about who Iran's leaders will be; that we....

...respect Iranian sovereignty and want to avoid the United States being the issue inside of Iran, which sometimes the United States can be a handy political football — or discussions with the United States.

Having said all that, I am deeply troubled by the violence that I've been seeing on television. I think that the democratic process — free speech, the ability of people to peacefully dissent — all those are universal values and need to be respected. And whenever I see violence perpetrated on people who are peacefully dissenting, and whenever the American people see that, I think they're, rightfully, troubled.

My understanding is, is that the Iranian government says that they are going to look into irregularities that have taken place. We weren’t on the ground, we did not have observers there, we did not have international observers on hand, so I can't state definitively one way or another what happened with respect to the election.

But what I can say is that there appears to be a sense on the part of people who were so hopeful and so engaged and so committed to democracy who now feel betrayed. And I think it's important that, moving forward, whatever investigations take place are done in a way that is not resulting in bloodshed and is not resulting in people being stifled in expressing their views.

Now, with respect to the United States and our interactions with Iran, I've always believed that as odious as I consider some of President Ahmadinejad's statements, as deep as the differences that exist between the United States and Iran on a range of core issues, that the use of tough, hard-headed diplomacy — diplomacy with no illusions about Iran and the nature of the differences between our two countries — is critical when it comes to pursuing a core set of our national security interests, specifically, making sure that we are not seeing a nuclear arms race in the Middle East triggered by Iran obtaining a nuclear weapon; making sure that Iran is not exporting terrorist activity. Those are core interests not just to the United States but I think to a peaceful world in general.

We will continue to pursue a tough, direct dialogue between our two countries, and we'll see where it takes us. But even as we do so, I think it would be wrong for me to be silent about what we've seen on the television over the last few days.

And what I would say to those people who put so much hope and energy and optimism into the political process, I would say to them that the world is watching and inspired by their participation, regardless of what the ultimate outcome of the election was. And they should know that the world is watching.

And particularly to the youth of Iran, I want them to know that we in the United States do not want to make any decisions for the Iranians, but we do believe that the Iranian people and their voices should be heard and respected.

I am struggling against a feeling of utter disgust. I recognize that there are times in diplomacy when one has to hide one's real feelings and to mince one's words about evil. And I realize that it is remotely possible that this is one of those times.

Yet this is a president who mormally loves the bully pulpit. And Obama's statements so far are about as restrained as it is possible for a president to utter without a gun actually being held to his head. One might perhaps understand a statement this mushy if Iran were America's closest political or military ally in the world. But it's not.

Note that even now Obama is not willing to denounce Ahmadinejad. All he is willing to say is "as odious as I consider some of President Ahmadinejad's statements." Obama chooses his words carefully. He doesn't call Ahminejad odious, nor does he call Ahmadinejad's core beliefs odious (after all, sometimes people say loose things that don't express their core beliefs). Nor does he say that Ahmadinejad's statements ARE odious, just that Obama personally "considers" them odious.

Obama is using the same Protestant ethic that he used with Rev. Wright and many others: Love the sinner, Hate the sin. Yet Obama seems to be uncomfortable with concepts like sin or evil. In this case, Obama's version appears to be more like: Love the man others consider to be a sinner, dispassionately (but genuinely) disapprove of what Obama personally considers to be odious.

Will we really get so much in return for our national cravenness as to justify prostrating our country before unelected or corruptly elected Iranian leaders?

Or has Obama already worked out a deal behind closed doors with Iran for them to end their nuclear program or to control their clients in Iraq, Syria, and Lebanon? Given his recent ousting of his envoy to Iran, I highly doubt it.

Related Posts (on one page):

  1. Obama on the Iranian Election:
  2. The leader of the free world speaks on Iran.--

Oddly Enough, Speech Restrictions in America Did Not Begin with the Modern Multiculturalist Left:

A commenter on the New Jersey parental profanity ban thread writes:

Geez, they didn't even bother to criminalize "offensive speech" yet, going directly from "hate speech" to "abusive to your own d*mned kids" speech.

But, hey, it's all for the children. The Village has to start raising them sometime, and you might as well not let a good crisis go to waste.

The trouble with this argument is that there's no "going directly from 'hate speech'" to punishment of vulgarities around one's own children here. The punishment of vulgarities long preceded the modern attempts to restrict "hate speech." This particular statute was enacted in 1915; the slightly musty language of the full statute, to which my post linked, might have suggested the same thing. (Consider, for instance, the clause about "performing of any indecent, immoral or unlawful act or deed, in the presence of a child, that may tend to debauch or endanger or degrade the morals of the child.")

Even if one looks way earlier than the modern "hate speech" movement to "group libel" statutes, the earliest such statute I could find was from 1917, two years after the New Jersey statute. And even if there were some earlier ones (there was a 1913 statute in New York banning advertisements that stated that people of certain races or religions weren't welcome in places of public accommodation, though that's pretty far removed from modern proposed "hate speech" bans), there's no reason to suspect any causal connection between the two.

The fact is that throughout much of American history, there were all sorts of restrictions — on vulgarity, on harsh criticism of religion, on speech that had the tendency to encourage people not to register for the draft, and much more — that would be pretty clearly unconstitutional today. They didn't come from the modern multiculturalist left, or from any discernible predecessor of it. Many, perhaps most, of them came from what would probably today be seen as the right, though it's sometimes hard to tell for sure.

I've often criticized many speech restrictions and proposed speech restrictions that have come from the left (as well as many from the right and from other places). I'm certainly happy to condemn many of the left's attempts to restrict speech (again, alongside others' attempts). But let's not lightly assume that past restrictions, or for that matter current restrictions, stem, directly or not, from the left's proposals. That just isn't what American history, or the present state of American politics, suggests.

For more on my general point here, see here. Such overattributions of speech restrictions to the left are, unfortunately, not just isolated incidents, which is why I thought they might be worth publicly correcting.

Related Posts (on one page):

  1. Oddly Enough, Speech Restrictions in America Did Not Begin with the Modern Multiculturalist Left:
  2. No Habitual Swearing Around Your Kids in New Jersey:
18 Comments

Monday, June 15, 2009

What the Didden Case Tells Us About Sotomayor's Attitude Towards Property Rights:

In today's New York Times, leading legal reporter Adam Liptak has an informative article about Sonia Sotomayor's dubious property rights decision in Didden v. Village of Port Chester, which I previously criticized here and here. In Didden, a court of appeals panel headed by Sotomayor upheld the condemnation of two businessmen's property because they refused a politically connected developer's demand to either pay him $800,000 or allow him a 50% stake in their business.

Liptak does a good job of summarizing the case and its importance, though some legal details have inevitably been omitted. I was slightly surprised to see the article draw an apparent contrast between my view of Didden's significance and that of Richard Epstein, the leading University of Chicago and NYU lawprof with whom I coauthored an amicus brief urging the Supreme Court to reverse Sotomayor's decision in the case:

“This is the worst federal court takings decision since Kelo,” said Ilya Somin, who teaches property law at George Mason University and helped write the brief. “It’s very extreme, and it is significant as a window into Judge Sotomayor’s attitudes toward private property.”

But another author of the brief, Richard A. Epstein, said the decision in Mr. Didden’s case was a rare misfire that provided no larger insights into Judge Sotomayor’s thinking.

“It’s a disappointment and it’s wrong and it’s ill thought out,” Professor Epstein, a law professor at the University of Chicago and New York University, said of the ruling. “But it’s not one of six. It’s one of two.” (The other poorly handled decision, he said, was Ricci v. DeStefano, which rejected employment discrimination claims from white firefighters in New Haven.)

If this is indeed Epstein's view, it is somewhat in tension with his previous statement that "American business should shudder in its boots if Judge Sotomayor takes the attitude [reflected in her Didden opinion] to the Supreme Court." As he explained in the earlier op ed and I discussed here, Didden is striking because it goes even further than Kelo v. City of New London in allowing private property to be condemned for the purpose of enriching other private parties, without any proof that some sort of public benefit will be achieved. Epstein also pointed out that Sotomayor dismissed the issue with a cursory one sentence statement, suggesting that she didn't even think it was a close call.

Perhaps Epstein merely meant to say that Sotomayor has made only two egregiously bad decisions in important cases (Didden and Ricci v. DeStefano, effectively criticized in this series of posts by co-conspirator Jonathan Adler), and that these two gross errors don't reflect her overall record. I certainly agree that Sotomayor's performance in most cases was far better than in these two, and that she is generally very competent. Nonetheless, I think these two cases are telling precisely because they are unusual. As Barack Obama famously pointed out, "while adherence to legal precedent and rules of statutory or constitutional construction will dispose of 95 percent of the cases that come before a court, so that both a Scalia and a Ginsburg will arrive at the same place most of the time on those 95 percent of the cases — what matters on the Supreme Court is those 5 percent of cases that are truly difficult." Didden and Ricci are part of Obama's 5 percent - major cases on important disputed constitutional issues. As Obama emphasizes, a judge's performance in these types of cases is especially critical in determining her fitness for the Supreme Court. Sotomayor simply hasn't handled very many important constitutional cases, so we must carefully consider the few that she has.

Indeed, Didden is probably even more telling than the cases Obama had in mind it was considerably easier than most cases in the 5 percent. It was precisely the kind of "pretextual" taking that even the Kelo majority considered to be unconstitutional.The "truly difficult" challenge here was justifying in favor of the government without even allowing the property owners to present their evidence of a pretextual taking before a jury; it would have been relatively easy to defend a decision going the other way. It is revealing that Sotomayor not only got the outcome wrong, but seemed to think it wasn't even close. If Sotomayor didn't believe that there was a serious property rights issue even in this extreme case, it is unlikely that she would protect property rights under the Takings Clause in any other situations likely to come before the Supreme Court.

UPDATE: Although less important, in my view, than Didden and Ricci, it's also worth noting that Sotomayor made another dubious constitutional ruling in Doninger v. Niehof, an important free speech case where she upheld a public school's decision to punish a student for an internet blog post that she wrote on her own time outside of school grounds. I briefly discussed Doninger in the first part of my LA Times debate with Erwin Chemerinsky. Liberal legal scholars Jonathan Turley and Paul Levinson have been even more critical of Sotomayor's Doninger opinion than I was.

Since Sotomayor has made no more than a handful of important constitutional rulings in her judicial career, the fact that she got three of them badly wrong must be given great weight in assessing her nomination.

UPDATE #2: While I don't want to comment extensively on Ricci v. DeStefano, I should perhaps point out that my disagreement with that decision does not rest on the view that affirmative action is categorically unconstitutional. To the contrary, I think it may well be both morally and legally defensible when used to provide genuine compensation for past racial discrimination. Ricci, however, did not involve any such effort at compensatory justice. For reasons elaborated in Jonathan Adler's posts, Sotomayor's ruling in the case raises many troubling questions even for people who believe, as I do, that the use of racial classifications for affirmative action is sometimes permissible.

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Did Judge Sotomayor Issue an Advisory Opinion?

Senator Cornyn thinks she may have.

[Note: I have no intention of linking to every Cornyn question of the day. I linked this one because it raises an interesting issue that I have not seen discussed in the context of the Sotomayor nomination.]

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Obama administration moves to ban 80% of folding knives:

Under the 1958 federal Switchblade Act, switchblade knives are not importable into the United States, and may not be shipped across state lines. On May 21, U.S. Customs & Border Protection (CBP) proposed the revocation of four previous Ruling Letters; the effect would be a drastic expansion of the definition of non-importable knives. The organization KnifeRights warns that revocations would outlaw approximately 80 percent of the current market in folding knives.

The federal law does not apply to the mere possession or carrying of knives, but as KnifeRights explains, many state and local bans on possession or carrying are parasitic on the federal definition. Accordingly, if the proposed Customs change goes into effect, many millions of people who own or carry pocketknives would instantly be defined as criminals.

The National Rifle Association and other Second Amendment groups have issued alerts about the proposed change, but the KnifeRights website is the key source for detailed information. Founded in 2006, KnifeRights is still a fledgling organization; they do good work, and I am pleased to be a member.

[Note: I added text to clarify that the 80% figure is for folding knives.]

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No Habitual Swearing Around Your Kids in New Jersey:

N.J. Stat. Ann. § 9-6-1 provides that, "Abuse of a child shall consist" of, among other things, "the habitual use by the parent or by a person having the custody and control of a child, in the hearing of such child, of profane, indecent or obscene language." § 9-6-3 makes such abuse a crime.

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No First Amendment Problem With Excluding Turkey-Friendly Materials from an Armenian Genocide Curriculum:

An eminently predictable result under current First Amendment law (Griswold v. Driscoll, D. Mass., June 10, 2009), but still worth noting, I think, for the clear First Amendment defense of leaving curricula to the political process (in the second to last paragraph of the excerpt below):

It appears that reference to the contra-genocide websites was added to the Curriculum Guide because of concerns expressed by the Turkish community. Viewed in the light most favorable to plaintiffs for the purpose of deciding the motion to dismiss, the court assumes that those references were later removed in response to "political pressure" that the Armenian community put on elected and appointed officials. This, however, is not unlawful.

Politics is not a pejorative term in our nation. Properly understood, politics is the essence of democracy. It is the way that a free and vigorous people make and then change public policy. With regard to what will be taught in public school classrooms, we rely on the power of the people to elect and, if they wish, change their representatives as the means to hold them accountable for decisions concerning the content of the curriculum. Except in limited circumstances not at issue here, this is not a role to be performed by United States judges in our federal form of government.

The facts of this case demonstrate that the plaintiffs and those who share their viewpoint concerning Armenians in the Ottoman Empire are fully capable of participating in the political process. It is in the political arena that they must seek the relief to which they are not entitled in federal court.

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Is the US Yielding to Iran's Preconditions for Negotiations?

It couldn't be worse timing, but Dennis Ross, the US envoy to Iran, is being reassigned.

People don't know exactly why Ross is being ousted. It might be because he was thought to be too hawkish, or too pro-Israel, or simply because Iran didn't want to accept Ross as an envoy because he is a Jew.

Early in the last Presidential campaign Barack Obama said that we should meet with Iran without preconditions (a position that he later "nuanced"). Who thought then that it might be Iran that would have the preconditions? And who thought that we might be the ones submitting to them?


Health Reform: Naive, Hypocritical, or Simply Dishonest?

Those are the three choices offered by Robert Samuelson in a scathing piece on the Obama administration’s health reform initiative in today’s Washington Post:

It's hard to know whether President Obama's health-care "reform" is naive, hypocritical or simply dishonest. Probably all three. The president keeps saying it's imperative to control runaway health spending. He's right. The trouble is that what's being promoted as health-care "reform" almost certainly won't suppress spending and, quite probably, will do the opposite.

* * *

[The Obama administration] talk[s] endlessly about restraining health spending — "bending the curve" is the buzz — as if talk will suffice.

* * *

The central cause of runaway health spending is clear. Hospitals and doctors are paid mostly on a fee-for-service basis and reimbursed by insurance, either private or governmental. The open-ended payment system encourages doctors and hospitals to provide more services — and patients to expect them. It also favors new medical technologies, which are made profitable by heavy use. Unfortunately, what pleases providers and patients individually hurts the nation as a whole. That's the crux of the health-care dilemma, and Obama hasn't confronted it. His emphasis on controlling costs is cosmetic.

* * *
What's needed is a fundamental remaking of the health-care sector -- a sweeping "restructuring" -- that would overhaul fee-for-service payment and reduce the fragmentation of care.

For more on the role of the payment system in our current state of affairs, including the degree of fragmentation, see this forthcoming piece.

Edited to add a further sentence to the block quote, and to revise the final sentence

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Can Obama Keep His Most Emphatic Promises on Health Care?

In President Obama’s speech to the AMA, he made firm promises that I don’t think he can keep if his plan were to be enacted:

So let me begin by saying this: I know that there are millions of Americans who are content with their health care coverage - they like their plan and they value their relationship with their doctor. And that means that no matter how we reform health care, we will keep this promise: If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what. . . .

If you don’t like your health coverage or don’t have any insurance, you will have a chance to take part in what we’re calling a Health Insurance Exchange. This Exchange will allow you to one-stop shop for a health care plan, compare benefits and prices, and choose a plan that’s best for you and your family - just as federal employees can do, from a postal worker to a Member of Congress. You will have your choice of a number of plans that offer a few different packages, but every plan would offer an affordable, basic package. And one of these options needs to be a public option that will give people a broader range of choices and inject competition into the health care market so that force waste out of the system and keep the insurance companies honest.

If this goes through, many employers will do little different than they are today.

But if the Obama plan is enacted, a substantial portion of employers will cut their health subsidies — raising their employees’ share of contributions to the company plan — in order to drive some of the employees into the government exchange and the public option. Other employers may drop their plans altogether — after all, workers could buy their own coverage in the government exchange — or simply fund part of their workers’ participation in the exchange.

These changes, which would be the direct results of the implementation of the Obama plan, would make it virtually impossible for Obama to keep these promises: “If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

Some rational employers would naturally respond to the changed incentives under the Obama plan and withdraw their health plans or change them to make them less attractive. It seems to me that, if the Obama plan passes as he describes it, many of you will NOT "be able to keep your health care plan. Period."

One additional point. Obama also promised to end restrictions on coverage for preexisting conditions:

That is why we need to end the practice of denying coverage on the basis of preexisting conditions. The days of cherry-picking who to cover and who to deny - those days are over.

Note that the reason for a preexisting conditions clause is in part to avoid cherry-picking by the insured. Obama did not give details, but a simple abolition of such restrictions would lead many rational people of limited means to avoid buying insurance until they got sick. Forego insurance and then enter the government-sponsored exchange to buy coverage when they face major costs. That, of course, would affect the pricing and cost of coverage for nearly everyone else in the system.

For a guy dedicated to change, President Obama seems to have a fairly static idea of how people react to reforms.

UPDATE: The Congressional Budget Office has just released an analysis of the Senate Bill that explicitly assumes that everyone will be required to have health insurance coverage and that those who can afford to pay but don't will be charged a penalty. If so, that pretty much eliminates the preexisting illness issue for basic coverage, though it remains for those who switch plans to get better coverage when they need it (e.g., dental care).

2D UPDATE: On closer analysis, the penalty for not buying insurance would be only $100 a person per year and would be waived for those who met income standards. Thus, the strategy of waiting until sick to buy coverage would still be highly cost-effective for many Americans of modest means. The prexisting conditions problem thus remains as a serious one.

The CBO study projects that by 2014 14 million fewer workers will be covered by employer health plans under the proposed changes than under existing law (thus seemingly undercutting Obama's promise). More than offsetting this loss of coverage, 38 million people will be covered by the exchanges, leading to 36 million people being still uninsured in 2014 (and 37 million uninsured in 2019). The 10-year cost of just part of the bill is projected to be $1 trillion, though that figure doesn't include many of the major costs (and some of the revenue). For example, the public health care option in the exchanges is not priced.

Related Posts (on one page):

  1. White House says Obama Health Care Promises Should Not Be Taken Literally.
  2. Can Obama Keep His Most Emphatic Promises on Health Care?

Treasury to require issuers to retain 5% of securitized loans.

CNBC is reporting that the US Treasury Department is proposing to require that issuers of securitized loans retain 5% of the security. Thus, they remain partly on the hook if they make bad loans and try to flip them to others.

At first glance, this seems like a good idea to me.


Tobacco Regulations and Norms:

The New York Times believes legislation passed by Congress granting the FDA the authority to regulate tobacco products is an "enormous victory for public health." For reasons I explain in this NRO article, I am not convinced the legislation does much for public health, let alone the public good. Among other things, the legislation could frustrate the development and marketing of reduced-risk tobacco products, impose troubling limitations on commercial speech, and cement Philip Morris' position as the tobacco industry's dominant player. Is it any wonder Philip Morris was a big backer of the bill?

Speaking of tobacco regulation, Henry Farrell has an interesting post considering the near "universal success" in implementing smoking bans in public places in the United States as well as overseas, including places like Ireland and Italy where one might have suspected smokers and pub owners to disregard such laws. Specifically, Farrell suggests:

my best guess in the absence of good evidence would be that the success of the ban reflected instabilities in previously existing informal norms about where people could or could not smoke. Laws that work against prevailing social norms face an uphill battle in implementation – unless people come to a general belief that non-compliers are highly likely to be sanctioned by the public authorities, they are likely to carry on doing what they always do. Hence, for example, the continued failure of the RIAA etc to stop file-sharing – file-sharers who both (a) think that there is nothing wrong with swapping music and movies, and (b) that the chance that they are going to be punished is low, are going to go on sharing files (current US law tries to counterbalance this problem by applying relatively draconian penalties to the few file sharers who are caught, but this strategy carries its own problems). Laws that broadly fit with prevailing informal norms, will, obviously, have few implementation problems.

But what we may have seen (if my guess is right) with smoking bans is an unusual case in which prevailing norms (that Irish people can smoke in pubs to their hearts’ content, and that others will just have to put up with it) were much more fragile than they appeared to be, and that the change in law made it easier for those disadvantaged by the prevailing norms to challenge smokers and to shame them into stopping smoking in certain places, hence creating a new set of robust norms.

This seems plausible to me. While I'm no fan of smoking bans — I think rules about smoking can and should be made by individual businesses — it is interesting that such prohibitions have not sparked more resistance, and I think it is clear that even us cranky libertarian types generally prefer patronizing smoke-free places.

So let's say Farrell is correct, and smoking bans have displaced an unstable norm that smoking in restaurants is acceptable with a more robust norm that smoking in restaurants is not. What would happen were such bans to be repealed? My best guess is that relatively little would change. When I think about my favorite local restaurants, I cannot see any of them allowing patrons to smoke even if the law were changed. There are one or two local bars, however, that I suspect might allow smoking on the premises, but they would be the exception. So whereas before the smoking ban here in Ohio, most restaurants and bars allowed smoking in a separate room or at the bar, were the ban repealed today I would be willing to bet that most restaurants and bars would remain entirely smoke-free.

What does this all mean? On the one hand, if most restaurants and bars would remain smoke-free, it seems to me the argument for allowing some establishments to adopt different rules is that much stronger. Remove the bans and us libertarian-types can still toast to the free market system in a smoke-free pub. But it is important to acknowledge that this state of affairs exists today because of the initial government intervention. The smoking ban appears to have helped solve a collective action problem that had kept a suboptimal norm in place. So even if a ban limited the ability of business owners to set the rules for their own businesses, it may have also helped them shift toward preferable business practices. Non-governmental efforts may have produced the same result eventually, but it would almost certainly have taken longer. So smoking bans have been beneficial, but it may also be the case that the maintenance of such bans is unnecessary to retain most of their benefits.

UPDATE: More from Megan McArdle and Stephen Bainbridge. My biggest difference with McArdle is that the market does produce non-smoking bars and restaurants -- I can think of several from Northern Virginia (from when I lived there) and in Ohio pre-smoking ban here. The market even produces non-smoking employers (such as the Cleveland Clinic). It simply does not produce either at a particularly fast rate because it typically takes time for norms to change absent government intervention.

Related Posts (on one page):

  1. Snuffing Out Tobacco Ads:
  2. Tobacco Regulations and Norms:
84 Comments

Peretz on the Cairo Speech:

Marty Peretz has won a lot of ridicule of late, primarily for a series of ill-thought out blog posts. But his recent article on Obama's Cairo speech is superb. (H/T: Instapundit)

One aspect of the speech that hasn't received sufficient attention is the focus on victimology: Israelis were victims of the Holocaust, Palestinians victims of dislocation after the founding of Israel, Americans the victim of the 9/11 terrorists, Arabs the victims of Western imperialism, and so forth.

That this appeals to Obama is not surprising. He and I attended law school at the same time, Obama at Harvard and me at Yale. Victimology was all the rage. It gave one not only moral standing, but, oddly enough (like Sotomayor's "wise Latina") a certain level of intellectual standing.

During our first year in law school, there was a one-day nationwide "student strike for diversity" at elite law schools, including Harvard and Yale. (I don't know for sure whether Obama was involved in this "strike," but he gave a speech on behalf of uber-diversity advocate, and Harvard lawprof, Derrick Bell.) At Yale, students gave speeches throughout the day. What struck me at the time was how eager, almost desperate, the various student speech-givers were to be perceived as victims.

This included not just "people of color," but gays, Jews, Moromons, Catholics, and so on. Not a member of a racial, ethnic, religious, or sexual minority? Perhaps you were victimized by being a "First Generation Professional," such that you didn't know what suit to wear for law firm interviews, or which fork to grasp at lunch with your interviewers. (I wasn't quite a first-generation professional, yet I also didn't know these things, but I hardly wallowed in self-pity about it.) Or perhaps you had a learning disability. Or were from a less-than-ideal home. Or were less wealthy than your classmates. Or had to go to law school while raising a family.

The implicit message was that we all--even white male Protestants attending the best law school in the country, ready to walk into six figure jobs upon graduation--could be united in victimhood, and without such victimhood, our value as individuals is somehow diminished. And this theme cropped up repeatedly in law school.

I've always wondered how the Ivy elite went so quickly from a bastion of self-confident, privileged WASP elitism to the opposite extreme of celebrating victimhood. Regardless, it's a unique way to run a foreign policy.

UPDATE: Peretz is exercised by, among other things the fact that Obama treated Zionism and Israel as a mere response to the Holocaust, neglecting both pre-Holocaust Zionism and Jews' dream of returning to their homeland for two thousand years. I noticed that, but I also noticed that when Obama mentioned America's ties to Israel, he failed to mention the underlying reason for those ties: not the Holocaust, but the fact that Israel is a thriving liberal democracy. In fact, the whole speech was rather devoid of calls for liberal democracy. The president could have appealed to the Arab/Muslim world based on shared aspirations for individual rights, the rule of law, a liberalized economic system, and democracy, but he chose instead of focus on a somewhat ahistorical "shared history." I'm agnostic as to whether that's smart diplomacy, at least for the particular audience at issue. But it's a far cry from a Reaganesque "Mr. Gorbachev, tear down that wall" speech. It's more like a "Mr. Gorbachev, like you we fought a war against the Nazis and suffered because of it, and like you we freed our serfs/slaves in the 1860s, who had suffered grievous oppression for generations. Now that we understand what we have in common, can we be friends now?"

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Supreme Court Takes Regulatory Takings Case:

Among this morning's four cert grants was Stop the Beach Renourishment v. Florida Department of Environmental Protection, a challenge to the constitutionality of Florida's Beach and Shore Preservation Act. Specifically, the petition challenges the Supreme Court of Flordia's conclusion that the law does not deprive upland owners of littoral rights without just compensation in violation of the Fifth Amendment's takings clause. The Florida Supreme Court's 5-2 decision is here.

Although the property owners' cert petition was supported by the Pacific Legal Foundation, it was not viewed as a likely cert grant. The good folks at SCOTUSBlog, for instance, did not have the case on their "petitions to watch" list. To be fair, it's not clear the good folks at PLF thought the case was a likely grant either, as there is relatively little about it on their website. Yet from my first look, it appears to me that this case could be quite significant. If nothing else, it will give us our first glimpse of how Chief Justice Roberts, Justice Alito, and (in all likelihood) Justice Sotomayor view takings issues.

On a related note, the NYT reports today that property rights may be a significant issue during the Sotomayor confirmation hearings and quotes some George Mason law prof as an authority on eminent domain.

UPDATE: Links to the cert briefs in this case can now be found on SCOTUSBlog here.

SECOND UPDATE: Speaking of takings cases, I have a short essay in PERC Reports on Casitas Municipal Water District v. United States, another significant takings case that could find its way before the Supreme Court.

YET ANOTHER UPDATE: The Pacific Legal Foundation applauds the Court's decision to accept cert here. Meanwhile, Richard Frank offers some thoughts on the cert grant, and ponders whether the Court will hear the Casitas case as well.

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Rosch v. Wright on Economics and Antitrust:

FTC Commissioner J. Thomas Rosch takes on Josh Wright for several of Josh's blog posts on Truth on The Market.

Josh responds with a long post here. In my view, Josh gets the better of the exchange, but I congratulate Commissioner Rosch on being willing to read, and engage, his critics. I wish more public officials would do that.

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What in the War on Terror Will the Obama Administration Bring to Congress?

The Washington Post ran a news story on Friday (June 12, 2009, A1), titled "Obama Bows on Settling Detainees: Administration Gives Up on Bringing Cleared Inmates to U.S., Officials Say." The article goes on to describe the situation of the Uighurs and how the administration, faced with revolt by his own party in Congress, and what amounts to a legislative rejection of bringing them or any other Guantanamo detainees to any place in particular actually in a Congressional district in the United States in which voters might reside, is trying to devise Plan B. Plan B in the case of the Uighurs involves buying off Palau with $200 million. But most particularly, Plan B, whatever it is, at least for now does not seem to involve going to Congress to get authority to do anything regarding Guantanamo.

This runs contrary to what Obama said in his much-noticed security speech at the National Archive on May 21, 2009. The title of the speech, after all, sounded like a book by Benjamin Wittes, or the loosely unifying theme of the Hoover Institution Task Force on National Security and Law: "Protecting Our Security and Our Values." It teed up Congress to work with the Administration to provide a long term framework for counterterrorism. Certainly that was how Ronald Brownstein heard the speech, in an article in the National Journal, "Can Congress Step Up on Security?"

Is any of that happening, and/or does it appear that it actually will happen? Is the administration going to Congress, does it really plan to do so, and if so, on what issues?

I am going to skip over the usual listing of ways in which it would appear the new guard is the same as the old guard, etc., etc. - not that it's not important, but it's worth a whole post on its own. What I want to ask here is much more specific than that, so please confine comments to this particular question: Is there anything so far in the War on Terror in which the Administration has gone to Congress for legislation and authority? Is there anything in the War on Terror for which the Administration plans to go to Congress for authority? Really, truly will go to Congress? Is pretty darn likely to go to Congress? Or, notwithstanding the speech, did the administration learn a very different lesson from the Guanantamo rejection by Congress?

I'm prepared to be corrected, because I haven't been following this minutely, and I might have missed some things, but offhand I can't think of anything so far it has sought and obtained from Congress in revamping the War on Terror. Am I wrong on that specific issue of seeking, and obtaining, legislation? Have I missed something?

Granted, the Obama administration is not necessarily proceeding on the basis of pure assertion of executive authority. It is able to proceed, at least in part, on the basis of legislation sought (finally) by the Bush administration - the Military Commissions Act, for example. Nonetheless, I am trying to understand the extent to which the Obama administration is (a) seeking, and obtaining or not, Congressional legislation to regularize the War on Terror, or whatever name we are now calling it, (b) proceeding on the basis of Bush-era legislation, such as the MCA, or (c) proceeding by the exercise of executive authority, apart from specific Bush-era legislation. The speech suggested (a); I am not sure I see evidence of that, now or looking to the future, except for the assertions in the speech itself. On the contrary, the brief but unhappy experience of getting slammed by Congress on bringing detainees to US territory seems, unsurprisingly, to have raised the bar for going to Congress again on any of these issues.

To the extent that (c) is the case. For people like me, who have written that a primary problem - indeed, perhaps the signal systemtic domestic problem of the Bush administration War on Terror - was the administration's adamant refusal to go to Congress in order to get both political branches on the same page through legislation, this raises many, many questions.

My position since 2002 has been that the Bush administration should have gone to Congress - partly for the political solidarity; partly because in taking actions so drastic it was the democratically proper thing to do; and partly to have the legal shield of the most powerful of the Youngstown categories, the two political branches acting on a question of vital national security and foreign policy in concert, so to forestall Justice Kennedy becoming Proconsul Kennedy - rather than asserting executive power as the sole basis by which to act. As I put it in a piece a couple of years ago in the New York Times Magazine (you can kind of tell from the title - "It's Congress's War, Too"), and again in Policy Review, if policy lives by executive discretion, it also dies by executive discretion.

Even if (b) is the case - the administration doesn't need to go to Congress for very much, because it has the specific legislative authority via the MCA and other, earlier enactments - rather than the pure exercise of executive power, I can't say I'm very happy. I had thought - hoped, indeed - that either an Obama or McCain administration would use the prestige that either one of them would bring to the political table to put the deep tradeoffs of national security and civil liberties in a considered long term legislative arrangement proposed and negotiated by the administration with Congress. When the election produced both Obama and a heavily Democratic Congress, I thought this was a done deal, even if I doubted I would be especially happy with particular substantive parts of the deal. To that end, I've been participating in various projects, such as Benjamin Wittes's forthcoming edited volume titled, funnily enough, Legislating the War on Terror: An Agenda for Reform.

So I am looking around and trying to figure out whether there will be new legislation, whether comprehensive or piecemeal, to address such things as trials, detention, interrogation, Guantanamo, state secrets, surveillance, national security courts, and other things.

Apart from the national security speech, what is the evidence for or against the proposition?

Additional thought:

(There is, by the way, another angle on this that is different from either the "meet the new boss, same as the old boss," or the "will they legislate anything?" memes. It is also worth an additional post, so I will only mention it here in passing.

Back in the pieces I mentioned above, but particularly and forcefully in Jack Goldsmith's The Terror Presidency (a Brilliant and Remarkable review of which you can read here in the Times LIterary Supplement, by the way), it was noted that the Bush administration's policies were extraordinarily lawyer-driven, very protective - excessively protective of the executive's litigation positions, as it were, even where those legal positions were light-years away from what the realistic policies might turn out to be. One might or might not agree with that; I'll post on it another day.

The question now raised under the Obama administration is whether it actually has the same syndrome - and, if anything, more of it, because it has still more and more skilled lawyers with all the benefits of hindsight and, in many cases, having the been the Bush administration tormentors during those earlier years. Now, finding themselves in power, "they" now being "them," they are even more mindful of the need to protect the adminstration's litigation positions, and do so even at, as The Terror Presidency notes, the expense of actual, conceivable policy. When the lawyers are in charge of policy in the name of protecting the maximum position in litigation, zealous advocacy can become a disaster for crafting the sensible, non-maximalist policies that were all the non-lawyers wanted all along.

But this I will leave for another post. Despite my having raised this here, I would be very grateful if comments would go to the main part of the post, and tell me what, if anything, is or is going to get legislated, and to what extent this is an exercise in pure executive discretion, and to what extent it is simply operationalizing the already passed legislation such as the MCA. Thanks.)

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Russ Roberts, The Price of Everything:

I recently read Russ Roberts's new novel, The Price of Everything: A Parable of Possibility and Prosperity. For those who don't know Russ's work, his novels are quite unusual. He writes novels that are designed to illustrate economic themes and concepts. Russ is an unusually clear and lively writer--especially for an academic economist--and he actually manages to pull off the feat of writing interesting novels that illustrate economic concepts.

Russ's last book was The Invisible Heart: An Economic Romance. That book illustrated basic economic thinking and the economic approach to questions. I liked it a lot.

I liked The Price of Everything even better. The main focus of the price of everything is to illuminate Hayek's idea of spontaneous order and the value of the price system as an information mechanism that enables individuals to coordinate their plans better. As a novel, the book uses the fictional narrative arc of the story to illustrate the way in which independent human actions are coordinated and evolve into a emergent order that no one sees.

The other (related) point of the novel is to illustrate and update Leonard Reed's famous essay "I, Pencil." That story is used to show the "unplanned" nature of coordination in a global economy.

I found the book quite enjoyable and filled with marvelous stories and illustrations of the principle of spontaneous order and the price system as a mechanism for coordination. My sense is that concept is often elusive for many people.

I think that the book is really ideal for those who are looking for a fun introduction to economic thinking. This would be, say, high school students or even incoming law students who did not take economics in college but would like to get a little sense of economic reasoning before law school. Russ's great gift is to use simple stories to illustrate complex economic ideas. If that's the sort of thing you are interested in, I recommend it highly.

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Suspicious Patterns in the Iranian Election Results.

In examining the provincial breakdown of the Iranian election results, I noticed some strange things.

First, while Mousavi was leading Ahmadinejad by 2 to 1 in Tehran in a poll last week, Ahmadinejad won Tehran 52% to 46% in the reported election results. In an authoritarian state, one would expect polling to understate the popularity of the opposition.

More seriously, the great enthusiasm and strong turnout in the election was presumed to be from those voting for Mousavi and change, but the official turnout in areas that favored Ahmadinejad most strongly was much higher than in areas where Mousavi did relatively well.

Here is the breakdown in the six provinces with turnouts over 90% (91.6% - 99.4% turnouts):

Ahmad. 68, Mousavi 31

Ahmad. 56, Mousavi 42

Ahmad. 46, Mousavi 34

Ahmad. 68, Mousavi 31

Ahmad. 77, Mousavi 22

Ahmad. 73, Mousavi 26

All but two have Ahmadinejad receiving at least 68% of the vote. The unweighted average of these six high turnout provinces was Ahmadinejad 64.7%, Mousavi 31.0%.

In the next six highest turnout provinces, all six gave Ahmadinejad at least 69% of the vote.

Here are the results in the six provinces with turnouts under 80% (63.4% - 79.2% turnouts):

Ahmad. 53, Mousavi 44

Ahmad. 47, Mousavi 50

Ahmad. 65, Mousavi 27

Ahmad. 46, Mousavi 52

Ahmad. 59, Mousavi 39

Ahmad. 51, Mousavi 47

Note that all six low turnout provinces are recorded at 65% or less for Ahmadinejad and five of the six are recorded as voting for Ahmadinejad by less than 60%. The unweighted average of these six low turnout provinces was Ahmadinejad 53.5%, Mousavi 43.2%.

In the provinces with the next six lowest turnouts, four provinces reported 66% or fewer votes for Ahmadinejad.

I find it highly suspicious that the high turnout provinces tended to go stronger for Ahmadinejad than the low turnout provinces. Of course, it is possible that the electorate did not trust the anonymity of the voting process, which might have led to a lower turnout in opposition strongholds.


Obama Delivers on Promise in Cairo Speech: "we would not presume to pick the outcome of a peaceful election."

So far, the response of the Obama Administration to the Iranian election must be a disappointment to all those who desire freedom for oppressed people around the world. The response has been compared to that of George H.W. Bush to the events preceding the fall of the Berlin Wall, which initially was similarly "flat-footed." (tip to Instapundit) This is in marked contrast to Ronald Reagan's insightful encouragement of rebellion against Communism in the 1980s.

Hillary Clinton expresses the wait-and-see approach of the Obama Administration:

“We, like the rest of the world, are waiting and watching to see what the Iranian people decide,” Secretary of State Hillary Rodham Clinton said during a visit to Niagara Falls, Ontario, on Saturday. “We obviously hope the outcome reflects the genuine will and desire of the Iranian people.”

In one sense, this unsatisfactory response is entirely consistent with the nuanced approach that President Obama laid out in his Cairo speech.

The fourth issue that I will address is democracy.

I know there has been controversy about the promotion of democracy in recent years, and much of this controversy is connected to the war in Iraq. So let me be clear: no system of government can or should be imposed upon one nation by any other.

That does not lessen my commitment, however, to governments that reflect the will of the people. Each nation gives life to this principle in its own way, grounded in the traditions of its own people. America does not presume to know what is best for everyone, just as we would not presume to pick the outcome of a peaceful election. But I do have an unyielding belief that all people yearn for certain things: the ability to speak your mind and have a say in how you are governed; confidence in the rule of law and the equal administration of justice; government that is transparent and doesn't steal from the people; the freedom to live as you choose. Those are not just American ideas, they are human rights, and that is why we will support them everywhere.

There is no straight line to realize this promise. But this much is clear: governments that protect these rights are ultimately more stable, successful and secure. Suppressing ideas never succeeds in making them go away. America respects the right of all peaceful and law-abiding voices to be heard around the world, even if we disagree with them. And we will welcome all elected, peaceful governments – provided they govern with respect for all their people.

So the current position of the Obama Administration follows just what he promised. Obama asserted that "we would not presume to pick the outcome of a peaceful election." And the Iranian election through election day was mostly peaceful, so the Obama Administration will not presume to pick the outcome of the election, even if it was indeed stolen.

But if Obama comes to the personal conclusion that the Iranian election was stolen, then what? Again, his Cairo speech provides a possible answer:

(1) Obama will not "welcome" such a government (but he will not necessarily oppose it); and

(2) Obama will retain his personal belief that the Iranian people desire the "freedom to live as you choose."

In his Cairo speech, Obama expressed his opinion that governments that respect rights are "more stable, successful and secure." So far, the Iranian government has not taken this observation to heart.

As with the pirate hostage crisis, I hope that the Administration evolves a better response when they have a day or two to think about it.

If Obama chooses to continue to be bound by the chains of his Cairo speech, two things that Obama will not presume to do is (1) try to pick the winner of the Iranian election and (2) try to impose a democratic system of government on Iran. I certainly wouldn't favor the latter in Iran, but trying to encourage democracy among those fighting for it would seem to be both the right and the smart thing to do.

Those who were disappointed by the lukewarm endorsement of freedom that Obama offered in Cairo should not be surprised by his lukewarm response to a stolen Iranian election. Obama is a man who (whenever possible) chooses his words carefully.

I have no doubt that President Obama genuinely loves this country above all others, but does he understand evil — or how to deal with it?


Sunday, June 14, 2009

Obama Administration Continues to Defend State Secrets:

The Obama Administration is continuing to defend the use of the state secrets privilege in seeking en banc review of Mohamed v. Jeppesen in the Ninth Circuit. The brief is here. As Marc Ambinder reports, the Obama Administration now "owns the state secrets privilege."

Related Posts (on one page):

  1. Obama Administration Continues to Defend State Secrets:
  2. Obama Administration to Revise State Secrets Doctrine:
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The "Empathy" Exam:

Ann Althouse asked her Constitutional Law students to identify cases that did (or did not) exemplify "empathy" on their exam. Try it for yourself and see how you do.

UPDATE: Here's the "winner."

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Time to Look at Geoengineering?

Tomorrow the National Academy of Sciences will convene a workshop on geoengineering as a way to slow or reverse the effects of global climate change. Samuel Thernstrom thinks serious federal research on geoengineering is overdue.

A geoengineering system would of course be controversial, but the policy question we face today is simple: Should the federal government conduct research on geoengineering? The scientific and engineering challenges involved in geoengineering the global climate for decades, and the potential consequences of success or failure, are extraordinary; all the more reason to begin a research program commensurate with the scale and significance of the task.

Geoengineering is not a substitute for mitigation, and it raises potentially serious environmental and ethical issues. It could, however, protect us from the worst effects of warming for the many decades it will take for emissions reductions to become effective. We may ultimately decide that geoengineering's risks are too great -- but undertaking a research program now would give future policymakers the opportunity to make decisions about geoengineering from a position of knowledge rather than ignorance and desperation.

I am not sure whether geoengineering is a good idea -- or even whether it would be legal under existing international law without a new global treaty -- but I believe it is worth serious study. Humanity is altering planetary systems on a global scale whether we like it or not. Shouldn't we at least consider whether and how we can influence the climate in a positive -- or at least less harmful -- way? Even dramatic emission reductions won't eliminate humanity's effect on the climate system, so we should have all of our options on the table.

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Cowen on Medicare Spending:

Economist Tyler Cowen of Marginal Revolution has a good piece in today's NYT on medicare spending. It begins:

Medicare expenditures threaten to crush the federal budget, yet the Obama administration is proposing that we start by spending more now so we can spend less later.

This runs the risk of becoming the new voodoo economics. If we can’t realize significant savings in health care costs now, don’t expect savings in the future, either.

It’s not the profits of the drug companies or the overhead of the insurance companies that make American health care so expensive, but the financial incentives for doctors and medical institutions to recommend more procedures, whether or not they are effective. So far, the American people have been unwilling to say no.

Read the whole thing.

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"Drugs Have Won":

The NYT's Nicholas Kristof joins the ranks of those urging an end to the drug war. The War on drugs, Kristof notes, has had three consequences: 1) "we have vastly increased the proportion of our population in prisons"; 2) "we have empowered criminals at home and terrorists abroad"; and 3) "we have squandered resources." Writes Kristof, "if our aim is to reduce the influence of harmful drugs, we can do better."

Kristof notes that the available empirical evidence suggests that decriminalization would not produce a dramatic increase in drug consumption. Still, there is significant uncertainty. He puts forward an interesting proposal:

Moving forward, we need to be less ideological and more empirical in figuring out what works in combating America’s drug problem. One approach would be for a state or two to experiment with legalization of marijuana, allowing it to be sold by licensed pharmacists, while measuring the impact on usage and crime.
A related idea, put forward some years back in the book Undoing Drugs: Beyond Legalization, would be for the federal government to treat more drugs like alcohol, leaving states to set specific drug policies but making it a federal crime to transport drugs into a state in violation of that state's laws. For most of the country, for most drugs, this would mean no change (at least not in the near term). But it would enable those states that are so inclined to experiment with marijuana decriminalization and other drug policy reforms, and such experiments would inform the broader debate over drug policy.

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DHS to Seek Replacement of "REAL ID":

From the Washington Post:

Homeland Security Secretary Janet Napolitano wants to repeal and replace the controversial, $4 billion domestic security initiative known as Real ID, which calls for placing more secure licenses in the hands of 245 million Americans by 2017. The new proposal, called Pass ID, would be cheaper, less rigorous and partly funded by federal grants, according to draft legislation that Napolitano's Senate allies plan to introduce as early as tomorrow.

The rebranding effort follows months of talks with the National Governors Association and poses political risk for Obama as well as Napolitano, a former NGA chairwoman who wants to soothe strained relations with the states without appearing to retreat on a recommendation by the 9/11 Commission. . . .

Eleven states have refused to participate in Real ID despite a Dec. 31 federal deadline.

"The department's goal is to fix, not repeal" Real ID, allowing all jurisdictions to comply by year's end, said a DHS official, who spoke on the condition of anonymity before a formal announcement. . . .

The new plan keeps elements of Real ID, such as requiring a digital photograph, signature and machine-readable features such as a bar code. States also will still need to verify applicants' identities and legal status by checking federal immigration, Social Security and State Department databases.

But it eliminates demands for new databases -- linked through a national data hub -- that would allow all states to store and cross-check such information, and a requirement that motor vehicle departments verify birth certificates with originating agencies, a bid to fight identity theft.

Instead, it adds stronger privacy controls and limits such development to a pilot program in Mississippi. DHS would have nine months to write new regulations, and states would have five years to reissue all licenses, with completion expected in 2016.

Supporters saw a slimmer measure as better than nothing. But critics said the changes gut the law, weakening tools to fight fraud and learn whether bad drivers, drug runners or counterfeiters have licenses in more than one state.

The story also notes that "privacy groups" think the changes do not go far enough, and REAL ID should be scrapped.

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