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The Supreme Court We Deserve

by Tim Kowal on April 11, 2012

imageIn one of his questions during oral arguments on the Affordable Care Act, Justice Kennedy observed the judicial presumption in favor of the constitutionality of federal statutes.  The presumption is a nod to the democratic process, which itself is generally the most decisive proxy we have for institutional legitimacy.  But it is not the proxy.  If it were, no review of “duly constituted and passed” laws would ever be necessary.  The Court review of even democratically passed laws insulates us from democratic tyranny—from majorities stripping the rights of the minority, or, in a fit of imprudence, trading inalienable rights for fashionable government services.  But the Court’s presumption in favor of constitutionality is not designed to root its decisions in legitimacy.  Rather, it aims to give its decisions the perception of legitimacy irrespective of whether those decisions are actually legitimate. 

Assuming the Court actually thinks this way (and based on the President’s recent remarks, there is reason to believe it does, at least to some extent), would upholding the Affordable Care Act increase or decrease Americans’ perception of the Court’s legitimacy?  I conclude the latter, and thus that the Court’s institutional incentives inclines it toward finding the Act unconstitutional. 

First, a few more thoughts about judicial legitimacy.  Why does the Court err on the side of perceived legitimacy rather than training its focus on actual legitimacy?  For one thing, the Court does not have special access to such things.  Judging is often hard, and if it comes to the wrong answer, better that it was first made by another branch of government closer to the people and thus the source of perceived legitimacy.  More importantly, the Court, like government generally, is a self-preserving institution.  Institutions derive no benefit by virtue of being actually “legitimate” or “right” or “just.”  They benefit from being perceived as those things, as citizens are more likely to accept its decisions.  Thus, there is no incentive inherent in the nature of the Court itself to arrive at actually legitimate results. 

imageThis is not to say that the human beings acting as judges have no incentive to reach actually legitimate results.  But for the Court as an institution, the only incentive is to get the result that will be perceived as legitimate, either immediately or at some point in the not-too-distant future.  (Because of its conservative nature and insulation from politics, the Court is permitted a much longer time horizon in this regard.  Thus, it may be to the Court’s advantage to hand down a ruling that may be unpopular in the short term, but that will make the Court appear prescient and worthy of trust in the long term.)

In short, the Court’s institutional incentives include perceived short-term legitimacy and perceived long-term legitimacy.  The only other possible motivation (excluding bad faith) is judges’ personal incentive to achieve actual legitimacy, whether in the individual decision, or in the justice system more broadly, or in society even more broadly.   Mileage may vary as to whether and to what extent these translate into perceived legitimacy. 

This may seem a cynical, nihilistic way of looking at the Court, but really it’s not.  By concerning itself with the perception of legitimacy, the Court must look to the views and deeply held beliefs of society.  These beliefs thus may form the basis for the Court’s decisions.  That is not to say the Court ought to pander to those beliefs merely to boost its legitimacy index.  But to the extent those beliefs are not internally self-contradictory (e.g., slavery versus the deeply held belief in individual liberty), it is appropriate for the Court to consider them. 

To maximize its perceived legitimacy, the Court must do more than reach a certain result.  Because of the nature of judicial power, the process and analysis that goes into reaching the result also count for a lot.  Thus, a professional, intellectual, and experienced Court may be able to achieve greater perceived legitimacy than one that is less so.  However, because the Court is primarily concerned with perceived legitimacy, intellectual rigor will take the Court only so far.  One can imagine brilliant judicial decisions written in what, to lay persons, might amount to a different language.  Decisions whose philosophical brilliance render them indecipherable to the public will count for little. 

The possible outcomes of the Affordable Care Act illustrate the point.  If, in upholding the individual mandate, the decision is too intellectually ambitious and convoluted, the Court may be perceived as having used philosophical abstractions to avoid its duty to review an unprecedented overstep of the federal government’s limited and enumerated power.  But if, in finding the individual mandate violates the Constitution, the decision is not ambitious and creative enough, the Court may be perceived as having feigned ignorance in order to deal a partisan blow to a sitting president’s signature domestic policy achievement. 

If it were somehow possible to rate the sophistication of judicial reasoning, we might insist that the Court’s decisions clock in at a certain level, say, a 5 on a scale of 1 to 10.  We might conclude that decisions rating below 5 are conspicuously incurious, and that ratings above 5 are conspicuously overzealous.  In either case, differing degrees of sophistication of judicial reasoning suggests the Court may be using just the right degree in a given case to reach a particular conclusion.  Observers would rightly conclude this is illegitimate.  In reality, of course, there is no such scale to rate the sophistication of judicial opinions.  Nonetheless, we can discuss whether creative rationales like those offered by Professor Jack Balkin would, if adopted by the Court, evidence conclusion-oriented reasoning. 

On the other hand, sophisticated or convoluted judicial decisions do not necessarily suggest a conclusion-oriented Court. There are three ways to explain a convoluted decision.  First, it is simply a hard case, and thus an intricate analysis itself is necessary to achieve perceived legitimacy.  In other words, the analysis itself is the basis of the perceived legitimacy.  This frequently happens in review of technocratic agency actions where the outcome itself often does not have much impact on the average citizen.  One might criticize agencies on the basis that they result in many convoluted court decisions, thereby undermining the perceived legitimacy both of the Court and the agencies. 

Second, the outcome that will be perceived as the most legitimate requires a convoluted analysis to get there.  In other words, the outcome is the basis of the perceived legitimacy.  This assumes that legitimacy is perceived principally in the outcome, or at least that the convolution will not significantly undermine that perception.  Whether the perceived legitimacy is to come in the short- or long-term is a judgment call the court must make. 

The third possible explanation for convoluted court opinions is that the Court is convinced in the objective rightness of the outcome.  Dred Scott v. Sandford and Roe v. Wade are examples; it can hardly be argued that the Court could have reasonably presumed either decision would elevate its esteem.  Relatedly, the Court may be convinced that the outcome, either despite of or in addition to its being objectively right, is necessary to the preservation of the state and thus the Court itself.  Brown v. Board is an example. 

All things being equal, then, it is in the Court’s interest—the interest of being perceived as legitimate—to avoid convoluted analyses whenever possible. 

Consider again the Court’s possible approach to the Affordable Care Act.  Even now, more than two years after the Act was passed, it fails to garner a majority of public support.  Thus, the Court is not likely to gain any perceived legitimacy in the short term by upholding it.  The longer term obviously is harder to predict, but certainly the Court could be perceived as having bent to pressure from the President, who dared the Court to strike down the Act just days after oral arguments.  In order to uphold the Act, the Court would have to engage in a somewhat convoluted and unprecedented analysis, or rely on New Deal-era precedent, itself at a nadir of perceived legitimacy. 

The only basis left to uphold the Act is if the Court concludes it is objectively legitimate.  This is a hard case to make for the individual mandate.  At best, it is an instrumental good in the sense that it helps overcome the moral hazard created by another federal mandate that health providers provide emergency services to uninsured patients.  It also still presupposes a terribly inefficient health care system in which tax incentives cause most health insurance to be tethered to employment.  A stronger case perhaps could be made that upholding health care legislation creating a universal single-payer system would be objectively legitimate.  It probably is not unfair to say that the individual mandate is something of a necessary evil in the service of an arguably objectively legitimate end of broadly accessible health coverage.  But it is hard to characterize it as objectively legitimate in its own right. 

Note that objective legitimacy has nothing necessarily to do with whether the decision comports with the text of the constitution, or with any other theory of judicial interpretation for that matter.  This is simply to be factored into the analysis of whether it is perceived as legitimate.  A population who doesn’t give a whit about constitutional fidelity will likely find its courts likewise caring very little.  Indeed, a population that cannot be bothered to care much about theories of constitutional construction, or consistency in constitutional construction, will have little basis on which to judge the legitimacy of judicial decisions. 

This may be why the President feels he can impact the outcome of Court’s decision, calling it “not an abstract argument” and “not even a close case.”  In fact, the “abstract arguments” have already been made in prior cases handed down during the New Deal, which have continuing legitimacy problems due to FDR’s court-packing scheme leading to “the switch in time that saved nine.”  Wickard v. Filburn, the prior case that the President was likely referring to in his recent comments, itself should not have been a close case, so out of step was it with the Commerce Clause and precedent at the time of publication.  Yet, through legal abstractions and convolutions, it provides cover for federal legislation touching on any activity that, under the “aggregation principle,” affects interstate commerce. 

If we don’t care about fidelity to the Constitution and legal processes, the Court won’t, either.  If we send the message to the Court that we will cease to regard it as legitimate if it does not simply rubber stamp popular legislation, or stamp out unpopular legislation, then over time, the Court, by operation of its institutional incentives, will have no choice but to respond to the signals of an intellectually shallow public.

This would be a decline of American politics.  It would mark the end of the studious and faithful adherence to a logical and consistent continuum in the development of law.  It would usher in the flippant selection among various and disparate bodies of disjointed legal precedent to deliver the result demanded by impatient and intellectually unserious consumers of government services.  A public who is taken in by the President’s partisan catcalling of his coequal branch of government has no right to demand better of judicial decisions. 

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Rick Santorum’s Mondale Moment

by Tom Van Dyke on March 23, 2012

The mark of a loser.  You don’t ride a fad or a pop slogan to the presidency.   Etch-a-Sketch.  Fritz Mondale and his “Where’s the Beef.”

Straight up, I’m voting for Barack Obama over Rick Santorum and I’m as conservative and Republican as hell.

This fool will not do.  Fortunately for the Republican Party and the American republic, Rick Santorum is a fad and as you read this is hurtling headlong towards the “Where Are They Now”  file, Etch-a-Sketch in hand.

I probably philosophically agree with Rick Santorum more than I do with Mitt Romney, and certainly more than with Barack Obama.

But this will not do.  So long, Rick, it’s been good to know ya.  Sort of.

 

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New ADA Guidelines Expose Pool Operators to Private Lawsuits

by Tim Kowal on March 15, 2012

imageThe Washington Examiner reports that, according to a DOJ guideline issued January 31 interpreting a provision of the ADA, all operators of publicly accessible swimming pools—including cities, HOAs, hotels, spas, and gyms—must install a permanent fixed lift at a cost of $8,000 to $20,000 each.  If the facility has a separate pool and spa, lifts must be installed for each.  The guideline takes effect tomorrow, March 15, and could subject violators to stiff penalties and attorney’s fees.

From the Examiner:

In fact, most people in the swimming pool industry thought that one portable lift would be enough. Pool owners claim they were led to believe that, as long as they had one device that could be wheeled out whenever someone needed help getting into or out of a pool or spa, there would be no need intrusive permanent fixtures.

But then industry leaders began hearing rumors last year that Obama’s DOJ would require permanently fixed lifts for each pool and spa. They began to write letters to DOJ asking for clarification on the issue.

On Jan. 31 of this year, DOJ granted the industry’s call for a clarification: But it was not the answer they wanted. All 300,000 public pools in the United States must install a permanent fixed lift. The deadline for compliance is tomorrow, March 15. Call it “Poolmageddon.”

There is no way all 300,000 pools can install permanent lifts by Thursday. There simply are not enough lifts in existence or enough people who know how to install them, according to industry spokesmen. Plus, each lift costs between $3,000 and $10,000 and installation can add $5,000 to $10,000 to the total.

imageThe Administration has assured the industry that it does not plan to enforce the new guidelines right away.  But the ADA contains a private enforcement mechanism, empowering private attorneys to bring suit immediately, collecting attorney’s fees from violators.  As the article mentions, trial lawyers contributed over $45 million to Obama’s campaign.

California-based businesses should be particularly worried.  The Unruh Civil Rights Act, itself a wellspring for abusive litigation, incorporates the ADA by reference, making any violation of the ADA also a violation of Unruh.  Since Unruh has more teeth than the ADA—$4,000 per violation, regardless of intent, plus attorney’s fees—the DOJ guideline may mean a very profitable summer for California trial lawyers.

The rest of us can probably expect to see many pools closed.

UPDATE [3/15]: Trizzlor points to this February 21 DOJ letter to the American Hotel and Lodging Association attempting to alleviate some of their concerns about compliance by the March 15 deadline (today).  The DOJ states:

“If a hotel or motel has more than one pool, it must remove barriers, to the extent that it is readily achievable, at each pool. If is not readily achievable to immediately provide an accessible means of entry and exit at every pool, then the covered entity must remove barriers to the extent that it is readily achievable to do so. It is important to note that the barrier removal obligation is a continuing one, and it is expected that a business will take steps to improve accessibility over time.”  The letter goes on to list various “factors” that must be considered to determine whether installation of the fixed lift is “readily achievable.”

This will be cold comfort to most operators.  But even if this gives some wiggle room against DOJ enforcement, pool operators have more than the DOJ to contend with.  When faced with a private attorney demanding $4,000 per violation under the Unruh Act, plus his attorney’s fees, a risk-averse operator is unlikely to toss the dice on the question of whether a judge looking at a laundry list of factors may or may not decide installation is “readilyachievable.”  He’s more likely to cut the check to the attorney and padlock the pool.

Trizzlor (ever helpful today!) also links to this DOJ article explaining the tax credits and deductions available to help businesses comply with the new guidelines.  This will take some of the sting out of the costs associated with compliance.  But it still won’t keep the trial lawyers off your back if you can’t get your lifts installed now.

UPDATE [3/15 10:35 a.m.]: Commenter Trizzlor also points out that most pool operators (except for those in California, as I explain below) can reduce their liability by preparing an “Implementation Plan” following a checklist provided by the ADA.  This does not mean that the DOJ can offer “waivers” or its own judgment on the question of whether compliance is “readily achievable,” however.  This is for judicial determination, and this is what will give private litigants leverage over operators who don’t want to incur the costs and risks of a lawsuit.

For example, from the DOJ’s checklist, the DOJ acknowledges:

the regulations do not define exactly how much effort and expense are required for a facility to meet its obligation. This judgment must be made on a case-by-case basis, taking into consideration such factors as the size, type, and overall financial resources of the facility, and the nature and cost of the access improvements needed. These factors are described in more detail in the ADA regulations issued by the Department of Justice.

The process of determining what changes are readily achievable is not a one-time effort; access should be re-evaluated annually. Barrier removal that might be difficult to carry out now may be readily achievable later. Tax incentives are available to help absorb costs over several years.

Here’s the important point from the next section in the DOJ paper:

The Department of Justice recommends the development of an Implementation Plan, specifying what improvements you will make to remove barriers and when each solution will be carried out: “Such a could [sic] serve as evidence of a good faith effort to comply.”

In other words, completing an “implementation plan” could serve as evidence in a lawsuit, but it won’t immunize anyone from a lawsuit.  Again, this is all the leverage trial lawyers need to subject even diligent and conscientious business owners to abusive litigation and shake down settlements.

And this was the real problem, underscored by the California Court of Appeal in the 2006 decision in Gunther v. Lin:

And it was precisely because it was so easy for businesspeople—particularly small businesspeople—to inadvertently violate the ADA that Congress limited the circumstances under which they might be sued for such a technical violation. Under the ADA, a private individual suing a businessperson has no right to damages absent intentional discrimination. . . .By contrast with the federal ADA, California’s section 52 allows private parties to seek damages, and in fact even provides for an automatic minimum penalty—now up to $4,000—when the statute is triggered.
. . . .
The alternative interpretation [allowing automatic penalties without a finding of intent], as a number of federal courts have already indicated (e.g., Doran v. Del Taco, Inc. (C.D.Cal. 2006) 2006 WL 2037942), has led to unconscionable abuses.

The Gunther case went on to hold that the automatic $4,000 penalties under California law were unavailable without the showing of intent required like the ADA requires.  But the California Supreme Court overruled that holding in its 2009 Munson v. Del Taco, Inc. decision.  Instead, lack of intent to discriminate (e.g., a “good faith effort to comply”) is irrelevant in finding a violation of the Unruh Act and awarding automatic $4,000 penalties plus attorneys’ fees.

Thus, the tendency of the DOJ guideline to increase lawsuit abuse is compounded here in California.  The remediation procedures that may help reduce (but not eliminate!) liability under the ADA don’t apply here since violations in this state are deemed automatic, regardless of motive, good faith, or due diligence.

UPDATE [3/15 10:48 a.m.]:  I gave an interview on KOGO San Diego in the 7:00 hour this morning.  http://www.kogo.com/pages/dablog.html.  Podcast is available here.

[Cross-posted at the main page]

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Are Millennials anti-democratic?

by Tim Kowal on March 2, 2012

MillennialsLet me set up the question with two observations.  First, from an interesting piece today at New Geography discussing the Millennial Generation’s government-friendliness:

Last November, when Pew asked whether Americans preferred a larger government that provided more services or a smaller government that provided fewer services, Millennials opted for a bigger government over a smaller one by a large 54% to 35% margin. By contrast, 54% of Boomers (born 1946-1964) and 59% of Silents (born 1925-1945) favor a smaller government. .

In addition, a majority of (55% to 41%) Millennials favored a greater level of federal spending to help the economy recover from the recession rather than reducing the federal budget deficit. Millennials also continue to support governmental efforts to lessen economic inequality; 63% agreed that government should guarantee every citizen enough to eat and a place to sleep.

And an observation I made in December about the correlation between relatively-few-legislators and relatively-high-rent-seeking, and between relatively-high-rent-seeking and relatively-high-regulatory-burdens:

Centralization makes our democratic institutions less democratic, making fewer representatives responsible for the fate of greater shares of the economy and the population. This decline makes it easier for special interests to buy influence. The pressures of this influence lead lawmakers to engage in policymaking designed as much to elicit campaign dollars as to benefit the public. This conflicted-interest policymaking results in more opportunities for rent-seekers to buy or extract further political influence. Decentralization of federal power and returning governance to states and local governments will increase the democratic function of legislative institutions and make it more difficult and expensive to buy influence. States like California and Florida with poor democratic representation can increase the number of state legislators to make rent-seeking a more expensive proposition. These measures would substantially dry up opportunities for crony capitalism, and direct special interests’ profit motive to the marketplace where it belongs.

And finally to my question:  If Millennials are indeed receptive to relatively high regulatory impacts and governmental policy influence on the economy (so long as those impacts and influence are the variety that Millennials like), does it matter if relatively non-democratically-responsive legislators, bureaucrats, and special interest rent-seekers play a significant role in getting there? 

My assumption, to be clear, is that you don’t get the kind of effective big-government policies that Millennials presumably are after without a centralized and thus relatively undemocratic government.  Is this a concern for Millennials or other big-government types?  How important is the democratic process?  I’m well aware of the argument that political equality matters little without economic means.  But does economic welfare take precedent to political process?  

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Newt Fatigue

by Tim Kowal on January 24, 2012

My patience with Newt is about up.  I was willing to overlook the fact that he’s a ball of contradictions with a short temper when he was at least bringing sanity and big, fun ideas to the debates.  And, being a red-blooded conservative American, I do love a good zing on the media.  But when he attacked the free market just to take Mitt down a peg or two, it irked me.  And since then, that mean old political operative turned lobbyist is all I see. 

Sure, I’d rather Mitt had made his wealth as a creative inventor a la Steve Jobs than as a financier (though they are two sides of the same free market coin).  Stacking finance against lobbying, however, I’d take even a Gordon Gekko over a Boss Tweed.  Flitting between public office (which doesn’t pay a lot) and powerful lobbying firms (which do) is the very sort of power brokering, Washington insiderism everyone, myself included, is getting really fed up with. 

In political Rochambeau, Jobs beats Gekko, but Gekko beats Tweed.  

Count me a happy Mitt backer. 

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No, Americans are not “operationally liberal”

by Tim Kowal on January 14, 2012

Responding to my demurrer to “the old saw that Americans are ideologically conservative but operationally liberal,” Yeggmen sticks up for the saw: 

what researchers have (repeatedly) done is get a bunch of people together and have them fill out a long and comprehensive political questionnaire. They ask them to choose an ideological label, vague questions about principles (e.g., whether the government should do more or less), and ask them thousands of questions on specific policies in order to ascertain the ideological character of their policy preferences.

Here’s what they found:

In the aggregate, Americans are always operationally liberal on average.
They prefer policies through which the government does and spends more to solve social
problems. And they are always symbolically conservative on average: they consistently prefer the
conservative label to the liberal one.

With respect, to explain the saw is not to defend it.  My argument is not that Americans do act consistently with their conservative self-identification.  My argument is that if Americans are “operationally liberal,” it’s because they’ve been painted into a corner.  As I wrote on Yeggman’s blog,

one might say Americans are “operationally liberal” who support laws like RLUIPA, or national education reforms, etc. Point being, liberals have changed the way political structures can be influenced, and conservatives have to play by these rules. For example, I might oppose federal dollars being spent on local schools. But a liberal California court changed the way residents paid for their children’s education, resulting in the passage of Prop 13 by concerned homeowners who suddenly lost the value of their investments due to the ruling, which ultimately wound up starving many California schools. ESL and other programs required by law, as well as overhead for liberal teachers unions also use up limited local funds. Am I “operationally liberal” to approve of federal funds or other national reforms to keep the whole patchwork going at least until my daughter graduates? Again, I think it’s a lousy political dig to say so.

Americans might also be “operationally liberal” because programs like Social Security work like, and may even be branded as, investment arrangements when they are actually generic liberal tax-and-spend programs.  Again, as I wrote in the comments on Yeggman’s blog,

many Americans believe that they’re entitled to social security not because young working people have a general moral obligation to pay for their retirement, but because they understand, incorrectly, that they’ve paid into something of a trust account. Thus, their support for social security is actually quite conservative (notwithstanding the big government aspect of it). I’d guess roughly the same psychological phenomenon is happening with medicare. It is disingenuous to call these folks “operationally liberal” when they have been made to pay into a system that looks like a retirement account and acts like a retirement account but is, by design of New Deal liberals, a liberal tax and spend program.

Public education is an especially impacted victim of 20th century progressive liberalism, suffering the confusion, expense, and indignity of having to incorporate the vagaries of First Amendment decisional law—and later other civil rights, some welcome but many bizarre—into the operations of local schools.  When student performance nosedived in the latter half of the century, there was no use in troubleshooting—everything had been changed.  The only thing left to do was follow one period of rash liberal experimentation with another.  And then another.  There’s no such thing as a “conservative” position on education anymore.  It’s got a century of liberalism’s fingerprints all over it. 

Beyond education, many liberal policies have become status quo.  And people don’t tend to assign labels to the political furniture they’ve become accustomed to.  Should we have a progressive tax code?  Well geez, haven’t we always?  Next.  Should the government require that workers get a “living wage”?  What should they get, a dying wage?  Next.  Should we spend a lot of money to protect the environment?  Aren’t we already?  And there’s always those folks mouthing off about how badly we’re still doing.  Better not do any less, then, I guess.  Next.

If this is what “operationally liberal” looks like, you can go right ahead and spare me. 

And this is not to mention favoring policies that directly benefit those being polled, such as laws favoring unions or subsidies, etc.  When President Bush sought to introduce personalized accounts into the Social Security system, a 2005 survey showed the most negative responses to the proposal was from respondents in their 50s—older baby boomers.  This was explored by Andrea Louise Campbell in How Policies Make Citizens.  Government policy was directly connected to this constituency’s well-being.  It would be obtuse to call this “operational liberalism.” 

(I’ll drop this in as a parenthetical, because I can’t figure out how to read the report Yeggman cited.  But the “political questionnaire” referenced there provides only topics, not actual questions.  E.g., “Spending on Welfare,” “Spending on the Poor,” “School Choice,” “Abortion,” etc.  How are the researchers interpreting responses to any of these topics as “conservative” or “liberal”?  I can think of both conservative and liberal reasons to favor and disfavor each of them until they’re made into English sentences.)

There’s all sorts of deck-stacking that goes into why people favor particular policies.  And it’s easy for liberals to sell a single policy, because they sound nice taken individually.  But when offered a choice between political philosophies, theories, worldviews, whatever you want to call them, Americans identify as conservative.  That counts for something.  It means that the informed liberal knows it’s going to take some doing to get these conservative Americans to endorse their policies.   More than just huckstering.  Americans are smarter than they’re sometimes given credit for. 

If Americans won’t be sold on the liberal narrative, then the liberal’s play is scorched earth:  convince them that all narratives are a stupid waste of time.  Liberals, in fact, don’t even have a narrative.  That’s offered as proof enough.  Narratives are then subverted by modern social science that villainizes “value judgments” through which to interpret the endless data it collects, and divorces science from human ends and destroys our ability to learn from or build upon the past.  Sound bite politics works well in this cause.  If I get all my politics in op-eds and four-minute news segments, that’s just enough to hear the conclusions of some of the aforementioned liberal social science data miners.  There’s no possibility I’ll learn the role liberalism played in creating the problem at issue, and thus why I should reject the solution it offers.   Status quo, ho. 

Just please stop calling it liberalism.

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“Ideologically conservative but operationally liberal”

by Tim Kowal on January 11, 2012

Kevin Drum:

You all remember the old saw that Americans are ideologically conservative but operationally liberal? It means that lots of Americans say they’re conservative and like to believe they’re conservative, but when it comes to specific government programs they turn out to be pretty liberal. They like Medicare and Social Security and federal highways and disaster relief and unemployment insurance and all that. Try to cut these things and you learn very quickly just how operationally liberal most Americans are.

Yes, I remember that old saw.  It’s rubbish.  Try it in another context:  A lot of Americans say they eat healthy, and like to believe they eat healthy, but put a bunch of tasty junk food in front of them and, Bob’s your uncle, they turn out to be pretty unhealthy after all. 

Of course people are not going to give up Medicare and Social Security after those programs have been dangled in front of them their entire working lives.  (They’re just tax-and-spend programs, remember, so we’re not “investing” in our own “trust accounts”—we’re paying for them because we like them so much because, again, we’re all “operationally liberal.”)  To suggest this means the whole thing’s a draw politically is pretty crooked scorekeeping.

In fact, I was surprised that Drum would be this transparent about the fact that, when it comes to underlying objectives concerning redistribution and centralization, liberals don’t bother appealing to intellect.  They’re going to appeal to base desires, and they’re going to capitalize on crises when the value of principles is depressed.  When people get something for nothing, they’re unlikely to give it up voluntarily, and in fact are probably going to ask what else is on the menu at the same price.

Drum goes on:

When Americans hear about free enterprise from conservative politicians, it’s usually accompanied by images of sunrises over wheat fields, hardworking farmers, and small-town construction workers heading home after a day of honest labor. It is very definitely not accompanied by images of well-coiffed guys in suits and green eyeshades, making millions by sitting in boardrooms and approving mass layoffs by adding a quick line to a spreadsheet before they head out to lunch. But guess what? That’s what you get with Romney whether you like it or not. Americans may be ideological free marketers, but operationally they’re just folks who believe in a day’s pay for a day’s work. If you rub their noses in the the true face of modern capitalism, they aren’t going to like what they see.

The condescension toward the cow-tippers in flyover country is palpable. 

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Under Siege: How Government Centralization and Expansion Puts Democracy in the Service of Special Interests

by Tim Kowal on December 18, 2011

In its first full year of business in 1998, the 99 Cents Only store in the north Los Angeles city of Lancaster did over $5 million in sales. This was welcome news to the city, given the space had been vacant ever since the new “Power Center” shopping development, where 99 Cents was located, opened ten years earlier. Almost immediately, however, 99 Cents’ next door neighbor, Costco, told the city it needed to expand. The owner of the center offered Costco optimal space behind 99 Cents, but Costco insisted that the city use its power of eminent domain to condemn 99 Cents’ business. If the city refused, Costco threatened to relocate to neighboring Palmdale, who surely would use ever tool at its disposal to attract the lucrative big box store’s business. To seal the deal, Costco issued an additional threat: not only would it relocate to Palmdale—it would leave its existing store shuttered and vacant as an economic deadweight on the city’s key commercial center. Backed against the wall, the terrified city relented. It condemned 99 Cents’ store, paid the shopping center owner $3.8 million, and give the parcel to Costco for one dollar.

This story typifies what drives all rent-seeking: Motive and opportunity. Businesses seek economic advantage wherever they can find it, and they frequently find it in the coercive power of the state. Ill-defined limits on government powers—of which eminent domain is just one example—give businesses easy access to this power. When the economy grows, the motive to capture the government intensifies. When government is centralized, the opportunities to capture it get cheaper and more convenient. When the limits on government recede, these opportunities get still cheaper and more abundant. Motive explains why rational private interests engage in rent-seeking: to gain a competitive edge. Opportunity—that is, the opportunity for access to government power through ill-defined limits on that power—explains why rational government officials yield to special interests: they face a “race to the bottom.” If the Lancasters of the world refuse to use their coercive government power for the benefit of special interests, some other government official or agency will. Denying access to special interests just means they will look elsewhere. And they will surely find it, so long as giving in to special interests is a matter of legislative “discretion.”

Motive and opportunity answers the problem of political corruption at the heart of Lawrence Lessig’s new book, Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It. Corruption, for Lessig, is not limited to vile, money-in-the-briefcase, quid pro quo corruption. The kind of corruption destroying American politics is systemic, in which ordinary people—both those in power and those seeking access to it—respond logically to powerful incentives. The opportunity for access to influence in the increasingly centralized federal government is overwhelming. This access has caused trust in government to reach an all-time low. Just 12% of Americans in 2008 had confidence in Congress, falling to 11% midway through Obama’s presidency. According to Lessig’s own poll, a staggering 75% believe “campaign contributions buy results in Congress.”

The distrust is justified according to Lessig by looking at the dramatic recent increase in campaign contributions. From 1974 to 2008, the average Congressional reelection campaign surged from $56,000 to over $1.3 million. The total spent by all candidates in the eight years prior to 1982 increased 450%. By 2010, it spiked another 525% to $1.8 billion. The financial sector alone spent $1.7 billion in campaign contributions and $3.4 billion in lobbying expenses between 1998 and 2008. The contributions of just 100 financial firms since 1989 total more than those of the entire energy, health care, defense, and telecom industries combined.

The motive for all this lobbying? Access to power over a national economy that, over the past 70 years, has been increasingly centralized in a single legislature—i.e., Congress. Henry Manne recognized in 1966 that “the federal government is the largest producer of information capable of having a substantial effect on stock-market prices.” According to University of Kansas researchers, every dollar spent on lobbying in D.C. returns between $6 and $20. The effectiveness of these dollars increases exponentially for major firms. After about $800,000, an additional 1% in lobbying produces tax benefits between $4.8 and $16 million—a 600% to 2,000% return. Rational economic actors are hard pressed to find better opportunity to advance their motive. This explains why, from 1971 to 1981, the number of registered lobbying firms in D.C. jumped from 175 to almost 2,500, and to 13,700 by 2009. These firms spend about $6.5 million per federal legislator per year. These lobbyists and the special interests they represent follow the model of Tammany Hall boss George Washington Plunkitt who, in explaining his self-styled “honest graft,” said “I might sum up the whole thing by saying: ‘I seen opportunities and I took ‘em.’”

A national economy governed by a single, centralized government, offers a rich variety of opportunities to access the levers of power. Lessig offers corn subsidies as an example. High-fructose corn syrup, a new invention in 1980, enjoyed a 35% share of sugar consumption in the U.S. just five years later, and a 41% share by 2006. Not that the stuff is actually profitable. Lessig notes that “every $1 of profits earned by ADM’s corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30.” This is due to high tariffs that keep competition largely limited to eight manufacturers who receive $1 billion in extra profits from the tariffs at a cost of about $3 billion to consumers.

These policies lead to freakonomics-style unintended consequences: In addition to hurting legitimate American businesses, consumers, and developing nations, federal corn subsidies and cane tariffs contribute to the proliferation of drug-resistant suberbugs like E. coli and salmonella. Cows and their seven stomachs are evolved to digest grass. By contrast, corn digests poorly, giving bugs time to brew, making the cows sick. In response, farmers supplement the cows’ corn diet with tons of antibiotics—25 million pounds every year, eight times the amount consumed by humans. Because corn is so heavily subsidized by the federal government, however, corn feed plus 25 million pounds of drugs still costs less than grass. This proliferation of antibiotics among cows, and passed up the food chain to us, fosters stronger, antibiotic-resistant bacteria.

The federal government extends similar subsidies and protections to the dairy industry. Price setting and other regulations increase the price consumers pay for milk by 26%, cheese by 37%, and butter by 100%. Again, the principal recipients of these subsidies are those farms with the greatest access to influence: 10% of the recipients of farm subsidies collect 73% of the subsidies, while the bottom 80% take just $3,000 each on average.

At one level, none of this ought to be surprising. Special interests are nothing new, and Lessig acknowledges that the warped influence of special interests on government was “the single most important corruption that the Framers were working to cure.” Nor can we reasonably claim surprise at the effects of wealth on politics. A hundred years ago, prominent statesman Elihu Root observed that as population and wealth increased, so would rent-seeking: “[P]olitical organizations controlled the operations of government, in accordance with the wishes of the managers of the great corporations. Under these circumstances our governmental institutions were not working as they were intended to work, and a desire to break up and get away from this extra constitutional method of controlling our constitutional government has caused a great part of the new political methods of the last few years.” Teddy Roosevelt concurred: “Corporate expenditures for political purposes… have supplied one of the principal sources of corruption in our political affairs.”

At another level, however, we have reason to suspect we are suffering more injury from special interests and crony capitalism than we have a right to. Had the Constitution’s limits on federal and state government power survived the 20th century, special interests simply would not have the opportunities they have today to capture government influence. Consider the nature of the opportunity that gave Costco access to Lancaster’s eminent domain power. It wasn’t money: the Constitution did not subject protection of private property to a highest-bidder qualification. It wasn’t cronyism: Lancaster officials, caught in the crossfire between rent-seeker and the awesome authority to decide the fate of private property, did everything it could to dissuade Costco and keep both stores. Instead, the cause was ill-defined limits on the government power. As a result of a series of U.S. Supreme Court decisions (culminating in Kelo v. City of New London a few years later in 2005), Lancaster was empowered—ironically, to its own detriment—to wield the eminent domain power subject to its own discretion and effectively without judicial oversight. This created opportunity for Costco to pit one city against another to demolish its competition, all removed from the actual marketplace. Though a federal district court in 2001 invalidated Lancaster’s transfer, Kelo upheld a similar transfer four years later.

The supply of influence is increased when limits on government authority are eroded or ill-defined. This opens the floodgates of money into politics, largely in the form of independent expenditures from rational rent-seekers. Regardless of whether this results in actual buying-and-selling of votes, the more certain and more disastrous result is the erosion of legitimacy in our democratic institutions: the individual sees his voice and political contributions drowned out by special interests with motive and opportunity to conscript lawmakers into their service.

Murray Kane, a Los Angeles redevelopment lawyer who helps cities take property for government projects, is perhaps an unlikely critic of ill-defined government power, at least when it comes to eminent domain. Yet, in 1995 Mr. Kane challenged the city of Diamond Bar when it similarly extended that power as an opportunity to serve private motives. Even though his clients benefit from eminent domain, Mr. Kane warned that eroding its limits would result in “a legislative backlash.” That backlash “could go beyond stopping redevelopment abuse, and will also hurt redevelopment in truly blighted areas where redevelopment is really needed.” Power exercised never fails to instill fear. It engenders trust only when its exercise is limited, and only so long as those limits are honored.

Members of Congress have not gleaned this lesson. Lessig explains how federal legislators increase the opportunity for special interests to extort rents from government—”[i]ncreasing ‘extortion’-inducing ‘rents’ produces only one thing: more extortion!” Our leaders seemed to have understood this at one time. Lessig recalls that 30 ago, Senator John Stennis, chairman of the Armed Services Committee, balked at hosting defense contractors at a fundraiser. “Would that be proper?” Stennis asked. “I hold life and death over those companies. I don’t think it would be proper for me to take money from them.” By 2006, however, Senator Chuck Hagel observed that “We’ve blown past the ethical standards, we now play on the edge of the legal standards.”

In his new book, Throw Them All Out, Peter Schweizer argues that the only reason politicians have not blown past legal standards as well is because, as the ones who write the legal standards, they’ve made themselves exempt. Congress imposes conflict-of-interest rules on everyone in the executive and judicial branches of the federal government. But Schweizer reports that the House’s 400-page ethics manual and the Senate’s 500 page manual “are silent on the matter of inside trading” when it comes to Congress. He provides example after example of members of Congress, both Republican and Democrat, who engage in substantial stock trading at the same time they negotiate pending legislation concerning the very companies whose stock they trade. In the private sector, we call this insider trading. When Nancy Pelosi heavily invested in natural gas IPOs at the same time she championed federal legislation favoring the development of natural gas, she told Tom Brokaw, “That’s the marketplace.” In the real marketplace, however, the average American investor underperforms the market. The average corporate insider trading his own company’s stock and the average hedge fund outperforms the market by about 7%. The average U.S. senator, however, outdoes them all, beating the market by a stunning 12%. When Washington insiders talk about “the marketplace,” then, they’re speaking a different language.

Oddly, Lessig is reluctant to dole out blame for legislators’ perverse motives. Yielding to special interests “isn’t selling out,” he reasons. “It is surviving.” Congress passes laws with “sunset” provisions and “tax extenders” in order to drum up donations from laws’ supporters when expiration draws near. “For every time a ‘targeted tax benefit’ is about to expire,” Lessig explains, “those who receive this benefit have an extraordinarily strong incentive to fight to keep it.” Lessig notes that in the 1990s, there were fewer than a dozen tax extenders in the U.S. tax code. Now there are more than 140. Because the average legislator cannot stand up to special interests and still draw enough contributions for the next reelection campaign, Lessig contends, can we really blame them for playing along?

But the dog wags his own tail, too. Schweizer describes how members of Congress use “juicer bills” or “milker bills” to extort campaign contributions and favors from businesses and individuals. For example, Schweizer recalls that in 2006, Senate Majority Leader Harry Reid “announced that he wanted a tax hike on hedge funds,” and the following January, after Democrats captured both houses, “Senator Charles Schumer sat down to dinner with a number of top hedge fund managers” whose net worth totaled more than $100 billion. According to the New York Times, hedge funds were not significantly involved in lobbying or campaign spending until that time—typically well less than $2 million per year. After being “juiced” by Senators Reid and Schumer, however, hedge funds more than tripled their lobbying and campaign spending, clocking in at more than $6 million in 2007 and more than $7 million in 2008.

Legislators also deliberately create rents by limiting entry to economic activity, granting monopolies, restricting corporate charters, imposing tariffs, quotas, and regulations, and so on. By creating these rents, legislators form coalitions with rent-seekers who express their support through campaign contributions. This crony capitalism—not partisan politics or rigid ideology—explains American political dysfunction. “Our tax system is an abysmal inefficient mess not because of idiots at the IRS or on the Joint Committee on Taxation,” Lessig explains, “but because crony capitalists pay top dollar to distort the system to their benefit.” For the same reason, real financial reform remains out of reach so long as the government remains invested in protecting bloated banks. And real health care reform was impossible where “insurance companies and pharmaceutical companies had the power to veto any real change to the insanely inefficient status quo.”

Notably, Lessig expresses a brutal indignation for one politician who vowed, more earnestly and persuasively than any other in recent memory, to confront the breach of trust in Washington. This message earned space on millions of Americans’ bumpers and carried on the lips of many otherwise jaded young people. Now on the back nine of his term, Obama is “an opportunity missed”; “a bad joke”; “the last straw”; and, worst of all, “conventional.” As a further insult, Democrats have been aped by the Tea Party as the vehicle of true reform. “Earmarks were blocked in the 2011 budget because the Tea Party insisted upon it,” Lessig concedes. “There is an Office of Congressional Ethics, the only independent watchdog ensuring that members live up to the ethical rules, because the Tea Party insisted upon it.” To Lessig’s chagrin, this is not a message his compatriots on the left are ready to hear.

The motive and opportunity problem is structural. The motives of special interests are not problematic because they are illegal or unethical (though they are immoral). They are problematic because they are based in human nature and thus intractable. Just as water always flows downhill, the motives of special interests will always flow toward rational self-interest. These motives become problematic where the opportunities to promote self-interest are procedurally unjust. Blaming special interests or self-interest for the corruption in American politics makes no more sense than blaming rain for a leaky roof. The solution in both instances is structural: Fix the structure so as to prevent the intractable force of nature from flowing where it does not belong. In the case of special interests, this means ensuring political opportunities are procedurally fair by breaking up concentrations of political power and carefully constraining government’s power over economic transactions.

Concentrations of power draw special interests into politics. The larger the concentration of power, the more overwhelming the demand. When the average legislator represents a relatively small number of constituents and a relatively small share of the economy—i.e., where the concentration of power is low—rents tend to decrease. Like any other valuable resource, political power responds to supply and demand.

Consider the nature of the “supply” of power in D.C. Congress’s 535 members wield power over more than 300 million Americans—including their wealth-producing activity. Responsible for 30 volumes and 6,200 pages of statutes, and regulations consuming over 25 feet of shelf space, Congress presides over an annual economy well over $14 trillion. The average member of Congress wields power over a share of population of about 573,000 people, and a share of GDP worth more than $27 billion. Little surprise, then, that in 2010—the year the Supreme Court held in Citizens United that corporations had the same right to make independent campaign expenditures as individuals—independent expenditures tripled from 2006 to over $210 million. Focusing on the right to participate in the political process misses the point: it’s the incentives that matter.

Devolving basic governmental functions back to the states would go a long way toward breaking up the dangerous concentration of centralized power and curbing the destructive incentive to rent-seek. For example, Alaska—one of the 10 states for which independent expenditure data has been collected—is substantially more democratic than Congress. Alaska legislators represent on average fewer than 12,000 people and a share of about $760 million of the state’s total annual GDP. Iowa’s legislature is also relatively democratic: each state legislator represents about 20,000 people and about $980 million of GDP. Even less democratic states seem Athenian when compared to D.C. A vote in the state capital speaks for 43,000 people and $1.9 billion in Wisconsin; 45,000 and $2.4 billion in Washington; 50,000 and $2.6 billion in Colorado; 67,000 and $2.5 billion in Michigan; 71,000 and $2.9 billion in Arizona; and 117,000 and $4.7 billion in Florida. Special interest dollars invested in these states thus get substantially less mileage in these states than in D.C.

Conversely, the most undemocratic state in the union, California, fares even worse than D.C. in terms of political rent-seeking. Heavily concentrated Sacramento governs both the nation’s largest population and largest economy, yet has the 16th smallest legislature: The average vote purports to speak for a staggering 310,000 people and a $16 billion share of GDP.

These numbers matter when stacked up against independent political expenditure dollars. In 2010, independent expenditures in Alaska were less than $4 million—about $62,000 per legislator. In Iowa, the number is even more modest at about $40,000 per legislator. In power-concentrated Sacramento, by contrast, independent expenditure dollars flood in at a rate of more than $1 million per legislator. Note that in the chart below, the states are arranged left-to-right according to the population per legislator (per the graph above):

Rent-seeking thus becomes more aggressive where political institutions are less democratic. The centralization of power in legislatures like those in D.C., California, and Florida empowers lobbying and campaign dollars and creates influence-buying opportunities too good for special interests to pass up.

Rent-seeking opportunities are also tightly correlated with activist regulatory policy. In June 2011, George Mason University’s Mercatus Center published its Index of Personal and Economic Freedom, ranking the 50 states according to the impact of their respective regulatory landscapes. States with pervasive labor regulations, health-insurance coverage mandates, strict occupational licensing requirements, weak limits on eminent domain, and other negative impacts on economic liberty and property rights are given a lower score on the index. The rankings are indicated in the graph as follows:

Using the Mercatus Center’s regulatory freedom ranking, the trend in independent expenditures tilts decidedly upwards as regulatory impact increases:

Rent-seeking tracks regulatory intensity. This is not an indictment of the merits of the regulations, of course. For purposes of the exercise, we can assume that the regulatory landscapes of Florida, Colorado, Alaska, and California—the states with both the highest reported independent expenditures per capita and among the least regulatory freedom—were crafted with scrupulous dedication to the public interest. But it is special interests’ motives, not the lawmakers’, that matter. Again, Lancaster had no desire to condemn 99 Cents. Yet this did not deter Costco from leveraging ill-defined government power against it. And recall the political game Lessig describes that legislators must play: simplifying the law, removing tax extenders, and other measures in the public interest deprive politicians from much needed fundraising opportunities.

Similarly, there is no reason to assume the New Deal’s massive expansion of government programs was the result of anything but good intentions. This does not change the fact that, as Peter Schweizer points out, the Export-Import Bank is now known as “Boeing’s Bank,” devoting almost 40% of its entire $21 billion annual business in 2008 alone to that single special interest. We could also stipulate that the U.S. Fish and Wildlife Service and the EPA are charged with important work. Not that this matters to special interests. According to Schweizer, “states with House members on the budget oversight subcommittee responsible for funding the U.S. Fish and Wildlife Service and the Environmental Protection Agency had significantly fewer listings than other states,” and “‘Congressional representatives who sit on the Interior subcommittee of the House Appropriations Committee use their position to shield their constituents, at least partially, from the adverse consequences of ESA.’” Similarly, according to one study, “the IRS actually shifts enforcement away from congressional districts represented by legislators who sit on committees with oversight of the IRS.”

Centralization makes our democratic institutions less democratic, making fewer representatives responsible for the fate of greater shares of the economy and the population. This decline makes it easier for special interests to buy influence. The pressures of this influence lead lawmakers to engage in policymaking designed as much to elicit campaign dollars as to benefit the public. This conflicted-interest policymaking results in more opportunities for rent-seekers to buy or extract further political influence. Decentralization of federal power and returning governance to states and local governments will increase the democratic function of legislative institutions and make it more difficult and expensive to buy influence. States like California and Florida with poor democratic representation can increase the number of state legislators to make rent-seeking a more expensive proposition. These measures would substantially dry up opportunities for crony capitalism, and direct special interests’ profit motive to the marketplace where it belongs.

Regulatory reform, on the other hand, can only be achieved by the courts restoring the original understanding with respect to economic liberty. Even assuming pure motives on the part of a state legislature, the very fact that courts defer to its judgment on matters of economic and property rights creates opportunity for special interests to achieve their profit-driven motives through political influence rather than the market.

Modern movements demanding more government action in response to concentrations of wealth get the problem exactly backwards. Corruption and cronyism are fundamentally the result of concentrations of political power, which give special interests inexpensive one-stop shopping. For this reason did Montesquieu approvingly observe that the separation of government powers “should naturally form a state of repose or inaction.” Every act and agency of government taxes the people not only of their property and freedom, but of their trust in their democratic institutions. We must ask, then, whether the progressive new business government is charged to conduct is worth the increased corruption that will be transacted through the back door.

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An Occupier rebuffs Lawrence Lessig’s proposal for taking the movement beyond mere protests

by Tim Kowal on December 7, 2011

The recent exchange linked below between self-described liberal Harvard professor Lawrence Lessig, author of the excellent new book, Republic, Lost, and The Nation sports editor Dave Zirin, helped crystallize for me why the Occupy movement will continue to struggle to establish meaningful roots.  I’m not going to summarize it; check it out if you’re interested:

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Quote of the Day

by Tim Kowal on December 4, 2011

Lee Habeeb on Hugh Hewitt, December 1, 2011:

I don’t buy the idea that Newt’s not conservative because he sat on the couch with Nancy Pelosi.  He sat on the couch with Nancy Pelosi at the moment because he wanted to say at the moment, hey, I am not a Republican, I am not a conservative, I am an American, and yeah, let’s talk about global warming … what can we do to reduce our carbon footprint anyway, aside from Kyoto and aside from these other things?  I don’t want to ever be a conservative who says we can’t be better stewards. 

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