Few public figures in the world were so utterly dull and lacking in apparent human interest until recently as the President of France, François Hollande, who even made an electoral virtue of his dullness by comparison with the meretricious firework sparkle of his predecessor, Nicolas Sarkozy. He promised to be a ‘normal’ president, though whether a normal person devotes his whole life to politics, as M. Hollande has done, was something I rather doubted from the first. Whenever I read something that he said I could not help but think of Doctor Johnson’s opinion of Thomas Sheridan: ‘Sherry is dull, Sir, naturally dull; but it must have taken him a great deal of pains to become what we now see him.’ Indeed, for the psychologist and sociologist, M. Hollande was outwardly so dull that he posed a puzzle: how could so dull a man have become so prominent? He was one of those strange careerists who rise without trace. Continue Reading →
Liberty Law Blog
America is under one-party rule. That is illegitimate because it is irresponsible. Restoring responsible government will take a revolt from within the ruling coalition, or a new party formed explicitly to represent the people against the ruling class.
The New York Times’ “News Alert” heralded the House of Representatives’ passage (359-67) of a single bill that appropriates money for the US government’s discretionary accounts through fiscal 2014: “The legislation, 1,582 pages in length and unveiled only two nights ago, embodies precisely what many House Republicans have railed against since the Tea Party movement began, a massive bill dropped in the cover of darkness and voted on before lawmakers could possibly have read it.” The same day, a Wall Street Journal headline hailed the event as “Budget Deal Gives Parties Break From Fiscal Combat.” Like the Times, the Journal published a summary list of “who gets what” from the $1.1 trillion deal.
The Party bosses and the lobbyists closest to them who worked out the deal over the previous weekend answered only to themselves. Continue Reading →
Everyone interested in individual freedom, should take a moment on Sunday, January 19th, to remember the birth of entrepreneur, lawyer, abolitionist, and scholar Lysander Spooner, born in 1808 in Athol, MA. In his prodigious corpus of work, Spooner emerges as an uncompromising champion of individual freedom, which he grounds in a robust understanding of Natural Law, what he came to call the “Science of Justice.” His strong belief in the liberty of the individual manifested itself in a number of ways.
Spooner operated a highly successful private postal service (soon shut down by the Federal Government). He developed a startlingly original and sophisticated argument that the US Constitution does not condone slavery (which greatly impressed, among others, Frederick Douglass). Next, he posed a powerful defense of personal freedom in Vices are Not Crimes: A Vindication of Moral Liberty (1875). Perhaps his most famous work was a series of essays entitled No Treason (1867, 1870) in which he makes a bold argument against the legitimacy of the US Constitution and, by implication, of State power in general.
For more information on the life and work of Lysander Spooner, please visit the excellent website www.lysanderspooner.org and the exhaustive collection of Spooner’s work at the Online Library of Liberty http://oll.libertyfund.org/person/4664.
Over at the Independent Review, they have a symposium on James Buchanan, who passed away last year. Buchanan was a giant. My own work on supermajority rules (with John McGinnis) was greatly influenced by that of Buchanan (and Tullock). In this article, John and I built upon Buchanan and Tullock’s The Calculus of Consent to argue that supermajority rules should be used for various types of decisions, including most importantly the decision to enact and amend constitutional provisions. John and I used a different model than Buchanan and Tullock but reach similar conclusions.
In our work, we argue that supermajority rules should be used in situations where special interests are arrayed disproportionately in favor of passing legislation. In this situation, special interests will lead to too much of that legislation passing. We argue that spending laws are favored by special interests, but tend not to be opposed by special interests, and therefore we argue for a supermajority rule for spending laws.
A more difficult question is whether supermajority rules should be employed for regulations. We also believe (but much more tentatively) that special interests tend to arrayed more in favor of regulations than against regulations. This suggests the possiblity of a case for a supermajority rule for regulations.
But what to do about existing regulatory laws that special interests favor but need to be repealed? One does not want to add to require a repeal to secure a supermajority when special interests are also against the repeal. One possible solution is to apply the supermajority rule for laws that add regulations, but not to laws that reduce regulations.
In my last two posts, I suggested that technological innovation is an important and undercounted source of economic growth and that it helps temper inequality by creating new ideas that can rapidly be enjoyed by most people. Thus, any agenda for increasing economic growth and reducing inequality should focus on increasing innovation and decreasing barriers to its enjoyment. Here are four items for an innovation agenda.
1. Clear obstacles to innovation. Federal, state, and local governments should eliminate regulations that make it harder for new firms offering disruptive technologies to enter markets. At the local level, for instance, big-box stores are often thwarted by big-city labor unions. Low-income urban residents in particular would could purchase cheaper goods from such outlets. The middle class would benefit from access to new car services, like Uber, that allow individuals to contract with taxis and private cars by smart phone. It is a service that gives one almost the equivalent of a chauffeur at beck and call—previously the province of the extremely rich.
2. Shrink protections for firms that are “too big to fail.” By increasing returns in the financial sector, these protections encourage talented people go into banking instead of other areas, such as high tech, that would produce innovations that could be quickly shared.
3. Improve intellectual property laws. Some laws make it harder to share innovative ideas. In some sectors, such as software development, companies use patent litigation to prevent innovation by their competitors. Further, as Alex Tabarrok observes in his excellent book, Launching the Innovation Renaissance, IP protection is not a prerequisite for innovation. He cites the fashion industry as an example. Greater protection may be justified in areas that require large investments to develop products that are hard to discover and easy to copy, like pharmaceuticals. But not all industries are like that. Differentiated intellectual property laws could help promote innovation more optimally.
4. Fund basic science research. Basic science cannot easily be patented, and private companies will underfund basic scientific research to the extent that they do not capture all of its benefits. Some basic research, such as the discovery of some natural processes, cannot be patented at all, as the Supreme Court reminded us this last term in the Myriad case. Government could increase funding for this research to the enormous benefit of both companies and their customers, who derive value in excess of what they pay for innovative products. Programs like the President’s BRAIN initiative which matches foundation funds to study the brain are worth taxpayers’ support.
In 1964 Herbert Hoover died at the age of ninety. He had lived a phenomenally productive life, including more than half a century in one form or another of public service. It was a record that in sheer scope and duration may be without parallel in American history.
His life had begun in humble circumstances in 1874 in a little Iowa farming community, as the son of the village blacksmith. Orphaned before he was ten, Hoover managed to enter Stanford University when it opened its doors in 1891. Four years later he graduated with a degree in geology and a determination to become a mining engineer.
From then on, Hoover’s rise in the world was meteoric. Continue Reading →
Earlier today, Judge Friedman (D.D.C.) sustained an IRS rule to the effect that Obamacare’s subsidies and coverage mandates apply in all states with a health care exchange–not just those with a state-run exchange but also those with a federal or federally “facilitated” exchange. That is so, the judge held, despite statutory language that specifically refers to exchanges established by or ”a state.” The IRS (or for that matter HHS) is not a state but never mind. The opinion is here; news coverage here.
The judge’s opinion is (in my humble estimation) not a “let’s-save-Obamacare” blow-off: it wrestles with a serious problem of statutory interpretation—a Chevron problem. The judge says that the overriding purpose (universal coverage) is so blazingly obvious that in the context of the statute, the plaintiffs’ literal interpretation makes no sense. I think that’s mistaken (and I think I’d say that even if I weren’t affiliated with the Competitive Enterprise Institute, which helped to engineer this case), and I hope that it will be corrected on an already-pending appeal. But I think the real problem lies elsewhere.
All of AdLaw rests on the premise of Congress as a deliberative assembly that wants reasonable ends, reasonably pursued. Sometimes (Chevron says) Congress speaks with precision, and we courts follow; at other times, it delegates, and then we ask whether the agency acted within the statutory bounds, and reasonably.
That may make sense in the context of statutes that Congress actually thought about, like (say) the Clean Air Act at issue in Chevron (and now that I wrote that sentence, I want to shoot myself). But the ACA?? The basic design question—state or federal exchanges—has proved kind of important, don’t you think? But the harsh fact is that the Congress that enacted this statute had very specific intentions with respect to interest groups pay-offs (that’s why the ACA runs over 1,000 pages) but no discernible intent with respect to anything beyond that—except to cram it down our throats. The text could have committed the exchanges to Evita Peron or Mylie Cyrus: it still would have passed. Everyone knows that. The litigants and judges know it better than most; but none of them can say that.
The deep challenge here, and in an increasing number of cases, is to improvise public law rules for a nihilistic Congress and political process.
Several commentators have noted the recent dictat from the (so called) Justice Department advising that, “Schools also violate Federal law when they evenhandedly implement facially neutral policies and practices that, although not adopted with the intent to discriminate, nonetheless have an unjustified effect of discriminating against students on the basis of race. The resulting discriminatory effect is commonly referred to as ‘disparate impact.’” Moreover, the decree goes on to say, “Examples of policies that can raise disparate impact concerns include policies that impose mandatory suspension, expulsion, or citation (e.g., ticketing or other fines or summonses) upon any student who commits a specified offense.” Continue Reading →
Uber, the service that allows you hail a car ride from your smartphone, has faced bureaucratic obstacles and legal challenges in nearly all of the cities where it has tried to expand, typically from local taxi and limousine commissions that aren’t happy about the competition. Today in Paris, those paperwork protests turned into smashed windows and flat tires.
Five thousand French taxi drivers are on strike today . . . Multiple men allegedly attacked an Uber car carrying passengers away from the airport . . . Uber has been operating in France since December, when new rules allowed such phone-based services to pick up passengers as long as they wait 15 minutes.
In Paris, the cabs are problematic. One can only get them at designated taxi stations, which often requires one to walk several blocks. (Interestingly, one can call for them from a hotel or apartment, but they put the meter on when they receive the call, not when they pick you up.)
And the French way, dating back to the Revolution, is to protest changes that people do not like by calling disruptive strikes (often involving some violence), which appears to work. This element of lawlessness appears to be accepted as legitimate protest in France.
As I suggested a while back in discussing Gordon Tullock’s work, it is possible that the French cab drivers – while protected from competititon – are not earning monopoly returns. For example, if they are restricted through a medallion system, the purchasing of the medallions would have paid the previous owner an amount that would have covered the higher than competitive returns that were expected from the ownership of the medallion.
These stable, but pernicious arrangements are often disrupted by technological innovation. What this suggests is that when measuring the benefits that new technology provides to us, we should not only consider the productivity gains they make possible, but also the circumventions of problematic regulations.
Growing economic inequality is now becoming a premise of our political debates. Unfortunately, however, conventional government measures of inequality provide a misleading picture of comparative living standards in the modern world.
Most importantly, income inequality is not a good proxy for gauging the rise or decline of economic equality. To be sure, if income equality is to be used as a proxy, incomes have to be calculated accurately. For instance, incomes have to be calculated after tax rather than before tax. Moreover, government transfers have to be included. Finally, for most people income changes significantly over their lives. The amount earned over a lifetime seems more relevant than that earned from year to year. All these adjustments temper the inequality of earned income.
Consumption, however, provides a better measure of economic equality than income. Consumption is the ultimate objective of earning, as Adam Smith himself recognized. And, as I have discussed in a recent essay, Innovation and Inequality, the most important phenomenon for consumption in modern world is that economic value is now more and more created by information that arranges material rather than the material itself. As a result, we all can enjoy a higher level of consumption from the common pool of innovations that rapidly become inexpensive or even free. Income differentials are less important given that common pool. Continue Reading →