Growthology

Anti-Federalists in the Twenty-First Century

The power of the federal government,

exercised without limitation, will introduce itself into every corner of the city and country. It ... will enter the house of every gentleman, watch over his cellar ... preside over the table, and note down all he eats or drinks; it will attend him in his bed-chamber, and watch him while he sleeps; it will take cognizance of the professional man in his office or his study; it will watch the merchant in the counting-house or in his store; it will follow the mechanic to his shop and in his work, and will haunt him in his family and in his bed; ... and finally ,it will light upon the head of every person in the United States. To all these different classes of people and in all these circumstances in which it will attend them, the language in which it will address them will be GIVE! GIVE!

You would be forgiven if you guessed that this passage came out of recent rhetoric from the so-called Tea Party. It is taken, however, from one of the more grandiloquent passages of the famous antifederalist Brutus during the heated debates over the proposed federal Constitution in 1787-88.

Which makes one wonder: if it were transported back to 1787, would the Tea Party have rejected the Constitution that today it professes to love and defend? Most likely, yes. 

This doesn't make their passion any less genuine, and it certainly doesn't mean that we should ignore the Constitution. I firmly believe the Constitution should be brought to bear on contemporary debates. But simplistic references to originalism and the Constitution as totemic touchstones are often historically confused and generally unhelpful, particularly when people have little idea about the substance of the debates over the Constitution when it was proposed and what they are defending (or rejecting).

Why isn't there an economist on the Supreme Court?

What's the most important economic job in America: President of the United States, Head of the Ways and Means Committee, or Chairman of the Federal Reserve Board? Answer: None of the above. The most important job is Supreme Court Justice.

Far and away, the most important economic decisions are the longest-term ones, the ones with the deepest roots that establish the most fundamental institutions. What exactly are property rights so constituted in our society?  Who sets prices? What information can be private, or should be transparent? What obligations do employers have to their employees: free contract, minimum pay, basic safety, paternalism, or more?  Is there a right to eat or a right to be fed?

Indeed, the almost entirely unreported but vital issue regarding the nominee to replace retiring Justice John Paul Stevens is whether he or she is economically literate, or rather, expert. It is not whether that person is left-liberal or left-center, pro-life or pro-choice, etcetera, yawn, etcetera. Face it, most Justices know almost nothing about economics beyond an Econ 101 class they had as a college freshman three, four, five decades ago. And these are the people who decide what the commerce clause means ... the ones who made it illegal for a man to grow his own tomatoes without federal approval?  Today we enjoy a Court that said it was peachy keen for the federal government to take ownership of General Motors on behalf of taxpayers who wouldn't touch GM stock of their own free will. To that, we can all say: "Thanks for less than nothing."

Isn't it about time we see an economist on the Supreme Court?  There are nine jusices, and nowhere in the Constitution does it say that a law degree is a qualification.  Yet, what we have now is a monopoly of lawyers on the Court. A monopoly.  All I'm suggesting is that a mere one of the nine have an economics degree.  And to assuage the fears of the status quo, a nominee with dual degrees would be more than fine. My own colleague, Bob Litan, has a Ph.D. in economics from Yale AND a law degree from Yale.

So why not Bob?  (That's our new rallying cry in Kansas City)

And maybe we're biased towards Litan, but how about Bob Cooter, a professor at Berkeley's law school and a pioneering thinker in the "Law and Economics" movement?  Or maybe skeptics want to stick to a reliable and registered Democratic economist. Fine with me. Why not Christina Romer or Austan Goolsbee, two of the President't top economic advisers?  Instead, I'm afraid we'll get the same short list of sitting judges who are part of the merry-go-round of law school-clerkship-judgeship pontificating.  It's time for a marginal revolution on the Court, Mr. President.

UPDATE: Thank to readers for catching the typo (Stevens, not Stephens).

Getting Sotomayor Wrong

Even if you don't have a strong opinion about Judge Sonia Sotomayor's fitness to serve as a Justice on the Supreme Court, you should be disappointed with the tone of the discussion. She is incredibly competent with an excellent track record of professional, intellectual achievement. So why can't the country have a substantive discussion? Or do you really think it's fruitful for the republic to spend the week debating how racist it is to mention your ethnic heritage? Newt Gingrich can say what he wants - hyperbole is his way of making a point - but I would hope for more from White House spokesman Robert Gibbs dodging a substantive defense. Here's Dana Milbank's summary:

The questioning had drawn the interest of ABC News's Jake Tapper, who said he had read the entire speech but was still "wondering if you can explain what she meant."

Gibbs ducked again, telling the reporters that the speech was "about the unique experiences that she has" and again recommending people "look at her whole record" in its "totality."

"You're not spinning us," Tapper complained. "We're asking you, spin us! Explain what you think she meant."

My suggested spin: It would seem her personal success is a testament to meritocracy, and we should be pleased and hopeful she will carefully guard America's meritocracy more than someone without that experience, frankly. Her success in life based on merit speaks more powerfully to the advantage of her subjective experience than accusations of her gender and ethnicity.

The slippery issue here is subjectivity versus the ideal of blind (objective) justice. The question Senators should be asking is whether any nominee's subjective experience taints their perspective in way that reinforces the core values of the Constitution or clashes with those values. Of course subjective experience matters! Now tell us why. Seems to me ethnic or gender favoritism is a pretty clear violation of basic Constitutional law. But I doubt that's the outcome of Sotomayor's experience, or what she has ever tried to convey. Do you really think she never met any poor white kids in public housing? No isolated, alienated boys? Being on guard for alienation is exactly what we want in blindly just society.

Sadly, too many smart folks are defaulting to the circular logic of subjectivity supreme. Objectivity is impossible, an illusion, an excuse for neo-imperialism, blah blah blah. Even a smart guy like Joel Achenbach, self-declared uber-geek, rational scientisticy guy, has fallen into this gaudy trap. Read this:

You can argue these things round or square, but it seems to me that, in most instances, interpreting the Constitution is not like interpreting a mathematical equation. The Constitution says nothing of stem cells, affirmative action, sexting, gay marriage. The cases that reach the Supreme Court are the hardest ones to solve, where there's no indisputable answer, and where even the sharpest legal minds, sworn to uphold the Constitution, will split 5-4 on what should be the law of the land. A justice's personal background shouldn't dominate the analysis, but neither should it be irrelevant.

Whoa! Flip this argument around and realize how silly it is ... Imagine if we lived in some bizarre alternate universe and we were discussing a nominee to head NASA, and Joel had written this:

... it seems to me that, normally, commanding astronautic exploration is not like the rigorous rules of grammar and spelling. The numbers 0 through 9 say nothing about gravity, radiation, alien life, or the creation of the universe. The decisions facing the nation's top astronaut are beyond mere logic, let alone cost-benefit analysis. The bravery and confidence-inspiring square jaw of the NASA Administrator matter far more than egghead reasoning.

Let's stop pretending the Constitution is just words. We need to care about what any nominee's reasoning is on the existence of a privacy penumbra. Hard objective argument. How about intellectual property rights, monopoly, contract law, federalism, commerce clause ...? Talk to me about the 10th amendment.

Yawn. "How do you feel, Sonia?"

Pragmatism = Ideology

From the front page of today's New York Times: "In Classroom, a Pragmatic View of the Supreme Court."

Regular Growthology readers might not expect us to comment on the impending Supreme Court nomination battle, but given the profile of the institution, its recent trend to hear business and regulatory cases, and its broader impact on areas touching growth and entrepreneurship, we feel we should contribute to the dialogue.

Much has been made, as in today's Times story, of President Obama's generally pragmatic approach to governing. "Pragmatic" has probably been the most frequently repeated word since news of Justice Souter's retirement broke, usually defined against ideology. From today's story:

"And more than anything else, he is a pragmatist who urged those around him to be more keenly attuned to the real-life impact of decisions. This may be his most distinguishing quality as a legal thinker: an unwillingness to deal in abstraction, a constant desire to know how court decisions affect people's lives."

The persistent juxtaposition of pragmatism and ideology raises several issues. First, can we please retire the trope that these two concepts are opposites? Ideology has gained a bad name, but really, who is bereft of ideology? It's simply the way one sees and interprets the world. Even increasing evidence from neuroscience research confirms that, as one writer put it, perception is inference. Your "pragmatic" approach is always filtered through your interpretative view of the world, that is, your ideology. (Even the Pragmatism school of philosophy is itself a distinct school of thought, not an anti-school.)

Second, reading the Times story carefully belies the now-established media narrative of pragmatic justice: "Mr. Obama believes the court must never get too far ahead of or behind public sentiment." Nothing earth-shattering there. Later, however, we read that "Mr. Obama often expressed concern that 'democracy could be dangerous' . . . that the majority can be 'unempathetic.'" In other words, the President views the Court as the Founders did, and as probably most people do: as a bulwark of democracy. Because it controls neither the purse nor the sword, the Court can rarely run far astray of public opinion even if wanted to; the Justices know this, by the way--they are as much interested in the preservation of their influence as normal humans. At times, however, President Obama sees the need for the Court to stand against the tides of public opinion. This is how it's supposed to work and few would dispute it. 

Third, the pragmatism-ideology debate is framed as concern "about legal consequences" versus "formalism," supposedly blind to those consequences. Last time I checked, justice was still blind, and a common mistake in any discussion of justice is to conflate justice and fairness. Justice means the consistent applications of established and accepted rules; fairness is a subjective determination. (Forgive me: I grossly oversimplify for space considerations. There is an entire discussion to be had about the foundations of those rules, for example, and Martin Luther King, Jr., probably rendered one of the most eloquent discussions of this in legal history.)

Two threads of justice have long run through Supreme Court jurisprudence: procedural and substantive due process. Procedural due process is justice as equal application of the law. Substantive due process is, as one of my law professors put it, the filling of an empty vessel with one's own beliefs and norms. The Times story--and every media narrative concerned with the Court--tries to make the case that President Obama will favor substantive due process. He doesn't deal in legal abstractions, we are told. 

There are indications, however, that the President tilts toward procedural due process--that is, justice and not fairness. 

"In Mr. Obama's due process and voting rights classes, he showed students the broad failures of Reconstruction-era amendments that tried to establish equality for blacks."

And who would the President most like to argue before? Judge Richard Posner, quite possibly the best legal mind and writer of the last half-century and a leading exponent of Law and Economics. Why? Because Posner "was smart enough to know when you were right, Mr. Obama told the class." In fact, if I try to think of an approach to the law that has as its lodestar the consideration of the real-world consequences of legal decisions, Law and Economics is the best example that comes to mind. And I assume that many people would consider Law and Economics to be ideological, not pragmatic. Yet it may turn out, and it certainly seems to be the implicit message of the Times story, that President Obama views Law and Economics as the way courts are supposed to approach the law. (The Rehnquist Court disappointed many conservatives because it wouldn't deal greatly in the broad-brush generalizations of prior Courts. This may have been a function of the types of cases it saw and their social context.)

Now, this is all just speculation on my part, but it appears that President Obama has a deep respect for Supreme Court jurisprudence. Our media-soaked interest group political culture makes the nomination process an Armageddon-type battle over ideology and the supposed substance of Court cases. Yet the President, unlike many in the media and many of his supporters and opponents, has actually read Supreme Court opinions, has studied the careful reasoning every Justice employs. It takes far more thought, analysis, and, frankly, willpower to weigh the process and substance of the law and resist the easy temptations of shallow "pragmatism." President Obama, thankfully, seems to know this.

Tyler Cowen on Law and Economics

Tyler Cowen, who directs GMU's Mercatus Center, has a short essay at Crooked Timber about law and economics, with some interesting points.  Here's one:

The eighty-page “blah blah blah” law review article is harder to sell in an age of competitive professionalization of the law professor market itself. Law and economics arguments usually can be stated succinctly and the quality of argumentation and evidence is relatively easy to evaluate. It is possible, for instance, that an argument or piece of evidence is wrong and can be demonstrated as such. If law and economics requires some technical knowledge, so much the better for its ability to “signal” the quality of law school professors. I expect these trends to continue.

In a later section, Tyler notes there is a marked difference between market-oriented economists and market-oriented lawyers, primarily in their political framework but also substantively in their regard for written constitutions. In both senses, the average economist is less constrained.

My own experience confirms that for economists, there is much less of a ladder towards judgeships and the ultimate occupational pinnacle represented by the Supreme Court. Perhaps you could argue that being the Federal Reserve Chairman is the pinnacle, but there is no calculable path to that position as there seems to be towards the SC.

Read the whole thing.

Creative Commons News

The notion that strong IP is essential for profitable innovation takes a big hit with this news:

Free Nine Inch Nails albums top 2008 Amazon MP3 sales charts (arstechnica.com)

"Reznor actually made a ton of cash from even those basic digital bits. Forget about the deluxe artwork and the high-priced, limited-edition extras; Reznor actually sold more copies of the basic Ghosts I-IV albums through Amazon's MP3 store than did any other act in 2008. He beat out Coldplay, Death Cab for Cutie, Vampire Weekend, Beck, and hundreds of others, and he did it without a label and by giving the music away.

"This is exactly the sort of success story that Creative Commons likes to highlight ("See, it's not just for hippies and anarchists— it's for actual business use, too!"), and the group did so Monday with a blog entry that attempts to answer the question of how Reznor succeeded."

Law and Economics 2.0

Fortune has a nice article discussing Kauffman's new initiative (championed by Bob Litan) to focus Law and Economics on entrepreneurship / innovation / growth.  It's a very well written piece by Roger Parloff that has some pithy quotes by Bob as well as good political and historical context.

How does the current economic collapse — and its implicit lesson that over-reliance on market mechanisms have led us to disaster — affect his [Litan's] and Kauffman’s plans?

“Ironically,” he responds, “it may be an even bigger deal now that economy is collapsing. We are now about to have a huge national debate on the role of markets and regulation … and how much are we going to roll back from the market-oriented philosophy in which a lot of law-and-economics participated. … From our viewpoint we’re hopeful that whatever repairs we make in the economic system, we don’t kill off risk-taking and entrepreneurial drive, because that’s what we need for growth.”