Saturday, August 30, 2008

Global Warming & Evolution

Per the Washington Post: "A changing environment will affect Alaska more than any other state, because of our location," Gov. Palin said. "I'm not one though who would attribute it to being man-made." The theory of the (tiny minority of) scientists who accept the reality of global warming but question the significance of human contributions to it is that over the course of geological time, the Earth goes through periods of cooling and warming, and that it's just a coincidence that the current period of warming coincides with unprecedented human release of greenhouse gases into the atmosphere.

That's a doubtful theory on its own, but note a key premise: geological time, measured in hundreds of millions of years, substantially longer than the six or so thousand years since the beginning of time according to the Biblical account of creation. So, someone who believes in the literal truth of the Biblical story of creation would seem to be unable to rely on evidence of the Earth's warming and cooling cycles over a course of years that they believe did not occur.

It's not entirely clear whether Gov. Palin believes in the "young Earth" version of creationism or even whether she's committed to creationism. As this article at the time of her gubernatorial race makes clear, when asked in a debate, she gave support to the (unconstitutional) idea of teaching creationism alongside evolution, but later backpedaled a bit to say that she wouldn't push a requirement for creationism in Alaska public school science curricula, and that she simply wouldn't prohibit "discussion" of creationism should the issue happen to arise. That's fair enough.

And so perhaps the challenge isn't for Gov. Palin herself (although it could be; we, or at least I, don't know enough about her actual views right now). But in any event, there is a glaring problem here for the apparently substantial number of our fellow citizens who both believe in young Earth creationism and question the contribution to global warming.

Posted by Mike Dorf

Friday, August 29, 2008

A 72-year-old heartbeat away

One of the problems Sen. Obama faces as a result of picking Sen. Biden as his running mate is that it somewhat undermines his ability to run as the candidate who displayed the better judgment on the crucial issue of our time: the decision whether to go to war in Iraq. If voting for the war displayed bad judgment--as Obama says, and I agree, it did--then why did Obama pick a running mate who, like Sen. McCain, supported the war?

To finesse this question, the Obama campaign can distinguish the relative enthusiasm of Biden and McCain. Biden says he supported giving Bush the authority to pressure Saddam, whereas McCain was gung ho for the invasion, and only started criticizing the Bush Administration's execution of the war well after the insurgency was established. These are legitimate distinctions but they don't entirely erase the challenge that picking Biden poses for Obama's foreign policy judgment argument.

Still, if Obama faces a hurdle in making his argument, McCain would now appear to face a mountain. His main point of attack against Obama has been that Obama is not ready to be Commander in Chief because Obama has not had the kind or extent of experience that McCain has. But Obama has much much more foreign policy experience than the person McCain thinks best qualified to serve if he cannot. Obama has served nearly 4 years on the Senate Foreign Relations Committee. Until December 2006, Gov. Palin was mayor of a town of 6,500 people, and the McCain campaign is now touting the fact that she is the head of the Alaska National Guard as governor.

Or maybe that does count as crucial experience if you plan to ignite a war with Russia. Alaska would be on the front lines.

Posted by Mike Dorf

Housing and Mortgages -- Dealing with the Crisis

In a series of recent posts (on August 18, August 21, and August 27), I have discussed housing policy in the United States in the context of the current mortgage crisis, a crisis that began with the excesses in the subprime sector but that has now spread into the rest of the housing market and the financial sector as a whole. The two most recent of those posts were mostly devoted to: (1) disproving the myth that home ownership is the key to financial success for average Americans, and (2) showing that home ownership is not the only way to create safe and stable neighborhoods. Owning one's own home has become something that every politician extols, employers encourage, the tax code subsidizes, people write songs about, and just about everyone believes should be the goal of a good society. It is genuinely surprising, then, that the benefits of home ownership are so overstated and the costs so ignored.

One possible conclusion to this line of posts would be to say, "Well, now that the party is over, the best thing to do is let the chips fall where they may. To the extent that specific policies have encouraged home ownership, the best thing to do is to repeal those policies immediately. In any event, too many people are in homes that they shouldn't own; and the last thing we should do is help them stay in those homes." As I have suggested in those earlier posts, however, I do not take that view. The current post-bubble disaster in housing calls for an aggressive policy response, in an effort to minimize the number of people who will lose their homes.

This seemingly paradoxical position -- advocating policies in favor of current home owners, even though I believe that they never should have bought houses in the first place -- is based on the simple idea that policy should be based on an assessment of where we are, not where we wish we were. If we could go back in time, I (like almost everyone else) would have done things differently -- in this and in so many other areas of national policy. (Iraq, anyone?) We cannot, however, simply pretend that there is no crisis just because we know how we might have avoided it in the first place. While it is possible that the right response among the entire range of policy responses is to "let 'em rot," in this case I agree that doing nothing would turn a terrible situation into an all-out disaster.

The Home Owners in or Near Default -- The place to start is with the people who stand to lose their homes. Many of them were approved for mortgage loans that made sense (even from the lender's perspective) only if housing values continued to climb at unsustainable rates. As I argued last Monday, however, these new home owners were hardly the well-informed bargainers that classical contract theory assumes. The mortgage approval process is set up to make people believe that they can afford homes if they are approved for a mortgage. Moreover, I do not believe that people are immune to the hype that surrounds home ownership in this country (and others). To a large degree, millions of people bought homes because we collectively told them that that was the patriotic (and financially wise) thing to do. Telling them now to deal with it on their own evokes a line from the now-classic comedy "Animal House": "You f_cked up. You trusted us!!"

This does not mean, of course, that mortgage loans should simply be erased. It does suggest, though, that there is good reason to try to allow as many people as we reasonably can to stay in their homes. The consequences of default and eviction include thousands of dollars of expenses at a time when people can least afford it, destroyed credit ratings, and often destroyed marriages and personally destructive behaviors. This is not something to take lightly, even if we wish that these people had not been so eager to buy their piece of the American Dream.

Other Home Owners -- Whether or not one feels the same level of sympathy as I do about the defaulting home owners themselves, the simple fact is that the rest of us are at risk if policymakers do not smooth out this crisis. People who have done everything right -- buying a house that they could clearly afford, signing mortgage papers after diligently reading every word on every page, making payments on time and in full -- stand to lose because of what is going on around them. Most obviously, those who currently need to sell their homes because they need to move to a new job or for any other reason could easily lose everything. Given that even safe mortgages are made on 80% of the house's value, a drop of 10% in housing prices wipes out half of an owner's equity in a home. When defaulting home owners flood the market, the downward spiral takes other home owners with them. Stopping that spiral can mean the difference between an innocent home owner's being wiped out entirely or "merely" losing a huge chunk of her net worth.

Just as seriously, the external costs of widespread housing dislocation go beyond financial losses. Communities around the country find themselves looking at neighborhoods in which half the homes are suddenly empty. This causes increases in crime, as criminals find it easy to move into empty homes. (When I owned a home in Ann Arbor a few years ago as an absentee landlord, my renters moved out. I asked my insurance company to change my policy to cover the empty dwelling while I tried to sell it. I discovered that there was no insurance company that would insure -- at any price -- an empty home for more than a couple of months. The risk, even in an otherwise fully populated neighborhood, was deemed "uninsurable.") People whose only sin is living in a neighborhood where half of their neighbors defaulted find that they cannot win either way. If they try to sell, they cannot sell their homes without themselves defaulting on their mortgages. If they stay, their neighborhoods are unsafe for their families to live in.

The Economy and the Rest of Us -- Even those of us who do not live in neighborhoods that will be affected by declining home values have much to lose from the current crisis. When banks and other financial institutions fail -- even when their failures are, as is so often the case in the current instance, due to poor internal management of risks -- it affects the rest of the economy and puts the entire financial system at risk. Loans for sound investments become harder to get, equity in formerly good institutions disappears, and it becomes essential not to let things get further out of hand. In Japan, for example, a once-roaring economy was choked by a real estate collapse in the early 1990's. That country is only now recovering from almost two decades of recurrent recessions and depressed economic activity. Thankfully, U.S. policymakers have understood that we have too much at risk to let that happen here.

The exact contours of the appropriate policy response to the current mortgage crisis are well beyond what one can describe in a blog post. My point here is simply to say that even someone like me who thinks that the long-term best policy is to encourage people to be more realistic about the choice between home ownership and renting can still see the importance of an aggressive policy to keep as many people as possible in their homes right now. Ultimately, this is in everyone's best interest.

-- Posted by Neil H. Buchanan

Thursday, August 28, 2008

Election Trivia

Obviously, everybody is excited about the fact that the Obama-Biden ticket contains a major "first": it's the first major-party ticket to include a candidate from Delaware (the First State), which means that there was a 221-year gap between the time that Delaware ratified the Constitution and the time on which a Delawarean (can that possibly be right?) landed on the ticket. Off the top off my head, I'm pretty sure that Rhode Island is the only one of the original 13 that's still waiting its turn, and Vermont (the 14th state) is close behind. Any other long-term goose-eggs that you can identify?

Posted by Craig Albert

Ad hominem

I agree with Mike’s post from several hours ago about Jeffrey Rosen’s defense of Joe Biden from conservatives who have faulted Biden for his handling of the Bork and Thomas confirmation hearings. Rosen refers to liberals’ “ad hominem attacks” on Bork and commends Biden for having “made clear that he would not tolerate” them. Rosen’s one example of these attacks is Senator Kennedy’s claim that “Robert Bork’s America is a land in which women would be forced into back-alley abortions.”

The point I would like to add is that ad hominem attacks are an entirely appropriate method of opposing a judicial nominee, including in confirmation hearings. Ad hominem arguments--arguments against the person--are invalid because one can’t refute an argument by discrediting the person who states the argument: the argument stands or falls on its own strength, regardless of the speaker. (Actually, as everyone knows, you can often get to the right answer faster and more reliably by evaluating the speaker, but let’s put that aside. There are circumstances in which it makes sense to rule ad hominem arguments out of bounds.) A judicial nominee, however, is a person, not an argument. Thus it wouldn’t be far off to say that every relevant argument made in the process of evaluating the nominee is ad hominem. Even a comment on a nominee’s past judicial writings or other stated positions is really relevant only insofar as it may indirectly reflect on the qualities of the person (and so, still more indirectly, on the likely qualities of the person’s future arguments). Ironically, Kennedy’s remark was ad hominem only in this weak sense. Despite the imagery, it was a comment on Bork’s stated position on Roe v. Wade, not, except indirectly, on his personal characteristics.

Of course, that the relevant arguments are all ad hominem does not imply that all ad hominem arguments are relevant. Attacks on the nominee’s singing voice or physical strength would not, for example, be relevant. A charge that the nominee had previously taken bribes to fix cases, on the other hand, would be. In the broad area in the middle, though--the nominee’s interest in pornography, how the nominee treated workplace subordinates, the nominee’s personal views on controversial issues--it should be the balance of relevance against privacy that determines whether the nominee must respond to issues raised, not a rule against ad hominem attacks.

Posted by David Gold

That Speech By Ted Kennedy

No, I don't have in mind the moving speech Senator Kennedy gave a few nights ago at the Democratic National Convention. I'm talking about the speech Kennedy gave over two decades ago, expressing his view that the Senate should reject President Reagan's nomination of Judge Robert Bork to the Supreme Court. In my latest FindLaw column, I explain that, as Chairman of the Senate Judiciary Committee, Senator Biden was impeccably fair in how he conducted the confirmation hearings for Judge Bork and for Judge, now-Justice, Clarence Thomas. In an Op-Ed in yesterday's NY Times, Jeff Rosen takes the same view. Rosen goes on to charge, however, that unlike Biden,
some liberal senators and interest groups were eager to distort [Bork's] record. Hours after the nomination was announced, for example, Senator Edward Kennedy charged that Robert Bork’s America is a land in which women would be forced into back-alley abortions.”
There is no question that Kennedy's speech was hard-hitting. But it was not unfair. Kennedy began by denouncing Bork for acting as Presient Nixon's Saturday Night Massacre henchman during Watergate. He strongly criticized Bork for opposing the 1964 Civil Rights Act, for the narrow view of the First Amendment Bork took in a well-known Indiana Law Journal article, for his narrow view of the Establishment Clause and the Fourth Amendment, and for his opposition to Roe v. Wade. In none of these examples did Senator Kennedy misstate Bork's views, which were a matter of public record. The only example that was arguably personal was the criticism of Bork's "unconscionable" act of firing Archibald Cox as betraying a lack of "integrity." But note that this was an inference about public character based on Bork's actions as a public official. Kennedy did not say that Bork was a bad man because he watched pornographic movies (he apparently did not) or because of some other irrelevant personal issue.

How then, did Kennedy "distort" Bork's record? What I think Rosen must mean---and what I have heard from conservatives over the last two decades---is that Kennedy conflated policy preferences with constitutional law: Just because Bork couldn't find an abortion right in the Constitution doesn't mean that Bork wants women to be relegated to the back alley; he wants the issue decided by the legislative process. This claim fails for two reasons.

First, in one important respect, Kennedy was pointing to Bork's policy views, not just his constitutional views. Bork opposed the Civil Rights Act (when it mattered) on policy grounds. He thought the freedom of whites not to associate with blacks was more important than the freedom of blacks to be able to use public accommodations.

Second, let us suppose that some substantial portion of the people who heard or read Kennedy's speech were not sophisticated about constitutional law. Let's suppose, that is, that they thought Bork opposed abortion on policy grounds rather than because of his interpretive method. Well, if those people were nonetheless sophisticated enough to distinguish between constitutional views and policy views, then Bork's case would actually be helped by their being misled. They would think, "okay, so he'd vote for laws criminalizing abortion, but he's not going to be a legislator, so I don't care about that." More likely, however, the sort of person who would be misled by Kennedy's speech into thinking Bork opposed abortion on policy grounds would also not understand that the Supreme Court doesn't legislate. But for such unsophisticates, the relevant question about the Supreme Court can only be what sort of outcomes it will produce. And it is completely fair to say that had Bork been confirmed, and had he succeeded in casting a decisive vote to overturn Roe, there would be many back-alley abortions.

That might not be "Robert Bork's America" in the sense that Bork affirmatively wanted abortion to be illegal (although his post-judicial career indicates that he does in fact want abortion to be illegal), but it would be Robert Bork's America in the only sense that mattered: how he would have moved the law as a Supreme Court Justice. That's what Senator Kennedy was talking about and that's why it's ultimately irrelevant if some people thought he was talking about Bork's policy views. Such policy views were themselves irrelevant.

Thus, once again, I find myself defending a prominent Kennedy---this one fighting for his life---against an unfair charge by my friend Jeff Rosen.

Posted by Mike Dorf

Wednesday, August 27, 2008

Pakistan's "Oddfather"?

For decades, the late Vincent "the Chin" Gigante was renowned for his methodical efforts to convince the world that he was crazy. Or, if not the world, at least the judges before whom prosecutors sought to convict the well-known crime boss on charges ranging from bribery and racketeering to conspiracy to commit murder. Gigante went to painstaking lengths to convey the appearance that he was mentally ill and therefore incompetent to stand trial, wandering around Greenwich Village in his bathrobe and slippers while either muttering to or having boisterous arguments with himself. (And on occasion, for good measure, scooping up cigarette butts off the sidewalks and trying to smoke them.) While the so-called "oddfather" never received the Oscar that he so richly deserved, he did manage to avoid facing trial for many years before finally being tried and convicted by a jury in connection with a conspiracy to murder a former associate in 1997. Gigante ultimately was forced to admit in 2003 that his decades-long performance was indeed a ruse, and he accordingly pleaded guilty to obstruction of justice. Along the way, dozens of prominent experts offered confident diagnoses asserting that Gigante was in fact mentally ill.

Today, many Pakistanis are wondering whether they have an "oddfather" of their very own, in the person of Pakistan People's Party co-chairperson Asif Zardari, the artist formerly known as "Mr. Ten Percent" and the widower of former Pakistan Prime Minister Benazir Bhutto:

Mr. Ten Percent and Vincent the Chin: Kindred Spirits?[C]ourt documents filed by Mr Zardari's doctors suggest he had been diagnosed as suffering from a series of serious conditions including severe depression, dementia and post-traumatic stress disorder. He had even experienced suicidal thoughts....

The details of Mr Zardari's mental health examination, revealed yesterday by the Financial Times, were presented to a court in London to support an application to delay a now-defunct corruption case that was being brought against him by the Pakistan government. His lawyers presumably were looking for reasons to persuade the court to postpone the hearing - something they were successful in achieving. [link]

**

Zardari could remember neither the birthdays of his wife and children, nor more than a handful of facts from two short stories he was read. "He had difficulty focusing, concentrating and paying attention, is persistently sad, chronically anxious and apprehensive. He stated that he has had suicidal thoughts, but has not made any suicide gestures," Mr. Reich wrote.

Another March 2007 diagnosis - by Philip Saltiel, a New York City-based psychiatrist - said emotional and neurological problems suffered by Mr Zardari because of medical treatment and imprisonment had resulted in "emotional instability" and "deficits in memory and concentration". Mr Saltiel wrote: "I do not foresee any improvement in these issues for at least a year." [link]

Almost a year and a half later, the revelations about Zardari's court filings place him in a bit of a quandry. On the one hand, as with Gigante before him, the opinions offered by Zardari's experts may have helped fend off some of the many court cases around the world charging him with corruption and fraud. On the other hand, in the aftermath of Pervez Musharraf's resignation, Zardari now wants to become president of Pakistan himself, and is the presumptive nominee for that office of his party and, apparently, of the Bush administration, which has rather clumsily dropped whatever pretense of neutrality it had left. Of course, one might readily believe that having a touch of the crazy is a time-honored prerequisite to holding high political office. However, the Pakistan Constitution does not permit an individual to become president if he or she has been "declared by a competent court to be of unsound mind," and authorizes removal of the president on the ground of "mental incapacity." Even in the absence of any formal court order declaring him of "unsound mind," therefore, Zardari may have placed himself in the somewhat awkward position of having rendered himself potentially removable -- through his very own defense strategy -- from the moment he is sworn into office.

Zardari's associates claim that he's not crazy, he was just a little unwell. (I know, back then you couldn't tell.) After all, they note, Zardari languished in prison for many years, claims to have been tortured, and even feared being killed while in custody. Under such circumstances, says Zardari friend Wajid Shamsul Hasan, "[a]ny human being" would have suffered. Zardari's true condition is, of course, difficult for any outsider to assess. And certainly one can and should have sympathy for the possibility that he could have suffered mightily if subjected to torture and inhuman treatment while in prison, as he has claimed. Nevertheless, Zardari's associates seem to be suggesting that during the past year -- in which he has endured not only the trauma of his wife's tragic assassination, but also the stress of being unexpectedly thrust into a high stakes leadership position -- his earlier afflictions not only have not been exacerbated, but in fact have gone away altogether. He has now fully recovered, they say, and is "fit as a fiddle."

Whatever the actual state of Zardari's mental health, Pakistan's lawyers and judges must continue to find themselves perplexed by Zardari's behavior since Pakistan held elections back in February. More than six months after the Pakistani electorate decisively repudiated Musharraf and made clear its desire to see the reinstatement of Chief Justice Iftikhar Muhammad Chaudhry and the other judges ousted by Musharraf, Zardari's government has yet to make any meaningful effort to reinstate those judges or roll back the other constitutional changes that Musharraf imposed by decree during the Emergency. Zardari has broken one promise after another about the judges to his coalition partner, Nawaz Sharif, leading Sharif to temporarily pull his Pakistan Muslim League ministers out of the cabinet back in May and, more decisively, to pull his party out of the government altogether earlier this week. Zardari has openly acknowledged reneging on his deals with Sharif about the judges, the most recent being a written agreement to reinstate all of the ousted judges within 24 hours after Musharraf's impeachment or resignation. Zardari has justified breaking his word by asserting that his agreements with Sharif are "not holy like the holy Quran and the Hadith," but rather can be modified as convenient. Somewhat inconveniently, however, with his latest agreement Zardari also reportedly told Sharif, "Let's take an oath on the Koran this time that I will fulfill all my promises."

And the mixed messages continue. Last week, Zardari told Newsweek that he "personally [is] in favor of the chief justice, but there is a position in the party, which says that he has become too politicized in the last many months and he has been leading rallies." This week, by contrast, Zardari cryptically said that "perhaps [he] cannot reveal the whole truth to the nation" about why he has been unwilling to move forward with the reinstatement of all of the ousted judges. Zardari also was reported to have suggested that a coalition partner, the Awami National Party, supported him in opposing restoration of all of the ousted judges, but later was forced to "clarify" that statement through a party spokesperson after the ANP protested to the contrary that they have consistently supported restoration of all of the ousted judges.

In the aftermath of the February elections, Zardari was hailed by many as a statesman for his role in building a broad coalition aimed at national reconciliation -- and for being able to do so only weeks after mourning his wife's death. With respect to the judiciary, however, more recent reviews of Zardari's performance have been decidedly less favorable. Reports have consistently indicated that the principal source of Zardari's reluctance to permit reinstatement of all of the judges ousted by Musharraf -- and his reluctance, in particular, to see the Chief Justice return to office -- is a fear that independent judges might permit the corruption charges against him to go forward. (Pressure from the Bush administration not to restore the judges could well be another factor.) However, Zardari's own experience suggests that perhaps he has nothing to fear from an independent judiciary at all. Maybe he simply needs to press his legal and medical experts back into service, and to invest in a nice bathrobe and a comfortable pair of slippers.

Posted by Anil Kalhan

The Wall Street Journal's Big Labor Bogeyman

After I blogged yesterday on the decidedly ill-informed Wall Street Journal op-ed regarding the Employee Free Choice Act, I got to wondering why the Journal wasted ink and paper on a bill that died in the Senate nearly 1½ years ago on a 51-48 cloture vote. The answer, I think, was revealed in this morning’s Journal. Yesterday’s op-ed was a lead-in to set the stage for today’s lead editorial entitled “Big Labor’s Comeback,” which explains in Journalese why card check authorization will spell the end of life on Earth as we know it.

Unlike the Marcus op-ed yesterday, today’s editorial isn’t simply ill-informed. Rather, it’s completely wrong. It says
The main vehicle [for rewriting federal law to promote union organizing] is “card check” legislation, which would eliminate the requirement for secret ballots in union elections. Unable to organize workers when employees can vote in privacy, unions want to expose those votes to peer pressure, and inevitably to public intimidation. This would arguably be the biggest change to federal labor law since the Taft-Hartley Act in 1947.

The underlying suggestions of the editorial are that under federal law today, all unions are organized by means of a secret ballot election, and that the proposed legislation would prohibit secret ballot elections. Both are false.

First, as I pointed out yesterday, union drives almost always begin with petitions or authorization card drives, which are non-secret. It is only when an employer contests the results of the drive that a secret ballot election is held. Any employer is free today to recognize the results of a card drive and bargain with the winner of the drive. This is nothing radical. It was cemented in a unanimous 1969 Supreme Court decision called NLRB v. Gissel Packing.

Second, the proposed legislation would in no way prohibit secret ballot elections. The law regarding secret ballot elections would remain unchanged: if a substantial number of employees, but not a majority, sign cards, then a secret ballot election would still be held.

If you’re looking for radical changes to federal labor law, you need only look to the Republican counterproposal to the Employee Free Choice Act. It’s called the “Secret Ballot Protection Act”, and it would change federal law to prohibit employers from bargaining with a union unless the union had been designated in a secret ballot election under the auspices of the NLRB. In other words, if an employer was presented by all of its employees with a petition for collective bargaining, and the employer was absolutely convinced that all of the signatures were genuine and voluntarily given, and the employer had had a full and fair opportunity to make its case against unionization to the workers, and the employer decides that it wants to recognize that union and enter into negotiations, the Republican proposal would prohibit the employer from doing so. It would be an unfair labor practice for the employer to bargain with the union, and it would be an unfair labor practice for the union to ask the employer to bargain.

It’s worthwhile to note that secret ballot elections don’t happen overnight. For example, in a recent case involving the election at the Trump Plaza Hotel & Casino, it took about 18 months from the time that the union filed its petition for an election to the date on which the NLRB issued a decision certifying the results of the election. That’s 18 months in which the workers, who overwhelmingly supported unionization, had no representation. Twelve- to eighteen-month delays are commonplace. In service industries where there’s a high rate of employee turnover, the delay inherent in the election process effectively renders the right to join a union meaningless.

If it takes the NLRB, at current staffing levels, more than a year to certify an election with a bargaining unit of 30 workers, imagine what would happen if the “Secret Ballot Protection Act” were the law. Congress would have to appropriate money to the NLRB to staff the election process, and oversee far more elections than there are today. The result would be an overwhelmed NLRB, and elections would either be delayed or simply not conducted at all.

Posted by Craig J. Albert

The Non-Ownership Society

In my most recent post, I pointed out that -- contrary to widely cherished assumptions -- the supposed financial benefits of home ownership, compared to renting, are minimal to non-existent. Even taking into account the tax advantages from deducting mortgage interest and property taxes (the latter of which are disallowed for taxpayers who must pay the Alternative Minimum Tax), it turns out that many (even most) people could do just as well or better financially by renting their residences. Putting money into home equity is, for many people, worse than paying rent and putting their savings into other financial instruments. This is, of course, shocking news to Americans who have been told repeatedly that there is no better investment than their homes.

There is an additional financial disadvantage to home ownership that I did not emphasize. Buying a home violates the bedrock principle of safe investing: diversification. No responsible financial advisor would tell the average person to buy shares of just one company, or to put all of their money into a business venture with friends who want to, say, open a restaurant. In fact, one of the little-appreciated problems with 401(k) plans is that too many workers put all of their money into the stocks of the company they work for. (Insert bitter Enron comment here.) Nevertheless, our social norms and explicit policies encourage people -- all but beg people -- to pass up a diversified portfolio in favor of putting all of their money into one big asset. If that asset tanks at the wrong time, life is not good.

Even if people are wrong about the financial advantages for buying versus renting, however, it is still possible that there are other benefits of home ownership that outweigh the net financial benefits that renting would bring. Unfortunately, the supposed social benefits of home ownership are at best overstated, and their are other disadvantages to widespread home ownership that cut even further against the idea that everyone should own their homes.

Other than those mythical financial advantages, probably the most common argument in favor of policies to encourage home ownership is that home owners are more responsible than renters, creating more stable neighborhoods. The basic notion is that renters are rootless while home owners stay in one place for the long haul, giving only the latter the incentives to engage with their communities. In part, this is based on a misreading of the simple fact that younger people move around before they settle down and (mostly because they have low incomes and no money for down payments) are renters. The correlation between renting and rootlessness is, therefore, not proof that homeownership will cause people to settle down. In fact, as I mentioned in my previous post, the average home owner in the U.S. sells and moves after only six years. The rock-solid home owners living in the same house from age 25 until they enter a retirement village are anything but the norm.

Still, renters move more often, right? Not necessarily. In places where renting is a meaningful option for similar residences, meaning mostly in big cities, people often rent one residence for decades at a time. Many people who grew up in New York City, for example, lived in the same apartment from birth through college (and their parents continue to live in the same place). Many European cities have much lower rates of home ownership, yet neighborhoods are quite stable. People plant flowers in window boxes, neighbors look out for each other's children, crime is low, and all is right in Ozzie and Harriett's world. By contrast, when a person buys a home and knows that she will be leaving in a few years, there is little reason to become engaged with the local schools, community issues, etc. (My personal experience is unique, of course, but having owned five different houses for periods ranging from 18 months to 4 years, I can testify that owning can feel just like renting. From Fox Point, Wisconsin, to South Orange, New Jersey, I never attended a town hall meeting or joined an Elks Lodge.)

In other words, while the question of neighborhood stability is ultimately an empirical one, there is at least strong reason to suspect that we can have very stable neighborhoods without everyone being on the hook for a huge mortgage. When people stay put (or, more accurately, when they expect to stay put), they take the time and effort to invest in their surroundings and to become part of the community. This suggests that landlord/tenant laws are as important to neighborhood stability as mortgage interest deductions. Probably more so.

Moreover, as I pointed out in my most recent post, one major social and economic cost of home ownership is precisely that it ties people down. In the depths of the recession of the early '80s (the worst downturn since the Great Depression), President Reagan encouraged people to "vote with their feet," since there were relatively plentiful jobs in the Sun Belt even as the Rust Belt was earning its new nickname. This was fatuous, because the people in Michigan, Ohio, and Pennsylvania who might have moved to Arizona and Texas were financially tied to homes that had become nearly impossible to sell without the owner losing everything.

The economy, therefore, significantly underperformed because too many people owned their own homes. (Put another way, risks in the housing sector were not spread efficiently.) This, by the way, would be true whether or not there is a net increase in rootedness due to home ownership. That is, even if there is no difference in mobility between home owners and renters during non-recessionary times, the difficulty of selling for owners during downturns harms the labor market as a whole.

This discussion, of course, hardly covers all of the issues. (Among other things, there are serious environmental and energy-use problems associated with U.S. housing patterns.) Still, taken as a whole, it is quite surprising that home ownership continues to be held out as an unambiguous benefit to families, communities, and America.


In the next episode of what has become a series on the topic of home ownership, on Friday I will discuss the current mortgage crisis and why -- even though it was a bad idea to encourage so many people to buy their own homes -- it is essential for policymakers to continue to try to minimize and undo the damage that the current wave of foreclosures has caused.

-- Posted by Neil H. Buchanan

Tuesday, August 26, 2008

Union authorization cards and the Employee Free Choice Act

I am not much of a fan of horror fiction. I do not read Stephen King. When I am in the mood for a mix of something scary stupid however, I need only open the pages of the Wall Street Journal and read the editorials and opinions.

One of today's Journal horror stories is an op-ed by Bernie Marcus, the founder of Home Depot, in which he rails against a proposed piece of legislation called the Employee Free Choice Act. He claims that enactment of this amendment to the National Labor Relations Act would “virtually guarantee that every company becomes unionized.” Mr. Marcus's view echoes that of many others who oppose unionization in the workplace.

Since this is a presidential election year, the electorate necessarily is focused on election mechanisms, and little is more emblematic of American elections than the secret ballot. It’s understandable, then, that much of the criticism of the Employee Free Choice Act centers on the canard that it eliminates the “secret ballot.”[1] That’s wrong. It eliminates the need for holding a contested election once a majority of the pool of potential voters have already expressed their choice secretly. What the opponents really protest is the absence of a do-over.

To understand why the criticism of the Employee Free Choice Act is so wrong, one must understand how unions are certified in the workplace today. Under the National Labor Relations Act, any group of employees may approach an employer with a request that they be recognized as a bargaining unit, and the employer is free to bargain collectively with the members of that group collectively through their authorized representative. It is entirely conceivable that a workplace can, under that model, have both collective bargaining with the representative of the group of employees who desire to bargain together, and individual bargaining between the employer and the employees who do not wish collective representation. Employers rarely recognize such an agent, however, and unions rarely seek such limited representation. Instead, the usual fight is over representation of all of the employees in a bargaining unit (in states that permit open shops).

There’s a big difference between when recognition is permitted versus when it’s required. It’s permitted anytime; it’s required only when a majority of the bargaining unit wants representation. Under current law, therefore, whether a union is recognized depends on how it is determined whether a majority of the bargaining unit wants collective representation. The current system is like a political election in that a number of workers – required to be “substantial”, but not necessarily a majority – sign a petition or authorization cards, and the NLRB then decides whether there’s a sufficient number of valid signatures to justify holding a secret ballot election. Then there’s a campaign (often dirty, just like in politics), culminating in a vote. As in a political election, people aren’t required to vote, and the winner is the side with the most votes cast in its favor. As in a political election, the “nominating” petition isn’t secret, but the final vote is. The campaign is often lengthy, dirty, expensive, and characterized by mutual charges of voter intimidation.

As an alternative, imagine that instead of the two-step process of nominating petition followed by contested election, there were a one-step process of petition alone. If the nominating petition or set of authorization cards is signed by a majority of all of the potential voters, then there is no need for a contested election. Even if an election were held, then as long as the voters’ preferences do not change between the time the petition or cards are signed and the time that the election is held, the position expressed in the petition or cards will be the outcome of the election. That’s the idea behind the Employee Free Choice Act; once a majority of the electorate has already expressed its preference through the petition process, the delay and expense of holding an election to rubber-stamp the result is counter-productive.

From the employer’s perspective, though, the availability of the election is the right to a do-over. If the employer has lost in the petition or card drive because a substantial number of employees requested collective representation, then the election provides an opportunity for a second chance to win. And who doesn’t like having a do-over? In my schoolyard, however, do-overs were disfavored. People who whine for do-overs are poor sports. Thus, the rhetoric in this debate is focuses not on demanding a do-over, but instead focuses on arguing “no fair”.[2] Here, the “no fair” part is that the second part of the process – the secret ballot that seems so iconic – is skipped. The necessary assumption is that if the second step were included, then the result might be different. The Employee Free Choice Act eliminates the window of opportunity during which employers can target employees to change their votes, because the employees “votes” – in the form of an authorization card – are secret from the employer, since the employer doesn’t know who signed the cards.

The Employee Free Choice Act creates a new way of designating a collective bargaining representative. Instead of collecting cards or petitions bearing the signatures of a substantial number of employees, presenting the signatures, being rejected, and conducting an election, the employees can instead collect signed authorization cards from the employees and then file a petition alleging that they hold cards from a majority of the workers. The NLRB’s job is then to count the cards, count the number of employees in the bargaining unit, and do the math. If a majority signed cards, then the union is designated as the agent for the bargaining unit. The authorization cards aren’t secret from the prospective representative who solicited the cards, of course, and that’s what Mr. Marcus is condemning as non-secret. But Mr. Marcus’s argument necessarily gives short shrift to the ability of a worker to just say no, and not sign a card.

Surprisingly, if both employers and unions played fair, the proposed legislation actually works no change in the law. It is already the law that if a majority of the employees in a bargaining unit sign valid authorization cards, the employer is required to recognize that unit as the representative of all employees in the unit, rather than just those who signed cards. The practice, however, is for the employer to refuse to bargain, at which time the petition is supplanted by a secret ballot election. In effect, the purpose of the election is to get employees who signed the petition to switch their positions. It is therefore false to argue that the Employee Free Choice Act works a radical change in labor law.

Finally, what could possibly be the basis for Mr. Marcus’s claim that virtually every company will become unionized? One thing only: that in virtually every company, a majority of the workers would sign authorization cards, no questions asked. The experience of union organizers, though, is that unionization drives take a lot of work and a lot of persuasion. If Mr. Marcus is so sure that a majority of workers in virtually every company is ready to sign a card, then that speaks volumes about how bad the state of employer-employee relations has become.


[1] As an aside, it’s worthwhile to note that plenty of elements of American democracy involve non-secret choices, such as nominating petitions, initiative and referendum petitions, recall petitions, caucuses, town meetings, legislative votes, and appellate court decisions. Secret ballots in United States elections did not become universal until the late 19th century.
[2] In my schoolyard, “No fair, do-over” was a doctrine different from the pure “do-over”.

posted by Craig J. Albert

The Michelle Obama Not-so-sub-text

Okay, first let's give credit where credit is due: Sasha Obama stole the show. No disrespect to my own two daughters but there is no way I would have trusted either of them on such a big stage not to make a bathroom joke. Now, a couple of reactions to the speech.

First, I just think it's sad that the obvious point of the introductions by Michelle Obama's mother and brother, as well as her speech itself was to say: "Michelle Obama is not at all scary and has the same values as middle-class white people. And even more so for Barack Obama." Her brother even worked in that Michelle grew up watching the Brady Bunch, and much of Michelle's speech, with its emphasis on the virtue of hard work and the importance of family, could have been given by Ronald Reagan himself. It's not that we Democrats don't believe in these things, of course, but (with the exception of Ted Kennedy's speech, which was not shown live on the networks) the script for the evening seemed extremely defensive---all about portraying the Obamas as Ozzie and Harriet, or perhaps more accurately, the Huxtables with a slightly greater sense of public duty. I don't doubt that the politicos who are managing the convention have better political judgment than I, and so this sort of show was probably necessary, but I find that sad.

Second, and less important, am I the only lawyer who's getting a little tired of the demonization of law firm practice? We were told several times last night that law firm practice just wasn't for Barack or Michelle, who wanted to do more to help people directly. That's great, more power to them, but you know, there are quite a few law firm lawyers with substantial pro bono practices, many of whom also support Democratic candidates for office with some of the money they make from their paying clients. Here too I get the point. Americans hate lawyers and so a successful lawyer-candidate needs to show that he's a different kind of lawyer. (For my extended treatment of that issue, see this FindLaw column from January.)

It's possible that the emphasis on Obama's use of his law degree to serve the public interest rather than line his pockets is also meant to draw a contrast with McCain, who can now be portrayed as an out-of-touch rich guy with a house for each day of the week. Maybe this will work, and if so, it won't be nearly as unfair as some of the nonsense hurled at Obama by the right, but I tend to think it's a mistake. Yes, McCain is out of touch and his policy prescriptions are awful (as I and most Dems see them) but it's not plausible to think that he is a man whose driving impulse in life has been personal enrichment. It's ALSO not plausible to think that about Obama. It's just sad that the fact that he's a lawyer makes the campaign think that they have to make the case.

Bottom Line: Night One may well have been judged a success, but I thought it was quite defensive. Oh well, better defensive than offensive, I suppose, as the Republicans discovered in 1996.

Posted by Mike Dorf

Monday, August 25, 2008

Now Comes Driller Time

I've heard that people want $2-a-gallon gas again, and I'm willing to bet that the presidential candidate who promises to deliver it is going to do well in the election. Now, putting aside the myriad of conspiracy theories that one can (and many do) spin out regarding what's happened to the price of crude oil over the last couple of years, we can certainly agree that three big factors in the run-up in prices are (1) a demand-shift brought about by higher consumption patterns in emerging economies, notably China and India, (2) a downward supply-shift brought about by the war in Iraq, and (3) weakening of the US dollar. We can't fix #1; it will take a lot of time and money to fix #2; and there's so much at work behind #3 that there's not really a short-run fix.

Is it any surprise, then, that the terms of the political debate have shifted to something that is unlikely to do anything at all in the foreseeable future? I write, of course, of deep-water drilling on the outer continental shelf. So here's a little discussion and a modest proposal.

First the discussion. The US actually does a pretty good job of supplying its own net energy needs, although the allocation is not so great. In other words, in terms of BTUs, we're nearly self-sufficient, but we've got a lot of extra coal, so we export a lot of it, and we don't have enough oil, so we import a lot of it. We use more than 7 billion barrels of oil a year; we produce a little less than 2 billion barrels a year. Of the 2 billion barrels we produce, about 500 million barrels comes from drilling in federal offshore tracts, so offshore drilling represents a big portion of what we produce, but a small portion of what we consume. But here's the problem: when our refiners go into the marketplace to buy crude oil to refine into gasoline, they're looking for 5 billion barrels a year at whatever the world price happens to be. If by some miracle we were able to drill offshore and double our production tomorrow morning, our refiners would have to go into the world marketplace and look for 4.5 billion barrels a year, and they'll be paying world market prices for that oil.

Now, let's imagine that anyone who wanted to could go and poke a hole in the Gulf of Mexico and suck out as much crude oil as he wanted to without paying for it, with the only restriction being that neither the crude oil nor the refined product could be exported. Would the price of refined product be zero? Obviously not. First, there's a cost associated with the extraction, refining and sale which would need to be recouped. Second (and more important), the price of the other refined product in the market would come down a little bit, while the price of the magic product would equilibrate at some market-clearing level. Bringing the magic, free oil doesn't do much to bring down the price of refined product.

And by the way, I haven't mentioned the law part, which is my justification for blogging. Producers aren't allowed to suck out as much as they want for free. Instead, under the Outer Continental Shelf Land Act, producers have to bid for the right to drill, and the Secretary of the Interior has to accept the highest responsible bid. So, if two oil producers bid for a lease on the same offshore tract, the bidder who projects the price of oil at $140 can formulate a higher winning bid than the bidder who projects the price at $70. (The high bidder may guess wrong, but the Secretary of the Interior can't take the lower bid.) The OCSLA has about a dozen different bidding methods that are authorized, but they're all designed to maximize revenue to the federal and state governments; none gives away something for nothing, and none gives any weight at all to what consumers pay at the pump.

Now the proposal. How do we get cheap gasoline by drilling on the outer continental shelf? We can't, so let's call the bluff. Introduce a bid with a penalty, in which the pump price of gasoline is pegged at whatever level is politically convenient, and the bid price is based on a mechanism already in the OCSLA. But the back-end penalty requires the winning bidder to pay an additional royalty in an amount sufficient to allow the federal government to subsidize the pump price by bringing it down to the pegged price, and have the federal government make that subsidy.

What would happen? Well, it depends upon what the pegged price is, but at $2 a gallon, I'll bet that no one would bid. The reason no one would bid is that the producers know that drilling on the OCS can't bring down the price of oil by any substantial amount, but they have no incentive to admit that in public. My proposal would make them think about whether they can deliver what politicians would like to promise, and if they can't deliver, then they won't bid. Indeed, the hearings at which we decided the level of the pegged price would be entertaining, because we'd get a good idea of what the true potential pump price reduction would be, based on what the producers claim would elicit their lease bids.

Posted by Craig J. Albert

Blame Bush or Clinton for Russia's Invasion?

Among the charges leveled against the West these days by Moscow's defenders is hypocrisy. Viewed from the U.S., the obvious parallel is Iraq: If we get to invade Iraq without prior international approval, why can't Russia invade a much closer neighbor?

But the better analogy---and the one that has apparently stirred up the Russians to a greater extent---is Kosovo. Recall that the NATO operation in Kosovo was not authorized by the UN Security Council, and thus, from the perspective of international law, illegal. Indeed, it was also probably illegal from the perspective of domestic U.S. law, as President Clinton sought and failed to obtain Congressional approval for the action, but then went ahead with it anyway.

At the time, the internationalist left in the U.S. was divided. (But pretty much only in the U.S. I happened to be in Italy at the time, where the left was almost unanimously opposed to the action, not principally on Serb-friendly grounds but on general anti-war and anti-U.S. grounds.) Many of the people who had been distraught by world indifference to the Rwandan genocide and the slow reaction to ethnic cleansing in Bosnia were glad that the West was finally taking a stand against many of the very perpetrators of the latter. But others worried deeply about what precedent would be set by a humanitarian intervention without formal legal authorization. After all, military expansionists (including Hitler himself) have used the pretext of humanitarianism to wage aggressive war.

Did Russia infer from NATO's actions in Kosovo that there was now a new norm permitting military action to aid a breakaway region? Maybe, although given the conflict in Chechnya, it's hard to see how Putin could have made that a universal principle.

Still, it's probably wrong to see in Russia's actions in Georgia simple self-serving power politics. Justifications do matter, and Russians may well be right to see a double standard here. Why does NATO get to say that Kosovo needs its help while Russia cannot say the same about South Ossetia?

I'm still tempted to say that the key event was not so much the 1999 NATO action in Kosovo but the decision of the US and various NATO allies earlier this year to recognize Kosovo's claim to independence. While atrocities are occurring, there is a good moral argument for military intervention on humanitarian grounds, even if such intervention is illegal because not authorized by the Security Council. But changing international boundaries should require a more orderly process. Viewed from Russia, Western acknowledgment of Kosovar independence confirmed the suspicion that the 1999 action (including the bombing of Belgrade, let's not forget) reflected anti-Slavic aggression all along---and such acknowledgment occurred on the watch of the current President Bush.

Posted by Mike Dorf

Saturday, August 23, 2008

IMMIGRATION: Five Questions for Rinku Sen

(Cross-posted from SAJAforum)

Rinku Sen with Fekkak Mamdouh, The Accidental AmericanThis month, Rinku Sen launches a new book, "The Accidental American: Immigration and Citizenship in the Age of Globalization." In the book, Sen, along with Fekkak Mamdouh, narrates the story of the Restaurant Opportunities Center of New York, an organization that supports and organizes workers in New York's restaurant industry. ROC-NY was initially founded by Mamdouh and fellow organizer Saru Jayaraman to support workers, like Mamdouh himself, who were displaced from their jobs at Windows on the World, the restaurant that was at the top of the World Trade Center's North Tower. In the aftermath of the 2001 terrorist attack, which claimed the lives of 72 individuals who worked at Windows, ROC-NY helped the surviving Windows workers launch a cooperatively-owned restaurant, Colors. Since then, the organization has expanded its work to organize and advocate for improved working conditions for restaurant workers throughout New York City, and has explored the prospects for expanding its work nationally.

Sen and Mamdouh tell the story of ROC-NY's founding and the ups and downs of its subsequent campaigns on behalf of New York's restaurant workers, critically assessing the challenges faced by advocates for immigrants' rights and drawing lessons from the local story about ROC-NY for the broader, national debates over immigration reform and globalization. Sen previously wrote about ROC-NY in a 2007 article, and she and Mamdouh discuss the themes of the book in a short video prepared in connection with the book's release. They launch a national book tour in New York on September 3, 2008 (details are available here).

Sen is currently president and executive director of the Applied Research Center and publisher of ColorLines, ARC's magazine on race and politics. She began her career as an organizer in 1988 with the Center for Third World Organizing and was named one of Ms. Magazine's "21 Feminists to Watch in the 21st Century" back in 1996. Her previous book, "Stir It Up: Lessons in Community Organizing and Advocacy," offers advice for activists and social change organizations based on her own experiences as an organizer and other case studies. She recently answered a few questions from SAJAforum about her new book, the role of journalism in her work as a community organizer, and her views on the current debate over immigration reform:

Continue reading at SAJAforum....

Posted by Anil Kalhan

A Clean and Articulate VP We Constitutional Lawyers Can Believe In!

When some people think of Sen. Joe Biden, they'll think of the unconscious racism of his characterization of Sen. Obama as "clean and articulate." Others will think back to the borrowing without attribution of Neil Kinnock's campaign speech. Or, those inclined more positively, will recall his terrific zinger about Rudy Giuliani ("a noun, a verb and 9/11"). The more serious will have a view about whether partition is the right course for Iraq.

For me, though, the defining Biden moment came over 20 years ago, during the Senate confirmation hearings on Judge Bork's nomination to the Supreme Court. (Complete pdfs in 5 parts are here.) Biden was the Chairman of the Senate Judiciary Committee at the time and during the course of what was essentially a week-long seminar on constitutional law, he showed himself to be clearly in command of the material. Only Senators Hatch and Specter were in the same league. Moreover, thoughout the course of his Senate career, Biden has displayed the kind of knowledge of the Constitution and constitutional law that cannot simply have been the product of cramming for confirmation hearings. (He also occasionally displayed terrible clock management skills, as when, in supposedly questioning a nominee, he talked without asking questions for nearly his entire time allotment.)

So now we have a Democratic ticket in which both the Presidential and Vice Presidential nominee are deeply knowledgeable about constitutional law. Given the dynamics of this and every Presidential election, that's not likely to be much of a factor in the race, but when constitutional issues do arise, it will be a pleasure to hear answers that are not simply scripted by the campaign staff.

Posted by Mike Dorf

Friday, August 22, 2008

What’s Next? Olympic Beer Pong?

[Hi all. I’m a newcomer to Dorf on Law, so I’ll briefly introduce myself: I graduated Columbia Law School in 2007, clerked on the Ninth Circuit this past year, and I’ll soon be joining the appellate litigation group of a New York City law firm. I’m grateful to Mike for giving me this opportunity, which I’m very excited about. I’ll try my best to match the quality of others’ posts, but please note that they do not review or edit my writings, so all errors are my own.]

According to this story in the New York Times, the International Table Tennis Federation is exploring sexier uniforms for its athletes in order to draw more spectators. Assuming that that this strategy would be successful, should the ITTF seriously pursue tighter, more revealing outfits?

The downside is apparent. When management---ITTF executives, team leaders, etc.---believe that the financial health of the sport is dependent on the attractiveness of the athletes, there is a risk that players who are less beautiful or who are unwilling to flaunt their bodies will face institutional hurdles to their participation in the sport. For example, coaches may choose to coach better looking athletes with less talent because they hope to get paid more from those athletes’ future endorsement deals. Universities may recruit better looking athletes in the hopes of increasing ticket revenues. Self-conscious individuals may choose to forego participation in a sport that puts their looks on display. This conflicts with basic notions of what sports are about. Athletes should be chosen to compete based on their talent and work ethic so that the best players will have the opportunity to win, regardless of their personal circumstances or looks.

Professional sports organizations and franchises are, however, businesses, not meritocracies, so it is rational for them to support a worse player over a better one if the worse player will generate more revenue. Of course, the same can be said of other biases. Sadly, in the current climate, the hiring of an identifiable Muslim by a business may have a negative effect on workplace morale or customer satisfaction because of irrational prejudices, so an employer might be tempted to “rationally” discriminate.

Fortunately, federal law forbids employment discrimination on the basis of religion. By contrast, my very quick and dirty research revealed that appearance-based discrimination is only actionable under federal law if it can be tied to a protected class status: race, color, religion, sex, national origin, disability, or age. (Commenters: corrections and elaborations are welcomed.) So employees who are rejected because they are simply unattractive---not because of their color, sex, etc., but because of their bone structure or body shape---are out of luck (under federal law).

But just because it wouldn’t be legally problematic, it doesn’t mean it isn’t normatively objectionable. As I see it, the problem with the ITTF is that it is leading a top-down (no pun intended) move toward sexier uniforms, as opposed to simply acquiescing in the non-concerted choices of individual athletes. I don’t think the ITTF needs to force players to wear drab clothing. If players independently choose, without encouragement by executives, to wear outfits that make them look sexier, so be it. This will still likely lead to professional benefits for the athletes who choose to dress attractively, but at worst the ITTF would be complicit in these market biases, not an enthusiastic proponent. Instead of marketing its athletes' bodies, the organization should publicly emphasize the thrills of table tennis, such as they are. If the ITTF needs to resort to t&a to generate interest in table tennis, can anyone really be expected to take the sport seriously?

-Posted by David Crowley

Thursday, August 21, 2008

Perestroika, Pereshmoika

Apparently regretting the role he played in bringing down the old Soviet Union, Mikhail Gorbachev has this astoundingly bellicose op-ed in the NY Times. Gorbachev begins with the claim that Georgia basically "asked for it" through its overly harsh response to South Ossetian separatism. Gorbachev puts the blame on Saakashvili for repeatedly refusing to sign "a legally binding agreement not to use force" against South Ossetia. Talk about the puss calling the maggot white! Would that be like the agreement Russia signed pledging not to use force against Chechen separatists? Oh, wait, there was no such agreement. Only the Bush Administration rivals Gorbachev for tossing stones from inside the glass house in its statements that in the 21st century you can't just invade another country because you don't like its leadership. Or as Secretary of State Rice put it, "When you start invading smaller neighbours, bombing civilian infrastructure, going into villages and wreaking havoc and (carrying out) the wanton destruction of (its) infrastructure, that is isolating." Insert Iraq joke here.

Speaking of Secretary Rice, what are we to make of the fast-tracking of the deal to provide Poland with a missile shield? Rice may not even be technically correct when she says that missile defense is not "aimed at" anyone, since it's defensive. Back when I was smart enough to understand such things, I learned that missile defense is likely to be much more effective if it can hit missiles in the "boost phase," before incoming warheads have an opportunity to deploy decoys. So a missile defense system might indeed be aimed somewhere. But even if we're talking about a shield that operates only over Poland proper, the notion that it's not aimed at anybody is silly, as the Bush Administration has long argued that the shield's principal purpose would be to defend against an attack by Iran, not Russia.

Which brings us back to Russia. One of the grievances Gorbachev cites is American unilateral withdrawal from the ABM treaty. He's got a point about that one. The ABM treaty was defensible as preventing either the US or the Soviet Union (and later Russia) from developing incentives to launch a first strike (as I explained here). So a robust missile defense by a heavily armed nuclear power could be perceived by its rival nuclear power as a threat. But it's hard to see how the sort of limited defense Poland would have constitutes a threat to Russia. If Putin, excuse me, I mean Medvedev, wanted to nuke Warsaw, he could still do so easily. The reason he wouldn't, even if he wanted to, is the risk of US retaliation, which is the same regardless of whether or not Poland has some ABM capacity. Alternatively, Putin, Medvedev, Gorbachev, et al could be miffed because a Polish missile defense would undermine the effectiveness of an Iranian nuclear threat, but they can't say that either, and that also seems nuts. It's fair to think that Russia is aiding the Iranian nuclear program both to make a buck and to counter US/Western influence. The Russian leadership would have to be totally deranged to actually want Iran to nuke a European country.

All of this leads me to conclude that the US/Poland embrace and the Russian reaction to it are largely symbolic, and largely empty, gestures. The problem, however, as both American and Soviet game theorists discovered during the Cold War, is that the logic of escalation can turn symbolic threats into real, and devastating ones. Here's hoping cooler heads prevail.

Posted by Mike Dorf

Home Sweet Rental

Earlier this week, I posted some thoughts on the ongoing mortgage crisis, describing various reasons why federal intervention is necessary and appropriate given the depth of the current problem and the circumstances under which mortgage loans are arranged. No matter how one feels, however, about the best way for policy makers to respond -- or, for that matter, whether they should respond at all -- this crisis raises a much more fundamental question: Why do so many people take out mortgages in the first place? With so many people facing financial ruin over mortgage deals that they can no longer afford (if they ever could), why are we not asking whether widespread home ownership itself is at the root of the problem?

Now that the recent housing bubble has burst, it seems obvious that too many people who shouldn't have tried to buy houses were approved to take out mortgage loans. One take on the problem, therefore, is that these people were simply not yet ready for the ultimate prize of owning their own home. The current problem is thus just another one of those crazy interludes that occasionally infects financial markets (and that will take years to clean up). Although the bubble years were indeed crazy, however, the problem goes deeper than that. In fact, it is fairly clear that widespread home ownership really doesn't make sense even when there is no crisis. For some people, the numbers add up, but for others it really does not. (This is not, by the way, a matter of income levels. For many middle income and high income people, renting makes more sense than buying.)

See, for example, a web calculator from the New York Times that was posted last year under the headline, "Is It Better to Buy or Rent?" It is fun (in its nerdy way) to plug in various plausible interest rates, resale prices, etc., to see how long one would have to own a home before buying would become financially superior to renting, if ever. Having owned five homes in my life (none for more than four years) before returning to rentals a few years ago, I have played with these numbers quite a bit. It is truly surprising how difficult it is to find a situation in which owning beats renting after less than 8 or 10 years. Given that the average American homeowner moves after 6 years, this says something pretty important about the choices we are making about the biggest purchases of our lives.

What is especially important to notice about these calculations is that the Times's calculator takes into account the tax advantages of home ownership versus renting, the accumulation of equity in the home, etc. It is truly an apples-to-apples financial comparison, including the opportunity cost of putting money for the down payment and a portion of each month's loan payment into home equity instead of interest- or dividend-bearing financial investments. In other words, the usual rhetoric about how "paying rent every month is just throwing money away" (as if interest paid on a mortgage is somehow saved), how "the mortgage interest deduction is the great middle-class tax break," and how "home ownership is the surest way to build up financial security" do not withstand scrutiny. The housing market has generally incorporated the tax advantages into prices, and the only financial advantage to home ownership comes from imperfections in the market -- which are legion but which can also cut in the other direction.

If all of this is true, why do people view home ownership as part of the American Dream? (Actually, this mythology apparently extends beyond the borders of the U.S. I was driving through Ontario earlier this summer and saw a sign for a suburban housing development on which a home building company reminded us that it has been helping people "achieve the Canadian Dream for over 30 years.") A big part of the story is direct government policy. The mortgage interest deduction, the deduction for state and local taxes, support for Fannie Mae and Freddie Mac, direct subsidies for loans and first-home purchases, etc., are all based on the idea that home ownership is the ultimate goal of adulthood. That this system creates huge economic problems, including the tying of people to pieces of property even when there are better and more productive job opportunities elsewhere, is left out of the celebration of white picket fences and apple pie.

This is also a particularly good example of how preferences are largely a social creation, not something that people come upon merely through private cost-benefit analyses. Everyone wants to buy a house because everyone else says that they should. Without such an array of social and policy signals, the hassles and perils of home ownership would surely be a lot clearer.

By this point, the cult of home ownership is so ingrained into the nation's psyche and policies that it should only be unraveled with a great deal of attention to the dislocations that would come from a mass movement away from individual home ownership. Given that just the current crisis alone is going to cost us -- privately and publicly -- trillions of dollars and millions of ruined lives, though, it is important to get started.

-- Posted by Neil H. Buchanan

Wednesday, August 20, 2008

Two, two, two votes in one (redux)

Earlier in the day, I posted and then deleted a piece about the prospect of one of the Vice Presidential candidates retaining his seat in the Senate while serving as VP. The musing came about because I thought the winning presidential candidate would be foolish to cede a Senate seat in a tightly-divided Senate, and in the rush of things I forgot about the Incompatibility Clause, Art. I, sec 6. My bad.

But then I read a piece by a fellow named Seth Tillman, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1099355, in which he argues (in a nicely-researched piece that I nevertheless find unpersuasive) that the Incompatibility Clause does not bar the President (and presumably the Vice President) from serving as a senator.

So now, putting aside the question of what the correct answer is, let's muse about what might happen if, say, Joe Biden were elected Vice President and then showed up on January 3 or January 21 to run the Senate, preside over the Foreign Relations Committee, and cast two votes (one as a senator and one as a tie-breaker) from time to time.

I haven't parsed Tillman's article in detail, but part of its argument seems to echo the position taken a little while back by Cheney as to the Vice Presidency not being a part of the executive branch. And consider the mechanics of the dispute, if it were to arise. Senator Biden would be sworn in for a new term on January 3; he would purport to take the oath of office as VP on January 20. Is he simply ineligible to take the oath, leaving the office vacant? Does he take the oath, occupy the office, wait for the Supreme Court to remove him? Or is it the Senate that decides whether he is qualified under Art I, sec 5, so that if the requisite majority does not vote to expel him, there is no further review? (Remember, Powell v McCormack reviewed an improper expulsion, not an improper retention.)

Posted by Craig J. Albert

Of Human Cannonballs and Lightning Bolts

So here I am sitting in my office, having just finished writing a draft of a short article on the Second Amendment, and looking to goof off for a few minutes by surfing the web. I go to ESPN.com and see that Usain Bolt has won the gold and set a new world record in the 200. Cool, I think, I'll watch that. ESPN doesn't have the video, however. Okay, I get it. NBC paid gazillions for the rights to cover the Olympics, so I'll go to their Olympics website. No luck there either. There's a story about the 200, and some still photos, but not the race itself. So I try the BBC website. It has video but the video won't play in my "region." There's probably some way to disguise my location and get the feed, but that's beyond my technical capacity and/or need to see this race right now. Indeed, the only place I can find Bolt's race is on Youtube, where someone has used a handheld camera to videorecord a French broadcast of the race, and then uploaded the wobbly, grainy feed.

Is the frustration of my ability to see Bolt (in decent resolution) now a First Amendment violation? Well, not quite. In the great "Human Cannonball Case," the Supreme Court held that a performer, and by extension, someone to whom the performer has assigned his rights, can embargo reproductions of his performances except on his terms. Or in lawyerspeak, a state common law "right of publicity" of performers, athletes, celebrities, etc., is consistent with the First Amendment rights of the press and the public. All sports fans know this in their bones from years of hearing how Major League Baseball or the NFL or whatever forbids rebroadcast, retransmission etc. of the depictions, descriptions and accounts of their respective telecasts without express written consent.

And yet, we take this notion so for granted that perhaps we overlook the obvious. Suppose that instead of setting the world record in the 200 meters, or better yet, in addition to doing so, Usain Bolt had, while on the medal stand, made a political gesture, as per Mexico City in 1968. That would be news, right? And NBC surely couldn't maintain a monopoly on the video reproduction of that gesture. So why isn't Bolt's great race in the 200 also news?

The Human Cannonball case tells us that the right of publicity protects interests similar to those protected by patent and copyright law. And likewise here. By investing NBC with the exclusive rights to show the Olympics in the U.S. (at least initially), the law permits NBC to reap the rewards of its investment in coverage. And we can say that NBC did invest in the technology to cover the race, for which it should reap the benefits, but that coverage of the hypothetical political protest would be a windfall. But note that we would (or at least I hope we would) draw this same line---okay to monopolize sports coverage; not okay to monopolize political coverage---even if somehow NBC had gotten a contract to be the exclusive purveyor in the US of "all Olympics and Olympics-related events, including political gestures" for an initial 24-hour period, or some such. In other words, it really is something like copyright or patent, i.e., public law, that's doing the work here, not the private law of contract.

I'll also note an irony. The websites have gotten very good at making us watch short but annoying ads before starting videos on demand. If NBC had included video of Bolt winning the 200 on its website, I'd have likely been forced to sit through the ad before seeing the race. As it is, I'll watch it tonight on my DVR and fast-forward through the ads.

Posted by Mike Dorf

Tuesday, August 19, 2008

Too Bad Michael Phelps Isn't 35

Per the 12th Amendment, candidates for the Vice Presidency must have the same qualifications as those for the Presidency, including being at least 35 years old. Thus, Michael Phelps is not available to serve as running mate for either Sen. McCain or Sen. Obama. Even the Olympics consummate running mate this year, Jason Lezak, is a few years too young. Thus, if either candidate wants to cash in on Olympic fever, he'll have to pick Dara Torres or perhaps Jason Kidd (assuming the U.S. beats Australia in the basketball quarterfinals).

Which leads me to the following question, which I'll pose more or less as an open thread: What is the effect of the Olympics on the Presidential election, each held the same year every four years? My preliminary thoughts are that it has the following impacts:

1) The Olympics help Republicans, as they stir up feelings of unalloyed patriotism, and while candidates for both parties are patriotic, Democrats tend to define patriotism in more complex ways, whereas for Republicans it tends to be more along the lines of "USA, USA, USA." (Yes, that's a vast oversimplification, I know).

2) Effect number 1 is more pronounced to the extent that US athletes succeed. Of course, the US media tend to focus on US athletes, and there are always a good number of successful ones, so this is a matter of small degree.

3) The Olympics delay the start of the general election campaign, so that there's a long period of the candidates feeling each other out after they've clinched their respective nominations. This year that period was shortened by the length of the Democratic race, but it has still seemed quite a long time since Sen. Clinton conceded. Perhaps, however, the Olympics delaying effect is swamped by the effect of the campaign finance rules. Parties schedule their conventions late, so that they can spend money raised for the primaries until the general election public funding limits kick in. Whether that will continue to be true in future cycles depends on how successful Obama's fundraising turns out to be after he dropped public funding for the general.

Posted by Mike Dorf

If Gitmo is in the U.S., Why Not JFK Airport?

Last week the 2nd Circuit sua sponte decided to rehear en banc its decision in the Arar case. (For you non-lawyers/non-Latin speakers, that means it decided on its own to rehear the case with all judges participating rather than the panel of 3 that originally heard the case.) Arar is a Canadian citizen who was detained by U.S. authorities at JFK airport while flying back to Canada from Tunisia by way of Switzerland, then shipped off to Syria to be tortured. (The Canadian government was complicit as well but that is the subject of separate proceedings in Canada.) He sued a number of U.S. government officials for damages, but for a variety of fairly complex reasons, the 2nd Circuit panel denied him relief.

Judge Sack, dissenting, took issue with the majority's reasoning on one point: that there was no jurisdiction because the alleged wrongful acts did not take place inside the U.S. As the majority noted, to the extent that the alleged wrongful act was Arar's removal from the U.S., a federal statute appears to bar jurisdiction over lawsuits challenging any "action taken or proceeding brought to remove an alien from the United States." But Judge Sack thought (and I agree) that that provision is about judicial review of deportation proceedings and therefore doesn't apply to a challenge to extraordinary rendition where the challenge asserts that in effect the U.S. officials, acting in the U.S., ordered Arar's torture by their (Syrian) agents. (Footnote: Apparently the U.S. policy of not dealing with Syria only applies to peace negotiations.)

On the merits, it's not clear what the right result is in this case, viewed as a matter of technical legal doctrine. But it does seem that if there is a general lesson in the Supreme Court's Gitmo decisions, it's this: Core rights such as the right to freedom from detention (and by extension the right against torture), cannot be defeated by jurisdictional games that treat actions taken by U.S. officials in places entirely controlled by the U.S. as though they fall outside the zone of legal protection. It's probably true, as the panel majority said in Arar, that Congress could either provide for or eliminate a private right of action for people in Arar's circumstances (although some of us, following the late great Henry Hart, think that the complete elimination of all remedies for outrageous violations of constitutional rights would itself raise constitutional questions), but that doesn't mean that the courts should let Congress off the hook. If Congress wants to say that extraordinary rendition is legal, it should have to say that expressly.

Posted by Mike Dorf

Monday, August 18, 2008

Two to Tango: Mortgages and Contract Law

Here on Dorf on Law, I recently discussed the problem of abusive credit card practices, suggesting that the discussion of whether and how to rein in certain controversial practices by credit card issuers will be distorted by absolutist rhetoric about contracts. "But they agreed!" is likely to be the retort to any suggestion of legal relief for people who signed or clicked through contract provisions that they now wish to avoid. I noted briefly in that posting that this absolutist language of contract carries over to debates about the loan contracts at the center of the current mortgage crisis. Again, the argument is that grown-ups must be held to their agreements, making any provision to modify or set aside contract terms now viewed as onerous a dangerous and paternalistic response.

The presumption in any system of contract must surely be that agreements will be honored. That part is easy. What we often seem to forget is that no system of contract law -- and certainly not ours -- ends at the beginning. The mortgage crisis, in fact, offers a particularly rich set of lessons in how and why some contracts should appropriately be re-written after the fact. (I do not propose to discuss here recent legislation that has been enacted in response to the mortgage crisis. Whatever else one might say, it is safe to assume that recent Congressional action on this issue will not be the last word on this ongoing crisis.)

As a macroeconomist by training, the natural place for me to start is to look at the aggregate picture. When the economy at large is threatened by a problem, averting greater damage is much more important than any particular contract. Just as it is appropriate to take action to prevent the catastrophic failures of large financial institutions ("too large to fail"), it can be necessary to take action to prevent the downward spiral that can come from widespread mortgage defaults ("too many to fail"). Policymakers, of course, will worry about whether the actions that they take today will set a bad precedent for future actions, but a doctrinaire hands-off response to these crises is, thankfully, no longer the end of the story.

The question remains, though, why it is appropriate to ask the non-defaulting party to take a hit in a crisis when it seems to have done nothing wrong. One simple answer is that, sometimes, losses need to be spread around to prevent greater damage. The more interesting answer, though, is that often non-defaulting parties should share in the losses, both because of what they knew when they entered into their contracts and what they did during the contracting process.

A borrower who cannot make loan payments when due is in default. The natural response is to say, "When you entered into the contract, you knew that you had to pay back the loan. You accepted the lender's money in consideration, and now they have a right to a remedy for your breach." Again, as a starting point, this is fine. What we rarely hear is a reminder of what lenders knew when they entered into these mortgage contracts. There are two sides to every contract, it is true, and both sides' actions need to be considered.

In the case of mortgages -- even mortgages that are not sub-prime -- the "negotiation" between the parties takes an odd form. It is true that mortgages are not "take it or leave it" contracts of the type that we see in the credit card market, with the terms of contracts (especially the interest rate, but also the length, the possibility of penalties for early repayment, etc.) the subject of direct negotiation. In many states, in fact, the buyer must be represented by legal counsel in purchasing a home.

Still, the mortgage process is deliberately set up in a way that makes the borrower a passive participant in the most important part of the process: loan approval. The borrower submits all kinds of confidential personal information to the lender, who takes that information and issues a one-word answer -- approved or denied -- to the applicant. Note that the potential borrower is now an "applicant," waiting for a considered judgment from an authorized expert. Applicants know that their loan will not be approved unless they have enough income or assets or if they fail to qualify on some other objective ground. When they are approved, therefore, there is reason for celebration. "We can afford the house!" The lender has set itself up as having greater expertise (a quite reasonable notion, in the eyes of a borrower), and it has said that the loan is acceptable.

The idea that "you knew what you were getting into," in other words, can just as easily apply to the lenders as the borrowers. Mortgage lenders tell borrowers that their loans are accepted, which a borrower reasonably takes to mean that they will be able to afford the loan. The borrower could have done more to make sure that this was true, but so could the lender. To the borrowers, we often say: "If you didn't want to pay back the loan, you shouldn't have borrowed the money." To the lenders, we must sometimes say: "If you didn't want this borrower to default, you shouldn't have lent them money."

This perspective does not reverse the presumption that loans will be repaid but rather makes that presumption rebuttable. It is a delicate matter to try to figure out how and when contract terms must be voided, altered, or enforced -- so delicate, in fact, that every law school in the world forces its first-year students to study just those issues for at least a full semester. Working out when and how to provide relief to over-extended borrowers is never easy, and the easy answer that they never deserve relief is the least satisfying approach of all.

-- Posted by Neil H. Buchanan