Thursday, December 31, 2009

A New Year's 'Declaration': Let's Get Finance Right This Year

By Bob Hockett

With the current 'generation's' opportunity to reform the US health insurance regime now nearly consummated -- and on a not altogether unsuccessful note at that -- perhaps it will not be inapposite to propose another 'let's get it right' resolution for the year ahead. My candidate this year will be this lofty hope:  How about we make 2010 the year in which, among other things (like getting serious about green-friendly energy and ending needless human and other animal suffering), we finally get both our domestic and the international financial systems and their regulation right?  This, at any rate, will be one thing to which I for one will be devoting a fair portion of energy -- as, unless I miss my guess, will be Neil and perhaps even our own polymathic Mike!

There will of course be a great many things to be done, and hence recommended, along these lines; and there will be the same danger of 'moderate'-mollifying half-measures' being settled for here as we've found at work in the health insurance reform efforts. And so DoL readers can expect, I think, a good variety of posts on this large subject in the months ahead. Since the new year is nearly upon us, however, and DoL readers will have better things to do in the next day or so than to read another long boring post from me, I shall close this post with a brief on-point anecdote and associated 'declaration.'

Earlier this month, I presented a paper at an interesting Yale conference hosted by Thomas Pogge, formerly at Columbia with such as Mike and now at Y's Philosophy Department. Although the occasion was now several weeks ago, I find that I'm still marvelling at how very inspiring this conference was. It brought together lawyers, economists, and philosophers not only from the academy, but also from such influential global institutions as the International Monetary Fund and the World Bank, and from such NGOs, 'civil society' organizations, and faith groups as Global Financial Integrity, Amnesty International, Human Rights Watch, the Soros Foundation, the National Council of Churches, Oxfam, and many others.

What was perhaps most profoundly encouraging about this conference was how so many morally committed and energetic people, from so many varied backgrounds and affiliations, were able in a spirit of fraternal concern and committed collaboration to grapple with a very real, very urgent, yet very much 'off the radar' global problem: That is the role played by 'offshore' financial secrecy, money-laundering, tax-dodging 'transfer pricing' schemes, and like practices in hampering sustainable, equitably shared development in many still undeveloped nations, locking the global poor into enduring penury.

Also eye-opening at this conference were a multitude of shocking reports that emerged of the brutal, dehumanizing ways in which laborers, often imported into many of these havens under false pretenses, are treated. And this is not even to mention, though perhaps it is to presuppose, the regard in which these same folk -- many from such places as the Philippines and Bangladesh -- are held by the wealthier 'tax refugees' who reside in the penthouses of these Vegas-like 'outlaw jurisdictions.' For the imported laborers appear to be viewed and routinely described, as well as treated, as less than human by those who import them.

I accordingly think that all lawyers of good will with an interest in financial regulation and tax policy (yep, lawyers like Neil!) might find the subject of this conference a very ripe field in which dramatic improvements in the lives of our innocent fellow human beings worldwide might be made -- if only we will continue to notice.

On that note, then, let me close this post and welcome the new year with the 'New Haven Declaration' upon which all attendees agreed at the close of our conference earlier this month, a declaration upon which we shall be following-up with more action:


New Haven Declaration on Human Rights and Financial Integrity

Human rights and international financial integrity are intimately linked. Where poverty is pervasive, civil, political, and economic rights often go unrealized. Today, large outflows of illicit money -- many times larger than all development assistance -- greatly aggravate poverty and oppression in many developing countries.

 Illicit money leaves poorer countries through a global shadow financial system comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing, and money-laundering techniques. Much of this money is permanently shifted into western economies.

Reducing these illicit outflows requires greater transparency and integrity in the global financial system. Achieving this is a prerequisite to creating an economic framework that is open, accountable, fair, and beneficial for all.

We call upon the United Nations, the G8, G20, WTO, IMF, World Bank, and other international fora, as well as on national governments, world leaders, faith groups and civil society organizations to recognize the linkage between human rights and financial transparency. We further call for decisive steps to ensure that developing countries can retain their resources for sustainable growth and poverty alleviation, which they must achieve if the human rights of all people are to be realized.

The undersigned individuals and organizations shall be working together in the coming months to pursue this agenda and look to add additional voices to this effort.
 
Happy New Year to all!

Wednesday, December 30, 2009

Entering the On-Line Food Fight

-- Posted by Neil H. Buchanan

Earlier this week, I was unfaithful to FindLaw and posted an op-ed on CNN.com's Opinion page: "Tax Wall Street's huge bonuses." Britain has recently adopted a one-time tax on financiers' bonuses in excess of $40,000 in 2009, and the U.S. is among a group of rich countries that are considering following Britain's lead. I argued in favor of adopting such a tax here. My main reason for taking this position, which I articulated at the beginning of the column, is distributional. (Rich getting richer, everyone else left behind.) There are other reasons as well, such as the ability to use tax revenue from a bonus tax to make other tax increases or benefit cuts unnecessary.

The central point of my column, however, was not to advocate the tax but to assess whether there is reason to believe that a tax on financiers' bonuses would be likely to drive people out of those jobs. That question is an interesting one, because the answer to it is not obviously "pro-tax" or "anti-tax." That is, some proponents of such a tax (such as Paul Krugman) suggest that people would leave Wall Street in response to the tax -- but such proponents think of this outcome as a good thing, because too many talented people have been enticed into financial jobs over the last few decades, impoverishing the nation by drawing those people away from more socially useful occupations. In other words, one can be in favor of the tax no matter what the incentive effect might be. (Similarly, one can oppose the tax even if it would have no effect on employees' job choices.) My prediction -- that a bonus tax, even if it were made permanent or if people expected it to be imposed periodically in the future, would be unlikely to drive anyone out of Wall Street jobs -- was thus essentially a neutral statement in terms of its possible impact on people's views of the wisdom of imposing the tax in the U.S.

One of the fun things about publishing in a national outlet, however, is that one gets to experience the mosh pit that is readers' reactions to op-ed columns. Put the word "tax" in anything, and the vitriol is cranked up to "11." ("It's one louder.") I looked at the comment board a few hours after posting, and there were already dozens of comments. (I did not indulge in reading through all of the responses, but I did scan through them to get a sense of the tone of the "discussion.") I also received a handful of angry emails from employees of Wall Street firms, plus one positive response.

Of course, even a hundred or so comments on a reader response board is a tiny slice of public opinion. It is also highly unrepresentative, with such boards being dominated by highly motivated, angry, anti-government ideologues. Nuanced debate is not the coin of the realm. Conceding that my observations are utterly unscientific, however, I will comment on two interesting phenomena:

First, there seems to be a large number of people who simply want to insist that all taxes are bad, all the time. This group has a few mantras that must be repeated. Most interestingly, the Treasury Secretary, Timothy Geithner, is a favorite weapon: "You guys want us to pay taxes, but Geithner didn't pay his taxes!" I argued in January of this year, after Geithner was confirmed, that it was a very bad idea to have him serve as Treasury Secretary after he received special treatment on his unpaid taxes. It is true that the crazies who scream about him would not be mollified if he had been dumped; but it is also true that people like me (who are not "anti-tax") simply have no satisfying answer to the Geithner embarrassment. The best we have is, "Well, yes, he received special treatment. But that's irrelevant now." It is irrelevant to the policy debate, but it is also a very unnecessary distraction. (Of course, I also happen to think that Geithner is doing a poor job as Treasury Secretary. But that is the subject for another day.)

Second, the go-to move of those who responded to my column is ad hominem attacks. Apparently, I am a jealous, pathetic loser who just wants to punish other people's success, because I made a stupid career decision and now want to lash out in revenge against the winners of the world. (Think I'm exaggerating? From one reader: "[Taxing bonuses] let's people who made a different life choice, say, academia over private enterprise, to exact a measure of revenge for their not having chosen the more lucrative professional path.") Imagine my surprise! And all this time I thought I loved being a law professor.

Of course, this "politics of envy" meme has been around forever. For example, the conservative English magazine The Economist sponsored an on-line debate in April 2009 on the resolution: "This house believes that the rich should pay higher taxes." On the web page for the debate, however, the resolution was presented under the headline, "Resenting the rich."

I suppose that there are people who want to raise taxes on the rich because of jealousy, resentment, or whatever. I know that I am not one of them, but they might be out there. What is interesting, however, is that this idea that people are proposing taxes on the rich out of envy is so reminiscent of what mothers have been telling their children for centuries: "Don't worry, Dear. The other kids are just jealous." Like all ad hominem arguments, the point is to obscure the merits of the debate. Here, however, we have a line of attack from the most privileged people on earth saying that anyone who believes that their privileges are undeserved is merely a jealous loser. Believing that must surely make it easier to sleep at night.


On a very different note, I will close my last post of 2009 by thanking everyone for reading Dorf on Law and by wishing you all a happy new year.

Sunday, December 27, 2009

Talk Amongst Yourselves

Posted by Mike Dorf

Ahoy DoL Nation.  As you may have guessed from reading between the lines of posts and comments, both Sherry and I are currently out of the country.  We're each teaching a two-week course at the Inter-Disciplinary Center at Herzliya, Israel. I'm teaching a course called "Judicial Review in Comparative Perspective," and learning from my students at least as much as I'm conveying.  (Sherry is teaching comparative reproductive rights.)  Once I return, I'll have all sorts of posts coming out of the experience.  But for now, I just wanted to wish everyone happy holidays.  Over here, it's still crunch time and I've got classes to prepare, sightseeing to do, etc.  Meanwhile, enjoy the posts by Neil and Bob.

Wednesday, December 23, 2009

Between the Scylla and Charybdis of Hyde and Casey: The Health Insurance Reform Legislation and Abortion-Neutrality

By Bob Hockett

I’ve been planning to add my two or three cents’ worth of reflections on the current ‘health care reform’ controversies for a while now. I am delighted at last to be in effect forced to do so, via the assurances I made to my DoL friends last week that I’d be happy to try to help with the attempt to fill in here while Sherry and Mike are away. (Yah, I know – ‘“please, please, please,” in the words of the immortal James Brown –  – hurry back!’ you are already crying out to the ColbDorfs.) And I am all the more delighted because, with reconciliation of the House and – one hopes, soon to be passed – Senate bills still ahead, there is still time to be prospectively rather than at best retrospectively relevant.

Had I managed to post earlier as I’d intended, I would have emphasized what I’ve thought – and still think – to be the most important insufficiently noticed aspect of the current ‘health care reform’ effort. That is the fact that we are currently engaged less in a ‘health care reform’ debate than in a ‘health insurance reform’ debate. And this is important because, as I elaborate in this article –  – coming out in the economic policy journal Challenge, health insurance bears certain ‘natural monopoly’ characteristics that render much that might seem mysterious about recent proposals and debates more intelligible. In particular, they go a long way toward explaining (a) why it is that most states’ insurance markets are dominated by one or two health insurers, (b) why, relatedly, it is that the US’s peer nations in the OECD have long since treated health insurance (if not health care itself) as a social insurance problem on a par with retirement and unemployment insurance (if not public utilities), and (c) why, again relatedly, a ‘public option’ or Medicare extension, not to mention a repeal of the McCarran-Ferguson anti-trust law exemption enjoyed by US health insurers, would be so desirable as fall-backs in the absence of a full-bore ‘single payer’ or ‘single provider’ system of the sort maintained by all of our developed peer nations.

But I did not manage to post earlier as I’d intended. And while discussing the insurance-theoretic aspects of the current ‘health care reform’ debate still might be helpful in explaining the desirability of what remains of the Senate bill after the ravages wrought by Senators Lieberman and Nelson, I think that more value can be added now by addressing what looks apt to become more salient when the House and Senate turn to reconciling their health care reform bills. That is the matter of how the bills affect the delicately balanced regimes of abortion rights and abortion insurance in the US – a subject that strikes me as having generated rather more heat than light in the past month or so.

Now there is of course an awful lot that one could say about this subject, and saying either too much or too little runs the risk of adding much more to the heat than to the light. What I’d like to do, then, is limit myself here to one particularly charged issue that has come up already and is apt to come up again during the reconciliation process – the issue of abortion-neutrality. In a later post, I shall perhaps address a related but distinct issue – namely, that of what method of assessment ‘pro-lifers’ and ‘pro-choicers’ should employ in deciding whether to support or oppose legislation that they would tend unequivocally to favor were it not for what they view as its objectionable effects upon the abortion rights or abortion insurance regimes.

On then to abortion-neutrality. As most DoL readers will know, it has been viewed as a desideratum by most who acknowledge the need of greater health insurance accessibility and affordability – be they ‘pro-life’ or ‘pro-choice’ (I shall use the parties’ own preferred names for themselves) – that where abortion and its funding are concerned the status quo ante should be maintained as nearly as possible. That way the two sides can ‘agree to keep disagreeing’ on what they’ve long disagreed about, without this still intractable disagreement’s preventing their pushing forward on a distinct front about which they agree. The hope, then, is to ‘bracket’ abortion so as to avoid an agreed-to-be-needed reform’s being held hostage to a separate question on which no unanimously accepted resolution is yet in sight.

Now this (to my mind, altogether sensible) desideratum of abortion-neutrality raises at least two sub-desiderata: Pro-lifers, for their part, do not want to see any change that might tip the delicate balance thought to have been struck by the Hyde Amendment many years back, such as might result in federal moneys’ going toward the funding of abortion or treatments incidental thereto. Pro-choicers, for their part, do not want to see any change that might render abortion and related treatments less available, more stigmatized, or otherwise unduly burdened after legislation than before legislation. So we must navigate, if I might put it this way, through the Scylla and Charybdis that are Hyde and Casey.

The question raised by the abortion-neutrality desideratum, of course, is first whether the desideratum can be met, and second whether, if not, one can at least manage to err so minimally as to render the resultant legislation nevertheless acceptable to all. The later post that I said above I’ll perhaps offer later will be addressed to that second question. Here I address only the first. Thus far the foci of attempts to address this question have been the Stupak amendment to the House bill, and this past weekend’s Nelson-wrought change to the Senate bill.

With respect to the Stupak amendment, there seems now to be a broad consensus among many pro-lifers (at least the honest ones) and pro-choicers alike that it quite possibly violates the neutrality condition. The principal reason appears to be that, in restricting public assistance solely to those who purchase comprehensive health insurance policies not covering abortion, a Stupak-including bill will yield one of two unacceptable results: Either nobody will receive public assistance, because all comprehensive health insurance policies cover abortion; or abortion will become less available, because many or all firms will simply continue offering the same policies as before save without covering abortion.

A predicate assumption here – sometimes stated, sometimes not – is of course that insurance companies, owing to accounting costs, will not offer parallel comprehensive policies respectively covering and not covering abortion. I must admit to some uncertainty about the likelihood of the predicate assumption’s being vindicated or otherwise (it’s not clear to me whether all or most insurers would in fact go all or nothing), but as it happens I shall not have to address it. For I am going to propose what seems to me an obvious solution to this problem, if problem it is, in a moment – after considering the Senate’s Nelsononian alternative to the House’s Stupak Amendment.

With respect to the Nelsonian method of putatively assuring abortion-neutrality in the Senate bill, there seems to be greater uncertainty as to its likely effects than there is in the case of Stupak. Pro-lifers assert that the ‘one plan, two cheques’ regime contemplated by the measure is nothing but an ‘accounting gimmick,’ since it does not prohibit recipients of federal subsidies from availing themselves of the ‘abortion portion’ of insurance plans to which their second cheques go. In consequence, the argument proceeds, the spirit of the Hyde Amendment will be violated and for the first time, federal funds will be used for the financing of abortions. Meanwhile, pro-choicers object that the seemingly gratuitous transactions costs and stigmatization introduced by the Nelson-wrought change to the Senate bill constitute Casey-offensive undue burdens placed upon women who seek abortions. More seriously, they argue, the opt-out from federal subsidies that the Nelson measure affords states that object to possible expenditures by recipients on abortion-covering plans effectively gives states the power as it were to ‘go Stupak’ themselves. So Nelson amounts to a sort of ‘federalist Stupak.’

Now, what to make of these arguments as we go forward? Should we all just ‘grit our teeth’ and go the Nelson route, as some now are reporting that the House is readying itself to do? Well, if that’s the best we can do, maybe. But possibly we can do better – by both pro-life and pro-choice lights alike – with the most minimal of changes, such as will not risk scuttling reform altogether.

Here’s my suggestion: First note that oddly missing from the WWID (what would insurers do?) question that those on either side of the Stupak and Nelson debates assume answers to, as well as from these answers themselves, is any mention of the fact that we don’t have to speculate. We can mandate. Why not, then, simply require that all health insurers offer parallel plans? Abortion-covering plans – ‘A-plans’ – would cover abortion in the manner that most comprehensive plans do now. Non-abortion-covering plans – ‘NA-plans’ – would be, in all respects save abortion-coverage, identical. Then the final House-Senate reconciled bill can restrict subsidies to the purchase of NA-plans, and abortion-neutrality would seem thereby to be maintained. No new burden raised before those seeking abortion or its coverage, and no change to the Hyde regime governing federal funding of abortion.

This proposed solution would of course result in some additional (but surely de minimis, no?) accounting costs to be faced by the insurers. But that seems apt to be a pittance in comparison to the great boon that the ‘health care reform’ legislation, alas, as it’s now shaping up, is conferring upon them. (Had a look at the share price performances of the majors ever since Senator Lieberman’s bombshell of last week?) More importantly, it would place the burden of adjustment on the insurers, which are not hurting, rather than on would-be insureds, who either are hurting already or will be hurting if abortion-neutral health reform legislation is not crafted.

Another problem with this proposed solution might be that it appears, perhaps perversely in the eyes of pro-lifers, to require something never required before – namely, that private insurers offer abortion-covering health plans. But this appearance is surely no more than the epiphenomenal by-product of a misleading ‘framing effect.’ For it is anything but clear, on reflection, that ‘requiring’ something that is already done anyway amounts to anything more than a prohibition from withdrawing, in response to legislation that pro-lifers themselves by hypothesis approve, something long hitherto offered. For again, all that this requirement would do is ensure that that possible result feared by Stupak-opponents – the withdrawal of insurance coverage for abortion by private firms responding to health reform legislation – not materialize. That seems an entirely innocent result if and insofar as it is the only means of assuring bona fide abortion-neutrality in the health reform legislation.

One final perceived obstacle to my proposed solution to the neutrality problem is that it would amount to a federal requirement placed upon health insurers, while the McCarran-Ferguson regime under which we continue to live reserves the power to regulate insurance to the states. This doesn’t seem a serious obstacle, however. For one thing, the change I propose, coming later in time, would presumably amount simply to an implicit partial-repeal of McCarran-Ferguson, rather as sundry ERISA provisions already do. For another thing, as I’ve argued elsewhere and will continue to argue in future in another connection – that of financial regulation – it is high time we repealed McCarran-Ferguson in any event. But more of that on another day.

Tuesday, December 22, 2009

Bastard Keynesianism Today

-- Posted by Neil H. Buchanan

Paul Samuelson died last week at age 94. The New York Times ran a front-page obituary last Monday, and Paul Krugman wrote a short, but very nice, entry on his blog praising Samuelson. At a time when Keynesian macroeconomic policy has once again become the key to economic recovery, we would do well to think back on Samuelson's contributions to public discourse. While those contributions were important, the story on Samuelson is more complicated than most people realize.

Samuelson was one of the most well-known economists of the 20th century, mostly because of his best-selling introductory textbook. His scholarly work covered a number of major areas within economics, but he was mostly known as a macroeconomist. One of his most famous papers, published in 1939 (when he was 24 years old!), described an important dynamic called "multiplier/accelerator interaction" that seems to me still to hold one of the key insights into why fiscal policy is especially important in fighting a recession. He also had theorems named after him (e.g., the Samuelson/Stolper theorem). In fact, he was such a leader in the field that he deserves to be called a legend.

With such a long and impressive career, it is difficult to know where to begin. On the positive side of the balance sheet is his embrace of activist government policy to fight economic downturns and put people back to work. He engaged in a lifelong intellectual battle with his nemesis Milton Friedman, and he combined academic work with policy work enthusiastically. Surely, the post-WWII economic environment could have been much worse if Samuelson had not been a leader in pushing against a return to pre-Depression economic classicism and its attendant policy passivity.

Postwar economics could also, however, have been much better. If the choice were only between Samuelson and Friedman, Samuelson was obviously the way to go. There was, however, a better choice available; and Samuelson aggressively pushed that choice to the margins of the academy and almost completely out of the policy debate. Now known as "Post Keynesianism," the losing side of that academic fight has never completely disappeared. The public debate, however, is much poorer because of the efforts of Samuelson and his cohorts to push the Post Keynesians to the margins.

The approach to Keynesian economics that Samuelson championed is now alternatively called "the Keynesian synthesis," the "neoclassical synthesis," or the "neoclassical Keynesian synthesis." The basic idea is that economics should be strictly split between micro and macro, not just in terms of the questions asked but also in determining the mode of analysis. Micro was all about supply and demand, rational actors, and efficiency. Macro was about fiscal and monetary policy. Virtually every major American economist of Samuelson's generation, and most in the generation that followed, adopted this approach. Solow, Tobin, Modigliani, and so on, were Samuelsonians. (They were also the leaders in the mathematization of economics, which Samuelson pioneered and promoted throughout his career. But that is another subject entirely.)

The other side of the debate lived on the other side of the Pond. Keynes's academic home, Cambridge University, included one proponent of the "synthesis" approach, John Hicks. Otherwise, the economists at Cambridge were overwhelmingly committed to the idea that the synthesis, or "bastard Keynesianism," was not only a theoretical abomination but a major error in policy. Joan Robinson, Nicholas Kaldor, Piero Sraffa, and others saw the error in conceding the micro side of the slate to the classical economists, and they spent the decades after the war fighting hard against the Samuelson approach.

What was at stake? As a policy matter, the difference between the American Keynesians and the British Keynesians boiled down to the difference between trusting markets and not trusting markets. The American (Samuelson) approach essentially said that the government should be as uninvolved in the economy as possible, intervening only to smooth the business cycle. Otherwise, markets would determine prices efficiently if government would stay out of the way. Inefficiencies like minimum wages were tolerated as part of the infamous "efficiency/equity tradeoff," but one had to hold one's nose in order to do so; and it was merely a matter of "morals" that would cause an economic scientist to deviate from the true path.

The British did not imagine that Adam Smith's fable about the invisible hand could ever be taken so seriously. They (like Keynes) saw the fundamental flaws in even the most sophisticated markets, and they offered a withering critique of the idea that government's role is merely to let rational private actors engage in self-interested action.

To Samuelson's great credit, one of the most important moments in academic history found him accepting defeat in a very humble and public way. When the debate between his camp and the Brits had reached a fevered pitch over something called "the capital controversies," Samuelson wrote a short but fascinating piece in which he admitted that his side had lost that battle. He did not say, "Well, if we only change this assumption ..." or any of the standard dodges in academic debates. He simply said, "They other side has proven that my position on this issue was wrong." Pretty amazing.

Samuelson then pretty much moved on to other issues. Unfortunately, Samuelson's cohorts did not follow his lead. Even people whom I otherwise greatly admire, like Joseph Stiglitz, continued to engage with the Brits on (to my mind) increasingly preposterous grounds. Even so, Samuelson deserves credit for refusing to continue a losing battle.

He did not, however, change his basic approach to policy. While he continued to find situations in which a market "imperfection" might cause us to deviate from the presumed ideal hands-off approach, he had set in motion the basic dynamic that we see to this day. The government is presumed to be a negative force in the economy unless there is something truly unacceptable happening, in which case we must reluctantly deviate from the preferred course.

Readers will recognize the analogy here to the fight within the Democratic party in the U.S. today. Samuelson's intellectual heirs, like Summers and Geithner, hold to a fundamental belief that market actors will end up doing the right thing with minimal regulation. Others, like Robert Shiller and (a changed) Joseph Stiglitz, see the problem quite differently. It is not that markets never do anything right but that markets must be set up in a way to prevent market meltdowns.

The damage that the bastard Keynesians are doing today is manifest. Attempts to do something so basic as making sure that rating agencies operate without conflicts of interest have apparently failed, even after we confronted the most frightening finance-led economic crisis since the 1930's. The political forces that were able to defeat improved regulations were relying in part on the belief buried in people's minds that the economy might occasionally need to be steered back on course, but regulating markets is inefficient and bad. That belief is so widely held to a surprising degree because of Samuelson. It is certainly better than the view that Friedman and his followers espoused (not even to try to right the ship), but that is a low standard indeed.

As Keynes himself said, "practical men" think that academics is irrelevant to them, but they are the slaves to some "academic scribbler." Samuelson's scribblings were better than most, but we should not be blind to the damage that his approach continues to wreak as we try to emerge from the Great Recession.

Monday, December 21, 2009

A ‘Political Agreement’ in a Legalistic World




With the fever of the climate talks behind us and the new "Copenhagen Accord" on the books, we should take stock of law’s role in this unfolding drama and of the progress made since 1992—the year the U.N. created the Framework Convention on Climate Change (UNFCCC).

1. "Taking Note" of a "Political Agreement"

The parties that negotiated Copenhagen's splash "accord" — Brazil, India, South Africa, China and the US (BISACUS) — agreed to cut "their emissions individually or jointly by at least 80 per cent by 2050." Of course: (1) the exact denominator was omitted from the commitment and that could change the pledged cuts dramatically; (2) 2050 is a long way off; and (3) this deal was struck without the participation of the vast majority of UNFCCC’s Conference of the Parties (COP). Most of the COP, indeed, was excluded from the negotiation of this 'political agreement' because, in the principals' views, the core of any real deal depended on only a handful of parties.

Put off indefinitely was a meeting where the UNFCCC COP as a whole would establish hard numbers and binding terms spelling out tangible actions in the foreseeable future according to a final text. For that, international law will have to wait.

Many in the COP majority objected vehemently to being excluded from the negotiation of the accord. (Global democracy has always been more ideal than real.) Perhaps as an inducement, richer nations pledged $30 billion in ‘fast-track’ finance for climate change "adaptation" from 2010-2012 (reportedly $11B from Japan, $10.6B from the EU and $3.6B from the U.S.) and to "jointly mobilis[e]" $100 billion in total by 2020.

The advantages of this deal for the rest of the COP weren't lost on the U.N. Secretary General (who got most of these so-called 'G-77' participants to see all of what they were about to scuttle and prevented them from doing so). Now these other parties have about four weeks to make their own pledges as they "associate" themselves with the BISACUS accord — a process that will tell us little about the domestic support for the accord within the BISACUS nations themselves.

Thus, at its close, COP 15 agreed only to "take note" of a loosely defined and irreducibly tentative accord. The legal significance of this 'taking note' is now the subject of real debate among international lawyers. (To whom my response is: the UNFCCC and COP have never established procedural standards for collective decisions precisely because they've always been so polarized; what possible good reason could there be to seek the undoing of this tiny step forward?)


2. Twelve Paragraphs

It took just 12 paragraphs to state BISACUS's common ground in Copenhagen. In some sense, it proves the force of international law that the parties didn't negotiate a treaty with tangible, numeric commitments because, if such commitments weren't powerfully binding, the participants' incentives all would have compelled exactly that result.

Of course, many observers were insulted by the modesty of the progress. In truth, though, we still don't agree how dramatically or how uniformly we should respond to climate change globally. Should we inhibit the economic growth of the poorest economies? Of only the largest two? Should we harness the US and EU economies with energy taxes, perhaps acknowledging our disproportionate contribution to today’s atmospheric baselines? I know a lot of tech hopefuls who say we will invent our way out with 'presto' technologies that supply the kind of energy we enjoy today without the GHGs. What little I know about technology's evolutionary tendencies, though, leaves me a lot less sanguine.

An agreement to agree — while also voicing a common sense of urgency — was probably the best possible outcome in Copenhagen. That is, unless one na├»vely assumed that the officials assembled could return to their countries and simply impose emissions caps on billions of people. The rise of constitutional democracy and legal protections for human rights — and, thus, of disagreement and the dispersal of political power — precluded exactly that going-in assumption. (It was never going to be the Congress of Vienna.)

So perhaps this accord will dissolve a Catch-22 that has become all too evident lately: no international agreement without domestic commitments and no domestic legislation without international commitments. But I doubt it. The diversity of stakes and of lunatic fringes in the US will probably still block meaningful cuts through broad scale legislation. If recent history is a guide, our Senate is capable of vetoing pretty much anything.

3. Acting Without Knowing

Conservation today is always about acting without good knowledge—taking effective actions against threats before their causes and/or scope are fully understood. COP 15 was a glimpse of that future when it unfolds on a global stage. Meaningful, practicable actions of global scale are too open to plausible critiques to command the support they need to succeed. But consider the following estimates of probable global annual temperature gains (C) from increasing CO2 and equivalent concentrations:



—John Holdren, Lecture, Meeting the Climate Change Challenge.

To level off around 450ppm (where 2° is still a good possibility), global emissions must probably peak by 2020 at the latest and decline steadily after that. And a future where the 'Copenhagen Accord' governed the world economy has been credibly associated with about 550 ppm. There aren't any reliable projections for a world that much warmer, although paleoclimatic evidence suggests that a global increase of 4° corresponds to a time when reptiles inhabited Greenland and sea levels were, well, a lot higher.

There may be a daunting hill, but we don’t know how to climb it or who we are climbing it for. Future generations — the unborn, most of whom are in far away places — have the most to gain from our discipline today. As Parfit and others have so famously argued, though, unborn people need never be born and this tends to complicate arguments which appeal to our mercy towards such people. For all the many reasons explored in Neil’s excellent symposium last year, net positive leverage on today's political actors is extremely hard to get when the weight used is the suffering of future people.

4. "Common But Differentiated Responsibilities"


Today's climate change scholars talk of "common but differentiated responsibilities" as if this notion has any intelligible content. Even if we could stipulate the consequences of our emissions with perfect certainty, the planet would still be twisted in most of the knots we have now because we disagree about the applicable norms of climate change. Should it be about consequences or culpability? Are "we" Americans to blame for America's generations of industrialization? The NYT’s Andrew Revkin has explored this underlying tension diligently. A striking illustration of our political predicament is a world map of the disparate emissions futures, emissions histories, and relative populations. They’ve all been combining to anchor our negotiations to the bottom of the ocean.

None of this is to deny the need for bold action or to suggest we are too late. We don't have a moment to spare while broad-scaled actions are being planned and coordinated, though. We must put any experiment with manageable opportunity costs into action — from carbon footprint labeling to carbonless energy subsidies to X Prizes to "entitlement reform" to changing the social meaning of consumption to the deployment of existing energy efficiency technologies – and thousands more. The single worst mistake we have been making is thinking that a "legally binding" treaty will change the world. The world is going to have to change first.

Posted by Jamie Colburn

Friday, December 18, 2009

In Memory of Ed Baker

By Mike Dorf

Last week,University of Pennsylvania Law Professor C. Edwin Baker died unexpectedly at the age of 62.  The Penn website has a nice remembrance of Ed here, but I'd like to pay my own respects.

In Isaiah Berlin's dichotomy of hedgehogs and foxes, Ed will likely be remembered as a hedgehog for his one big, powerful idea: that freedom of speech is best justified in terms of autonomy of the individual (what Ed called the "liberty theory") rather than because of the marketplace of ideas to which it ostensibly contributes.  Like all great, big ideas, part of the appeal of Ed's liberty view of the First Amendment was the clarity with which he stated it.

Ed's 1978 article in the UCLA Law Review, Scope of the First Amendment Freedom of Speech retains as much power today as it held then--perhaps even more.  In an era of truthiness, it is hard to argue with Ed's critique of the marketplace of ideas, summed up in the Introduction:
Just as real-world conditions prevent the laissez-faire economic market--praised as a social means to facilitate optimal allocation and production of goods--from achieving the socially desired results, critics of the classic marketplace of ideas theory point to factors that prevent it from successfully facilitating the discovery of truth or generating proper social perspectives and decisions.  Because of monopoly control of the media, lack of access of disfavored or impoverished groups, techniques of behavior manipulation, irrational response to propaganda, and the nonexistence of value-free, objective truth, the marketplace of ideas fails to achieve the desired results.
Ed went on in the UCLA L Rev article to explain why the standard responses to the failure of the marketplace of ideas--various versions of "market-correcting" regulation--either relied on the same false assumptions as the marketplace metaphor itself or unduly subordinated liberty to equality.  Ed then developed his own account, which he assiduously advanced and defended for the next three decades.

Ed certainly deserves credit as a hedgehog for his liberty theory, but he was more than a hedgehog; he was also a fox--and a fox with a heart of gold at that.  If we do not feel the need to reduce the work of an original  and subtle thinker to an idea that fits on a bumper sticker, then we can see that for all of Ed's criticism of First Amendment doctrine rooted in the marketplace of ideas, he cared deeply about the contributions that First Amendment freedoms make to democracy.  For example, in recent years, he was working on and much concerned with the baleful effects of the disappearance of newspapers.

Nor was Ed simply a one-trick pony.  He had wide-ranging scholarly interests.  I last saw Ed at a conference on the Constitution and the Rule of Recognition at Penn in the spring of 2008.  He wasn't presenting a paper but simply joining our two-day discussions for the fun of it.  The "Rule of Recognition" is an idea pioneered by the late H.L.A. Hart to explain what distinguishes legal norms from social norms.  I needn't get into the details here but suffice it to say that Hart is generally regarded as the leading legal "positivist" of the last century.  Positivists believe in the possibility of describing the law without endorsing any moral propositions.  Positivism is typically contrasted with "natural law" theories, which hold either that in general or in particular legal systems the content of the law depends on some moral propositions.  That "in general or in particular legal systems" turns out to be important because in a posthumously published Postscript to his leading text, Hart said that his version of positivism--"soft positivism"--was consistent with the possibility that in some legal systems, the law could incorporate morality in its legal norms.  People interested in these fundamental jurisprudential questions sweat the fine distinctions here, which is why Ed's interventions at the conference were so arresting.  He said flatly that Hart's great contribution was to open a space for natural law--and he didn't mean the space to which Hart adverted in his Postscript.  In just a few minutes, Ed developed a plausible account of Hart as a thoroughgoing natural lawyer.  The committed positivists in the room were skeptical, but as a mere dilettante in jurisprudence myself, I was mesmerized.  Ed had that way of just showing you something completely familiar in a totally different light.

No doubt a great deal of Ed's persuasiveness in person was due to, well, his personality.  He was soft-spoken, with a twang in his voice that suggested a kind of just-folksiness that was at once completely consistent with his manner and totally at odds with both his erudition and the force with which he expressed his ideas.  If he disagreed with you, he let you know it without sugar coating but also without any hint of malice.

Thinking back now, I don't think I met Ed on many more than a dozen or so occasions over the years, but he made a singular impression.  Both past and current colleagues who knew him far better than I did speak of Ed with a mix of deep fondness and something like awe.  One such colleague said of Ed's kindness last week something like this: "I only hope that I will one day be remembered as I remember Ed."  Amen.

Thursday, December 17, 2009

Local Plutocracy

--Posted by Neil H. Buchanan

In my FindLaw column this week, I return to my efforts to endear myself to America's automobile dealers. As part of their strategy to emerge from bankruptcy and respond to severely-reduced economic prospects, Detroit's automakers have announced that they will discontinue relationships with about 2,000 auto dealerships across the country. The U.S. House of Representatives included a provision in a bill passed last week that would require the automakers to go through arbitration if a local dealer appealed that decision, even if the decision to discontinue the business relationship fully comported with the contract between the manufacturer and the dealer. (The standard situations involve non-renewal of an expiring contract and invocation of contractual language allowing a party to end the agreement.)

I describe in the column why I think the business model that independent dealerships represent is flawed; but more importantly, I point out the crucial flaw in the usual defenses of the economic value that dealerships might provide. If dealerships really provided economic value, then they would not need to be protected by anti-competitive laws in every state that require cars to be sold through car dealers. The House's legislation, then, is just an add-on to a legal arrangement that has allowed this business model to continue unchecked for decades, even though consumers hate car dealers with a passion, and even though the manufacturers chafe under the rules.

The explanation that I offer is hardly rocket science. Political muscle is backed by money, and if all politics is local, then local money buys political results. Specifically, if one looks at the list of the richest people in cities and towns across the country, the list nearly everywhere includes the owners of car dealerships. Those local dealers then use the super-normal profits that the anti-competitive laws provide to buy politicians who will keep the gravy train running. Local politicians become national politicians, and we now see the results in bipartisan (bipartisan! in 2009!!) support for protective legislation for car dealers. Political Economy 101, a perfect example of the results of concentrated benefits and diffuse costs.

This situation led me to think about the nature of local bigwigs. In every town, there are other people (in addition to car dealers) who dominate chambers of commerce and who have serious influence on politics. These are not the CEO's of mega-corporations but rather the guys who buy local advertising time on TV and radio stations -- and who contribute to the campaigns of state legislators and Congresspeople. For much of the last century, this group very prominently included the owners of department stores. New York City had Gimbel's and Macy's, Boston had Filene's and Jordan Marsh, Philadelphia had Wanamakers and Strawbridges, D.C. had Garfinkel's and Woodward & Lothrop, among others. Even smaller towns had their own department stores, owned by local families. (Growing up in Toledo, Ohio, I thought that stores called LaSalle's and Lamson's were big deals.)

Almost all of those are gone now, bought up in many cases by Macy's. Of course, that consolidation did not happen because of a national strategy to kill local department stores but because of changes in the economics of retailing. Long before the internet, the business model represented by the department store had run its course. The emergence of Sears, Roebuck and Montgomery Ward represented an important breakthrough moment in American consumer capitalism, but the model simply no longer worked. The local department stores shrank and were sold at huge discounts (irony alert!), ending a chapter of commercial history.

If, however, local politicians are driven to enact protective legislation by local money, and if so much local money was in the hands of local department store magnates for such a long time, why did the department stores die? Couldn't the kind of legislation that protects car dealers have been crafted to protect local department stores? There was certainly plenty of money at stake.

The major difference between the two industries is that car dealers have a specific, small group of suppliers on which legislation can impose obligations, whereas department stores do not.
Legislation forcing, say, Sealy to continue to sell mattresses to the local department store, could have been passed in an effort to protect an uncompetitive business model from changes in the economic environment. Although such legislation is imaginable, the very genius of the department store model -- as a consolidator of many different types of stores into one -- meant that any such legislation would have had to cover a much broader range of suppliers, raising enormous difficulties in keeping up with new suppliers and enforcing the laws on hundreds of smaller ones.

Therefore, the large automakers did not reap the political protection that one might imagine would be available to companies employing hundreds of thousands of workers and dominating the highest echelons of global commerce. Big targets are easy to spot. Moreover, in the early days, there was simply a lot of money to go around, and the automakers could tolerate the sales requirements imposed by the states. Once the anti-competitive laws were in place, they became seemingly impossible to dismantle. (Certainly more difficult to dismantle than union contracts, which were simply torn up even though they were legally valid.)

Of course, even this explanation must have some limits. Once the fight is being waged over a smaller and more precarious market, things become fierce. With GM and Chrysler all but sleepwalking through the current fight, however, it is not obvious that even the wrenching changes in the automobile industry will be enough to bring about the changes in the law that would move local auto dealerships into the history section of business marketing textbooks.

Yoo Go Cite Yourself

Posted by Craig J. Albert

Today's New York Times reprints a lengthy 2001 memo from John Yoo to Alberto Gonzales on the subject of the application of certain treaties and domestic laws to the conduct of the war in Afghanistan. We can discuss the content on another day, but I would like to point out an early gem. Yoo writes, on page 17, "Nonetheless, the President has the constitutional authority to determine that Afghanistan is a 'failed State,' so that the Conventions are currently inoperative as to that country." Hmmm, I think that needs some kind of citation to some kind of authority. Oh, wait, look, there's a footnote. Footnote: John Yoo, Politics as Law?: The Anti-Ballistic Missile Treaty, the Separation of Powers, and Treaty Interpretation, California Law Review 2001.

Hey, wait a second! Surely Yoo isn't citing himself as the only authority for this idea that the President can decide that another nation is in such bad shape that it wouldn't be able to carry out its treaty obligations, so as to allow us to ignore our obligations under that treaty. If I look at that well-researched, comprehensive law review article (written in the same year as the memo), then surely there will be a further and deeper analysis, right? No, no such luck. It's actually a book review (to show that Yoo has read a book), but there's no authority whatsoever for the cited proposition. So, it's Yoo on Yoo.

Wednesday, December 16, 2009

How Much Should We Pay The Victims of Global Warming?

Posted by Mike Dorf

Here in the U.S., talk of addressing global warming--when it does not involve the all-too-widespread belief that man-made global warming is a hoax--concerns what measures the U.S. and other countries should undertake to limit emissions of greenhouse gases.  But much of the "north/south" wrangling over how to deal with global warming considers the size and distribution of transfer payments from countries (such as the U.S. and the members of the EU) that industrialized using fossil fuels--thus creating much of the mess in which we all find ourselves--to developing countries.  Such transfer payments would serve two broad categories of purposes.

First, rapidly industrializing countries such as China and India say that we in the West got to industrialize by burning dirty fuels, and that much of our advantage today rests on that base.  If we want developing countries to cut their own emissions by using cleaner fuels more efficiently, they say, we should pay them something like the difference in cost between doing that and simply burning coal.  I don't have a strong view on this claim, although I think there are serious baseline issues.  China is the most populous nation in human history and so the pollution cost of its industrialization to current US/EU levels would be enormous.  Perhaps a more sensible approach would be to cap all emissions for all countries going forward but to require already-industrialized nations to pay into a fund for the damage they have already done.  That too would have measurement problems, I realize, and I'll just acknowledge them and move on.

A second kind of transfer payment would go to countries that will bear large costs of global warming without having caused much of it.  For example, a Bangladesh state-run think tank says that rising sea levels due to global warming will displace 20 million inhabitants, unless the country receives billions of dollars in aid to raise embankments and plant them with forests.

Which brings me to today's question: How do we monetize the money owed to countries that are victims of global warming?  There are many such countries, with many examples of harm already occurring, as illustrated by this tragic story about Bolivia.  However, to make matters simple, I'll make up some facts (but not too unrealistically).  Let's consider the Solomon Islands, which has a population of roughly half a million.  Let's assume (not too unrealistically) that the most likely steps taken to curb global warming will be insufficient to prevent a rise in sea level that literally inundates the Solomons, drowning or displacing all of the inhabitants.  Let's also assume (less realistically) that the already-industrialized countries want to compensate the inhabitants fairly.  Suppose that it would cost $20,000 per Solomon Islander to resettle him or her in another country, Australia, let's say.  That's a total of $10 billion.  Now suppose that the cost of protecting the Islanders in place--by creating embankments, dredging to increase the mass of the islands, etc.--would be $20 billion.  Assuming (unrealistically), that the developed countries are going to pay the bill based on what is truly owed rather than as the product of a complex and highly politicized negotiation, what is the right amount: $10 billion, $20 billion or some figure in between?

It turns out that this issue--or a related one--comes up frequently in contracts and torts cases.   First the contracts issue.  Suppose that Owner hires Builder to build a house.  The contract calls for the use of copper pipes but Builder mistakenly uses iron pipes.  (Pretend you've never heard of pvc.)  Assume that the cost difference was $5,000, and that if sold on the open market, the house as built with the iron pipes would fetch $5,000 less than the same house with copper pipes.  Now assume that it would cost $35,000 to rip apart the walls, remove the iron pipes, replace them with copper pipes, and then restore the walls and finish work.  Builder is clearly liable to Owner for using the wrong pipes but for how much: diminution in value ($5,000) or cost of completion ($35,000)?

My recollection of contract law (confirmed by a discussion with a contracts expert) is that most courts will only award diminution in value, absent an express term in the contract making completion cost the measure of damages.  The core idea here is avoiding economic waste: Judges do not want to award damages based on the notion of spending $35,000 to make an improvement worth $5,000.  Indeed, we also might suspect that if a court were to order the payment of $35,000, Owner might well decide to pocket the $30,000 surplus rather than actually spending it to replace the pipes.  Certainly if Owner intends to turn around and sell the house that is the most likely outcome.

Now consider the same issue in tort.  Suppose that Plaintiff loses a pinky as a result of using a badly designed can opener.  Plaintiff sues Manufacturer and establishes liability for design defect.  Plaintiff recovers for medical costs of immediate treatment, pain and suffering, and lost wages.  Plaintiff is also entitled to be compensated for the loss of the pinky itself.  How much?  Suppose that the average person values his pinky at $50,000 (as established, say, by asking how much extra money unionized workers need to be paid to take on additional risk of losing their pinkies) and that Plaintiff is, in this respect, average.  Meanwhile, there is a prosthetic pinky that is fully functional and indistinguishable to the naked eye from a real pinky, which could be attached for $250,000.  Does Manufacturer owe $50,000 or $250,000 for the pinky?  I put this question to a remedies expert, and was told that a good plaintiff's lawyer will argue that Plaintiff is entitled to the $250,000 as a medical expense, even though having a replacement pinky is, in some sense, not truly "worth" that much.  This remedies expert thought the preference of courts for avoiding economic waste that one sees in the contracts cases involving property would not apply to a personal injury.  And that would hold even though the Plaintiff, upon being awarded the $250,000, could decide to use it all to buy a new house (with copper pipes!) rather than to replace the pinky.

Now obviously the U.S. law of remedies differs from state to state, and has no application whatsoever to compensation for global warming, but, if we think that the principles underlying the foregoing distinctions are sound, we might see how they apply in our case involving the Solomon Islands.  If living on the Solomon Islands rather than in Australia is like living in a house with copper pipes rather than a house with iron pipes, then one will be tempted to say that the industrialized countries only need to pay the Solomon Islanders the $10 billion to relocate to Australia.  But if losing their ancestral homeland to the ocean is like losing a body part, then it would seem that the Islanders are entitled to the full $20 billion it would take to keep them in place and above water--even if they then pocket the money and head for Australia.  Recognizing the limits of this analogy--and that it is only a thought experiment because the real issue will be resolved through international politics rather than the cold application of legal analysis--I find the pinky analogy more apt in this case.

Tuesday, December 15, 2009

Anti-Discrimination Versus Pro-Inclusion

By Mike Dorf

And now . . . still more on CLS v. Martinez to follow up yesterday's post and column.  Today I want to focus a little bit on the way in which Hastings implements its non-discrimination policy.  The policy as written bars discrimination on grounds of race, color, religion, national origin, ancestry, disability, age, sex, or sexual orientation."  In application, however, Hastings interprets this policy to mean that no official student group can exclude from membership any student who wants to join.  This raises a number of interesting issues.

To begin, we might doubt whether this can really be the Hastings policy.  Consider the fact that the Hastings Law Journal, the school's flagship student-edited journal, selects members based on grades, a writing competition, and other factors (as set forth here), but HLJ does not simply accept as members all students who want to join.  When I talked with a Hastings faculty member about this, I was told that he thought that journals were not subject to the open-membership policy.  (I assume that the journals are not exempt from the anti-discrimination policy itself, so that the HLJ gets to reject less-qualified prospective student editors, but not on any of the enumerated illicit grounds.)

What justification would there be for exempting the HLJ from the open-membership requirement?  Presumably, there's a judgment that it's legitimate for a law journal to select only those students who are most likely to be good edtors.  But if that's the judgment with respect to the HLJ, why not a similar judgment for other student organizations?  Given that part of its mission is to raise cycling-related awareness, it's not burdensome to require the Hastings Cycling League to accept any student as a member, but suppose that another group of students wanted to form a club for bicycle racing enthusiasts, perhaps competing in club level competitions.  If the HLJ is allowed to hold a writing competition, why should the putative Hastings Bicycle Racing Club not be permitted to hold time trials?  Shouldn't the Hastings Tax Law Society be permitted to require that any student member have enrolled in or completed at least the basic course in tax law?  For just about any activity, we can imagine some valid reason why the organization would want to limit membership to people with some minimum proficiency in a skill related to participation.

So, why does Hastings nonetheless simply require open membership?  I can think of two sorts of reasons.  The first is that doing so avoids difficult line-drawing problems. A requirement that all official organizations be open to all members obviates the need to determine what sorts of non-illicit membership criteria are legitimate and, perhaps more importantly, avoids the need to inquire into motive that can arise with a simple non-discrimination policy.  If someone claims he was kept out of the Hastings Ballroom Dance Club because he is over age 45, the HBDC does not get to say that no, the real reason was that he wasn't a good enough dancer.  The requirement to take all comers completely obviates the need to inquire into motive in a case of exclusion.

A second sort of reason for the open-membership policy would be more substantive: Hastings could have reasonably made a judgment that it only wants the sorts of student organizations that are open to everyone.  Exclusion, in this view, is always harmful to the overall sense of community the law school wants to foster, even if the exclusion is not on the basis of some specifically enumerated illict ground.  This would simply be an anti-elitist policy.

Exempting the Hastings Law Journal is, of course, inconsistent with both of the foregoing rationales.  Flagship law reviews with competitive membership criteria are inherently elitist--although that's not necessarily bad.  A law school could reasonably conclude that fostering some competitiveness in the enterprise of legal scholarship is worth the price, even if such competitiveness in activities such as who gets to play the board game Othello is not worth the price.  And having decided that competitive membership procedures are worthwhile for one or more law journals, the school could also conclude that complaints about discrimination will be sufficiently few in number as to make acceptable the cost of having to adjudicate them.

I don't know whether there have been any complaints of discrimination by the HLJ, but if there were, it would not be surprising if they were complaints by white and male students that the "hardship selection" provision, described on page 4 of the HLJ's by-laws, violates California's Proposition 209, which bans affirmative action based on race, sex or ethnicity.  Although the hardship criteria are formally neutral--they ask candidates to describe hardships and obstacles they have faced--they are also expressly justified in part by the diversity to which their application is expected to lead.

Finally, I should make clear that none of the discussion in this blog post bears directly on the Christian Legal Society case.  CLS claims a constitutional right to be able to exclude "unrepentant" openly gay students on the basis of sexual orientation, so there is a conflict with the Hastings anti-discrimination policy as written--rather than a conflict only with the broader accept-all-students interpretation of that policy.  (The fact that CLS would also bar "unrepentant" adulterers does not, in my view, mean that its policy does not discriminate on the basis of sexual orientation--although CLS will surely argue that it has nothing against people on the basis of sexual orientation; it's just insisting on willingness to abide by the CLS tenets.)

Monday, December 14, 2009

Another Perspective on Christian Legal Society v. Martinez: Guest Post by Michael McConnell

Post by Mike Dorf with a Contribution by Michael McConnell

My latest FindLaw column digs into last week's cert grant in Christian Legal Society v. Martinez, about which I also posted preliminary thoughts here.  As I read the cases, Hastings should win, I say, but that's no guarantee that it will win.  My column also proposes a split-the-difference compromise in which Hastings would be able to deny direct funding to student groups that do not permit all students to become members but would not be able to deny such groups access to the school's media for communications, such as the email system.  I note, however, that this compromise appears to be ruled out by the Court's rejection of something similar in the Rosenberger case.

After I finished writing my column, but before it went up, I received an email from Stanford Law Professor (and until recently, 10th Circuit Judge) Michael McConnell, who will represent the Christian Legal Society (CLS) in the Supreme Court.  Below is Michael's commentary in response to my first blog post on the cert grant.  My own reaction then follows.

-----------------------------------------------------------------------------------------------------------
[MM]
I strongly disagree with my friend Michael Dorf that Christian Legal Society v. Martinez raises the question of whether we should “tolerate the intolerant.”  The question presented is whether a public university may deny a small religious student group equal access to a forum for speech on the ground that it limits its leaders and voting members to those who adhere to its statement of religious belief.

There is nothing remotely “intolerant” about a religious group confining its leadership or spokesmen to adherents to its faith.  Must synagogues hire non-Jewish rabbis?  Must a Baptist Bible study group have a Catholic chair?  The reason the religious group confines its leadership positions to adherents is not some distaste or intolerance for others, but the desire to meet and worship with students sharing a common belief, and to communicate those views to a wider audience.  Others are free to attend the  CLS meetings and activities, but not to seize control of their podium. Even nonreligious groups at Hastings – the Democrats, the pro-life group, the trial lawyers group, and ironically even the respondent student gay rights group in Martinez, limit their leadership to students who agree with their core beliefs.  There is nothing wrong or “intolerant” about this.  It makes sense, especially for small or unpopular groups who might otherwise be taken over by students who do not like their message.  But only when it is the religious group has the Hastings administration cried foul.

And it is not “intolerant” for a Christian group to espouse a sexual morality based on marriage between a man and a woman.  Everyone this side of the Marquis de Sade draws the line somewhere and there is no need for everyone in this diverse and pluralistic land to draw our lines in the same place.  These students disapprove of “unrepentant” sex outside of marriage (whether gay or heterosexual).  Others do not.  But it is not accurate, or helpful, to brand those with whom we disagree as “intolerant.” 

It might be intolerant if the religious students sought to deny those who disagree with them the benefits of civil society – if they tried to shut them up or shut them out.  But it is not intolerant for people with a particular moral standard to form a group where they can provide mutual support and encouragement among themselves, or to communicate their opinions to a wider audience, along with everyone else.       

Which side in this case is being “intolerant”?  Those who want to meet and speak just like every other student organization, or those who have kicked them out?
-----------------------------------------------------------------------------------------------------------
[And now my, i.e., Michael Dorf's, response]:

Some of Professor McConnell's disagreement focuses on my use of the term "intolerant" in my earlier post, to characterize the attitude of CLS towards sexual minorities.  As I explained in the comments section to that post, in response to a similar objection by Professor Michael Livingston (yes, we're all called Michael; it's a very popular name, deriving from the Hebrew "Who is like God?"), I used the term mainly because that is the standard translation of Rousseau's point.  Perhaps I might have been more precise to pose the question this way: "Must liberal standards of inclusion of all persons and groups extend even to those groups that, in their own governance, reject the very standards of inclusion of the larger society?"

In any event, McConnell's objection regarding who is tolerant and who is intolerant operates at a higher level of abstraction than the one at which I was working.  He says "it is not intolerant for people with a particular moral standard to form a group where they can provide mutual support and encouragement among themselves, or to communicate their opinions to a wider audience, along with everyone else."  I say it depends on the content of the moral standard.  Suppose the moral standard condemns inter-racial dating and inter-racial marriage, as Bob Jones University did when the Supreme Court, in 1983, upheld IRS revocation of its tax-exempt status on that basis.  Or suppose the moral standard insists on the subordination of women by men. I think that denunciation of "unrepentantly" gay and lesbian Americans as sinners is on a par with racism and sexism, and that it's fair to call any of these views "intolerant," even if rooted in religious conviction.  Perhaps McConnell would draw distinctions among these views, but if not, then his objection can only be to my use of the word "intolerant" as a synonym for "inegalitarian."

Of course, if Hastings were urging the silencing of CLS, then it could rightly be labeled illiberal or even intolerant.  But it is not.  As my FindLaw column explains at greater length, no one disputes that an organization like CLS could limit its leadership or membership on various grounds.  The question is whether it's entitled to a subsidy while doing so.  In general, government has considerable power to refuse to subsidize activities that it could not directly regulate or prohibit, and conservatives usually like that fact.  Just ask Bart Stupak.  To be sure, the Supreme Court's "public forum" doctrine limits the refusal-to-subsidize power in certain contexts, but as I discuss in the column, it is far from obvious that Hastings has violated that doctrine.  Both the district court and the Ninth Circuit thought otherwise.

And with good reason.  McConnell says the case poses the question "whether a public university may deny a small religious student group equal access to a forum for speech on the ground that it limits its leaders and voting members to those who adhere to its statement of religious belief."  But the religious basis of the CLS exclusion is not the reason that Hastings refuses to recognize CLS as an official organization.  Hastings denies official recognition to ANY student organization that excludes ANY student for ANY reason.  Maybe that's a sensible policy; maybe it isn't; I'll have a few thoughts on that issue tomorrow.  But so far as the key First Amendment issue goes, there is no discrimination against any viewpoint, religious or otherwise, by Hastings.  The issue is not what effect the policy has on CLS; the issue is what the Hastings policy targets.  It's true that Hastings hasn't denied recognition to any other group yet, but the record shows that no other group excludes prospective student members.

Perhaps McConnell really wants religious organizations to be exempt from the rules that apply to everyone else.  The Supreme Court rejected this approach to the Free Exercise Clause in Employment Division v. Smith.  McConnell has produced the finest scholarship there is criticizing the Smith rule on historical and other grounds--and I myself have considerable sympathy for the view that Smith was wrongly decided.  However, Smith remains the law, and CLS v. Martinez is being litigated as a free speech case, not a free exercise case.  The effort--if that is what it is--to dress up a claim for a religious exemption as an objection to censorship should fail.  But McConnell is a skillful advocate as well as a fine academic.  Perhaps he will win the case after all.

Friday, December 11, 2009

Collateral Orders

By Mike Dorf

Per tradition, the first full opinion assigned to a new Justice--in this case Justice Sotomayor--was in a unanimous case.  On Tuesday, the Court handed down Mohawk Industries Inc. v. Carpenter.   The case involves the scope of the "collateral order" doctrine.  I'll provide a very abbreviated intro to the issue and then a few observations.

Background

Modern federal court litigation is often a very complex undertaking, in which a district judge will make very many rulings both before and during trial.  Some of these rulings could turn out to be wrong but if a party objects to any particular ruling, he, she or it usually does not get to appeal right away.  The aggrieved party must wait until the whole case is over and then, if unhappy with the final result, appeal based upon whichever of the alleged errors the party thinks contributed to losing the case.  This is called the "final judgment rule" (FJR) and it's codified here.  The reason for the FJR is obvious upon a moment's reflection: If the entire district court case had to stop for an appeal whenever any party was dissatisfied with a district court ruling, a case would bump back and forth between the district court and the appeals court potentially dozens of times.  Cases would take way too long to litigate.  (They already take way too long, so w/o the FJR they would take way way way too long.)

That said, there are occasions when an immediate appeal is appropriate, and the legal system has a number of mechanisms for dealing with this: Notwithstanding the FJR, another provision authorizes a district court to certify a difficult question for interlocutory appeal, which the appeals court then has discretion to entertain.  This procedure makes sense, for example, when the district court fears holding a lengthy trial based on a preliminary ruling that could be reversed, thereby necessitating a second lengthy trial.  In addition, an aggrieved party need not wait until final judgment to seek a writ of mandamus from an appeals court effectively reversing a district court ruling, where the latter is a clear abuse of discretion or manifest injustice.  This too is a discretionary remedy.

Yet another means of obtaining review before final judgment is under the judge-made "collateral order" doctrine.  Here the idea is that some issue is wholly collateral to, and separate from the merits of the underlying claim AND that the party seeking to appeal cannot vindicate his or her underlying rights by waiting until the end of the whole case.  A classic example is double jeopardy.  Suppose a trial court rejects a criminal defendant's argument that trying him for crime X would violate his right against double jeopardy because he has already been acquitted of crime Y, which, he claims, is effectively the same.  The double jeopardy ruling is not a final judgment, because there hasn't yet been a trial on the charge of X.  Nonetheless, the defendant gets to appeal the ruling under the collateral order doctrine because the right against double jeopardy is understood specifically as a right against HAVING TO STAND TRIAL AT ALL.  There is no way to vindicate that right after a trial.

Observations on the Mohawk Case

1) The issue in Mohawk was whether a district court ruling that a party waived the attorney-client privilege (ACP) falls within the collateral order doctrine.  The argument for so finding is straightforward enough: The ACP does not merely protect against the introduction of privileged statements into evidence; it protects against their disclosure.  Thus, once the assertedly privileged info has been disclosed, there's no way to "undisclose" it.  Nonetheless, the Supreme Court rejected this argument, and not just for waiver questions but for all cases in which it is argued that a district court erroneously denied a claim of ACP.

2) To my mind, a key portion of Justice Sotomayor's opinion is illogical.  She makes a great deal out of the fact that the collateral order doctrine is not the sole means of obtaining review before final judgment, citing discretionary interlocutory review, mandamus, and the possibility that a party can defy a disclosure ruling, and then obtain review in the course of an adjudication of sanctions, including the possibility of contempt.  The reason I find reliance on these alternatives illogical is that they are ALWAYS alternatives.  The point of the collateral order doctrine's focus on whether an interest can be vindicated post-judgment is to determine whether the party has a (statutory) right to pre-final-judgment review, under the collateral order rule.  If the possibility of discretionary review under some other mechanism or of review via contempt were sufficient to defeat this claim under the collateral order rule, then it would be sufficient to defeat every claim under the collateral order rule.  A criminal defendant seeking to appeal an adverse double jeopardy ruling, or a state seeking to appeal an adverse sovereign immunity ruling, could also try to take advantage of discretionary review, mandamus, or contempt.  But they don't have to because the Court has held that they ARE entitled to review under the collateral order doctrine.

3) The real concern of the Court appears to be a worry about floodgates.  District courts decide a lot of privilege issues and if they're all going to be reviewable as collateral, then that will undermine the FJR.  The petitioner had argued that this concern was fanciful--that there was no flood of collateral review of privilege decisions in the circuits that had allowed such review--but the majority brushed that aside by saying that it was too early to know this.  I suspect as well that the Court saw no good basis for distinguishing ACP claims from other privilege claims, and so thought that the floodgates really might have opened up.

4) [Finally, a point that was suggested by a number of my civil procedure colleagues from around the country who take part in a civil procedure listserve:] There is in the subtext of the opinion some hint of Justice Sotomayor's experience as a district court judge.  A district court's ruling is likely to be upheld and, we can imagine her thinking, even if it's reversed, that doesn't mean the appeals court was right and the district court wrong in any deep sense.  So, she says, the game isn't worth the candle, especially given what a nuisance collateral order review is for a district judge trying to move cases on her docket along.  And a district judge who doesn't mind the intrusion can always grant her discretionary permission for an interlocutory appeal (which the appeals court can then take if it's really gung ho on reversing).  So this turns out to be a very fitting first opinion for the only current Justice who spent time as a district judge.

Thursday, December 10, 2009

Death and Journalism

Posted by Neil H. Buchanan

Earlier this week, The Wall Street Journal's Style & Substance editor announced that news articles in the paper should no longer use the term "death tax." The editor, Paul Martin, explained: "Because opponents of estate taxes have long referred to them as death taxes, the term should be avoided in news stories." A few thoughts:

(1) This is a triumph for those who guard the wall between news and editorial at the WSJ. The biggest concern that people had when Rupert Murdoch's News Corporation bid for the Journal was that the wall would quickly fall. This would be very bad as a general matter, but it would be especially bad in this case because people familiar with the paper have long known that the editorial page is run by a group of extreme right-wing, anti-tax zealots, while the news operation has been scrupulous about policing any attempts to editorialize outside of the op-ed pages.

Thus, for example, the news section of the paper ran one of the best summaries of the now-infamous "McDonald's hot coffee" case, describing it in a way that made it absolutely clear that there was no runaway jury, etc.; but the editorialists continue to invoke that same case as proof positive of the excesses of the U.S. legal system.

This new ruling from the Style & Substance editor is a clear move to maintain the apolitical style in the paper's news columns. Very good news. (Of course, this means that the editorial page will still be filled with references to the "death tax.")

(2) Regular readers of this blog know that this was particularly welcome news for me. In August 2007, I gave my gold medal for "dishonest tax rhetoric" to the use of the term "death tax" in place of estate tax (or inheritance tax, which is not the same thing). This seemed like yet another case where the culture was moving irreversibly in the wrong direction, accepting a dishonest locution purely because of repetition of a lie. With the WSJ now having taken a step back, there is renewed hope.

(3) Mr. Martin's explanation for his ruling was bizarre, arguing that it is the preference of one side in the estate tax debate that makes the term "death tax" political and, therefore, unacceptable. Why, by that logic, does he allow writers to use the term "estate tax," given that proponents of the estate tax have long referred to it as the estate tax? The answer has to be that the term "estate tax" is correct, not that "death tax" is preferred by one side in the debate.

(4) Mr. Martin tries another explanation later in his memo: "[T]the term death tax has become too politicized to be of any use except in editorials. Bury it." It has "become too politicized"? "Become"?! There was never a time when this term was not politicized. The birth of this term, as has been well documented (see especially Graetz and Shapiro's Death By a Thousand Cuts), was entirely a political exercise. It was tested on focus groups by political operatives who had been heavily funded by wealthy opponents of the estate tax. You couldn't find a better example of something that is -- and has always been -- a purely political term.

(5) Interestingly, the particular use of the term "death tax" that brought the matter to Mr. Martin's attention was arguably correct. The offending article began: "With the federal estate tax disappearing for most people, state death taxes have emerged as a surprise new worry." As I argued in my 2007 blog post, there is no federal "death tax," and referring to it as such is thus technically incorrect. (I also argued that it is substantively incorrect.) By contrast, the Internal Revenue Code does use the term "death tax" in a few obscure places to refer generically to state (and foreign) estate and/or inheritance levies. That means that the quoted sentence was technically accurate (i.e., it reflected statutory definitions), referring to the federal estate tax as an estate tax and to the various state taxes collectively as death taxes. This implies further that the very success of the effort to convince people to use the term "death tax" as a political weapon is what really motivated Mr. Martin to ban its use entirely, even where it would otherwise have been unobjectionable.

(6) Mr. Martin's memo contained another oddity. In an attempt to clear up the use of the term "wealth tax," he wrote: "While we’re at it, let’s also bury mislabeled wealth taxes. Any proposal to impose a surtax on high incomes is just that, a tax on income, not a tax on assets. Such proposals affect high-income earners, not necessarily 'the wealthy.'" This is correct, in that it is absolutely accurate to refer to a tax on income as an income tax and not a wealth tax.

On the other hand, the term "wealth tax" is a very simple and familiar one, referring to any tax that is levied on the value of a taxpayer's property (broadly or narrowly defined) at a particular moment in time. The estate tax is a kind of wealth tax, because it is levied on the value of the estate at death (or later, under certain conditions). Plain vanilla property taxes (i.e., local taxes on the assessed value of one's home and land) are wealth taxes. Some states' tax the value of each citizen's car each year, which is a wealth tax. Neither income taxes nor sales taxes are wealth taxes.

This difference is a core part of the tax policy debate. In general usage among tax types, wealth taxes means taxes on large accumulations of money or property, whether those taxes are collected at death or before then. Some analysts, for example, advocate a general consumption tax accompanied by a significant tax on large accumulations of wealth (assessed and collected annually), the latter of which can (if calibrated correctly) turn an otherwise regressive system into a progressive one. Being able to refer to wealth taxes, income taxes, and sales taxes has therefore been a well-understood shorthand in conversations in tax policy circles.

If Mr. Martin simply means that the WSJ's writers should no longer use the term "wealth tax" to refer to an income tax on high-income earners, then there is nothing unusual about that. He appears, however, to be going further, suggesting that the term has become so degraded by misuse that it has lost its meaning. If so, that is a loss to clear communication. Even so, Mr. Martin's call would be the right one. If a word loses its meaning, we do ourselves no favors by pretending otherwise.

But it is important to end by emphasizing the good news: A major news organization has finally said unambiguously that it is bad journalism to use the term "death tax." It is a very good day.

Wednesday, December 09, 2009

In Which Pro-Life Camp Do Murderers of Providers Belong?

Posted by Sherry Colb

In my FindLaw column, which will appear here later today, I discuss the distinction between the pro-life movement in this country -- which in general would exempt women having abortions from the criminal responsibility that attaches to providers -- and the pro-life approach of such countries as El Salvador -- where women can go to prison for abortion along with their providers.  I suggest in the column that this distinction may expose an important division between different camps in the pro-life movement on the question of a woman's relationship to her own abortion and, accordingly, to her unwanted pregnancy.  This division may, in turn, reflect a subtle but important difference in how pregnancy and its impositions on women are understood.

In this post, I want to raise a different question:  In which pro-life camp -- that of people who would exempt the pregnant woman from criminal liability or that of people who would punish the pregnant woman along with her provider -- do violent members of the anti-abortion movement belong?  I speak here of those who would bomb abortion clinics and kill abortion providers as a means of "rescuing" fetuses from abortion.  I do not know the answer to this question, but I have two competing hypotheses that I would propose.

The first hypothesis is that one's embrace of anti-abortion violence does not, in theory, necessarily correspond to one or the other view of pregnant women.  That is, one could view women experiencing an unwanted pregnancy as subject to a kind of duress that excuses them from criminal responsibility for having an abortion and, at the same time, view the provider as a mass murderer who may be stopped by any means necessary.

The second and competing hypothesis is that those who murder abortion providers are not operating from an entirely logical and sane platform.  In a society that permits abortion, it is generally considered wrong to murder a provider who has violated no law.  Indeed, it is generally considered inappropriate to murder anyone.  From the perspective of people within the pro-life movement, of course, the fact that the law permits abortion is itself immoral.  Nonetheless, in a democracy, those who believe that the law is unjust attempt to change the law and/or to change hearts and minds through advocacy.  To kill a provider only increases the amount of violence, while simultaneously alienating the very public that might otherwise have felt sympathy for the underlying cause.  Stated differently, "pro-life" murder, though arguably not an oxymoron, as I argued here, is, at the very least, a counterproductive means of achieving nonviolence.

The reason that the deviant nature of those who murder abortion providers is significant, here, is that a person who feels enough hatred and rage to carry out a murder against an abortion provider (despite alternative avenues of peaceful protest and advocacy) is unlikely to feel much compassion for the pregnant woman whose bodily integrity is compromised by an unwanted pregnancy.  He (or she) is more likely to hate the pregnant woman too and, perhaps, to hate the fact that she is free under the law not only to terminate her unwanted pregnancy, but also to engage in the non-marital (or non-procreation-directed) sexual relations that gave rise to the unwanted pregnancy in the first place.

Once again, I am guessing here.  My guess is that a pro-life individual who cares enough for pregnant women to excuse their decision to abort -- notwithstanding a commitment to the fetus's value as a person -- would not be drawn to an act of ultimate violence toward someone who, after all, violated no law.  By the same token, a person willing to murder an abortion provider is unlikely to be sufficiently sympathetic to the woman who chooses to visit that provider to understand the unwanted pregnancy as a form of duress.