Sunday, February 02, 2014

Score a Round for Lawyers in the Neverending Economists-versus-Lawyers Challenge

-- Posted by Neil H. Buchanan

[Note: The text below has been edited to replace the incorrect term "White House Office of Legal Counsel" with "Office of Legal Counsel," and for consistency thereafter.]

Although it is Sunday (and an especially sacred one at that -- Super Bowl Sunday), I cannot help but offer a short response to a notably misguided little post on Paul Krugman's blog the other day.  Krugman, who continues to defend the idea that the "Big Coin Gambit" (also known as the "platinum coin option) was a very good idea, happened to read an article recently in HuffPo that said that the Office of Legal Counsel (OLC) is refusing to release the legal memos that it prepared about a year ago regarding that gambit.  Krugman takes this as definitive proof that the gambit is not "self-evidently ridiculous" and that "it was seriously considered as an option."  This is, of course, a completely unwarranted leap of logic.

At the time that the memos were created, a major political/constitutional/economic crisis faced the country (and the world).  Some legal scholars had noted an apparent loophole in the Coinage Act, suggesting that minting one or more large-denomination coins would allow the Administration to sidestep nihilistic House Republicans.   So OLC looked into it, and the White House then doused the rumors by announcing that minting big coins was not an option.

Krugman, as I said, takes this as undeniable evidence that the gambit was not ridiculous.  Lawyers looked at it seriously, right?  I suppose this is, in some sense, merely a matter of arguing over what one means when one calls an argument "ridiculous."  Some bad arguments are so bad that they never even merit a response from OLC, of course.  However, the idea that we learn anything at all from an indirect acknowledgement that OLC did some due diligence on the gambit is absurd.  It is not as bad as saying that the fact that someone was allowed to appeal their case in federal court reflects on the merits of the case itself, but it is close.

I think this error by Krugman, and his approach to the Big Coin Gambit in general, reflects a few notable ongoing issues, small and large.  First, he can be as stubborn as anyone when it comes to defending himself on weak ground.  (To his great credit, he spends so little time on weak ground that he is simply inexperienced in dealing with such a situation.)  He got into a short, outright nasty exchange with Jon Stewart last year about the big coin, essentially because Stewart mocked an idea that Krugman thought was serious.  Ninety-nine percent of the time, his tenacity is put to good use.  But when he was wrong, his persistence turned into petulance.

Second, Krugman continues to suffer from "economists' disease," that is, he has never quite extinguished the last vestiges of the adolescent logic (and glee) that at least initially motivates so many of us who take up that profession.  That is, one of the immature joys of being an economist is realizing that one can see the truth of what other people do not see.  Money illusion, tax incidence, and so much more in the economics playbook are extremely important insights by economists, in which they/we apply consistent logic to a problem and triumphantly say (correctly), "You people just don't get it."

As much as Krugman is admirably able to fight the extreme rationalists in the pro-austerity camp, his approach to the Big Coin was remarkably similar in its error: Other people don't get the elegant brilliance of this, so they have to get over it.  Reality has to bend to theory.  He simply cannot see that, just as real people's failure to think "rationally" in the technical economic sense fatally undermines so much of the theory that he rightly attacks, real people's incredulous response to the Big Coin Gambit needs to be taken seriously, not rejected as know-nothingism.

Third, this is a perfect example of the ways that professional economists' simplistic understanding of the law can get them into trouble.  During the hysteria prior to the White House's rejection of the gambit, news reports quoted Larry Tribe invoking the expressio unis est exclusio alterius canon, concluding that the gambit was legal.  Krugman jumped on that statement.  Tribe is the best constitutional law scholar that Krugman has heard of (Tribe being, in many people's minds, the Krugman of constitutional law), and Tribe says that the law means X.  Therefore, the law means X.  That it might not mean X, as (for example) both Professor Dorf and I separately argued (here and here, respectively), is simply not possible.  The law is the law.

Two years ago, I wrote a Verdict column trying to explain why Krugman (and other economists) are flummoxed by so many of their colleagues' unwillingness to see reality when it comes to macroeconomic policy.  I noted that there is simply no correlation between the skills that the economics profession prizes and nurtures and the skills that make people like Krugman generally savvy about economic policy.  Krugman happens to possess the skill set that makes him a modern economist par excellence, and he also happens to possess the clear-eyed sense of reality (as well as a moral compass) that his profession does not value at all.  When he sees his colleagues applying their professional skill set, unguided by good judgment or ethics, he simply cannot see how they can go so far astray.

Here, we see what happens when Krugman reaches the limits of those of his talents that have nothing to do with his professional training.  I have often recalled how, during my days before law school, other macroeconomists and I would mock the idea of a balanced-budget amendment (which, of course, does deserve to be mocked and opposed) by saying things like, "If Congress doesn't pass a balanced budget, what are you gonna do, put all of Congress in jail?"  Ha ha.  Legal analysis is so easy!

Now, Krugman learns that OLC wrote a memo, and he concludes that this means that the gambit was not ridiculous.  Because the OLC's lawyers wrote a memo rejecting it.  Oy.


Paul Scott said...

Don't you think that if you and Tribe are on the opposite side of an argument that it is reasonable for a non-lawyer to present that as evidence that the idea is not crazy, even if you happen to disagree? Unless you have evidence that Tribe held that opinion dishonesty.

Jimmyd said...

That's a strange post. You are an economist who became a lawyer and so Krugman is a fool because he chose to remain an economist? Oy.

I too think the Big Coin idea is ridiculous but I do not find it legally ridiculous. I do not think the White House rejected it because of any legal niceties: I think they rejected it because of the political realities. It looks like a gimmick (because it is a gimmick) and the White House should be above gimmicks.

See, if there is one thing more foolish than economists who never went to law school it is lawyers who think they understand politics.

Michael C. Dorf said...

Neither of these comments comes to grips with Neil's main point, which is not that platinum coins are self-evidently illegal, but that Krugman's reasoning--which you can verify is exactly what Neil reported by reading it at -- is flawed. Krugman says the fact that OLC produced a memo shows that the White House took the idea seriously. Neil says it shows nothing of the sort. By Krugman's logic, the White House took seriously the idea of building a death star because executive officials produced text rejecting that idea:

AF said...

Lots of overstatement and unsupported assertions here. Is it really the case that the OLC writes memos on legal issues that are "self-evidently ridiculous"? I am a lawyer, and I would have thought that for most reasonable definitions of the word "ridiculous," the answer is no. But my status of a lawyer doesn't mean I'm right. Perhaps there are specific examples of the OLC writing memos on self-evidently ridiculous issues that Professor Buchanan can point us to?

Professor Dorf correctly intuits that the proper way to think about this is to identify examples of ridiculous ideas that have been considered in the past. But the example he cites is a response to an online petition, which is obviously irrelevant as the whitehouse is committed to responding to all online petitions that reach a certain threshold whereas the OLC has no such policy.

Paul Scott said...

Firstly, there is a hyperdrive on the Death Star, so if the only thing standing between us and the Death Star is $850,000,000,000,000,000 then the failure to pursue the Death Star is this administrations biggest mistake. Having a very large vehicle with life support and a hyperdrive all but guarantees that humanity lives until the end of the Universe. Obama should immediately mint an $850,000,000,000,000,000 platinum coin and get this project underway.

Secondly, I doubt very much that the OLC memo on the Big Coin is presented tongue in cheek. There may be political reason why it (like the Trilema or other 14A) are not being pursued, and that Jon Stewart (and, by proxy, a lot of people) thinks it is too cute, might well be a big part of those politics. But that has less (though not nothing) to do with its legal merits.

Finally, while I agree the bulk of the post was mostly about the particular evidence submitted, and I agree with the post that the evidence actually submitted fails to establish conclusively what Krugman wants it to establish, I think that is a smaller part of what is important.

Neil suggests Krugman's holding on to the Big Coin is comparable to the far right's (and even near right, frankly) support of austerity in face of recession at the zero lower bound in the face of overwhelming evidence to the contrary. That comparison is completely unfair.

There is nothing fairly called "evidence" one way or the other for the Big Coin. All you have is a series of legal opinions - some public such as you and Tribe and some undisclosed - OLC. Unless you are Dwarkin, you don't even think this sort of thing is subject to "evidence." Economics is largely not properly labeled as science, but Law can't even pretend to be. So that Krugman holds his opinion in the face of what? contrary opinion, I suppose, is just not the same thing as - not even close to the same thing as - a group of politically motivated economists holding to their conclusions after overwhelming evidence that their models have failed.

I'd also reject the description that "Tribe says so, so it must be true" as an opinion that is held by Krugman. Krugman posts so frequently that argument from authority is foolish; that authority should get you a read, but if your arguments can't stand on their own without your name, then they fail. So I very much doubt he makes an exception for Larry Tribe.

What can be said about the Big Coin is that some very smart people with expertise on the matter have considered it. Some (maybe even most) have rejected it. But that is it.

The same thing can be said of the last five years of austerity programs, but in addition we also get to say "and here is all the models that have failed to predict outcomes and here are all the models that have succeeded." There is nothing similar for Big Coin.

That Neil (and you?) think it is not only wrong but ridiculous does not make it so. The OLC did review it and rejected it (along with 14A and I presume, trilema). Maybe they even concluded that the ideal was ridiculous. Hopefully we'll find out eventually. But whatever their conclusions, I think we can be comfortable in guessing it will more resemble a serious legal memorandum than a comment on building a Death Star.

Michael C. Dorf said...

AF quite fairly asks for an example of OLC (as opposed to other parts of the government operating under different rules) considering and rejecting an outrageous claim. I can do better. Sometimes OLC considers and ACCEPTS outrageous claims. For an example, consider
(that's one of the "torture" memo). If OLC taking a position is no guarantee of its non-ridiculousness, a fortiori, OLC's mere consideration of a position is no guarantee of its non-ridiculousness.

AF said...

I was afraid someone would mention the torture memo. Is Professor Buchanan's point so self-evidently correct that it doesn't need any actual evidence or argument to support it?

Chris Long said...

What the platinum-coin option really shows is how odd the debt ceiling is. It’s an artificial obstacle to the government paying for spending it has already issued. The debt ceiling isn’t an economic limit on spending; it’s a legal one. It has no implications for inflation, even if the Treasury never buys back the coin. Anyway I would secure myself financially just in case. payday loans Canada is the service that works at any time.

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Bill Walton said...
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Bill Walton said...

I'd also reject the description that "Tribe says so, so it must be true" as an opinion that is held by Krugman. Krugman posts so frequently that argument from authority is foolish; that authority should get you a read, but if your arguments can't stand on their own without your name, then they fail. So I very much doubt he makes an exception for Larry Tribe.League of Legends boosting
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