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.