Five years after its enactment, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 remains controversial. Critics argue that the statute imposes disproportionately large compliance costs on small community banks, institutionalizes “too big to fail,” and drives up the cost of banking services to consumers. Comparing Dodd-Frank to past securities reforms, particularly those of the New Deal, shows that these three problems are related and are nearly inevitable features of post-crisis legislation.
Archives for September 2015
I am obliged to Patrick Lynch for his thoughtful reply to my four posts concerning drug policy.
Mill’s “very simple principle” is important for two reasons. First: This harm principle is, at least in my experience, adduced quite often in some form or other by those who argue that drugs should be produced, sold, and consumed like any other commodity. In trying to reach this conclusion, advocates are right to quote it because of the second reason: Once the principle is breached, it has been admitted that public authorities, however they are constituted, may legitimately interfere in the matter. This having been conceded, it becomes a question of the best policy to follow, and not one of applying a simple, fundamental, and universal principle to the problem.
Donald Trump is not the most usual candidate in this campaign season. That distinction belongs to Lawrence Lessig, a professor at Harvard Law School and now a candidate for the Democratic Party’s nomination. It is unusual for a professor to choose the Presidency as his starter office and doubly so when he is running on a single issue—reform of the electoral system. Perhaps triply so, when he promises to resign immediately after getting his reforms enacted.
While I admire citizens of accomplishment who are willing to put themselves forward, some of Lessig’s core ideas pose a threat to free speech and indeed to liberal democracy itself. In his book, Republic Lost, Professor Lessig argues that the Framers believed that elections should make the government dependent upon the people alone. That dependence, according to Lessig, was the basic principle of republican government at the time. As result, Congress can legitimately regulate campaign expenditures to prevent “the distortion” that would occur from permitting legislators from becoming dependent on those who make campaign contributions or expend large sums of money on elections.
Lessig tries to use the rhetoric of republican government to recast the equality argument against permitting citizens to spend independently on campaigns or make substantial contributions to candidates. These interventions, according to this argument, make some citizens more politically influential than others. But Lessig’s focus on dependence demonstrates why an equality argument cannot be rooted in the original Constitution.
The Constitution emphatically does not provide any measure for deciding how public opinion becomes “distorted.” The constitutional dependence of representatives does not come from their being in sync with the opinions of their constituents on any set of issues but on their getting the most votes at periodic elections.
A while back I did a bunch of posts on the relationship between positivism and originalism. At the time, I also planned on doing a post on Dworkinian theory and originalism, but never got around to it. I am finally doing the post.
Dworkin favored an interpretive theory of law that attempted to interpret or give an account of a legal practice by considering the criteria of fit and justification. Under this view, one would first consider the actual legal practice – in the constitutional area, the actual Constitution and the judicial (and other) decisions interpreting it. One would seek a constitutional interpretation that “fits” with these legal materials – that is consistent with the practice. But one would also seek a constitutional interpretation that is justified – that renders the actual practice to be the best that it can be on normative grounds. The overall best interpretation would be based on both fit and justification.
Under these criteria, I believe there is a strong argument for originalism – especially the type of originalism that John McGinnis and I have developed. This type of originalism is both attractive normatively and does a reasonable job of fitting the practice.
Even after the Supreme Court’s lamentable decision in King v. Burwell, litigation over the Affordable Care Act and the administration’s creative implementation of the statute continues. Last week, Judge Rosemary Collyer of the U.S. District Court for the District of Columbia held that the House of Representatives has standing to sue the executive (more precisely, Secretaries Burwell and Lew) over their decision to implement an ACA program with unappropriated funds. While it’s certainly a good thing to keep this excretion of a statute in litigation, from here to eternity, there are reasons to be nervous about Judge Collyer’s ruling.
When I read the preface, I thought: What a great story awaits the reader. The authors of The Constitution: An Introduction, Michael Stokes Paulsen and Luke Paulsen, father and son, spent nine summer vacations together discussing the original Constitution and the Amendments. I wish I could have been privy to the conversations. Did the father ever say to the son, “you changed my mind on this point?” Did the son ever say to the father, “you changed my mind on that point?” After all, I think, the key to introducing America is by way of a dynamic conversation within and between the generations. Their aim is both lofty and restrained: to write an introductory book that is “rigorous, accurate, and scholarly” yet at the same time “brief and readable.” But they fall short.
In the coming weeks Washington faces another budget showdown between Democrats and Republicans in Congress and then between Congress and the President. Sadly, whoever wins or whatever compromise is struck, the federal budget will remain not only bloated but grotesquely misshapen.
The reason is that the debate concerns only cutting discretionary spending, not reforming entitlements. Yet entitlements are the primary drivers of ever increasing spending. In contrast, discretionary spending can generate public goods that aid long-term prosperity. An economist would define the essence of a public good as one from which individuals cannot be excluded and where the use of the good by one individual does not prevent use by another.
National defense is the paradigm case of a public good. Scientific knowledge is another. Given that such goods provide benefits which for which the provider cannot receive remuneration, they will be undersupplied. And some kinds of infrastructure goods with lots of positive spillovers also are likely to be undersupplied, even if they do not quite meet the definition of a public good. The primary fiscal focus of the classical liberal state should be on the creation of such goods, because neither the family nor the market will do so in sufficient quantity.
Not all federal discretionary spending supports these kinds of goods, but a good deal does. For instance, spending for the NIH is declining, despite very substantial evidence that it pays off in longer and better life for citizens.
Every year, I teach the 1976 case of Buckley v. Valeo in my Administrative Law class – not the portion that involves campaign finance regulation, but the part that concerns the Appointments Clause.
Congress had established the Federal Election Commission, which was an independent agency with significant power to administer the campaign finance laws. Congress, however, had adopted a novel method for appointing the six voting members of the Commission. It provided that
two members are appointed by the President pro tempore of the Senate “upon the recommendations of the majority leader of the Senate and the minority leader of the Senate.” Two more are to be appointed by the Speaker of the House of Representatives, likewise upon the recommendations of its respective majority and minority leaders. The remaining two members are appointed by the President. Each of the six voting members of the Commission must be confirmed by the majority of both Houses of Congress.
This method of appointing the commissioners obviously departs from the Appointments Clause of the Constitution. The Appointments Clause provides that the President may appoint an officer with the advice and consent of the Senate. (It is true that the Clause does specify other methods for the appointment of inferior officers, but the commissioners, who run the agency, are clearly not inferior officers.)
Ayoub El-Khazzani, aged 25, failed to reach the trigger of his Kalashnikov aboard a train passing through Belgium en route to Paris last month, which enabled three Americans and a Briton to stop the radical Islamist from killing any of the train’s nearly 500 passengers. When the four were awarded the Legion d’Honneur in Paris, it had been nine months since the gruesome Charlie Hebdo killings in that city.
The Americans remember 9/11; we remember Madrid (2004), London (2005), Paris (2015), and many other outrages, and we were relieved not to have to add the high-speed Thalys train to the list. Innocents have met a violent death at the hands of a few fanatics, thousands have been maimed. Europeans have been feeling under siege even before the new waves of refugees from Syria, Afghanistan, and Eritrea began reaching us; the possibility of ISIS fighters being smuggled in among them has added to the sense of crisis.