Tag Archives: Congress Watch

A radical legal ideology nurtured our era of economic inequality

By Sanjukta Paul – Where does economic power come from? Does it exist independently of the law?

It seems obvious, even undeniable, that the answer is no. Law creates, defines and enforces property rights. Law enforces private contracts. It charters corporations and shields investors from liability. Law declares illegal certain contracts of economic cooperation between separate individuals – which it calls ‘price-fixing’ – but declares economically equivalent activity legal when it takes place within a business firm or is controlled by one.

Each one of these is a choice made by the law, on behalf of the public as a whole. Each of them creates or maintains someone’s economic power, and often undermines someone else’s. Each also plays a role in maintaining a particular distribution of economic power across society.

Yet generations of lawyers and judges educated at law schools in the United States have been taught to ignore this essential role of law in creating and sustaining economic power.

Instead, we are taught that the social process of economic competition results in certain outcomes that are ‘efficient’ – and that anything the law does to alter those outcomes is its only intervention.

These peculiar presumptions flow from the enormously powerful and influential ‘law and economics’ movement that dominates thinking in most areas of US law considered to be within the ‘economic’ sphere.

Bruce Ackerman, professor of law and political science at Yale University, recently called law and economics the most influential thing in legal education since the founding of Harvard Law School.

The Economics Institute for Federal Judges, founded by the legal scholar Henry Manne, has been a hugely influential training program in the law and economics approach. more>

Why the US bears the most responsibility for climate change, in one chart

By Umair Irfan – Humans are pumping more carbon dioxide into the atmosphere at an accelerating rate. But climate change is a cumulative problem, a function of the total amount of greenhouse gases that have accumulated in the sky. Some of the heat-trapping gases in the air right now date back to the Industrial Revolution. And since that time, some countries have pumped out vastly more carbon dioxide than others.

The wonderful folks at Carbon Brief have put together a great visual of how different countries have contributed to climate change since 1750. The animation shows the cumulative carbon dioxide emissions of the top emitters and how they’ve changed over time.

What’s abundantly clear is that the United States of America is the all-time biggest, baddest greenhouse gas emitter on the planet.

That’s true, despite recent gains in energy efficiency and cuts in emissions. These relatively small steps now cannot offset more than a century of reckless emissions that have built up in the atmosphere. Much more drastic steps are now needed to slow climate change. And as the top cumulative emitter, the US bears a greater imperative for curbing its carbon dioxide output and a greater moral responsibility for the impacts of global warming.

Yet the United States is now the only country aiming to withdraw from the Paris climate agreement. more>

Kavanaugh Ethics Complaints Once Again Dodge Ruling In The 10th Circuit

By Steve Denning – The judicial review of multiple ethics complaints against Justice Kavanaugh continued on its Gilbert-And-Sullivan trajectory with a 6-1 decision by the 10th Circuit last Friday that that court does not have jurisdiction to consider the complaints, even though Chief Justice Roberts explicitly requested the 10th  Circuit to assess them.

Some 83 ethics complaints had been filed against Judge Kavanaugh alleging not only false statements under oath during hearings on his nominations to the U.S. Court of Appeals for the D.C. Circuit in 2004 and 2006, but also, more flagrantly, misconduct at the nomination hearing for the U.S. Supreme Court itself in 2018, including making inappropriate partisan statements and treating senators with disrespect.

The complaints were not made without legal basis. More than 2,400 law professors concluded that during the Senate confirmation hearings, Kavanaugh has “displayed a lack of judicial temperament that would be disqualifying for any court.” Unlike the allegations of lying about events that happened many years ago, there was no question of fact as to whether Kavanaugh’s conduct at the Senate hearings actually took place: it was visible for the whole country to see on national television.

Former Supreme Court Justice John Paul Stevens also stated that Judge Kavanaugh has demonstrated bias and is “not fit for the Supreme Court.” Former Justice Stevens, in remarks to retirees in Boca Raton, Fla, declared that Kavanaugh’s statements on September 27 revealed prejudices that would make it impossible for him to do the court’s work. “They suggest that he has demonstrated a potential bias involving enough potential litigants before the court that he would not be able to perform his full responsibilities.” more>

How Trump’s Economic Chickens Are Finally Coming Home To Roost

By Steve Denning – Assisted by the least qualified White House staff in history, Trump has continued to breach conventional wisdom and practice. Yet Liberal analysts have watched with dismay as polls have showed stable support from Trump’s base, no matter how outrageous the behavior. Surely, they said, the economic reality of what Trump is up to must eventually kick in.

Now a trifecta of bad economic news for his base raises the question whether that time has finally arrived:

The comfort offered by Trump’s fictions is too seductive to be undermined by facts. To Trump’s base, the beautiful myth of “the Wall” is, and remains, more attractive than the real world.

In this way, “the Wall” has become a code-name for the racist, anti-immigrant isolationist policies of Trump’s presidency and a symbol of multiple toxic policies,

There’s a catch with the use of fictions in politics. “The chief disability of propaganda,” wrote Hannah Arendt in her classic book, The Origins of Totalitarianism, “is that it cannot fulfill the longing of the masses for a completely consistent, comprehensible, and predictable world without seriously conflicting with common sense.”

For a time, common sense can be held at bay and prevented from intruding into the cocoon of reassuring fiction. Yet the deliberate distortion of reality is also the cause of propaganda’s inevitable downfall. It is the inexorable collision with reality that eventually ruins the cocoon. It’s not a matter of whether. It’s only a question of when. more>

Democracy splutters—good governance under pressure

Amid political polarization and declining democratic standards, can OECD and EU countries sustain the good governance challenges such as globalization, social inequality and climate breakdown demand?
By Christof Schiller – Eroding standards of democracy and growing political polarization are severely hampering the implementation of sustainable reforms. This is one of the main findings in the Sustainable Governance Indicators (SGI) 2018 study by the Bertelsmann Foundation.

SGI is an international monitoring tool, which sheds light on the future viability of all 41 countries in the OECD and the European Union. On the basis of 140 indicators, we assess democratic standards, the quality of governance and reforms in the areas of economics, social affairs and the environment. More than 100 international experts are involved in our cross-national survey.

The most recent study highlights how waning standards of democracy and growing political polarisation hamper sustainable reform. Governments in countries including the United States, Hungary and Turkey are deliberately stoking social tensions rather than seeking consensus.

The report shows that the quality of democracy in many western industrial nations is waning, with democratic standards declining in 26 of the countries surveyed, compared with similar data from four years earlier. ‘Even within the OECD and the EU, the model of liberal democracy is subject to growing pressure—in some countries this means that even central democratic and constitutional standards such as media freedoms are already severely damaged or undermined,’ it finds.

Compounding this worrying trend, the study’s authors identify a simultaneous decline in the adequacy of governance, with many countries losing ground on key measures of good governance. more>

Updates from Chicago Booth

No, America is not more divided than ever before
By Howard R. Gold – It may seem sometimes like the United States is coming apart. “While rural America watches Duck Dynasty and goes fishing and hunting, urban America watches Modern Family and does yoga in the park,” write Chicago Booth’s Marianne Bertrand and Emir Kamenica.

“The economically better-off travel the world and seek out ethnic restaurants in their neighborhoods, while the less well-off don’t own a passport and eat at McDonald’s.” Conservatives, they write, favor masculine names for boys while liberals prefer more-feminine names, and men play video games while women browse Pinterest.

These kinds of cultural splits can have economic, social, and political consequences in that they may ultimately reduce social cohesion within a country. But according to Bertrand and Kamenica, who measured cultural divisions over time, the cultural gap in the US is largely stable—not widening.

The data reveal that divisions definitely exist. Watching certain movies or television shows, reading certain magazines, or buying particular consumer products are predictable markers of traits such as how much money people make or how far they got in school. more>

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The World Order Is Starting to Crack

By Stewart Patrick – When Donald Trump was first elected U.S. president, foreign observers hoped that he would moderate his more outrageous campaign positions as the practicalities of governing socialized him to adopt more conventional stances. Failing that, they hoped to contain the damage until the U.S. electorate returned to its senses. Trump’s scythe has sliced through these thin reeds.

For a onetime chaos candidate, Trump has been remarkably methodical in his efforts to destroy the liberal international order.

Stunned U.S. allies are now adapting to their new normal by taking steps previously unimaginable. They are hedging their bets in dawning recognition that the America of old may never return, regardless of who succeeds Trump. They are pursuing strategic autonomy, seeking to decouple from an unpredictable United States. And they are considering how to restore some semblance of international cooperation in a world left rudderless in the wake of the U.S. abdication of global leadership.

Collectively, Trump’s actions have sent U.S. allies reeling, shaking their long-standing faith in the West as a community of shared values, interests, and institutions. In response, they are working with China to safeguard globalization, expanding their own strategic autonomy vis-à-vis Washington, and grasping to defend what remains of the open world from the depredations of its erstwhile creator.

Trump’s trade protectionism has done the seemingly unimaginable. It has allowed mercantilist China—which flagrantly steals intellectual property, restricts foreign investment, and protects entire sectors from foreign competition—to portray itself as a bastion of multilateral trade. more>

The Wounds Won’t Heal

By David French – We usually place outsized emphasis on elections that define our politics and too little emphasis on the values that define our culture.

But it was the nomination of Kavanaugh and the wrenching debate about core cultural and constitutional values that dominated American discourse these past few weeks. It’s a debate that illustrated the fundamentally different ways in which conservatives and progressives view the world, and it unlocked not just an intellectual response but an emotional response that has radicalized otherwise reasonable and temperamentally moderate individuals into believing that the other side hates even the good people in their own tribe.

And so when Ford came forward, it’s as if her allegations landed in two different countries. The good-faith residents of Redworld were skeptical and said, “Prove it.” The good-faith residents of Blueworld believed Ford and said, “Finally, she has a chance for justice.” The presumptions were diametrically opposite, and everything that followed turned on those different presumptions. more>

Four Lessons (Not) Learned From The Financial Crisis

By John T. Harvey – That’s fantastic. Good work, Presidents Bush, Obama and Trump. But just because we bailed the water out of the sinking ship doesn’t mean we patched all the holes. And while the former is a necessary first step, without the latter we won’t remain upright for long.

So what didn’t we fix that could still potentially cause a catastrophic leak? Too much. Here’s a short list of what we should have learned but didn’t.

  1. If you are going to bail someone out, bail out the debtor and not the creditor
  2. Financial institutions should be very closely supervised
  3. The market is not always right
  4. Deficit spending doesn’t cause inflation or bankruptcy

Most people assume that what financial institutions do is loan out other people’s money. That is, of course, part of what they do, but what is far more significant is the fact that they create money. I don’t just mean the intro-econ, money-multiplier story where banks make loans after the Federal Reserve injects new funds. In fact, that view is so wrong that economics professors are beginning to eliminate it from their curriculum (not nearly fast enough, but it’s getting there).

Rather, the standard scenario is one in which banks increase the money supply first by making loans to customers and then the Federal Reserve steps in second to supply the necessary reserves. Financial institutions make money out of thin air, not from someone’s savings, and if that leaves the system short of reserves then the Fed buys securities from banks. They do this to prevent interest rates from rising above their targeted rate and therefore the central bank accommodates rather than dictates when it comes to the supply of money. more>

Lessons From The Greek Tragedy Unlearnt

By Simon Wren-Lewis – Private banks were happy to lend to the Greek government because they mistakenly believed their money was as safe as if they were lending to Germany.

Other governments first delayed and then limited Greek default because they were worried about the financial health of their own banks. They replaced privately held Greek debt with money the Greek government owed to other Eurozone governments.

From that point voters would always want all their money back. In an effort to achieve that the Troika demanded and largely achieved draconian austerity and a vast array of reforms.

The result was a slump which crippled the economy in a way that has few parallels in history. Most economists understand that in situations like this it is ridiculous to insist that the debtor pays all the money back. For basic Keynesian reasons this insistence just destroys the ability of the debtor to pay: it is not a zero sum game between creditor and debtor. This is why so much of German debt was written off after WWII.

By July 2015 the Greek government was able to pay for its spending with taxes, so all it needed was loans rolled over. The Troika would only do that if the Greek government started running a large surplus to start paying back the debt i.e. further austerity. more>