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Saturday, April 7, 2012

A Lawyer Comes Up Short on Obama on the U.S. Supreme Court

As president, Thomas Jefferson campaigned against the U.S. Supreme Court in the pivotal 1800 election after the court let the Alien and Sedition Acts stand. The law criminalized criticizing government officials of the U.S. Government. Lincoln announced during his 1860 campaign that he would not enforce the court’s Dred Scott decision upholding slavery in U.S. territories. In saying that invalidating the Affordable Healthcare Act would represent an unprecedented act of judicial activism, Obama was not going nearly that far. In other words, he was not saying he would ignore the decision. Nor did Obama announce anything like Roosevelt’s unsuccessful court-packing scheme.

Even so, a lawyer who teaches law at Samford University in Alabama opined, “It’s virtually unprecedented for a president to criticize the institutional powers of the Supreme Court. I don’t know of any other instance where a president has publically questioned the legitimacy of judicial review.” Apparently the lawyer had not heard of Lincoln’s announcement or Roosevelt’s court-packing.

This example of commentary by the lawyer illustrates why law schools hiring lawyers to teach law classes is fundamentally different than hiring legal scholars to be law professors. A lawyer can become an expert on the technical nuances of a statute or judicial opinion, as well as how to argue such points in a court of law. This is not the same as having scholarly expertise on jurisprudence, which includes constitutional philosophy and history. The difference can be expressed as that which exists between examining individual trees and grasping the contours of the forest. Ironically, as a graduate student in law progresses in the LLM and JSD degrees, the seminars become more specific in coverage (the dissertation of the doctoral candidate in a JSD program being incredibly specific), the level of abstraction increases so a wider perspective is proffered though the narrowing disciplinary focus.

Were law school deans in the U.S. republics to hire scholars as professors rather than lawyers as instructors, the students would benefit immensely from the standpoint of learning the knowledge of law, rather than simply how to practice it.

Source:

Richard Wolf, “Other Presidents Took on High Court before Obama,” USA Today, April 6, 2012. http://www.usatoday.com/news/washington/story/2012-04-05/obama-mcconnell-supreme-court/54065008/1

Wen and Obama: Breaking Up the Banks

Chinese Premier Wen Jiabao told a radio audience on April 3, 2012 “that China’s state-controlled banks are a ‘monopoly’ that must be broken up.” He also urged other businesses to get into the financial sector. “Let me be frank,” he said. “Our banks earn profit too easily. Why? Because a small number of large banks have a monopoly. To break the monopoly, we must allow private capital to flow into the financial sector.” This included raising the total amount foreigners can bring into China under the Qualified Foreign Institutional Investor program to $80 billion.

Besides combined earnings of a bit over 632 billion yuan ($99 billion) in a slowing economy, the largest banks—Industrial & Commercial Bank of China, Bank of China, Agricultural Bank of China, and China Construction Bank—were able to raise fees indiscriminately, sparking the popular resentment that Wen was able to tap on the radio. Beyond the unfairness of the windfall profits, the artificially low cost to the banks in borrowing from domestic savings accounts has meant that investment has proceeded at the expense of consumption. Given that the current account surplus stood at just 2.7% of GDP in 2011 due to slackening demand in Europe and North America, the imbalance regarding consumption could already be seen as a potential constraint to economic growth.

Therefore, Wen’s strategy in going after the unpopular banking oligopoly is wise both politically and economically. The question at the time was whether anything would come of his remarks. According to the Wall Street Journal, the “major question is whether increasing rhetoric and new initiatives toward economic revisions will lead to broader reform. Prior efforts have faltered amid Beijing’s drive to keep a tight rein on the economy and opposition from interest groups.” That Wen made his remarks as he was preparing to leave office may mean that they should be regarded as akin to President Eisenhower’s “Beware the military-industrial complex” farewell speech. A swan song is not apt to be followed by still another act.

In terms of lessons from a comparative approach, it would be ironic, to say the least, were the Chinese government willing and able to break up the four largest banks while the Dodd Frank Act of 2010 in the U.S. let the banks too big to fail remain intact in spite of the plights of Bear Stearns and Lehman Brothers in 2008. That is to say, if the Chinese government can take on its powerful banks, the U.S. may be shown in relief as a plutocracy.

Of course, we could add a historical dimension by bringing in President Andrew Jackson’s defunding of the Second Bank of the United States at around 1830. Five or six years later, Congress finally got around to ending the bank’s charter. Jackson’s argument was that having a bank would make Congress, and thus the U.S. Government, too powerful in the American federal system. The dangers to the American republics in having a powerful moneyed interest were also not lost on the nineteenth-century president.

Therefore, we can view the Dodd Frank Financial Reform Act of 2010 through the lenses both of China, assuming something comes of Wen’s remarks, and of American history. Obama barely broached the subject of breaking up Wall Street banks even though they had been culpable in the derivative mess. Congress would hear nothing of it.  The Chinese government may not be so constrained by the self-serving interests of its banking oligarchy.

Similarly, claims that President Obama’s reliance on private health-insurance companies rather than a state-owned entity in his Affordable Healthcare Act of 2010 is somehow socialism (i.e., ownership by the state of means of production) can be viewed relative to a Wen’s criticism of the state-owned banks (which favor state-owned enterprises in terms of lending). Obama caved to the private health-insurance company lobby on even a public option, whereas Wen suggests that the Chinese government might break up the four biggest banks. Is the Chinese state stronger than the U.S. Government relative to the interests of private capital?

Relative to the “socialist” leader’s distancing himself from a bias toward state-owned banks (and enterprises in general) in China, President Obama’s support of both the Dodd-Frank and Health-care Affordability laws can be seen as anything but advocating U.S. Government ownership of means of production/services. Wen’s remarks show a movement away from socialism, toward Obama’s stance, though perhaps with government rather than banks in the driver’s seat.

Source:
Dinny McMahon, Lingling Wei, and Andrew Galbraith, “Chinese Premier Blasts Banks,” The Wall Street Journal, April 4, 2012.


Tyco’s Kozlowski: Isolation or Work-Release?

L. Dennis Kozlowski, a former CEO of Tyco, was denied parole “due to concern for the public safety and welfare,” according to the New York Department of Corrections. A parole board ruled that releasing him in 2012 would have the effect of minimizing his corporate crimes and affect public safety. The board concluded that early release would “not be compatible with the welfare of society at large, and would tend to deprecate the seriousness” of his offenses. He was convicted in 2005 of looting nearly $600 million in bonuses and other payments from Tyco in the 1990s.

As much of a sentence of 8 to 25 years in prison may seem to befit such a case of greed and abuse of corporate position, that Kozlowski was transferred three months before the denial of parole to a minimum-security facility in Manhattan and approved in a work-release program suggests that the seriousness of his crimes did not translate into the punishment after all.

Although white-collar convicts should not be conflated with murderers and rapists, prison should not be conflated with a dorm for the corporate criminals. Put another way, the punishment ought to fit the crime (rather than another, or none). If the sentence includes prison, then prison it should be.

It is worth asking, however, whether prison is suitable for white-collar crime. Put another way, would the public safety really have been compromised had Kozlowski been released early? Does stealing $600 from a corporation without any threat of violence put anyone’s safety at risk? If not, then only enough security to keep the criminals in the prison facility should be necessary, as they are not dangerous. This does not mean an open door policy or giving the inmates permission to go out of the facility to work.

Having to confront oneself for hours without distraction in a cell for a sustained period of time—as if a kid sent to his or her room for hours as a punishment—may well be fitting to the white-collar crime. Furthermore, taking the criminal’s wealth and property and requiring work to repay any losses to others also seems fitting. These two elements ought to be applied successively rather than concurrently so each can have its full effect.

Sources:

Chris Dolmetsch, “Former Tyco Chief Kozlowski Is Denied Parole in New York,” Bloomberg, April 5, 2012. http://www.bloomberg.com/news/2012-04-05/former-tyco-chief-kozlowski-is-denied-parole-in-new-york.html

Kevin McCoy, “Former Tyco Chief Told No on Parole,” USA Today, April 6, 2012.

Thursday, April 5, 2012

Experts on the Supreme Court: Lawyers Who Teach and Journalists

For all the American lawyers and law “professors” who had been predicting on the basis of their "expertise" that the three days of oral arguments before the U.S. Supreme Court meant that the Affordable Healthcare Act would go down, the Court's decision must have been a rude awakening. Immediately after the ruling, the Huffington Post observed that the decision "comes as something of a surprise after the generally hostile reception the law received during the six hours of oral arguments." This is an understatement at the very least.

Lest the public be taken in by the predictions of judicial "experts" in the future, we might want to recalibrate just how much insight the so-called experts really have on the inner workings of the U.S. Supreme Court.

           This public face of the U.S. Supreme Court may be distinct from what goes on behind the curtain.      NYT

Pete Williams, a journalist, reported on NBC Nightly News after one of the days of oral arguments that “Obamacare” was in trouble. Unless Williams had clerked at the Court, it is unlikely that he knew the Court’s inner workings, not to mention how the justices use oral arguments. For example, a justice might use the arguments to test out legal theories. Because I have not clerked at the Court, have no knowledge of its inner workings, and cannot get into a justice’s head, my projection out from the arguments can only be conjecture. Sadly, the journalists covering the case showed no such hesitancy concerning their own knowledge of the court and, indeed, the oral arguments themselves.

Lest we turn to American law “professors” as experts having even more insight into the Court’s workings than do the lawyers who have argued before the justices, it is important to remember that American law schools hire lawyers rather than scholars to teach law. Whereas legal scholars have the doctorate in law, the J.S.D. (Doctorate in Juridical Science), to practice law one needs only the undergraduate, or first, degree in law (the LLB or JD).  The LLB nomenclature was changed in 1900 at the new law school of the University of Chicago as a marketing ploy to attract students. Students had been complaining about having only a BA and LLB (two bachalors degrees) after seven years of college. Even with the name change, however, having the first degree in Liberal Arts and Sciences and the first degree in Law still constitutes two undergraduate degrees.  One must go on in the same body of knowledge to graduate degrees before one can be considered to have mastered it (i.e., masters degree) and then to be a scholar of it (i.e., doctoral degree).  To treat a lawyer with one degree in law as though he or she were thereby a scholar of law omits two degrees of law (the LLM and JSD).

So when Benjamin Barton, who teaches law at the University of Tennessee, says, “I am a law professor and have been quite interested in this case,” we ought to view him rather as an instructor rather than professor because he is not a scholar of law (i.e., having earned the JSD degree). A clue to his true situs, educationally speaking, is in his next statement: “I had a pretty hard time following those arguments.”  He was referring to the oral arguments. Benjamin Barton is a lawyer who teaches law as an instructor. We should neither blame him nor be particularly surprised that some of the arguments eluded him.

In the E.U., by the way, one must have the equivalent of the LLB/JD, LLM, and JSD degrees to join a faculty of law as a professor. In fact, one must have published one’s dissertation and published another book too, at least before one can become a full professor (it might be a requirement even to become an assistant professor). I know such a law professor, and his legal education goes far beyond a year and a half of survey courses and a year and a half of senior seminars. By “beyond,” I do not simply mean more seminars.

A doctorate is more than just a few additional years of classes. One must sit for long comprehensive exams (over anything in the discipline), and oral exam, as well as write and defend a book-length work of original research (i.e., a dissertation). So adding another year to a physical therapy program does not make the degree a doctorate. Also, a doctorate must be the terminal degree in a body of knowledge, whether or not a particular school offers the degree. Lest a masters be presumed to be a terminal degree (e.g., the MFA), the comprehensive exams and dissertation must also be part of the degree (as well as advanced seminars).

Just as everyone today is a professional, we as a society have a habit of naively assuming that someone is an expert simply because they claim to be one. Whether journalists who presume to know how the inner workings of the U.S. Supreme Court or lawyers who teach law yet somehow have trouble following the Court’s oral arguments, a good bit of self-restraint is called for in terms of self-entitlement.

Sources:
 Mike Sacks, "Supreme Court Health Care Decision: Individual Mandate Survives," The Huffington Post, June 28, 2012.



Adam Liptak, “Justices’ Celebral Combativeness on Display,” The New York Times, April 3, 2012. http://www.nytimes.com/2012/04/03/us/sidebar-justices-cerebral-combativeness-on-display-in-health-law-hearings.html






Wednesday, April 4, 2012

A Myanmar Spring?

The party of dissident leader Aung San Suu Kyi, the National League for Democracy, won a decisive victory in by-elections on April 1, 2012. The party 40 of the 45 seats reported as of April 3rd, with the results of five more seats not yet in. The news of the victory reached the outside world, which reacted with optimism. Catherine Ashton, the E.U.’s foreign minister, said “I congratulate the government and people of Myanmar on the conduct of the by-elections.” Meanwhile, the White House indicated that the vote marked “an important step in Burma’s democratic transformation.” Both the E.U. and U.S. approached the outcome as necessary but not sufficient for democracy in the country that had had five decades of harsh military rule.

                                     Aung San Suu Kyi on the day of the by-election.          Agence France/Getty

Indeed, the impact of the by-election must be put into perspective in terms of governing. At the time, the Wall Street Journal noted that the NLD party “will have only a small presence in Myanmar’s parliament, where most of the more than 600 seats are held by current or former soldiers linked to the old military regime.” From this perspective, the by-election itself can be viewed as a public relations coup by the soldiers. Such a dramatic victory of the NLD would give the appearance of a new democracy when in fact nothing would change in who controls the government. At best, the by-election’s results would mean that the governing party would have to accommodate some dissent within the legislative chamber. In terms of removing sanctions, the U.S. and E.U. officials would be wise to wait until a majority within the parliament is up for grabs under a free and fair (and monitored) election.

Like the military in Egypt, that in Myanmar might have known that it could retain control even after the apparent shift to democracy. Indeed, all the optimism that comes with an apparent switch to democracy could operate as cover, enabling the real power to continue much as before. Becoming a true democracy in which power transfers between parties is likely a long process where a military dictatorship has been the rule. People don’t give up power easily, and they can be quite crafty in how they retain it.

Source:

Patrick Barta, “Suu Kyi’s Victory Leads to Rethink About Sanctions,” The Wall Street Journal, April 3, 2012.

http://online.wsj.com/article/SB10001424052702304023504577318770993783912.html


Tuesday, April 3, 2012

E.U. Bailout Fund: The IMF of Europe?

One of the benefits of being in a federation—as distinct from an international organization—is that states in fiscal trouble can benefit from redistribution through a federal center. In other words, federalism provides a safety buffer that is lacking at the international level. 

E.U. finance ministers agreed on March 30, 2012 to create a permanent bailout fund for states that have adopted the euro. The New York Times reports that questions persisted “about whether the fund, even at about $1 trillion, will be sufficient to deal with crises” in large states like Spain and Italy, which are comparable to Illinois and California in the U.S. Mudding the water, the Times incorrectly refers to the bailout fund as the E.U.’s IMF: “(T)he “bailout mechanism . . .  is meant to be a European equivalent of the I.M.F.” However, the term “bailout fund” itself comes from the TARP, which was not the U.S.’s IMF.

The complete essay is at "E.U. & U.S."