Wickard vs. Filburn: Federalism vs. Congress

If you are wondering how the Congress got away with taking over so much from the state legislatures, you need look no further than Wickard v. Filburn, on which the U.S. Supreme Court unanimously decided that the interstate commerce clause can reach all the way to penalize a farmer for growing his own wheat.

The complete essay is at Essays on Two Federal Empires.

Fraudulent Foreclosures

Looking at foreclosures from 2008 to 2010 of federally-backed mortgages serviced by five major banks, federal investigators at the Department of Housing and Urban Development (HUD) found that bank managers “ignored widespread errors in the foreclosure process, in some cases instructing employees to adopt make-believe titles and speed documents through the system despite internal objections.” Generally, the banks engaged “in a pattern of unfair and deceptive practices.”[1] This finding contradicts the self-serving statements by managers at the banks that blamed low-level employees. The investigation found that the managers had actually been the active agents. That is, the shortcuts were in many cases formulated and directed by managers. The inspector general at HUD pointed to “simple greed” to explain how so many people could have participated in the misconduct.[2] Considering that millions of Americans were tossed out of their homes as a result, I would sociopathic indifference or even callousness to the mix. Additionally, the rush to sign documents may have undercut the banks’ own positions with respect to both the foreclosure process and the homeowners—adding incompetence to the mix.


The full essay is in Cases of Unethical Business, available in print and as an ebook at Amazon.com.  

1. Nelson Schwartz and J.B. Silver-Greenberg, “Bank Officials Cited in Churn of Foreclosures,” The New York Times, March 13, 2012.

2. Ibid.

Spain’s Deficit: Violating E.U. Law

In early March, 2012, Spanish Prime Minister Mariano Rajoy announced that Spain’s budget-deficit target would not be the 4.4% that had been promised by his predecessor to the E.U. Commission in 2011. Instead, the anticipated deficit in 2012 would be 5.8 percent.[1] That announcement put the state of Spain on a collision course with the enhanced enforcement of deficit limits by the Commission and the ECJ. Even though Rajoy had signed onto the added-enforcement “pact” a month before, he said of the 5.8 percent, “This is a sovereign decision made by Spain.”[2] A few days after his announcement E.U. finance officials met and accepted a 5.3% target.[3] Although it comes with a “tough deficit target” for 2013, one wonders whether the proposed strengthening of the “fiscal pact” will ever be enforced—and in a way that is fair to all of the states.

The complete essay is at Essays on Two Federal Empires.

1. Stephen Fidler, “Spain’s Move Tests Europe’s Mettle on Deficits,” The Wall Street Journal, March 10-11, 2012.

2. Ibid.

3. Matthew Dalton, “Euro-Zone Ministers Press Spain for a Deal on Deficits,” The Wall Street Journal, March 13, 2012.

On Television’s Sunset: Thinking outside the Box

Sometimes I think the human mind is like a train in being limited to the tracks that have already been laid. We are habituated to think it sufficient that we can turn off the main line on to another at the next signal. We think this is change because it involves turning onto a different track, but is it really change if the train is still on track?

The full essay is at "On Television's Sunset."

Justice as Fairness: Writing Down Greek Debt

In 2012, 80% of Greece’s private creditors agreed to “voluntarily” convert their Greek debt into debt of a bit less than half the face-value (plus a lower interest rate). With such a proportion having agreed to the swap without triggering credit default swap insurance payouts, Greece could get the E.U. to agree to force the remaining 20% to involuntary write-downs. That would trigger the credit default swaps, at least in theory.

The full essay is at "Justice as Fairness: Greek Debt."

A Democratic Spring in Russian Cities

The “Arab Spring” of 2011 might have given the world an over-optimistic notion of what political protest can engender in terms of “regime change.” A year later, the Egyptian military was still in control, which suggests that removing one particular dictator had constituted real change. In Myanmar, soldiers still dominated the parliament even after the opposition party won a landslide victory in by-elections in March 2012. Meanwhile, Assad in Syria was getting away with teaching the protesters in his country a bloody lesson while both the Arab League and the UN looked on. Meanwhile, Putin viewed his fraudulent presidential election victory as a mandate to deal more severely with the Russian protesters. The notion that a brave new world of democracy had somehow sprung to life in the Arab Spring suffered an cold snap of sorts from the cold winds of real politik. I suspect that real change happens more incrementally, and from the bottom up. This was evident in Russia in March, 2012.

The full essay is at "A Democratic Spring."

Pardons in Mississippi: On the Role of the Supreme Court

In a 6-to-3 decision, the Mississippi Supreme Court ruled in 2012 that pardon procedures lay outside of its constitutional authority—that to interfere even in cases where those procedures were flouted would violate the separation of powers. Section 124 of Mississippi’s Constitution “gives pardon power exclusively to the governor, but also requires applicants to have their petitions for pardon ‘published for 30 days, in some newspaper in the county where the crime was committed.’”[1] This is constitutional language, and yet the Supreme Court refused to determine whether Haley Barbour had acted unconstitutionally in all but 22 of the 200 pardons he had granted in his last days in office. In other words, the Court’s function in interpreting the constitution is at odds with the principle wherein the three branches of the Mississippi government are separate—none being directed by any of the other two.

The full essay is at "Pardons in Mississippi."

1. Campbell Robertson, “Highest Court in Mississippi Upholds 9 Pardons,” The New York Times, March 9, 2012. 

The SPD in Germany: Holding the Euro Hostage

Because the so-called “fiscal pact” amendment that would strength the E.U.’s enforcement of state government deficits and debts involves a shift of more state sovereignty to the E.U. for the states that ratify the informal amendment, the ratification in Germany requires a two-thirds majority in both the Bundestag and the Bundesrat. The latter body represents the German regions, or Länder, which in Texas or California would be counties. Generally speaking, the process of European integration has involved a succession of shifts of governmental sovereignty both from county and state governments to the E.U. itself as a federal government that includes an executive branch, a parliament, a council or upper chamber, and a supreme court that has a supremacy clause.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Scott Walker’s Recall in Wisconsin: Mob Rule?

In early March, 2012, unions and conservative groups had already “turned Wisconsin’s battle over labor rights into a national, multimillion-dollar war.”[1] In 2011, the two sides had spent $44 million in it. The unions began an effort in that year to recall Scott Walker, the government’s figurehead and chief executive, and several senators in Wisconsin’s Senate “after they pushed through legislation restricting the collective-bargaining and organizing powers of workers belonging to government-employee unions.”[2] While this depiction is cogent—a battle over labor rights involving legislation restricting collective-bargaining rights for government employees—I contend that the assumed linkage between the battle and the recall is deeply flawed.

The full essay is at "Scott Walker's Recall in Wisconsin."

1. Alicia Mundy, “Wisconsin Recall Realigns Campaign Spending,” The Wall Street Journal, March 6, 2012.

2. Ibid.

Corporate Social Responsibility Countering Rush Limbaugh

On February 29, 2012—Leap Day—Radio political-commentator and entertainer Rush Limbaugh called a female law student at Georgetown a “slut” and “prostitute” simply because she had said that Georgetown’s student health insurance should cover birth-control—a staple for even 98% of sexually-active married and single Catholic women as of 2012. On the following day, Limbaugh went on to offer to pay for aspirin that the women at Georgetown could “put between their knees” in lieu of birth-control. If you are wondering how that even makes sense, I am with you on that one. What strikes me in particular is the extreme to which Limbaugh went in his rhetoric or appeal for a larger audience for his radio show (and attention on himself). That corporate social responsibility would function as the corrective also surprised me, for CSR is typically merely marketing, window-dressing, or for better public relations.

The full essay is at "Corporate Social Responsibility Countering Rush Limbaugh."

E.U. Staving Off War: Statehood for Serbia

On March 1, 2012 when Serbia formally became a candidate for statehood in the European Union, it had been over 50 years since a state was added to the U.S. So from an American standpoint, watching the E.U. expand “in real time” from “across the pond” might be like a person in our solar system watching the unfolding of a new solar system light-years away and thinking, “So that is how it must have looked when it happened here.” Of course, the accession of additional states in the E.U. reflects the distinct time and culture of twentieth and twenty-first century Europe rather than of the world in the late eighteenth century. Even so, certain commonalities can be discerned.

The complete essay is at Essays on Two Federal Empires.

Corporate Legal Personhood in the Kiobel Case

In Kiobel v. Royal Dutch Petroleum, the U.S. Supreme Court waded into the murky waters of corporate legal personhood, at least potentially, in hearing oral arguments in late February 2012. The issue in the case is whether corporations can be held liable to the extent that they are complicit in a foreign government’s human rights abuses. Legal personhood would say that they could be. This would represent an obligation that goes with legal personhood. The question is whether the justices who conferred in the Citizens United decision the right of corporations, based on their legal personhood, to make unlimited political donations would also be willing to view obligations as “part and parcel” with such personhood. If not, then legal persons, unlike human persons, would have the benefits of personhood without any of the obligations—an oxymoron to corporations to be sure. In other words, such an asymmetry would render the legal personhood doctrine itself as akin to a one-sided coin—which cannot exist, let alone stand.

The full essay is at "Corporate Legal Personhood."

Prognosis for the Chinese Economy

At the end of February 2012, the World Bank released its “China 2030” report in Beijing. The bank’s president, Robert Zoellick, said that China’s economic growth model is unsustainable, so significant reforms are needed. The report projects growth down to five or six percent annually by 2030, down from the ten percent annual growth in the thirty years up to the issuance of the report. Given the nature of the reforms, the Chinese government officials have their work cut out for them.

The full essay is at "Prognosis for the Chinese Economy."

Ailing the E.U.: Unbalanced Federalism and the Euro

Lest it be thought that the economic safety net for the neediest led some of the E.U. states into excessive public debt toward the end of the first decade of the twenty-first century and beyond, the existence of some counter-examples suggest that the actual culprit was misapplied modern federalism. In early 2012, Sweden still had a very generous welfare state and yet had the fastest economic growth of any E.U. state. Leaving Malta and Cyprus aside, ranking the 15 E.U. states that were using the euro at the time by the percentage of GDP that they were spending on social programs before the debt crisis shows that of Greece, Ireland, Portugal, Spain and Italy, only the latter was in the top five—and with a welfare state smaller than that of Germany. In other words, an economic safety net for the poor does not necessarily translate into unsustainable government debt.

The complete essay is at Essays on Two Federal Empires.

Moral Hazard in Mortgages

“The cherished American ideal of self-reliance has a flip side”[1]  Before getting to the implications, or flip side, I want to fill out what informs this ideal. One could add to it the ideological stance that came into its own in 1980 with the election of Ronald Reagan, who declared that government is the problem. This implies that government should be minimized, and otherwise corrected as much as possible. Government is hardly to be viewed as the solution. This is the legacy of the Kennedy assassinations of the 1960s, the Vietnam War, and Watergate as well as Ford’s pathetic “WIN” buttons and Carter’s micromanagement and failure in regard to the hostages in Iran. I was not old enough for the Kennedys’ truncated optimism (and that of Martin Luther King) to resonate; I knew the political (and economic) pessimism of the 1970s and the energizing “fix it” mentality of the early 1980s. Of course, Reagan’s “new federalism” failed, as did his aim to balance the federal budget, and the jury is still out on whether “peace through strength” pushed the USSR off the cliff.

The full essay is at "Moral Hazard in Mortgages."

1. Shaila Dewan, “Moral Hazard: A Tempest-Tossed Idea,” The New York Times, February 26, 2012.