Any resemblance to current members of the SELS council is purely coincidental.
Any resemblance to current members of the SELS council is purely coincidental.
5

“Mighty In Their Day:” Reflections on the 9th Annual Empirical Legal Studies Conference

In Tolkein’s legendarium, the 9 rings of power were given to mortal men as a means of their corruption.

“Those who used the Nine Rings became mighty in their day, kings, sorcerers, and warriors of old. They obtained glory and great wealth, yet it turned to their undoing. They had, as it seemed, unending life, yet life became unendurable to them. They could walk, if they would, unseen by all eyes in this world beneath the sun, and they could see things in worlds invisible to mortal men; but too often they beheld only the phantoms and delusions of Sauron. And one by one, sooner or later, according to their native strength and to the good or evil of their wills in the beginning, they fell under the thraldom of the ring that they bore and of the domination of the One which was Sauron’s. And they became forever invisible save to him that wore the Ruling Ring, and they entered into the realm of shadows. The Nazgûl were they, the Ringwraiths, the Úlairi, the Enemy’s most terrible servants; darkness went with them, and they cried with the voices of death. — The Silmarillion, Of the Rings of Power and the Third Age, 346.

The fate of those holding one of the Nine struck me as a useful starting off point for my review of the Ninth Empirical Legal Studies Conference. [For previous installments in my CELS recap series, see CELS III,IV, V, and VI, VII, VIII.1, VIII.2]  The ring-of-power story is apt for several reasons.  ELS is waxing — we’ve obtained “glory and great [relative] wealth,” yet our methods are often described as inscrutable, as we see “things in worlds invisible to mortal men.” One well-known law blogger and sci-fi geek repeatedly has claimed that we behold only Sauron.  Ultimately, there’s a fairly decent argument, based on this year’s conference, that our thraldom — to machine learning — is nigh.  But putting aside the obvious parallels between the world’s leading legal empiricists and Angmar, the witch-king, there’s a far more pressing reason to use the 9 rings as a hook. Multiple sources told me that they found last year’s two-part recap to be “boring” or at best “workmanlike,” asking for more “made-up anecdotes” to spice it up.  So, off we go to Berkeley.

To start, let’s acknowledge the obvious. The West Coast is terribly distant from the home schools of most of the conference’s attendees. (I can’t prove that with data, but I thought this was exactly the kind of unsourced gossip that my readers wanted to see here.)  That was especially true for roughly 200 attendees from the Max Planck institute & the entire faculty of every Israeli law school.  The weather rendered the long trip tolerable, but only just.  Why not bend to reason and just hold a future conference in Germany or in Tel Aviv? Certainly, the conference is now decidedly more international in scope than it was only a few years back.  Was this the result of a maturing discipline, rapidly falling domestic travel budgets, or some unknown missing variable?  Other than the location, which they couldn’t help and probably were proud of, as West Coasters tend to be, the organizers (Anne Joseph O’Connell and Eric Talley) were magnificent and deserve credit for pulling off an enormous project without a hitch.

I arrived in time for both plenaries the first day. In a session on The Future of Big Data and Social Science, I learned that it’s much easier to do social science research when pesky IRBs don’t stand in your way. Though, given recent events, maybe IRBs only get in your way if you bother to tell them you are working on manipulating the political process with your purloined state seals.  In Evidence on Income and Wealth Inequality, Emannuel Saez pitched the utility of very high marginal tax rates as the (only?) solution to persistent and rising inequality. When pushed to articulate whether and how inequality was a social evil, he not surprisingly responded with a market-based argument: i.e., his co-author’s book sales demonstrated the issue’s political salience, and, consequently, the question’s irrelevance.  I thought this was a rather chippy answer, though at the end you have to give it to him.  It may be the least read popular book of the last fifty years, but that’s a ways better than the least read unpopular book!

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5

Does King v. Burwell Present Constitutional Difficulties?

Here is an interesting point raised in this piece by The New Republic.  If the Court interprets the ACA to say that subsidies may go only to states that set up exchanges, then wouldn’t that raise a Spending Clause issue under South Dakota v. Dole and NFIB v. Sebelius?  Maybe that use of Congress’s spending authority is too coercive (whatever that means) because the subsidies are large and a state would suffer a lot if they had a health insurance system without federal subsidies while their neighbor had one with subsidies.

Mind you, I can see why what Congress may have done with the ACA subsidies is constitutional, but that’s not the question.  The question is whether the challenge to the Act raises “constitutional difficulties” that should be avoided by not reading the Act as providing for conditional spending.  I’m not sure what to think about this yet.

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The Flawed Foundations of Article III Standing in Surveillance Cases (Part III)

In my first two posts, I’ve opened a critical discussion of Article III standing for plaintiffs challenging government surveillance programs by introducing the 1972 Supreme Court case of Laird v. Tatum. In today’s post, I’ll examine the Court’s decision itself, which held that chilling effects arising “merely from the individual’s knowledge” of likely government surveillance did not constitute adequate injury to meet Article III standing requirements.

Then-Secretary of Defense Melvin Laird Sharing a Light Moment With President Nixon

Then-Secretary of Defense Melvin Laird Sharing a Light Moment With President Nixon

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6

The Roberts Convention

When I think about NFIB v. Sebelius, my understanding of what Chief Justice Roberts did was to say that in an election year the Justices appointed by one political party should not strike down the signature legislation of the other political party.  I have no idea what the Chief Justice thinks that the Chief Justice did two years ago, but how would what I just said apply to King if the decision is 5-4 against the Administration.

Well, 2015 is not an election year, and King would not strike down the Affordable Care Act.  But is an adverse ruling tantamount to striking it down given that Congress will not do much in response?  I don’t know.  I get different views on that from health law experts.  Some say this would be crippling, others say not so much.  One would think that the briefs will try to convince the Chief one way or the other on this–that matters as much as the technical aspects.

One other note–Paul Krugman’s column in today’s NY Times today on King is the liberal equivalent of a Rush Limbaugh tirade.  I don’t have time to go through all of the flaws.  I love reading him and think his economic views are spot on, but on this one he doesn’t know what he’s talking about.

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American Founding Son

I see Amazon is temporarily out of stock of my John Bingham biography, but don’t let that discourage you from buying the book.  (Yes, this is shameless self-promotion.)  More substantive posts about King coming tomorrow.

3

Piketty’s Capital & the Continuing Pull of Macroeconomic Theory

One of the important points of Thomas Piketty, Capital in the Twenty-First Century is to undermine the use exclusively of the long prevailing macroeconomic theories focusing on national economies called “the Chicago School.” Saul Levmore, in a review of Capital forthcoming in the Michigan Law Review, delivers what should be a devastating blow to macroeconomics as the only way to describe how our society works if, as Piketty shows, that in the long run the return on capital exceeds economic growth, r>g. In a nutshell, Piketty’s microeconomic view shows that macroeconomic theory simply fails to describe reality. Levmore describes how macroeconomic theory would predict that in the long run competition for capital would reduce its rate of return to close to the rate of economic growth: “If the rate of return to capital is high, then there should be more investment in capital. Individual can be expected to save more and to defer consumption. . . . . But as high returns attract capital, opportunities to earn high returns ought eventually to diminish, and decreasing returns should be expected. Moreover, if capital remains expensive, because its suppliers need to be paid high returns, then there is room to substitute labor for capital. This demand for labor ought to increase g. Piketty’s response to this doubt about the long-term claim regarding r>g is essentially to report that it simply had not been so. . . . [D]ata do not lie. . . . At every turn it is useful to remember that this is a thesis driven by data rather than by theory.”

Levemore goes on to describe how macroeconomic theory would predict that the initial very high returns to hedge funds and their managers would, again in the long run, be reduced by competition. But, he says, the continuing “stratospheric compensation of hedge-fund managers is more difficult to rationalize [using Chicago school macroeconomic theory]. It is possible that in the beginning there were some gifted managers who could find extraordinary investments, but with thousands of funds and trillions of dollars in the industry, the reality of efficient market prevails.” The attraction to hedge funds should create competition that reduces the earnings of their managers. But Levemore concedes that Piketty’s microeconomic data shows that it hasn’t and likely won’t absent some enormous disasters like another World War.

After setting forth such a radical critique of macroeconomic theory – that it does not describe reality — Levmore fails to take the next step of asking why marcroeconomic theory does not hold up. Perhaps that simply indicates the continuing hold that Chicago School macroeconomics has over how we all think. That economic ideology is the prevailing paradigm that has a powerful hold on how we think. Through sizable investment by big business and the very wealthy in Milton Friedman’s macroeconomic theory, the prior Keynesian microeconomic paradigm was replaced in the U.S. and also more broadly. While contesting data don’t lie — the prevailing macroeconomic theory fails to describe the real world — it is still hard to see and understand a new paradigm that replaces the existing ideology because it does so much better at describing reality.

In some sense, Piketty may make seeing the new paradigm more difficult. His characterization of capital as things – cash, corporate stock, buildings, etc. – fails to understand its essence. Capital is power. No only economic power, but also social and political power. In The Rise and Decline of Nations, Mancur Olson describes how special interests groups organize to capture power to serve their own interests. Olson’s Logic of Collective Action describes how small, focused groups are more effective than large, more diffused groups in being effective. In the late 1960s and early 1970s, the U.S. Chamber of Commerce directed a campaign for it to become such a group. Future Supreme Court Justice but then Chair of the Chamber’s Commerce Committee called on “business to mobilize politically: Strength lies in organization [and in] the political power available only through united action and national organization.” Chicago School macroeconomic theory triumphed very broadly and the public policy decisions made following the Reagan Revolution continue to reflect that triumph of what Piketty shows is theory over reality.

Certainly a work of such broad scope and in depth presentation of data from 20 countries over almost two hundred years calls for scrutiny and critique. Admitting “data don’t lie,” but then falling to acknowledge how devastating that data is to the prevailing economic paradigm that has helped to bring our world to such a precarious situation, while understandable from a psychological point of view, does not seem to advance very far the project of what to do about the alarming level of growing economic inequality in an economy that is not growing except for those at the very top.

 

5

The Most Important Statutory Case?

Today I was thinking that King could be the most important statutory case decided by the Supreme Court.  How many other candidates are there?  The early cases under the Sherman Anti-Trust Act come to mind (Northern SecuritiesStandard Oil), and maybe one or two involving the Civil Rights Act of 1964.  Anything else?

UPDATE:  I suppose Ex Parte McCardle was more important.

13

King v. Burwell-The Gruber Tape

Yesterday I said that my view is that Congress did not intend to use subsidies as a carrot for states to create exchanges under the ACA.  What is the best argument on the other side?  The answer is that Jonathan Gruber, one of the architects of the law, said in 2012 in a public Q&A that the subsidies were a carrot.    Gruber now says that he misspoke.

I have significant reservations about relying on this statement.  First, is this in the record?  Thus, can the Court consider this at all?  Second, even if it is in the record, Gruber did not give testimony in the District Court.  Maybe he is lying now when he says he made a mistake.  Maybe he is telling the truth.  I don’t know.  The way we figure these things out is through a fact-finder.  The way not to do this is through appellate briefs.

 

5

King v. Burwell

The blockbuster case of this Term (depending on the timing of the next cert. petition on same-sex marriage) is the case granted today that could cripple the Affordable Care Act.  I’ve always thought that the Supreme Court would take this (nice try–DC Circuit en banc) and that there is a good chance that the Administration would lose there.

What about the question of who should win?  The most plausible explanation of the contested language is that Congress did not intend to limit the subsidies to state exchanges.  Why does the statute say that then?  Because Scott Brown was elected in a special election to fill Ted Kennedy’s seat.  This deprived Democrats of their filibuster-proof majority in the Senate.  Thus, the final bill was passed in the Senate through the reconciliation process (which only requires a simple majority).  There was no conference committee or the usual procedures to fix errors in the bill.

What should a court do about this?  The language about state exchanges is not ambiguous.  The problem is that it is inconsistent with the rest of the statute, the intent of Congress, and could lead to an absurd result.  Supporters of the Act are trying to make that an ambiguity argument because that gets the IRS interpretation Chevron deference.  I am  skeptical about this argument.  And normally if the text is unambiguous then you do not look at the legislative intent or anything other than the possibility of an “absurd result.”  So this may end up being the point on which King turns.