Of Compromises and Congresses

The beginning days of 2015 have brought the convening of a new American Congress.  It is fair to say that expectations and skepticism are high. 

Both are merited.  Our Constitution was inaugurated with high expectations, not that the end to all problems was at the door but that the means were available to deal effectively with the problems of government for the new nation.  The people who wrote the Constitution and those involved with implementing it (many the same people) were also deeply skeptical of government, including the one that they had just created.  Memorable and personal experiences had shaped their skepticism.  For that reason, the adoption of the Constitution had been a close thing, the opposition coming chiefly from those who thought that it imposed too much government on the people.  There may have been some contemporary views that the proposed national government would be too weak and light, but I have not found any examples.

No surprise, then, that an early use of the new Constitution was to adopt the Bill of Rights—a set of fundamental rights to protect individual people from their government.  If this new government were really self-government (a misconception reflected today in such bromides as, “Don’t worry about the national debt, we owe it to ourselves,” and “we should not fear the government because we are the government,” as well as much similar foolishness), then these first ten amendments would all be unnecessary.  They have since proven to be very necessary, sometimes breached by our government, but more often employed to preserve and protect us from government offense.

Much as with the convening of the First Congress in 1789, the 114^th Congress convenes after a troubled period of bad government.  Hopes and wishes abound that errors can be corrected, freedoms restored, troubles addressed.  As then, so today patience is in order.

A great virtue of our Constitution, an intentional feature, is that no one person can do much, for good or ill, in the federal government.  It takes a lot of people cooperating together to get things done.  Both Houses of Congress, usually with significant majorities, must agree to identical—word for word identical—legislation for it to be sent to the President, who must agree enough to add his signature to make it law.  And then the President and his colleagues in the executive branch must actually execute the law, which as we are seeing with this President is no sure thing, despite a solemn oath to do so.

All of that coming together of many people, with varying ideas and backgrounds and interests, seldom happens quickly.  For a people who do not need a lot of laws and direction from government to know how to live their lives, that is a fact to be celebrated.  As the Founders envisioned, making law requires compromise and accommodation of the many interests of the many who compose our great nation.  That takes time, as it should. 

It is a mistake to banish the use of compromise from republican government.  Those who would eschew compromise in our Republic would doom us to the fate of the Roman Republic.  The members of the Roman Senate lost the ability or willingness to compromise.  In so doing, they were doomed to inaction—not just slow deliberation—in the face of crisis, followed by reliance upon dictators, whom they fancied they could limit if not control.  They sometimes chose wise men, sometimes they trusted their liberties to demagogues, invested with nearly unilateral authority for an entire year.  The Republic and Roman freedom regressively devolved into the rule of the Caesars.

I understand the impatience that many have with compromise, people who would wish bold and decisive action in response to the would-be Caesar currently in the White House.  To these I would say, do not despair of the strength of the Constitution, even as the chief executive seeks to violate it.  In such times strengthening the Constitution and reinforcement of its checks and balances are the orders of the day, not further erosion of accommodation and compromise that have held our nation together (even through a Civil War) for two hundred years and more.  It is true that some compromises are bad; despotisms or anarchies are not much good.

One of the most important compromises involves idealism and realism.  American legislation requires a marriage of idealism and realism.  Idealism can offer the vision of a free and prosperous nation and the inspiration to action to protect and promote our liberties.  Realism, when operating in the light of idealism, focuses our work on what can be achieved now, without exhausting our energies and resources on quixotic quests that may do little more than tear the national fabric.  Realism would teach that much of the policy errors of years will take years to unravel.  With idealism and realism together, we can know what can and should be done today to make things better and get national policy moving in the right direction.

While a realistic view of the doable is essential to good legislating in a Congress of free men and women, the key and fundamental principles of our idealism help us discern a good compromise—one that makes things better and enables further progress—from a compromise that walks us closer to the abyss.  President Reagan made many compromises, but he had a vision and knew where he was going, each compromise uniting our nation for more prosperity, greater freedom, and stronger security.

We should rejoice that no one in the Republic by himself can bring about much change, however well meaning.  That virtue of our Constitution is why it has taken many steps and many mistakes to come to the many calamities our nation now confronts.  In the same way, because of this Constitution, it will take seemingly many steps along the way to optimal answers.  Every reason to be about the work and not tire of it.

Of Presidents and Derelicts

Barack Obama is no fan of the Constitution.  He has been known to criticize it for its focus on limiting government, for telling governments what they can and cannot do.  He prefers a Constitution that focuses more on telling governments what they should do, at least telling governments to do what he would like, including seeing to the “redistribution of wealth,” or what he calls elsewhere “redistributive change.”

Of course, that is a mischaracterization.  Not a mischaracterization of Obama’s views but of what the Constitution says.  It does limit government, but it also gives government specific responsibilities and the power to exercise those responsibilities.  Article I, Section 8 provides a very clear list of the federal government’s duties.  It is noteworthy that those enumerated responsibilities and powers are in the Article that establishes the Congress.  The list includes such things as providing for the common defense, borrowing and paying government debts, regulating foreign and interstate commerce, establishing standards for weights and measures, and so forth.

There are plenty of other provisions that limit the powers of the government and how it operates.  The Constitution is a balance of governmental duties within a structure intended carefully to limit the government.  As a limited government our Republic has prospered.  It has struggled either when its duties were neglected (as in the days of President Buchanan, who did nothing while he watched state after state rebel from the Union) or when the limitations have been eroded (as we have witnessed through much of the twentieth century and in the first 14 years of the twenty-first).

The President has specific powers and duties, too, nearly all of which are carefully linked with the role of the Congress.  For example, while the President does not make the laws—Article I, Section 1 gives “All legislative Powers” exclusively to the Congress—the President is authorized to make proposals to Congress and has the authority to veto legislation (but not change it) that Congress has approved.  Once an act of Congress becomes law, the President then has the explicit obligation to, “take Care that the Laws be fully executed” (Article II, Section 3).  

Note the words, “fully executed”.  The President takes an oath to fulfill those duties, and nowhere in oath or Constitution is the President authorized to execute the laws only as much as he likes or agrees with them.  Once something has become a law, the President may not set aside this or that part of the law or decide that he will only enforce the law so far.  His obligation is to take Care that the laws are fully executed.

Average Americans may not like this or that provision of law, but we are not at liberty to ignore any law that applies to us just because we do not like it.  The President is not exempt from that common responsibility of all citizens, either. As the chief government executive, who sought to hold his high office of public responsibility, he is even more obligated not only to obey the laws but to execute them, fully.  The President may not make the laws, he may not amend the laws, he may not change the laws, and he may not disregard the laws.  His duty is to execute the laws, and when he does not he is derelict in his duties. 

This is all in accordance with the important division of labor, the separation of powers that the Founders put into the very structure of the Constitution to combat the tendency of all humans to abuse power once it comes into their hands.  By dividing the power of government among three separate but coequal branches, dividing legislative power even further between House and Senate, and yet again separating government power between federal and state governments, the Founders went to clear and elaborate lengths to create checks and balances. 

Under the American system of government no branch, no person, no group of people in government, are to be able to do very much on their own without getting the other elements of government to go along.  Where they are not able to agree, where there is no consensus, for the safety of our freedoms government is prevented by constitutional law from moving forward unless substantial consensus among the different branches can be reached.  Those checks and balances again and again, throughout the more than two centuries of our Constitution, have forced the very human people in government to revisit their differences and come to terms with one another, however much they may disagree and be disagreeable.  There is safety for you and me in that.  And it helps keep our Union together, repeatedly forcing our leaders (and the parts of the nation that they represent and whose authority they exercise) to work with one another, like it or not.

Recently, President Obama has expressed impatience with the Constitution’s checks and balances.  After all, he personally, in and of himself, embodies an entire branch of government.  The other branches, Congress and the courts, have many different people with a messy variety of ideas.  President Obama complains that Congress cannot decide what it wants to do as quickly as he can.  In his view, why wait? 

By design, Congress of course has something of a multiple personality.  It is a gathering of elected representatives, reflecting the diversity of views among the people of the nation.  Appropriately, it takes time to build a consensus that accommodates those views, as it should.  But President Obama cannot wait.  He sees the need to accommodate no ideas other than his own.  He has decided that on this issue or that—today it is immigration laws—there is a limit, defined by himself, as to how much time Congress can take to consider things.  When time is up, he, the executive branch, will take the matter into his own hands, and pretend to the authority to do it.

His tool of choice today is to abjure his duty to execute the laws fully and instead to execute them partially, just to the extent and manner that suit his own desires, as he engages in another round of redistributive change.  That he is endeavoring to violate rather than execute our national, founding law, and his constitutional oath of office, apparently does not trouble him.  It is the Constitution itself that troubles him. 

But from where does he think he gets his authority to do anything.  When he breaks the Constitution, does he not break his very authority to act in the office that the Constitution created?

Of Closed Governments and Coming Together

Battered and bruised and stretched and torn, our Constitution still has life in it.  One of its central principles is that no one person can do much by himself in Washington, for good or ill.  We are watching that play out in this year’s appropriations process.  We see that it is impossible for one man, the President, to make a new law.  It is similarly impossible for one House of Congress, whether Senate or House of Representatives, to do so alone.

Under the Constitution, all appropriations bills must originate in the House of Representatives, where they are given their initial shape and substance.  Next, the Senate must concur or amend.  If the Senate chooses to amend, the bill goes back to the House, which can either agree to the Senate amendment, disagree, or disagree with a further amendment.  If there is disagreement, representatives from House and Senate can meet to resolve those differences.  If they do and succeed, then each House, first one and then the other, passes the bill, after which it is sent on to the President.

It is still not a new law.  According to the Constitution, the President may not amend the bill that has passed both Houses of the Congress.  He can choose to sign it, making it a law.  It does not become a law unless he does.  He can choose to veto it.  In the latter case it goes back to the Congress, where it can only become law if both Houses override the President’s veto.

I lay this process out in some detail, because to listen to the institutional media and most of the pundits you might think that they have all forgotten, or never learned, how the constitutional process of making laws works.  It is not an easy process.  In fact it was meant to be difficult.  Some seem to wish it were easy, at least for enacting the policies that they favor.  They would wish to make one or more constitutional parties to law making redundant and of no separate account or purpose other than to do the will of their favorite other.  They should, instead, take comfort that it is easier to defeat policies that they oppose.

The genius of the Constitution for making laws is that it requires three separate parties of people, sometimes with very different views, to come together to make anything a law.  The Founders made it difficult because they were not very fond of new laws.  They knew that an abundance of laws could mean a scarcity of freedom.  And so it is today, but it has taken over 200 years to build up the awesome pile of laws that regulate so much of our lives, and yet it still is harder to make a new law than many would wish.

Our Constitution requires that a lot of people have to work together to make a new law.  When they do not, nothing happens.  That is why much of the federal government has run out of money and has “shut down.”  A new law is needed to appropriate the money for these shuttered parts of the federal government to open. 

They will continue to be without operating money until the elected representatives in the House and Senate and the President work together to make a new law.  The Constitution forces them to work together.  Nothing will happen until they do, whether that takes a day, a week, or longer.  The Constitution requires sufficient cooperation for law making.  For either House, or Senate, or President to be able to make laws without the other would impose the tyranny of one set of views over the rest.  The Constitution will not allow that.  The Constitution forces a meeting of the minds, either by persuasion or by compromise, or in practice some of both.

The Constitution is a beautiful thing.  I rejoice in it.  I can be patient for a while as it does its work and forces our elected leaders to come together.  The issue is not keeping parks open. The issue is preserving our freedom and our society.  The Constitution still has some power to do that.

Of American Exceptionalism and Our Chief Executive

Two colleagues and I recently had an Internet conversation.  The first brought up the question of American exceptionalism, wondering what it really was, in what it consisted.  Two of us responded with some ideas.  You may find the brief discussion interesting, as I did. 

I would note that this is a real discussion on a public forum.  While I have edited the segments down a bit, I have not inserted new material or changed any of the thoughts expressed.  I give only the first names of my two colleagues.  While this took place on a public forum, I did not ask them to repeat their comments here.

Neal:  American exceptionalism is demonstrated as American values and beliefs projected to the world with Washington, D.C. policies.  Therefore, American exceptionalism is arrogance. This is what I would believe if I allowed myself to accept conventional wisdom.  But I’m settled on understanding exceptionalism to mean that ordinary individuals doing extraordinary things, even beyond their own expectations.  And the reason why it is called “American exceptionalism” is because the country was founded on principles of liberty, freedom, and structures that were intended to defeat tyranny.  This was unique in the world and history at the time of the nation’s founding.

So I conclude that American exceptionalism is something that is not collective and is something that cannot be demonstrated by any policy that comes out of Washington, D.C.  American exceptionalism is something that can only be demonstrated by an individual.

I have trouble believing American exceptionalism was the deliberate intention of the Founders, because I see slavery in the Constitution.  How is it possible to reconcile the concept of American Exceptionalism with the tyranny of slavery?

Wayne Abernathy:  Neal, perceptive questions.  I think that when considering American Exceptionalism—and it is very real—you have to take modern Washington and collectivism out of the equation.  Our current collectivism, which is at the heart of much of what Washington does, is a throwback to what people came to America to escape. The basic idea of American Exceptionalism—which even preceded our independence and our constitution—was that this new land was a place where the worth of the individual, protected by the rule of law, prevailed.  While there were elements of those ideas in much of Europe, they struggled there against monarchy, class systems, and other means of imposing collective will on individuals.  The European ruling classes failed in their efforts to impose collectivist and class rules in North America, but they tried very hard.

I would dispute your point about slavery.  The U.S. Constitution did not create slavery.  It took the thirteen states and brought them as they were into a new foundational rule of law based upon individual liberty.  While slave states entered into that constitutional system and brought their slavery with them, they entered into a system that would not long tolerate slavery.  Before four score and seven years had elapsed most of the slave states recognized that if they stayed under the U.S. Constitution they would lose slavery through the operations of that Constitution, and they would lose it through peaceful means.  That is why they chose to try to leave the Union and defend slavery by force of arms.  The Constitution triumphed—or the people within that constitutional government did—and defeated both secession and the defense of slavery by force of arms.

All of those were elements of American exceptionalism. We risk American exceptionalism to the degree that we embrace the age old practices and policies of group rights, class structure, collectivism, and other policies that undermine individual liberty and the rule of law.

Honza:  As an immigrant, I always took American Exceptionalism to be what our first political generations meant it to be—the idea that we are not a collection of tribes or a particular trading depot that elbowed its way into nationhood so much as people united by a very specific set of ideas:  life, liberty, and the pursuit of happiness (including but not limited to property).

Contrast us to Saudi Arabia or any nation with an established faith, or even, arguably national countries like India or Germany, where group membership matters more than who one is.  That’s our genius, it’s why we perform, decade in and decade out, remarkably well compared to other places and why we’re always anxious, as we are now (thanks Wayne), that we’re becoming a nation where who one knows matters more than what one knows.

Neal:  Thank you guys for offering corrective perspectives on this wildly misunderstood idea of American Exceptionalism.  I first got interested when listening to Rush. I thought he was going to define it in a quick sentence, but there was a bunch of table setting.  But Rush gave us more establishment of context.  I was still not certain I had correctly grasped what he defined.  

A whole bunch of people use the phrase “American Exceptionalism” in a very wrong way, and I think it must require an individual effort to get yourself beyond the conventional wisdom meaning. We need somebody more eloquent than Obama to explain it to the American people.

Wayne Abernathy:  I don’t think that Obama believes in it.  He offers a lot of rhetoric—and policies—rooted in the idea that America is just like everywhere else, or where it isn’t it should be.  The United States was founded on the belief and vision that this was a place that could and should be different, that could break the patterns of oppression that had prevailed throughout history and all over the Old World.  By and large, the Founders succeeded, though it is a work in progress and is constantly challenged at home and abroad.

I think that it is that difference, that respect for the individual and for the rule of law, that makes us the target of ideologies of slavery, like the Islamists and the socialist tyrannies.  I am not sure that Obama recognizes that.

Neal:  Comparison to Saudi Arabia brings to mind a question I toyed with:  would the mundane act of a woman driving a car without fear of punishment be considered an example of American Exceptionalism?

Honza:  Neal, I think Wayne is correct. The Canadian rock band Rush (at first I thought you were talking about them rather than the radio host) is less likely to blame others’ poverty and repression on America’s prosperity and freedom than Obama is.  Obama hasn’t really thought about the idea of American exceptionalism, isn’t interested in it and just knows he’s against it without understanding it.

Of Liberty and Breaking the Rules

Sometime in the 1990s, before the days of YouTube, I received a homemade video from a man who owned and operated a small business near Dallas, Texas.  He ran a landscaping company, had a handful of employees, and, according to the video, was in violation of some rule or regulation of the federal government every day.  He did not intend to be in violation.  He did not want to be in violation.  As he explained, it was just impossible to comply with all of the requirements. 

The video began with the owner sitting behind his desk, explaining the problem.  He stood up and took the camera with him as he walked through different parts of his operations, pointing out what was required of him, his business, and his colleagues. 

In the main office he described the employment rules, the tax laws, the related mandates and regulations that applied because he had hired other people.  He walked over to the equipment and described the numberless “safety hazard” regulations, from warning notices that had to be glued beneath the seats of garden tractors, to how he and his workers used, carried, and stored their tools, gear, and machines, and what they were supposed to wear while using them.  He discussed the multitude of formal requirements for managing and applying the fertilizers, pesticides, and other chemicals that are commonly used in his business, including their handling, storage, clean up, and their transportation.  Speaking of transportation, because his company used trucks and other vehicles, there was another long list of rules and regulations that applied to that part of the firm.

Added to all of this, there were numerous reports, applications, notices, and other papers to be filed with a variety of agencies on a regular basis.  When he was through, he sat down again behind his desk and said, “I break the law every day.  I don’t intend to, but I cannot avoid it.  I can’t keep up with it all as long as I stay in business.”

How did we get here?  Is this America?  Is this the land of the free and the home of the brave?  Is this a land of freedom sustained by law?  It is an unknown America, too unknown to most but too familiar to people who run a business, especially the people who own a small company.  The rest of us see little of it, though perhaps we suspect it is there.  Some of us catch glimpses. 

In a large business it takes longer for the regulatory burden to become overwhelming.  For a while the boss can hire more people to help carry the load.  In the large firms of America there is a host of employees who produce no goods or offer any services to any customers.  They spend their careers complying with their slices of these federal rules, laws, and mandates so that some of the other employees can be involved in what the business is all about, providing something to a customer for which the customer is willing to pay. 

The customer may not realize that a large share of what he pays for he never receives; it goes to pay those people who work to keep the business in compliance with the government rules.  More than businessmen would be wealthier without this heavy, dead hand clamped on firms, factories, and farms.  The necessities and luxuries of life would all be a lot cheaper.  Or, another way to say it, we would get more of the goods and services we pay for, less of our money sunk into these hidden costs for unproductive activity. 

America’s Founders sought to create a land of freedom, not dominated by government and the officiousness of government functionaries.  To them “unregulated” was a goal, not a criticism.  They also knew the danger of what could happen, even in America.  James Madison wrote, “It will be of little avail to the people that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood. . .”  (James Madison, Federalist no. 62)

And yet here we are.  What the Texas businessman faced in the 1990s has not become any lighter since.  When was the last time that you read the full text of a law?  Who has read the Obamacare statute, the Dodd-Frank Act, or any of the other voluminous, incoherent laws recently enacted, each written on more than a thousand pages?  For each page of law enacted by Congress today government bureaucrats write ten pages of rules and regulations, all of which are enforced as law though never voted on by anyone who himself has been voted into office by the people.

In the land of the free, whose founding document begins with “We the People”, why do we tolerate it?  One of the complaints against the king of England in the Declaration of Independence reads, “He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.”  And yet we have done the same to ourselves.  The Dodd-Frank Act alone created several New Offices and has already stimulated the hiring of more than a thousand new officers.

“I wear the chain I forged in life,” replied the Ghost.  “I made it link by link, and yard by yard; I girded it on of my own free will, and of my own free will I wore it.  Is its pattern strange to you?”

Scrooge trembled more and more.

“Or would you know,” pursued the Ghost, “the weight and length of the strong coil you bear yourself?  It was full as heavy and as long as this, seven Christmas Eves ago.  You have laboured on it, since.  It is a ponderous chain!”

(Charles Dickens, A Christmas Carol)

There was a time when the chains had to be broken to restore the rule of law.

Of the Rule of Law and the Separation of Powers

In the 1990s I was part of a congressional delegation to Argentina.  At that time the Argentine economy was growing strongly and steadily, inflation was low, the currency was pegged to the dollar, convertible 1-for-1.  Trade barriers were being lowered, commerce was booming.  I recall asking Argentines what could possibly darken what seemed to be a very bright future.  They were quick to reply:  “Here in Argentina we have no rule of law.  You can have no confidence in getting justice from the courts.”

That reminded me of Washington Irving’s observation on a European judge, from his famous work, The Alhambra:

It could not be denied, however, that he set a high value upon justice, for he sold it at its weight in gold.

Not long after that visit, the politics of income redistribution and confiscation threw the Argentine economy into turmoil, where it has remained.

I recently spoke with an economist friend of mine, who was waxing eloquent about the attractive monetary and tax policies in Bulgaria.  I remarked that this would probably invite foreign investment.  He replied, “No, there is no rule of law there.”

The point is that good economic policy cannot long survive inadequate legal safeguards.  Many businesses that made major investments in China, attracted by a market of a billion people, have learned that the lack of a reliable legal and justice system in China has undermined much of the business value they thought to find.  A similar story has been holding back investment and economic development in Russia.

Bringing that home, I would venture that concern for changing rules (or even lack of rules)—the substitution of arbitrary bureaucratic powers in Washington over objective rule of law—has been inhibiting more robust investment in the United States, a major cause for our current anemic economic recovery.

An ancient king in the Western Hemisphere, named Mosiah, warned, “because all men are not just it is not expedient that ye should have a king or kings to rule over you.” (Mosiah 29:16)  Because men are not consistently just, freedom has historically rested upon rule by law rather than rule by men.

Fundamentally, that was the very reason for the American Revolution.  Our revolution was based on the rule of law, an assertion of the rule of law, a response to violations of the rule of law by the English king and parliament.  Most of the Declaration of Independence is a lengthy litany of violations of law by the English rulers.  The Revolution was designed to take power away from man and men and rest it upon laws and rights, soon to be secured by a written supreme law embodied in the Constitution.  Any erosion in the force and effect of the Constitution is an erosion of the rule of law and of the freedoms that rely upon law for their defense.

The Progressive Movement that thrived about a century ago, and found a major advocate in the federal government in President Woodrow Wilson, aggressively proposed an alternative to the rule of law.  This program was the Rule of Experts.  Their new view—and it really was a very old view though they dressed it up in modern-sounding rhetoric—was that there are Benign People, Experts, who know the process of modern government better than most people do, to whom we can safely yield governing authorities. 

It sounds akin to the ancient theory of Divine Right of Kings, that the monarchs of the world are chosen by God and endowed with greater wisdom and perspective than the average man and woman.  To their benign expertise and fatherly care was to be entrusted the governance of the rest of us.

The modern Rule of Experts people have much the same view, that these experts were endowed by their universities and other sources of expertise with ability far above that of most, and it would be wise to trust ourselves to their benign care.  Not very democratic, and in fact these Benign Experts make no secret of their impatience with the Congress and other constitutional brakes on arbitrary authority.

As King Mosiah wisely pointed out that men are not always just, it is also appropriate to recognize that putting men in government does not make them any more reliably wise than the rest of us.  The American Founders thought to address this problem by dividing political power among not only three branches in the Federal Government but also by embracing the federal system of dividing government with the States.

The current regulatory structure and program of the United States rest heavily on the idea that Benign Experts should be entrusted with authority for many of the big questions facing Americans and for many of the much smaller questions, too.  That is certainly the structure of the Dodd-Frank Act, to offer one recent, prominent example among many.

Charles Calomiris, of the Columbia University business school, described the theory of the Dodd-Frank Act and related regulations this way:

The implicit theory behind these sorts of initiatives, to the extent that there is a theory, is that the recent crisis happened because regulatory standards were not quite complex enough, because the extensive discretionary authority of bank supervisors was not great enough, and because rules and regulations prohibiting or discouraging specific practices were not sufficiently extensive.

(Charles W. Calomiris, “Meaningful Banking Reform and Why it Is so Unlikely,” VoxEU, January 8, 2013)

This program of federal regulation has been imposed increasingly in contravention of the basic constitutional principle of separation of powers, by merging legislative, executive, and judicial authority in “independent” regulatory agencies.  The unelected federal regulator today decides the details and specifics of binding mandates, identifies violators of those regulations, assesses guilt, and applies penalties.

Taken together our current regulatory system, by merging rather than maintaining the separation of powers of the Constitution, is eroding the rule of law.  It is returning us to the age old practice of rule by men, with all of the potential for abuse of rights and freedoms, abuses that fill up most of the sadder pages of human history.

During the debate over the creation of the new financial consumer Bureau, Senate Banking Committee Chairman Dodd boasted that with this new agency people would no longer have to come to Congress for the enactment of new consumer laws.  The Bureau would take care of all that.

There are serious operational flaws—too often overlooked—in the program of governance by Benign Experts.  First, the regulators are not dispassionate umpires, limited to calling the balls and strikes.  These umpires are also players in the game, the federal agencies each having their own set of particular interests and incentives that they take care of first.

Second, reliance on Benign Experts assumes an unproven, undemonstrated level of knowledge, insight, and forecasting skills.  AEI President Arthur Brooks, in his book, The Battle, provides one of many examples of this flaw:

Federal Reserve economists were still forecasting significant positive growth and moderate unemployment in May and June 2008.  They believed that economic growth in 2009 would be 2.4 percent, and unemployment would be 5.5 percent.  What we experienced instead was negative growth, double-digit unemployment, and the destruction of at least $50 trillion in worldwide wealth.  No one can get the numbers exactly right, to be sure.  But getting them this much wrong certainly lends a whole new meaning to the expression ‘margin of error.’

(Arthur C. Brooks, The Battle, p.46)

It is not that regulators are dumber than the rest of the population, but they are no smarter either.  The regulatory problems are increasingly too great for any designated group of humans to solve. 

Third flaw, mission creep:  power attracts power.  Even if the tasks are too great, require too much knowledge, insight, foresight, and other skills in unachievable degree, the regulators still take them on, especially if the task increases the reach and influence of the agency.  

I offer two examples from an example-rich environment.

Basel III capital rules started from a simple idea, that banks all around the world should be subject to the same capital standards.  Capital (the financial cushion a bank carries against losses) is one of the three key elements of sound banking, the other two being liquidity and earnings.  These international rules did not remain simple.  Developed by an international team of experts from around the world, who labored on them for years, the rules number hundreds of pages, affecting the entire financial structure and business model of a bank, any bank.  Congress was not involved and has no particular role in approving the rules.  When exposed to public review they attracted thousands of comment letters expressing dismay that they are a bad fit for the U.S. economy.  In the end, though, the regulators can go ahead with what they alone think is best.

A second example would be the Federal Reserve.  One hundred years ago this year the Fed was created with a specific, identifiable, and rather narrow purpose, to provide liquidity for the banking system in times of financial stress.  Before long, the Federal Reserve gained control of monetary policy and built up the practice of controlling interest rates.  Later, it was given the task of promoting maximum employment.  Under Dodd-Frank the Federal Reserve’s role in supervising banks and bank holding companies was expanded to supervising any financial business considered to be significant for financial stability.  Each of these powers has drawn the Federal Reserve away from its narrow, objective task, to broad fields of subjective authority. 

Perversely, this expansion of authority into more judgmental areas is eroding the independence of the Federal Reserve, making it yet one more political player in Washington, with responsibilities that far exceed human ability to fulfill, but which reach to every business and every home.  The Fed’s prolonged policy of keeping short-term interest rates at or about zero has penalized all who save and live off of their savings, transferring trillions of dollars from savers to borrowers, the biggest borrower being the Federal Government, a policy decided by a small group of Washington experts.

I offer a partial but simple solution to point us back toward strengthening the rule of law and reducing our exposure to the rule of man and men, however expert they might be.  Return the lawmaking and the policy decisions to the elected representatives.  It is a messy process, but exactly the messy process that the Founders intended to preserve freedom from the encroachment of arbitrary and oppressive government.  The regulators, which are theoretically part of the executive branch, should be left with the duty of implementing the laws and policy decisions that the elected and accountable representatives make. 

If Congress were required to write the rules and mandates and delegate to the executive agencies only the execution, the mandates of government would be circumscribed by the limitations of a legislative body forced to be directly accountable for what it has wrought.  It is easy for legislators to complain about bad regulatory decisions, when all too often these are decisions that Congress never should have delegated to regulators in the first place.

We would still have laws and regulations, but the laws might be more direct and specific, and perhaps fewer and surely smaller.  We would probably not have Dodd-Frank Acts that number thousands of pages read by no congressman or Senator, containing a cacophony of half-baked ideas and multiple solutions to the same problem, all left for the regulators to sort out.  

And legislators might recall this caution, from Thomas Paine:

Laws difficult to be executed cannot be generally good.

(Thomas Paine, The Rights of Man)

Of Vice Presidents and Manners

One of the most moving scenes in the entire Harry Potter series of books by J.K. Rowling is the death of beloved headmaster, Albus Dumbledore.  A standard element of much good fiction writing is the presence of a character representing a deliverer, sometimes referred to by scholars of fiction as being a “Christ figure.”  Such a character in the novel serves as a touchstone of good, who is rarely the main character but is a steady and constant central person to guide and often deliver the main character from danger and evil.  Gandalf serves that role in the Lord of the Rings trilogy of J.R.R. Tolkien.  Albus Dumbledore fulfills that role for Harry Potter and his friends.

In the scene to which I refer, Dumbledore is on a balcony of a high tower, cornered, disarmed, and surrounded by merciless enemies impatient for his murder.  I quote just a few lines for my purpose:

            “Good evening, Amycus,” said Dumbledore calmly, as though welcoming the man to a tea party.  “And you’ve brought Alecto too. . . . Charming. . .”

            The woman gave an angry little titter.  “Think your little jokes’ll help you on your deathbed then?” she jeered.

            “Jokes?  No, no, these are manners,” replied Dumbledore.

            (J.K. Rowling, Harry Potter and the Half-Blood Prince, p.593)

Manners.  Perhaps they seem extravagant for a man facing sure death, but why not, why not retain high humanity in the last moments of mortality?  Outside of novels and in the real life where we live, what I find distressing is the absence of manners in places where they should be found.

A prominent example is the recent debate between the 2012 candidates for vice president of the United States, the second highest executive office in the land.  This is a lofty and important office, one of only two to which a man or woman ascends by the vote and permission of the entire nation.  Many vice presidents have gone on to become president.  A debate among these candidates is an important opportunity to help voters discern who would make the better government leader, deserving of their support. 

Respect for the electorate as well as each other would seem to call for courtesy and a display of good manners.  And yet the current, sitting vice president displayed very poor manners, frequently interrupting his opponent and openly laughing at serious arguments about serious subjects.  The assertion and presentation of views in public debate can be sharp and indeed critical of the views of the other, but courtesy to the electorate would allow them to hear each argument made fully and without interruption, and respect for the views of one another would create an atmosphere that fosters a thoughtful consideration of the issues.  Such manners were largely absent in the public conduct of the current vice president of the United States in this nationally televised debate.  I might add that the debate moderator, who should have encouraged better conduct, herself showed poor conduct, frequently interrupting each of the candidates to insert herself as a third participant in the debate.

Society exists only by respect that people have for one another.  We extend our courtesies that allow all of us with our own personalities and interests and characters to live in close proximity to one another and even to be ready to cooperate from time to time.  It tears the social fabric to undermine that civility.

About a year ago I visited Tokyo, one of the most densely populated places on the globe.  I was astonished at how relatively quiet the city was.  I do not think I ever heard a car horn sounded, though I witnessed driving practices that would have quickly provoked anxious beeping in the United States.  I asked my hosts about that.  All of the cars were equipped with horns, but I was informed that it would be considered discourteous in Japan to sound them other than for emergency purposes.  I am sure that Japanese drivers get on each other’s nerves as frequently as American drivers do, but the incidence of driver’s rage is significantly reduced by observance of this courtesy.

And then there was my recent visit to Johannesburg, South Africa.   There is a lot of hope that South Africa can play a major leadership role in the economic and social development of much of the rest of the continent, the poorest of all the seven continents.  The nation has a good head start on its neighbors, with a functioning representative government with free and competitive elections, laws supported by an independent judiciary, a diversifying economy, including much local industry, and a strong banking system. 

What surprised and depressed me was what I saw of South African homes.  Traveling throughout the city I did not see a single family home that was not enclosed in a concrete or fenced stockade, topped in barbwire, concertina wire, or even electrically-charged wiring.  During the day people seemed pleasant enough, but come nighttime, families retreated into their fortified compounds, however small.  Every nation has crime, but not every nation lacks the minimum of civility needed to allow people to sleep at night without dread of violent assault on their property and person.

I do not doubt that we can find similar zones in parts of American cities, but I have never seen anything so pervasive as what I observed in Johannesburg.  I am told that it was not racially based, given the history of difficult race relations in South Africa, but rather economically based.  Not only was there little respect for property among many in the population, but too little respect for each other.  I hope and trust that things are getting better there or will get better.

I fear what the erosion of respect for property and person might produce in the United States.  Kind words and practices of courtesy reinforce through our conduct our recognition of each other’s humanity.  What we witnessed in the vice presidential debate was a courser, callous style of human interaction.  We encounter similar scenes too often.  I pray that in places where respect and courtesy are lacking I have not seen the future for our society, or for the erosion of our society.  It is not a happy way to live.

Of Government and Getting What We Deserve

There is a theory that I believe but I am not sure how to prove (this side of the final judgment) that over time people tend to get the government that they deserve.  This idea comes to mind when I hear complaints in the public media about the Congress.  You have certainly heard them.  They come in various flavors, but they are the same soda:

• Why can the Congress get nothing done?

• Congress is unable to rise above partisan politics.

• The people in Congress seem so out of touch with the rest of America.

• Congress avoids making tough decisions.

You could surely add to this list.  The underlying theme is that the Congress is not doing its job.

These comments are a frustrating alloy of truth and silliness.  There is a lot that is right and wrong with the current Congress.  Who put these men and women on Capitol Hill?  With the exception of a handful of Senators appointed by their governors to fill temporary vacancies, and the few dozen congressmen who by order of the Supreme Court must be elected in districts where there really is no democracy (I refer to those from districts mandated by the courts to provide only minority representation), all of these congressmen and Senators were elected—by the people whom they represent.

I mention that to refer to both sides of the coin.  We, the people, put those people there.  The other side is, we the people can send them home.  That is a weighty responsibility, one that we cannot discharge faithfully by just complaining.  We cannot do our legislators’ jobs for them and be involved in all of the minor details of all that they do, but we can and must hold them accountable for the sum of what they do and for the general tone and direction of their actions.  To be successful we need to have a clear idea of what we want our representatives to do and be well educated about what they are doing—not just what they are saying.

One of the sillier comments I hear is the suggestion that we should “throw them all out.”  Is that true?  Is every single congressman and Senator doing a bad job?  Even a basic review of congressional action should tell us that is not the case.  On nearly all of the most important issues there is in fact quite a divergence of views and actions.  Again, our inescapable job is to figure out what is the right policy and look carefully at how our elected representatives are conducting themselves with regard to it.  We should weed the garden, not plow it under.

There are many policies and many issues from which to choose.  Let me suggest two.  The first would be the Constitution.  What have been the actions of our own particular representatives with regard to supporting and defending the Constitution and the rule of law?  Our current President has been active in undermining the Constitution and disregarding the rule of law, so this is not a theoretical issue.  What have our representatives been doing to combat voter fraud, to make sure that the executive branch does not spend money that has not been appropriated by Congress, or to prevent bureaucrats from telling law abiding people how to spend their money, run their businesses, freely express their opinions, or observe their religion?  There have been many other assaults on the Constitution by people in Washington.  As voters, we should be mighty touchy about any of those efforts and reluctant to vote for people who do not share our sensitivity about the importance of the Constitution and our rights as citizens.

The second issue I would suggest is economic growth.  We will never really get out of this recession (that feels depressingly like the 1930s) unless we place a top priority on getting the economy growing.  We cannot solve our budget deficit and federal debt problems without economic growth.  People forget that the few years that we had a balanced budget in the 1990s did not come by government action.  Congress and President were in fact surprised by the surpluses.  They came about because the economy grew more strongly than expected.  We should support those legislators who act like they understand that economic growth creates jobs and that economic growth is created by private initiative.  We should support those legislators who consistently vote to remove barriers to business creation and innovation and defeat those who do not.  Those barriers include higher taxes and increasing government involvement in business decisions and operations.

All of this will take work on our part.  We cannot expect to have legislators who work for what is right and wise unless we do our work to find and support those who do.  There are many of them in the House of Representatives and in the Senate today.  We need more of them.

I believe that people eventually get the government that they deserve, and I yet believe that we deserve better than we have and that the time has come to get better.

Of Lawlessness and the Constitution of the United States

Trivia question for the day:  What is the smallest national legislature in the world?  If you answered, the Supreme Court of the United States of America, give yourself 25 points and a chance at the bonus question:  What is the highest law of the land?  If you answered, the Constitution of the United States of America, subtract 50 points from your score and shake hands with the moderator as you leave the contest in polite and condescending disgrace.

If you are a student of the history of the United States, particularly of its founding, and if you are in addition a constitutional scholar, including some experience reading the writings of the writers of the Constitution, you can take some solace in knowing that your second answer used to be right.  It was right for most of the first 100 years of the history of the United States, and remained right for another 50 years or so after that, although things were already changing in the late 1800s.

In the latter part of the 1800s the Progressive movement, and its fellow travelers the Positivist legal scholars, asserted its voice in America with the notion that law was not at all really connected to natural law as the Founders believed and intended.  In the Progressive/Positivist view, law was whatever lawmakers wanted it to be, and that extended to how the Constitution was to be interpreted.  The Constitution was a collection of written words, words whose meanings were to be interpreted by the new supreme legislature, the Supreme Court, to accommodate the Progressive/Positivist agenda.

The whole idea of a constitution is that there are some fundamental, basic laws that do not change, or that change only by the specific decision and action of super majorities of the population (super majorities to ensure that the rights of minorities are safeguarded).  To preserve their integrity those fundamental laws are written down and taught and embraced from generation to generation.  In the United States, it was on the basis of written constitutions that our nation came together, first the Articles of Confederation, and later the Constitution.

The Constitution of the United States begins with the words, “We the People”.  All of these were new, exceptional ideas.  The approach at the time in the rest of the world was, “You the People”, with a despot, monarch, or some small group of people governing the rest of the population.  In America things were different, and the Founders sought to enshrine and perpetuate that difference within strong bands of a written constitution and the division of governmental power prescribed  and preserved by the Constitution.

It does not seem so different or exceptional anymore.  It seems that today the law, constitutional or otherwise, can be changed or written by five out of nine unelected people in black robes issuing their decrees from a Greek temple in Washington, D.C.  The rest of the 313 million who make up We the People have no more say about it.  That is tolerable, and even desirable if these nine, or the five of the nine, limit themselves to enforcing the laws and Constitution that the people themselves have established through constitutional process.  It becomes intolerable when they just make it up, as they have been increasingly doing since the 1930s.  That is not law.  It is tyrannical lawlessness.

This is very real to the 313 million who are expected to follow the dictates of this tiny legislature.  Under the influence of the lawless behavior of the members of the Supreme Court and their failure to uphold the Constitution, lawlessness and lack of respect for the Constitution are spreading throughout the American system of government.  In very recent years we have witnessed a narrow majority in the Congress, violating its own procedures, pass legislation that obviously violated the Constitution. The executive branch, suspected by the nation’s Founders as ever prone to plans to oppress the people, has exerted an increasingly cavalier attitude toward the Constitution.

These lawless acts themselves are not trivial.  They were explicitly designed to restrict the freedoms of the people, whether with regard to their healthcare choices, how they conduct their financial affairs, or how they find, develop, and use energy—all pretty fundamental to the way that the people live their daily lives.  Under the rule of law we would look to the courts (among other places) to uphold the law and turn back unconstitutional and thus lawless efforts to take away the rights of the people.  Too often lately we look to the courts in vain.  It is far from a sure thing these days that the Court will come to the rescue of the Constitution and the freedoms it was written to protect, witness the suspense that precedes each new decision.

The recent Obamacare decision is the latest and most painful insult to “We the People” yet to come from the Supreme Legislature.  For now, the Five have said that the Commerce Clause of the Constitution cannot be used to force Americans to buy health insurance.  No need.  The Five decided that the taxing authority can be used to force people to do whatever our leaders in Washington want us to do—although they failed to indicate which taxing authority was used. 

The Founders were chary with the taxing authority that they extended to Washington, putting strong walls and tight rules around its exercise.  Remember, it took an amendment to the Constitution to allow an income tax.  Obamacare is not an income tax, or any of the other constitutionally allowed taxes.  Yet a tax it is, now decreed by the five of the nine Justices, that can be applied to anyone—and the anyone is mostly younger adults—who choose in the future not to buy health insurance.  The Five did not say what we might next be forced by taxes to do:  that is just a blank that they have left for people in Washington to fill.

In the days when the Constitution was the highest law of the land one of its great defenders, Daniel Webster, declared in a pleading before the Supreme Court that, “The power to tax is the power to destroy.”  The Chief Justice of that Court, John Marshall, quoted and enshrined that thought in his ruling, McCulloch v. Maryland.  Today that power is now available, at the will of the Five, to destroy the freedoms of the people, freedoms that the Constitution and the earliest Courts served to protect.

Of Individual Freedom and the United States Senate

The first lawsuit has been filed.  There will likely be others.  When President Obama, in an action more redolent of hubris than homage to the Constitution, gave recess appointments to four individuals to lead government agencies, even though the Senate was not in recess, he initiated a constitutional crisis that is only beginning to unfold.

Three of these illegal appointments were to the National Labor Relations Board (NLRB).  The NLRB has been pushing a new requirement that all businesses put up posters, designed by the NLRB, encouraging workers to form a union. Businessmen have objected.  Only about 20% of American workers have chosen to form or join unions, which frustrates the Obama Administration, because it relies heavily upon unions for political support and funding.  Without those three appointees the NLRB does not have a quorum to finish its work on this new requirement.  Pretending that it now has a legal quorum, the NLRB resumed action on the rule, and businessmen filed suit, complaining that President Obama did not just break the law; he is trying to break the Constitution.  That is to say, this is not about the Senate; it is about the rights of American citizens, in this case the right to be free from imposed unionization.

Administration advocates would like to trivialize this crisis as a mere political dispute between the President and Republican Senators, yet another partisan spat.  That would be a superficial view, and it would be wrong.  Besides that fact that so far only one Democrat in the Senate has concurred with the President’s assertion that he rather than the Senate decides when the Senate is in recess, the core of the matter affects you and me far more than it affects the Senate. 

We must remember and never forget that the Senate (and the other branches of the United States government) was created by the Constitution to be an instrument for defending the rights of the individuals who make up “We the People.”  The Founders divided the power of the government into three coequal branches specifically so that they could block each other from taking unilateral action.  When the Senate asserted its authority against action of the President, it did so to preserve our freedom, in this case our freedom from being governed by people who are not accountable to the citizens.  During the 1787 debate on ratification of the Constitution Pennsylvanian Samuel Ryan described it this way:

Mr. [John] Adams’s sine qua non of a good government is three balancing powers, whose repelling qualities are to produce an equilibrium of interests, and thereby promote the happiness of the whole community.  (Samuel Bryan, “A Most Daring Attempt to Establish a Despotic Aristocracy”, in The Debate on the Constitution: Part One, p.55)

After all, we do not live in a monarchy where the king appoints his ministers to impose their will on the king’s subjects.  Our ancestors fought a war to get away from monarchy or they fled from lands where lords, ladies, kings, dictators, and other tyrants governed.  The Constitution, first and foremost, was designed to preserve our hard-won freedom and protect us from arbitrary rule.

The Declaration of Independence cited numerous objections against exercises of despotic power by the British king.  Consider these two, relevant to this whole question of whether President Obama, or any American President, should be allowed to appoint whomever he wants as judges or other government leaders without Senate consent:

He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance. 

Under the Constitution, people with the power of government were either to be elected or appointed with the consent of people who were elected.  The President can nominate, but he must wait for the Senate to approve the nomination.  That can be inconvenient to those appointed—I had to wait several months before the Senate confirmed my nomination as an executive officer—but it is very convenient for the preservation of freedom.

After President Obama’s unconstitutional appointments his Justice Department—which reports directly to him—rendered its opinion that the boss was right.  The core argument supporting its unsurprising (albeit late) conclusion is that the Senate should not be allowed to block what the President wants to do.  Of course, in our system of government, that is the Senate’s job, insisting that no one be given power to make laws and issue edicts without its consent.  That is not a part of the Constitution that our freedom can allow the President to skip.