Pretty much the most interesting blog on the Internet.— Prof. Steven Landsburg

Once you get past the title, and the subtitle, and the equations, and the foreign quotes, and the computer code, and the various hapax legomena, a solid 50% English content!—The Proprietor

Friday, January 29, 2010

A Note on Pseudonymity

This blog is blatantly and openly pseudonymous. Blatant because it is published and written under a name obviously different than the author's legal name. Open because anybody with even a smidgen of Internet know-how (and many without) can figure out the legal name of the author with a few minutes snooping at most.

So why bother with this semi-anonymity?

  • Truly pseudonymous blogging can and has been done, but is far more trouble than it is worth to the author. Ever increasing precautions against discovery by ever more sophisticated methods would in this case be a symptom of either paranoia or delusions of grandeur. The author tries to avoid both.
  • The author, while glad to defend his writings here to anybody interested, would just as soon not impose his boring obsessions on anybody who just innocently googles his name.
  • Finally, the author has used the same pseudonym more or less consistently all over the net and elsewhere for a decade or two and is loathe to part with it entirely.

Hence, Sub Specie Æternitatis lives.

Thursday, January 28, 2010

Standard Talking Points Against Citizens United Are Legally Lightweight

The two standard talking points against the Supreme Court's decision in Citizens United—(1) Money isn't Speech! (2) Corporations Have No Rights!—are so easily refuted at even the most rudimentary level of legal analysis that their frequent, thoughtless repetition is little more than an indication that the speaker has been living in an echo chamber unexposed to any critical thought.

  1. Money isn't speech? Indeed it isn't. Yet, regulation of money can restrict or even strangle the exercise of constitutional rights and thereby violate the Constitution, as it was found to do in Citizens United.

    If you find this difficult to understand, look at constitutional rights against which you are not currently at war, such as the right to counsel or the right to abortion. Laws which banned criminal defendants from paying lawyers or pregnant women seeking abortions from paying abortionists would undoubtedly be found unconstitutional. I shudder to think that any law school graduate would consider “Money isn't Counsel!” (or “Money isn't Abortion!”) to be killer arguments to the contrary.

  2. Corporations Have No Rights? Really? Anybody outraged at the thought that corporations can bring claims under the First Amendment must have been boiling over for quite some time.

    One notorious corporation controlled by a secretive ultra-wealthy family with a ideological agenda to change this country has been hiding its machinations behind the First Amendment for decades! What's worse, this powerful ideology-driven corporation has been bamboozling the Supreme Court to grant its schemes constitutional protection again and again.

    I am referring of course to the New York Times Corporation. In New York Times Co. v. Sullivan, 376 U.S. 254 (1964), the Supreme Court granted this corporation (and others like it) a privilege to violate long-standing and democratically enacted libel laws based on its alleged “First Amendment” rights. In New York Times Co. v. United States, 403 U.S. 713 (1971) , the Supreme Court again invoking these imaginary “Corporate First Amendment Rights” held that the corporation could freely violate the democratically enacted Espionage Act of 1917 to publish the classified so-called “Pentagon Papers.”

    I'm sure you are as outraged about these judicial usurpations on behalf of corporations as you are about Citizens United (though strangely most of you have managed to contain their outrage for the last forty, fifty years or so). Or perhaps not.

    Seriously, if you believe that there would have been a First Amendment issue if the Republican Congress had passed a law requiring all New York Times editorials to be pre-approved by Dick Cheney, you believe that corporations can bring valid First Amendment claims. Don't embarrass yourself by embracing the silly talking point to the contrary.

Wednesday, January 27, 2010

Left-wing Hate Speech

Thomas Frank delivers himself of the usual progressive advice to Barack Obama in the pages of the WSJ:

What you need to do now is pick a fight, preferably one that forces the obstructionists of the right to take the side of privilege. You need a battle that will expose their populism and their protest for the pretenses they are. Your target is obvious: the financial industry, from Wall Street to the credit card companies. Yes, taking them on will cost you campaign contributions for 2012, but take Wall Street down a few pegs and Americans might start to remember what it was their grandparents loved about Democrats all those years ago.

In all my years of reading right-wing punditry I have never heard any of the groups conventionally deemed to be the go-to scapegoats of the right (ethnic minorities, gays and lesbians, welfare recipients) or even Al-Qaeda denounced as readily and unashamedly as progressives gleefully demagogue banks and the rich. Much less have I read in any respectable publication that the soundest strategic counsel to the Right would be to focus public scorn on a particular despised minority and ride the wave of hatred to electoral success.

Yet, progressives like Mr. Frank do so shamelessly and will at the same time claim the mantle of dispassionate reason and adopt an attitude of vast superiority to the slavering Republican-voting hordes with their hate-filled minds.

How does that work?

Sunday, January 24, 2010

Thaler on Mortgages: Sentiment over the Liberal Order

Richard Thaler, of Libertarian Paternalism fame, has a generally sensible piece in the New York Times, Will More Borrowers Walk Away From Their Mortgages.

Two points however bear refuting:

[The] norm [to keep paying a mortgage even on underwater property] might have been appropriate when the lender was the local banker. More commonly these days, however, the loan was initiated by an aggressive mortgage broker who maximized his fees at the expense of the borrower’s costs, while the debt was packaged and sold to investors who bought mortgage-backed securities in the hope of earning high returns, using models that predicted possible default rates.

That is in equal parts sentimental and pernicious. If it is ok to exercise the put option to Morgan Stanley, it is also ok to do it with the local banker. You, I, Morgan Stanley, and the local banker are all equally responsible under the law for our promises and the contracts we enter. That there should be one law for favored in-groups, like the local banker you may run across in the grocery store, and another, lesser law for outsiders and strangers, like Morgan Stanley, is profoundly subversive to continued existence of the liberal order. That we have largely overcome such distinctions in the law is a fundamental pillar of a commercial republic. Throwing it overboard would be dangerous and wrong.

Eric Posner, a law professor, and Luigi Zingales, an economist, both from the University of Chicago, have made an interesting suggestion: Any homeowner whose mortgage is underwater and who lives in a ZIP code where home prices have fallen at least 20 percent should be eligible for a loan modification. The bank would be required to reduce the mortgage by the average price reduction of homes in the neighborhood. In return, it would get 50 percent of the average gain in neighborhood prices—if there is one—when the house is eventually sold.

This is equally ruinous to the rule of law. If such a modification was to the advantage of both sides, there should be nothing to prevent it from happening now. That this is not happening shows that it is not in the interest of at least one side. That it is eagerly embraced by the politically attuned suggests that the large and politically powerful group—homeowners—who would benefit at the expense of a small and despised minority—Wall Street banks and their investors.

So, shorn of rhetorical pretense, the Posner/Zingales proposal is no more than a expropriation of property held by the politically powerless for the benefit of the politically powerful. It is disappointing that distinguished economists such as they should need to be reminded that such proposals—even if they are not enacted!—undermine the rule of law and push nations along the road to ruin.

Thursday, January 21, 2010

To Hear the Lamentations of the Campaign Finance "Reformers"

It has been said:

Mongol General: What is best in life?

Conan: To crush your enemies, see them driven before you, and to hear the lamentation of their women.

Mongol General: That is good! That is good.

That is why, on days like this, I like to visit these sites. And for special bonus points, How depressed are you? SCOTUS decision, Brown, etc.

Update: More, more! Destructive Decision Turns Back Clock to 19th Century; Supreme Court Decision Creates Political Crisis.

Wednesday, January 20, 2010

A Motto for this Blog

Until further notice, I pick my oft-repeated observation that We are ruled by children … malicious children.

Needless to say, this motto was itself inspired by the observation that giving money and power to government is like giving whiskey and car keys to teenage boys. P.J. O'Rourke, Parliament of Whores: A Lone Humorist Attempts to Explain the Entire U.S. Government xxiv (ed. 2003) (1991).

Princess Brides in D.C. Circuit Briefs

While on the subject of literary allusions in legal briefs, here is my favorite from a D.C. Circuit brief I filed in a FERC case a couple years ago:
[T]he Coalition claims that only a 'a structurally competitive market' qualifies. Id. (emphasis added); accord id. at 11, 22, 23, 24, 28.2
2 '[They] keep using that word. I don’t think it means what [they] think it does.' William Goldman, The Princess Bride 114 (Harcourt 2007) (1973).
Brief of Supplier Intervenors at 8, Public Service Electric & Gas Co. v. FERC (D.C. Cir. 2008).

Monday, January 18, 2010

Underpants Gnomes in FERC Briefs

From a brief I filed with the Federal Energy Regulatory Commission on Monday:
However, this still leaves an Underpants Gnome-sized chasm3 at the core at the center of the California Parties’ argument: The California Parties completely failed to establish any causal connection between propositions 1 and 2.

3 The industrious underpants-stealing gnomes were introduced to the world by the television program “South Park.” Famously, their business plan consists, in its entirety, of three stages: “Phase 1: Collect Underpants. Phase 2: ? Phase 3: Profit.” Wikipedia, Gnomes (South Park), (last modified Jan. 2, 2010). The gnomes’ business plan have since become a byword for theories with large logical gaps of which their expositors appear to be blissfully unaware. See, e.g., Editorial, Obama and the ‘South Park’ Gnomes, The Wall Street Journal at A16 (May 26, 2009) (postulating that the television episode may “surpass[] Milton Friedman’s ‘Free to Choose’ as the classic defense of capitalism”); Ezra Klein, The Underpants Gnomes Theory of Single-Payer, The Washington Post Blog (June 26, 2009), So too here: The California Parties proceed, as if blissfully unaware, to propound a theory in this case that totally lacks any causal connection—or even any attempt to draw a causal connection—between the successive steps of argument. In actuality, of course, the California Parties are keenly aware of these fatal flaws but apparently have no choice other than to pretend that they simply are not there.
Id. at 8.

Update on July 12, 2010: FERC adopted the position argued in the brief and dismissed all claims by California against my client and even went on to quote the underpants gnomes. Initial Decision on Motions for Summary Disposition at P 221.

A "Financial Crisis Responsibility Fee" on sub-prime borrowers

The administration proposes to impose a punitive ex-post-facto tax "Financial Crisis Responsibility Fee" on banks who received TARP bailouts--regardless of whether they wanted, needed, or have repaid the funds. Wall St. Weighs a Challenge to a Proposed Tax, New York Times at B1 (Jan. 17, 2010). Of course, bailout recipients with sufficient links to the Democratic Party, such as the union-owned automakers and retired-politico-operated Fannie Mae and Freddie Mac, are exempt.

But haven't we been told that the financial crisis was caused by all those irresponsible sub-prime mortgages? So, surely, sub-prime borrowers should not escape their share of the blame. So let's make them pay another percent or two of interest on their mortgages, regardless on whether they are current on their mortgages, have repaid them, or discharged them in bankruptcy. That is not the deal they signed up for? Well, no, but then neither is it the one the TARP recipients signed up for.