Obamacare

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The great attraction of Substantive Due Process as a substitute for more specific constitutional guarantees is that it never means never—because it never means anything precise.

Justice Scalia, Stop the Beach Renourishment v. Florida Dep’t of Envt’s Prot., 130 S. Ct. 2592, 2608 (2011).

The Supreme Court has begun its epic consideration of the “most important case ever” — the one reviewing the constitutionality of Obama’s health care reform.  Under established law, the case is neither difficult nor very interesting.  The challenge is to Congress’s power to impose a (modest and essentially compensatory) penalty on those who do not purchase health insurance as a necessary step to its objective of guaranteeing health insurance coverage for more Americans.  As many, many people have written, this is surely a necessary and proper means for regulating the interstate, commercial markets in health insurance and healthcare in order to ameliorate the severe problems suffered by and imposed on others by the uninsured.  (Whether it is a wise or good means is not a question that the Court has the power to consider.)

I see the case as a kind of constitutional oddity, where we’re just left with jaws gaping, wondering how we got to this point.  The point where the specter of government forcing you to buy broccoli is bandied about as a serious reason to dismantle the post-Great Depression understanding that Congress has power to attempt real solutions to national problems.

The vehemence of the debate is made both possible and inevitable by the uncertainties embedded in the Constitution. The words of the Constitution do not provide absolute constraints on their application.  Congress has the power to regulate interstate commerce and to do all things necessary and proper to regulate interstate commerce.  What’s commerce?  What’s necessary?  What’s proper?

When words have such open texture, there is room to locate within them many different outcomes in concrete cases. If you hate Obamacare, you’re drawn to thinking of it as illegitimate, surely representative of government excess.  And here’s the clause of the Constitution that defines that power, doesn’t grant unlimited power, and so must contain a limit — of some kind, right?

When constitutional or statutory language is unrestrictive, disagreements about how to apply it is played out in a predictable fashion.  Not being able to settle the dispute definitively using language, text, and intention, the debate shifts.  Legitimacy, not correctness, is the criterion for victory.  Tactics in such debates include pointing out the personal inconsistencies of the debaters, breaks with tradition, or slippery slopes.  We saw all this on display in the Obamacare litigation.

While the opinions may well sharply differ from the views their questions implied, the conservative members of the Court insisted: that there just must be some judicially enforceable limit to the commerce power, that personal liberty to refrain from commerce is implicit from an unwritten, vague penumbra of constitutional provisions, including the commerce clause itself and the Tenth Amendment’s reservation of unspecified rights to the states and people, and assertions concerning the unprecedented nature of the individual mandate.

The liberals pointed to the routine nature of commercial regulation, the particularities of this market (impliedly noting that most regulations are particularized for certain markets and that health care is an especially odd market), the history of judicial restraint in reviewing economic legislation, etc.  And many of us have marveled at the suggestion  of unwritten, penumbral individual rights on display in Scalia’s questions, a glaring, personal inconsistency if embraced as doctrine.

Indeed, if the questions reveal his thinking (a big “if” and so I use his name for discussion purposes not to criticize views he has not yet claimed as his own), Scalia has neither precedent nor personal consistency on his side.  But that doesn’t mean he’s wrong here.  He’s using a document that provides few constraints to infer concerns about the extent of federal power that trump concerns about the ability to solve national problems.  

We liberals typically see in the Constitution’s structure and historical development a concern for federally protected individual rights and a gradual realignment in favor of broad federal prerogatives to the detriment of state sovereignty — and the counter-majoritarian uses, rather than elite-protecting ones, of federal courts.  These broad principles lead us to find, in the uncertain language of due process and perhaps other clauses, a right to privacy and more robust protections for criminal defendants and others who are not likely to be able to protect themselves in the political process.

Scalia doesn’t think much of doctrines like substantive due process and the right of privacy that he perceives as unmoored from the constitutional text.  These doctrines, he maintains, provide no limits on judges and permit them to make essentially political judgments on a case by case basis.

But here in the Obamacare cases, as in cases striking down congressional acts in the name of “Our Federalism” rather than specific provisions, Scalia might find his own roving, super-textual mandate for expunging legislation that interferes with economic rights and property.  Indeed, the last couple of decades have seen a wave of conservative attacks on the post-Depression legal order: attempts to restore judicial protections of states rights and individual, economic and property rights.  From Citizens United, to the conservative reaction to Kelo v. City of New London, to efforts to expand the reach of the takings clause, to the effort in Lopez to reinstate commerce clause limits, to the sovereign immunity and anti-commandeering cases, to the subtle shift from suspect classes to suspect classifications in Equal Protection law.  These threads come together in the health care cases.  But only because conservatives have chosen to bring them together.

If Obamacare feels, deeply and intuitively, excessive, as I assume it does for some libertarian-minded conservatives, it’s natural to find it inconsistent with a constitutional scheme aimed to cabin excess.  First, you just assume there must be a “limit” to what Congress can do under the commerce clause, a limit beyond the existing ones (the Lopez limit to commercial activities when aggregating individual activities to find a substantial economic effect) and the protections against rights violations.  But the direction and magnitude of this limit a not specified, a principle beyond “The Federal Government Must Be Limited” is not made clear.  Under such conditions, any use of federal power lies on some vector from the origin, along which we can argue at some point lies “too far.” If we have no principle to tell us what purposes the limit serves and what it demarcates, then for any law we can scan around us, 360 degrees, to find the direction in which their is a downward slope, and we can call it slippery.

So what’s the alternative? Originalism or textualism? No.  Scalia’s right to look at the power-conferring and rights-protecting language of the Constitution and wonder what structure it implies.  It sets out ideas, ideas that reflected and gave birth to practices, and ideas that set the terms of debate.  But absolutely nothing in the clauses themselves provides a definitive answer, even in these very easy cases.  (I don’t mean here to imply I’m providing any kind of rebuke to recent academic writing concerning the various sorts of originalist interpretive theories.  It’s true that I don’t think they work, but this isn’t an argument to that effect.)

What’s odd is not that Scalia does this but that he worries about such odd things.  There’s a reason, for example, to worry that textualist elimination of the right of privacy would unleash governmental power inconsistent with the Constitution’s own structure.  Not only is it a possibility that government could do all kinds of bad things without the protection of judicially enforced privacy rights, it has actually happened.  There are reasons to believe that majority-controlled legislatures filled with culturally and religiously homogeneous legislators might not respect the integrity of the private lives of political minorities.

But what reason do we have to fear that government might force us to engage in unwanted economic transactions that similarly threaten to undermine the anti-authoritarian aims of the Constitution?  Is any actually worried that this law is indeed a stepping stone to one forcing us all to buy broccoli or to exercise?  In a nutshell, what reason is there to think that the political processes, elections and such, aren’t good enough to protect us from such things?  And, most importantly, can you think of any areas where the political processes would indeed fail but where the rights to autonomy contained within and among the Bill of Rights and Civil War amendments would be inadequate to the task?

Politically, I see Obamacare as an attempt at compromise, an attempt to do something about the millions of uninsured while leaving as much to private markets as possible.  I’m left to scratch my head and wonder what opponents wish to do actually to solve this problem.  Do they understand the extent of problems many Americans have in this market?  Consider this:

[Young people without health insurance] aren’t stupid.  They’re going to buy insurance later. They’re young and need the money now. ….  When they think they have a substantial risk of incurring high medical bills, they’ll buy insurance like the rest of us.

Justice Scalia, at oral argument (emphasis added).  And there it is.

State Action Problems

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I’ve finally released a draft of an article I’ve been working on for some time. I encourage, nay beseech you to download it and take a look! In this post, I’ll sketch out the problem, with a bit of background, and my solution. The fuller argument, obviously, is in the article. Here, I hope to use the description of my paper to show the kind of shift in thinking that we expect law students to make in the first year. A goal in law school is to move students from asking whether some bit of law is “right” to thinking more deeply about which institutions get to decide whether it’s right, whether there should be rules governing that decision, and how other institutions should treat the answers. Let’s turn to the problem at hand.

State Action

When you throw someone out of your home for saying something offensive to you, we say that’s your right. When the government throws someone out of a public park for saying something that offends it, we say that it’s violated the speaker’s rights. Why the difference?

In the case of the park, courts say there is “state action,” meaning that the state, the government, has produced the bad consequences. Nearly every prohibition in the Constitution and its amendments applies only to government, not to private citizens. That’s why you generally can’t complain to a court that your neighbor or your (private) boss has violated your “free speech rights.”

Seems easy enough: if some state agent stops me from speaking, takes my property, or treats me differently on account of my race, I can cite the First, Fifth, or Fourteenth Amendments to the Constitution as reasons for a court not to allow it. But if it’s a private citizen who fires me, refuses to invite me over, or divorces me on account of my race, religion, or activism, then the Constitution provides no help. At best, there might be statutes or other types of law to which I could turn. The Civil Rights Act of 1964, for example, prohibits racial discrimination in private hiring. The Constitution, however, does not.

Hard Cases

As is often the case in law, hard cases have destroyed this quaint understanding of state action. Such cases can lead us into nihilism, just accepting that the law on the books provides no real answers in any case in which we’d actually need to consult it, but they can also provide a deeper, richer understanding of what the underlying problem really is.

Take one hard case, perhaps the most famous of hard cases. In Shelley v. Kraemer, the Supreme Court was confronted with the perfect end-run around the Equal Protection Clause. Having struck down racist zoning laws in Buchanan v. Warley, property owners in many areas of the country were left to create their own, private racist zoning schemes. Using a device called a covenant (really just a contract relating to land that, if certain conditions are met, binds not only the parties but those who later purchase the parties’ lands), private landowners agreed with one another to bar African Americans from white neighborhoods. The state of Missouri upheld such a covenant. There was, therefore, no state law and, at the time, no federal law barring such an agreement. The effect was racially segregated zoning, with private actors using the market rather than the voting booth to enforce their racist preferences.

In another case, a private political group (the Jaybird Democrats) in Texas held a private poll to determine which white candidate would run in the actually primary. Unopposed by other whites, this candidate would be assured victory and non-whites practically excluded from holding office. And in yet another hard case, one corporation owned an entire town: streets, shops, buildings, sewage system and all. It, as a private citizen, refused permission to a Jehovah’s Witness to preach on a street corner.

In each of these cases, the Supreme Court found there was state action and that the Constitution applied to prohibit the private actors from discriminating. The reasoning for these decisions is a bit mysterious, and that is the problem with the doctrine. In Shelley the Court pointed to the fact that a state court enforced the covenant, and this enforcement was clearly state action. The obvious problem with that ground is that every legal dispute between private parties concerning private agreements may ultimately be resolved by and enforced by a public court. A private contract is not subject to, say, the First Amendment simply because the contract is the subject of a lawsuit.

In other cases, the Court has pointed to the “public functions,” like operation of a private town, performed by a private party as setting the party apart from most private actors, and using that to justify constitutional regulation. But the line between public functions and things private parties sometimes do is, to put it mildly, an uncertain one.

The Heart of the Problem

Let’s start over. It’s worth it, because understanding these cases actually helps us to see more clearly our legal system as a whole. It’s their very oddity that makes the state action cases such ideal objects for study. Scientists look for phenomena that break the known rules in order to understand the real rules better. That’s what we need to do here.

The first thing to note is that there is a distinction between laws that govern primary behavior, those that provide sanctions for actions, and those that provide rules for recognizing and making laws. H.L.A. Hart called these primary and secondary rules, respectively. This isn’t a very difficult concept: just think of the distinction between a law that prohibits murder and a law that says Congress can’t abridge the freedom of speech. The latter is a law regulating the making of law, a type of Constitutional Law.

The difficult state action cases arise because there’s a problem with the way we usually apply these secondary rules. Normally, the privately made rules of private actors are governed by what I call private Constitutional Law, which includes the ordinary law of contracts — how contracts are made, when they go too far, how they’re interpreted, and so on. And publicly made primary rules, like murder laws and laws creating liability for negligently caused injuries, are governed by public Constitutional Law, which includes, among other sources, the U.S. and state constitutions.

Here’s the thing: each body of Constitutional Law is tuned to govern a particular type of institution. Private Constitutional Law, including the law of contracts, is primarily concerned with ensuring truly voluntary transactions. Public Constitutional Law focuses on the problem of legislators, agents of the public, making law that will bind all the rest of us whether we like it or not. We need protection from public laws that ban speech, because lawmakers may impose this on us without our consent and to serve their own ends. We usually do not need protection (at least, as aggressive protections) from private contracts restricting speech, because the parties to the contract can refuse to consent to such terms. This paper, my earlier paper on the public/private theory of legal systems, and my earlier blog post on the structure of legal systems explain in greater detail how these two bodies of Constitutional Law differ.

The Two-Step State Action Solution

Let’s look at why Shelley, the case of private racist covenants, is so difficult. Formally, we have private actors engaging in private contracting. The private Constitutional Law established by the state’s law of contracts sees no problem with the voluntariness of these contracts. (There’s a wrinkle here that I explore a bit in the paper.) But, of course, the problem in Shelley is not with a single such covenant. It’s the fact that there were a great many of them, so many that there was a virtually uniform rule in lots of neighborhoods that non-whites could not live in the same areas as whites. Private constitutional law is not adequate to deal with this problem. Here, acting in concert, private landowners created a virtual law that imposed obligations on others. They acted as a legislature to create a racist zoning scheme.

In state action cases like Shelley, there appears what I call in the paper a “state action problem.” Private action that amounts to compulsory, public legislation creates a state action problem. (It’s not the only way, but a consequence of my theory is that this is a sufficient condition for finding a state action problem.) When private individuals make law for others, it becomes relevant whether they have acted adequately on those others’ behalf, just as it is for public legislatures. The consent among the contracting parties is a poor proxy for the overall public impact of the law. I say these sorts of laws raise state action “problems” because simple application of ordinary private Constitutional Law would poorly govern the private lawmakers. It’s the wrong set of rules given the lawmaking behavior of the private entities.

But, for a court, identifying a state action problem is only the first step. Other legal institutions may well solve the state action problem — by, for example, legislatively or judicially amending state contract law to provide specific constraints, perhaps even borrowing bits of public Constitutional Law. In the regulation of Homeowner Associations, state courts typically review rules passed by private boards, which look very much like the laws of legislatures, for “reasonableness,” rather than for the far more deferential “unconscionability” of ordinary contract law. This, to at least some extent obviates the need for a federal court to solve the state action problem itself.

So when should a court take it upon itself to solve a state action problem, through the rather blunt technique of pretending the private actor is a state actor and applying the Constitution? I argue that it should do so only when (a) there’s a state action problem that (b) other institutions, like legislatures and state courts, are peculiarly disabled from solving. And when does condition (b) occur? Among other times, when the private actors are using private law to impose disadvantages on “discrete and insular minorities,” groups that are relatively powerless to attract the protection of those other institutions that could solve the problem.

If you’re interested in seeing how this theory explains the apparently erratic state action doctrine and why the presence of racial discrimination seems so determinative, read my paper!

Are There Muppets in Galt's Gulch?

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The op-ed by soon-to-be-ex Goldman Sachs employee, Greg Smith, is getting plenty of attention on the internets this morning. Called, “Why I Am Leaving Goldman Sachs,” the letter is a fine exemplar of the genre of bridge-burning parting shots by exiting employees. See also here and here. Smith excoriates the firm for what he says is its shift toward viewing clients only as profit centers, with the success of the client’s investments a distinctly, well not even secondary goal. Clients, it turns out, were often called “muppets.” On Twitter, Andy Borowitz went on a tear, tweeting: “BREAKING Goldman Reassures Clients: ‘All the Other Assholes are Staying.’”

I want to draw attention to one paragraph that captures the essence of the problem here.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.

In simple terms, Goldman seeks to profit by encouraging clients to enter deals on bad information it provides.

The very reason we like private transactions is that we think people who trade with one another each want what the other has. They’ll be better off if they trade, and, therefore, we’ll collectively be better off. When you buy a car, you value the car more than the money you give to the dealer, and the dealer values the money more than the car. Simple. Here, Smith says, Goldman’s doing two things. It’s conveying information to clients in order to make them value a trade erroneously (erroneously form Goldman’s perspective). Then it’s transacting with them in a way that enriches Goldman but, presumably, impoverishes the client. And there’s no guarantee that Goldman’s gains even outweigh the client’s losses. You’d think the mortgage crisis never happened.

Economists may well suggest that we’re getting an efficient level of bad deals here. That is, clients don’t invest in obtaining more information on their own, because the marginal increase in deal quality that better information would give them is not worth the cost of acquiring it. Maybe, but this is a problem that repeats itself, and one wonders if this is really the best we can do. Your mechanic tells you that you need a new engine. The doctor tells you that you need a surgical procedure. The air conditioning repairman says that you need a new compressor. What do you do?

The simple fact is that our counter-party in each of these scenarios is wearing two hats. There is not one transaction, but two. On the one hand, they are our information agents, meaning that we are relying on them, and often paying them, to produce the information needed to decide whether to engage in a transaction. On the other hand, they are our prospective partners in that very transaction.

The case for regulation, for imposing legal duties on parties that both provide information and profit from our use of the information, rather than allowing the free market to do its thing is greater as the costs of getting a second opinion (in time, effort, and money) go up and as the cost on the agent of acquiring the information it’s withholding or distorting go down. (For a classic discussion of this, see this article by Richard Posner, especially page 21 about fraudulent nondisclosure.) In all of the above cases, there’s significant hassle in acquiring additional information — so much so that people often prefer investing in online systems to distribute information about trustworthiness (like yelp) to shopping engaging in more than one transaction to acquire information.

Now, there are of course costs that would owe to regulation here, perhaps even large ones to the extent we do more than punish outright, conventional fraud. And I’m not trying to make the case for any particular response. (I’m just kind of scratching around in this post.) Rather, I just found this to be an example of one of the many ways that free markets are not really free. They may, or may not, be freer than the alternative. But we are constantly boxed in by the state of our own knowledge, at the mercy of others whether we like it or not.

Clear: An App Object

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When I began this blog with a post about the future of applications, I had in mind something like Clear, a new todo app for the iPhone. It, like Flipboard or Twitter for iPad but to an even greater degree, moves away from presenting an interface composed of standard computer-y metaphors. People who use computers all the time understand cursors, menus, dialog boxes, minimizing, windows, and the like. The designer, through these tools, is trying to say, “Use this program like you’ve used other programs that you’ve gradually learned to use or been taught how to use.” Apps of this style scream to the user, “I’m an interface. Just learn which parts of me to select or click in order to request I do something from the list of things I’m able to do.”

Clear is more like a physical object — but not at all in the faux-thing sense (or skeumorphic sense) of Apple’s calendar app, which is made to look but not completely act like a calendar, or the leather stitching in Find My Friends. No, Clear has an intuitive, internal logic and physics. It works more like a fully realized thing. You learn how to use it more like you’d learn how to use, say, an old cash register or a popcorn popper. In Clear, you pull, pinch, and push, and the app responds as if it’s a thing in the world being pulled, pinched, and pushed — but responding in slightly magical but coherent ways. You play with it for a bit, and then you just get how it works. Imagine that.

Clear’s not all the way there, but it’s pushing the boundaries toward App as Object. I’m convinced that the future of applications lies in the design of coherent, complete, functioning things.

[Note: Posting’s slow and going to continue to be slow for the next couple of weeks as I’m deep in article drafting and revising mode. Will post about that when I reemerge.]

Kids Today

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You’ve all seen it. A father attempts to murder modernity itself:

Humanity is always becoming something else, and yet each generation wants to be the last ever to change. There’s a complicated sort of fear — for their children’s security and for their own irrelevance — in this attitude. Not helped by the fact that the agent of all change, whether good or bad, is disrespect.

Pearl

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Reason is nothing without the sensation of it. Absent emotion, we’re just thermostats, inert. When feeling is drained, and our everyday is drawn over us like a tight sheet, we lose the desire to push further and the sense to know whether we have. Because that’s what it is and what people too often deny: creating something new from reason is all about the feeling of it. Even down to the “pure reason” of math. And I keep thinking of David Foster Wallace’s “horrifying billowing black sail at the edge of perception,” one of Infinite Jest’s lasting images and the purest portrait of a hellaciously tormented mind. I can’t truly empathize with it, but like most of what he wrote, it gives me a window into what it must be like out at the further edges of things, and it also stands for something much more basic. The desperate fear of being rendered inert. A pearl.

The Failures of Freedom

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Few notions are as destructive of human welfare as “freedom.” The problem lies in the word’s siren-like allure combined with its clay-like malleability. Who doesn’t want freedom? It’s one of those words that chiefly calls to mind its opposites: slavery, obedience, constraint, “a boot stamping on a human face forever — forever.” Whatever freedom might mean, surely it’s something we’d far prefer to the alternatives. That is until we reflect on the suffering and atrocity, not to mention more minor corruptions, inflicted in freedom’s name.

There are three domains, three kinds of markets, in which the concept of freedom has in recent times been unleashed as a kind of apex predator of the law. Two of them, economic markets and government, have since been exposed as far more complex than starry-eyed libertarians or collectivists wanted to admit. In one of these, the marketplace of ideas, this predator still roams free, destroying laws that can be characterized as regulating speech. Under the guise of freedom, the modern interpretation of the First Amendment tends to perpetuate a laissez faire market for speech replete with market failures and catering to powerful interests, just like the judicial enforcement of freedom to contract kept in place the lopsided, failure-filled laissez faire economic market that preceded the Great Depression. That is the real story of Citizens United. All of this has happened before, and all of this will happen again.

The Free Speech Talisman

In the United States, the freedom of speech is venerated as our highest ideal, maybe our greatest achievement, and perhaps even constitutive of what it means to be an American. Our nation professes to have adopted lock, stock, and barrel Evelyn Beatrice Hall’s characterization of Voltaire’s speech ethic: “I disapprove of what you say, but I will defend to the death your right to say it.” And so, we have upheld the rights of Neo-Nazis to march through a town inhabited by many holocaust survivors and to display the swastika as proudly as they would like. We have struck down a statute that attempted to criminalize sexually explicit images that appear to feature, but do not actually feature, minors. We have famously upheld the right of Hustler Magazine to make fun of televangelist Jerry Falwell by stating that his sexual debut was with his mother in an outhouse. The freedom of students to protest the Vietnam War by wearing black armbands. The freedom of civil rights activists to criticize harshly and even if slightly mistakenly the state police. The freedom to burn the U.S. flag.

These cases, and many others, stand for the idea that we are truly free to express ideas that are inimical to others. Here is a bit from the influential dissent of Justice Oliver Wendell Holmes, Jr. in Abrams v. United States:

[W]hen men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideas — that the best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out. That at any rate is the theory of our Constitution.

Holmes asserts not only that speech and ideas are bandied about in a marketplace but that our Constitution requires that market to be free. The Darwinian selection of The Best is made possible by judicially protected laissez faire. This idea has held on, won out, and delivered to us the line of free speech cases trumpeted in books and films for protecting the powerless and the unpopular.

Economic Markets

Even as he wrote the words above, Holmes was also in the dissenting minority in cases striking down congressional regulations of economic markets. Fourteen years earlier, Holmes had dissented from the now-infamous decision of the Supreme Court, in Lochner v. New York, to strike down a New York law prohibiting bakery employees from working more than ten hours in a day. There, he wrote that “a constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the State or of laissez faire.” And in a case decided four years after Abrams, the speech case above, Holmes dissented when the Court struck down of a minimum wage law on grounds that it unconstitutionally interfered with the “freedom of contract.” Holmes believed the Court should defer to legislatures adopting a non-laissez faire theory of economics, including those which, and here he quoted a law review article, “freedom of contract is a misnomer as applied to a contract between an employer and an ordinary individual employee.”

Throughout this period, a number of influential scholars were busy attacking courts for their formally pro-freedom but substantively pro-business agenda. The legal realists, as they are known, included figures like Robert Hale, who along with Wesley Hohfeld pointed out that freedom in a legal sense is a relative concept. My “freedom” to do something necessarily means, roughly, that someone else is disabled from stopping me. You don’t, then, add freedom to a society by refusing to regulate private transactions. Rather, logic dictates that one needs some additional, moral principle to evaluate which kinds of freedoms and whose freedoms to choose over others. These and other scholars established that, rightly or wrongly, many courts had promulgated law that was cloaked in the language of neutrality and freedom but in fact favored the freedom of the wealthy by aggressively protecting their “rights” to coerce the less well off. Spurred by the economic disaster that was the Great Depression, strong empirical evidence that laissez faire sometimes fails massively, the case for market regulation prevailed — at least in the Supreme Court. Ever since, Congress and the states have been pretty much unrestrained by the courts in their ability to regulate markets. No longer is “freedom” used uncritically to prohibit market regulations intended to correct failures or to redistribute in the interests of fairness or to prevent undue suffering.

Over the years, economists have added criticisms of markets that are interior to market ideology. By that, I mean that they have described a number of circumstances in which markets fail to deliver efficient results, where the voluntary participants are made objectively worse off by their participation, under pretty much any moral theory you choose to apply. Market failures occur for many reasons, including, for example, the wasted expenses necessary to complete a transaction (transaction costs), monopolies, and the fact that individual behavior is often allowed to affect others without their consent through payment (e.g., pollution, an example of an unpriced externality). It’s not important now to understand all of these, but the point is that an unregulated market can sometimes bring terrible results, even if we measure results by aggregate wealth alone. For one example scenario, see Garrett Hardin’s Tragedy of the Commons (skip down to Tragedy of Freedom in a Commons) describing how rational, unregulated herdsmen grazing cattle in a common pasture might be locked into a losing game of putting cow after cow on the increasingly degrading lands despite all recognizing the insanity of the situation.

More recently, legal scholars have started to be more systematic in analyzing the case for market regulation, or deviations from laissez faire, in terms of the predictable irrationality of the human brain. Economic transactions can be inefficient, in the sense that they make the actors involved jointly worse off, because of their refusal to ignore sunk costs, their predictable overoptimism, loss aversion, and other psychological curiosities. (Both law and economists and behavioral law and economists are concerned with more than just market regulation and apply their techniques in many areas of the law. I recognize that. What I’m not aware of, though perhaps it exists, is a systematic study of the failures of speech markets.)

Governments

Just as it was with economic markets, the dream that free political systems can deliver great results if only the voters are free to express their preferences at the ballot box has been discredited. The market for votes is as infected with endemic problems as the market for dollars. Here, the dominant critique is known as public choice theory and has as its objects special interests, rent-seeking, the capture of regulators by regulated parties, and the like.

My point here is only that freedom, defined as the relative absence of regulation, counting on voters to regulate with their votes, sometimes fails within governments, just as the absence of regulation can lead to failing markets. This is well known, well described, and non-controversial. People dispute the extent, the qualities of the problems, the appropriate solutions — sure. But laissez faire as a theory of political and economic market regulation is a dead letter, while the sources of problems in these markets and the search for solutions is hopping.

Speech Markets

When Holmes extolled the virtues of a free marketplace of ideas, he was writing against a majority that approved of a ban on core, political (though revolutionary in the midst of a war) speech. It was a little like extolling the virtue of freedom in an economic market to decry a government’s outright seizure of an average person’s modest home. Rhetorical defense of a libertarian position in one case is understandable. But Citizens United seems to me a sort of endpoint, at which Holmes’s marketplace model has hit upon its ultimate expression. If you’re not familiar with it, the ruling struck down a federal statute preventing corporations and unions from spending corporate money to advocate the election or defeat of political candidates.

No matter how apparently broken the market, market participants, in whatever form, have the constitutional freedom to work it out themselves. As Justice Kennedy wrote, to uphold an earlier Supreme Court decision allowing such regulation would “interfere[] with the ‘open marketplace’ of ideas protected by the First Amendment.” And as Justice Scalia said, defending the decision at a meeting of the South Carolina bar, “I don’t care who is doing the speech — the more the merrier. People are not stupid. If they don’t like it, they’ll shut it off.” And just like that, just like Lochner before it, the freedom of the individual is the sword the Court wields to block attempts to rescue a failing market.

Now, there are ways to attack the kind of thinking embodied in Citizens United that take issue with the very conception of the freedom of speech as a free marketplace. Alexander Meiklejohn, writing in 1948, attacked the marketplace of ideas approach, taking Holmes’s dissent in Abrams as a focal point. For Meiklejohn, conceiving of the freedom of speech in market terms was mistaken from the start. Rather, the right model was the town hall meeting, at which each citizen could speak his mind and be heard. The freedom of speech is about not the “words of the speakers, but the minds of the hearers.” It is not an unregulated, noisy clash of ideas, but an organized but free airing of them, calculated to enlighten the listener.

Markets not only diffuse means of production but they diffuse purposes. For the libertarian speech advocate, the freedom of speech includes the freedom to disagree about the purposes speaking to one another should serve. As I said above, I believe that the marketplace view has held out against such attacks and rules judicial intuitions across the land. But that’s not a stopping point, only a starting point.

What I would like to see more of is the “free speech legal realist.” Broad considerations of freedom allow, perhaps even subconsciously, courts to sweep under the rug the consequences of their interventions. But markets can and do fail. Implicit in saying that is that there are some criteria of success, or purpose. There need not be only one. As with economic markets, there could be patterns of transaction that deliver poor results under any conceivable rationale.

Our political campaigns are an example of the failure of the speech market to live up to our ideals. I am certain some will argue that the problem with campaigns is that there is too much regulation. But surely we can detect the hint of the failure of laissez faire by observing just how awfully electioneers make use of the freedom they already have. Can anyone honestly look at the body of campaign speech and at the polling evidence concerning how people consume that speech and reach decisions and fail to say that the open exchange of ideas has failed to lead to more informed decisionmaking? Modern political campaigns, like all other advertising, sell emotion: fear, identification, hope, purpose. The more money you have to secure broadcast to the masses, the more of it you can shovel. As Dahlia Lithwick ably points out, it’s actually Stephen Colbert who is doing the best work laying out for all to see the ways that the market in campaign speech is a mess. Though his medium is hilariousness, his role is not unlike Upton Sinclair’s in writing The Jungle, which exposed just how unfree and miserable life as a cog in the laissez faire free market could be. Sinclair wrote of the brokenness of the economic market then protected by the Supreme Court, while Colbert lampoons the speech market now protected by the Supreme Court.

My purpose here is only to provoke the more careful, internal study of speech markets and their failures. Do people assume the relative volumes of speech on either side they encounter reflect the volumes of support in the public? Do transaction costs (here, collective action problems) prevent coalitions of large groups with somewhat milder preferences from securing limited media space that is easily secured by smaller groups with more intense preferences and access to capital — and do voters draw the correct inferences from the presence of the latter and the absence of the former? Do certain emotional cues play on biases that listeners themselves would like to overcome? Are listeners as prone as our media to believing that anytime there are two opposing assertions the truth lies in the middle, incentivizing extreme speech by candidate proxies? Is there a tragedy of the commons at work with negative and non-substantive campaign speech, a sort of game that drives the participants to a discourse no one would choose — the slavery occasioned by freedom? What other psychological quirks of the human brain are exploited by speech in a free market in ways that drag us all down?

Some evidence that regulations intended to ensure higher signal to noise could be fruitful, other than the common sense of one subjected to typical campaign speech, is the effect of deliberative polling. But I don’t intend to lay out the case here.

As with economic markets, the failure of the speech market does not automatically imply the superiority of regulation, for government failure is also possible. I call only for an honest appraisal, a search for truth concerning this marketplace or ideas. When does it go wrong, and why? No more hiding behind a “freedom” that has us collectively in chains.

Wikipedia

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It’s difficult, but I’m trying to avoid using the blog as a running commentary on my favorite 5by5 podcasts. I’ll indulge this time, though, because John Siracusa’s rant on what’s wrong with Wikipedia raises an illustration of a broader problem I’ll write about in an upcoming post on the freedom of speech. For now, I want to add something that I think Siracusa intuited but did not say. As always, it’s about the institution, not the rules per se.

The gist of the rant, which begins at about the hour mark of the podcast, is that Wikipedia’s criteria for inclusion probe a fact’s verifiability, not truth value. If you know a fact, you are not permitted simply to assert the fact in a Wikipedia entry. If a fact is published in a “reliable source,” then you can write that fact in a Wikipedia entry. Siracusa points out the various ways that this approach and the other criteria, like notability, which are similarly biased towards appeals to authority rather than truth, undermine truth seeking.

What Siracusa did not say, but which I think he intuits, is why these rules are the wrong fit, institutionally, for Wikipedia. He argues, and I agree, that Wikipedia’s rules seem calculated to appeal to exactly the kinds of people, older school teachers and librarians, who now discount Wikipedia and forbid reliance on it even as they allow other tertiary sources like encyclopedia. Whether that was the intent, the rules do seem to replicate those of the encyclopedias that Wikipedia has, in fact, made obsolete.

The trouble is that verifiability criteria are a solution to the institutional problems of encyclopedia editorial boards. These problems are not those of the free-market-style collective that builds Wikipedia. Encyclopedia editorial boards were, of necessity, limited to a small-ish group of people. The challenge is to ensure that such boards are good agents of the readers, meaning dedicated to accuracy and free of undue bias. By restricting inclusion to information verifiable elsewhere, readers have a means to hold encyclopedia producers accountable. After all, the biggest danger in a disconnected world in which information comes to us from a small number of gatekeepers is that those gatekeepers will manipulate the information for their own selfish ends. Verifiability is a strategy to deliver the truth given the particular institutional structures that produced encyclopedias.

But that’s not Wikipedia’s problem, at least not to the same extent. Self-interested and misleading assertions need not stand unchallenged. The “marketplace of ideas” has a chance to work on the Internet to ferret out falsehoods that a cabal of editors might have been able to sneak through decades ago. Wikipedia’s difficulty is to govern the commons, to regulate an open market of speakers to produce a high quality result. For this institution, verifiability is perhaps the wrong strategy to deliver the truth.

This is not an argument that Wikipedia should lift all its restrictions and let the market work out what articles are included and what their contents are. Like other markets, speech markets can fail. But that’s the subject of a forthcoming post.

Envy

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Human beings like to find out not only what people say but why they say what they do. The impulse to search for motivation, I’m guessing, is highly adaptive. In many circumstances, it serves us well. And it even contributes to valuable discussion. When I hear what you mean and not what you say, I’m able to be more generous and more responsive. It’s a tenet I try to follow.

Like most traits, however, the search for motivation has downsides. When we ascribe bad but hidden purposes to our enemies, we start down a useless and destructive road. Most recently, I have in mind the assertion that those advocating a higher marginal tax rate on high wage earners and increases in tax rates on unearned income do so out of “envy.”

I don’t know how often the various political factions engage in motive-fixing. I feel it most acutely when conservatives ascribe to me reasons for my positions that I know I do not have. And it’s not only in politics. I’ve been lumped in as a purely status-conscious computer consumer on account of my longstanding use of Apple gear. In reality, I’m a nerd, not someone trying to adopt a look or posture by my choice of nerd equipment.

So what of this “politics of envy” thing? Obviously, I can’t say that everyone who advocates for higher top marginal rates does so for reasons unrelated to coveting the privileges of the wealthy. I only know for sure that I am not and never was so envious of such things that it led me to advocate for forcible redistribution. Many people would prefer to acquire more wealth, sure, and a salutary social goal is to increase everyone’s wealth. But just because someone would like to make more money does not mean that they are so jealous of those who already do that they want to seize that wealth for that reason.

That the public advocates for more progressive taxation are not motivated by envy strikes me as so obvious that I, naturally, wonder at the motivations of those who suggest they are. But this takes us further down the road from debating the actual question in front of us. Once we start the motivation war, I’w swept in. Frankly, I think the “envious of the rich” message bearers are of two types. First are those who know it’s bullshit but need the appearance of an argument that has emotional appeal. They need this so that cable news can present the debate as having two sides and therefore a matter of opinion rather than an analysis of facts. They need it also to check the impulse of the struggling to complain about their lot. To do so, the envy-propagandists assert is to be truly sinful. Nothing keeps the disadvantaged in line like really making them feel they have a moral duty to stay there.

Second are those who actually believe that progressive advocates are envious of their greater wealth. I suspect that, in many cases, holding that view is a strategy to dissipate cognitive dissonance. The people advocating for taking more of my wealth are envious. They want to be me. On that, they have rights far inferior to mine. So my keeping my wealth is not selfish, as giving it up would not be for a public purpose but only to enrich the looters - and I should decide how I want to help my fellow man. In this way, the idea that some additional redistribution might actually increase the size of the pie in addition to alleviating some suffering is cast aside, and the negative feelings about one’s own selfishness are forgotten.

You see how these suspicions about the motivations of the other side do very little for us? In speculating, I’ve just taken us further down the spiral and away from what’s actually at stake. But how are we supposed to respond to a charge of “envy”? That emotional appeal is just not effectively combatted by sober analysis showing, in a nutshell, that a society is more prosperous, including its rich, when a very broad part of it can comfortably buy shoes, computers, games, food, and other goods. Even if you’re unmoved by appeals to do what we can to decrease suffering, you can surely understand that some distributions of wealth generate greater gains over time, just like some allocations of capital within a firm will promote better growth than others - and that the market may not always deliver optimal allocations.

But the envy-peddlers have sought to turn a policy debate into a base, emotional one. I’m not one who believes emotion should be drained from politics, but calling out your opponent for what you believe is his or her motivation injects emotion in all the wrong ways. I wish we could expunge it from political discourse. As suspicious as I am of the motives of the Republican leadership, I’m going to try to keep my mouth shut about it. What matters is to debate what they say, not what I think their ultimate purpose is.

This is all a somewhat long way to say that in all walks of life that involve disagreement, we need to foster a generosity of spirit. The cost of that is being occasionally played for the sucker in someone’s long game. But intelligent engagement with the immediate arguments is often sufficient to disrupt any such longterm, nefarious plots. And it’s a far better way to live one’s own life.

Law's Not That Hard, 3: Lawsuits

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This is the third in a series of posts laying out the basics of the operations of legal systems. I’m a believer that law is not nearly as complex as many lay people assume. A little abstraction actually makes the whole thing accessible to anyone with some facility for analytical thinking. I’m using the blog to begin sketching out a way to present the core ideas. In the first post, I explained the mechanics of making a legal argument.

In the last post, I argued that legal systems have an underlying, simple structure: Contract, Tort, Criminal Law, and a small set called Parens Patriae. The differences between these areas of the law stem solely from who makes the law and who enforces it. Privately made, privately prosecuted law is called Contracts (where individuals make the contracts that govern them and sue if they’re violated). Publicly made, privately prosecuted law is called Torts (e.g., lawsuits for injuries in accidents or violations of fair housing laws). Publicly made, publicly prosecuted law is called Criminal Law (where government attorneys will prosecute for violations of statutes, whether seeking fines for traffic violations or prison time for burglary). My academic work on this model is free for anyone to download … as many times as you wish!

This time, I’m going to get to some nuts and bolts. How do legal actions work? Every suit, no matter the area, has the same form. There are discrete, but not air-tight, steps to convincing a court that the defendant should lose — meaning, be coerced to pay money or otherwise do something he or she wishes not to do. Here they are: Duty, Breach, Causation, Damages, Defenses. Whether it’s Contract, Tort, or Criminal Law, liability is established by showing that there existed a duty, established by a law, that the defendant breached, causing harm to the plaintiff, as to which there are no relevant defenses.

If you know this legal workflow, and you understand the institutional differences between the areas of law, you’ll have an easy time learning how the steps are a little different in each area, and you’ll be able to move between areas with relative ease. That’s the power of abstraction and why it’s worth the effort. Rather than learn a large catalog of skills and procedures for accident law and a completely separate set for lease agreements, we learn the general structure for all lawsuits and how the institutional definition of an area might affect how the general principles are made into specific requirements. If we also know how to formulate legal arguments about these steps, see the first post, we’re off to the races. In this post, again just a first shot at explaining law, I will only lay out these steps. I won’t endeavor to explain, yet, how to make each particular to its area.

Duty

The very first question we must address is what the duty, if any, of the defendant was. Duties are what we might casually think of as “the law,” the things you must do or not do. Duties can be created in statutes by legislatures or administrative bodies (think speed limits and nearly all criminal laws), by courts refining the “common law,” or by private individuals in contracts. Each institution will have different rules governing how it can make duties and what kinds of duties it is permitted to create.

For contracts, we examine whether the group of private entities that will be bound by the terms of the contract consented — usually by looking to see whether someone made an offer of terms that the others accepted. If so, the contract operates very much like a statute, specifying that one of the parties is under a duty, say, to deliver a car and that the other is under a duty to remit payment. There really isn’t much difference between this kind of duty, to deliver a car under a contract, and a duty to obey a speed limit under a public statute or regulation. Both are “laws” that courts will back up with coercion, though possibly using different remedies.

Courts explicitly create duties in certain areas not governed by legislation and do so by deciding cases. Historically, Tort, private lawsuits to recover for violations of publicly made law, has been composed primarily of judge-made duties. Suits for injuries sustained in various types of accidents, for example, are the bulk of what first-year students study in tort classes, and these are often governed by the body of prior cases courts have decided. Today, numerous legislatively enacted statutes also provide for and govern private lawsuits. For example, the Civil Rights Act, among other things, creates duties on public accommodations owners and employers not to discriminate against customers and employees on account of race, and it gives private individuals rights to sue if these duties are violated.

(Also note, and I may return to this trans-substantive idea in later posts, that many duties prohibit conduct only if accompanied by a particular mental state, or mens rea in the dead language lawyers sometimes use. So, I’ve only violated the duty contained in a certain murder statute if I purposefully or knowingly kill another human being.)

No matter the source, the question is what conduct the law requires or prohibits. That is duty.

Breach

Just because the law imposed a duty on the defendant does not mean the defendant violated the law by breaching that duty. The question, here, is whether the facts show that defendant did something or failed to do something the law required. So if the law imposed on me an obligation when driving to operate my car with the care of an ordinary, competent driver under all the circumstances, whether I breached the duty would turn on an analysis of the facts and an interpretation of the duty. Perhaps the court will compare my facts with those in other driving cases to see whether courts have further specified what kinds of driving fall short of the general duty of care.

Same thing under Contract and Criminal Law. Regardless of the source, we look at the duty the law imposes and then at the facts of our case to see whether that duty was breached — by not performing a contract or by committing a crime, for example.

As a matter of practice, the act of comparing a contractual, statutory or judge-made duty with the facts will sometimes lead to a refining of the duty. The case in front of you may not clearly fall on one side of the violation/no-violation line, forcing you to look more carefully at what the duty is and perhaps sending you back to step one to restate, refine, or amend the duty. This can involve “making new law” either through interpretation — deciding what a written formulation of a duty “really” means — or through judicial amendment.

Consider this example. Maybe some other states have decided, on similar facts to the ones in your case, that the duty of accountants to perform analyses like “reasonably prudent accountants” would, a judge-made tort duty, does not extend to plaintiffs who lack a contractual relationship with the accountant. Still other states have allowed people that the accountant should have foreseen would rely on his or her work to sue. This is a question of duty, and we’re forced to consider more carefully the ambit of the duty (violation only if you also have a contract with the accountant or any foreseeable reliers — or something else?) as we apply the facts to see if there is a breach.

Another example: In a contract for the sale of goods, suppose I receive the goods but pay you less than you think you are owed. The contract contemplated payment but failed to include an explicit price term. Did I violate (breach) a duty established by the contract? We need to go back to the first step and figure out what, specifically, I was obligated to pay. Under the law of most states, I’d be on the hook for a reasonable price at the time of delivery. Whether I breached that implicit obligation depends on what that duty is. So we’ll litigate it, offering evidence of what was reasonable to establish what our private law required me to pay.

Causation

Even if I “break the law,” I’m often not liable unless my actions caused a result specified by the law. This is sometimes tricky, because in the law we often use the concept of causation to serve both logical and policy ends. Logically, causation is straightforward to understand, if not always to apply. If I’m under a duty to operate a car non-negligently and I breach that duty, I’m only responsible to someone injured in a crash if I caused his or her injuries. At the very least, my breaching the duty the law established must be a but-for cause of the injury. That is, but for my breach, the injury would not have occurred.

Sometimes this is called “actual causation” or “cause in fact,” instead of “but-for causation.” The problem is that it’s greedy, in computer-nerd speak — it sweeps in lots of conduct that we probably don’t think of as causal. So, if I injure someone in an auto accident, and but for my negligence the person would not have been injured, it’s also the case that my parents are a “but-for” cause of the injuries. After all, no parents, no me. No me, no breach by me.

The law’s solution to this is to require something more than but-for causation. We will insist that the defendant’s conduct was a proximate cause or substantial factor in producing the injury. The language and exact analysis vary, but the idea is to restrict liability to violations that are connected in a fairly direct way to the injury. This is a matter of policy rather than logic.

In both tort and contract law, the ability of the breaching part reasonably to foresee the injury is the key. They differ, though, in the kind and timing of the thing foreseen. Traditionally in tort, if you should have foreseen, at the time of the breach, damage of the kind that occurred, you will be liable for the damages caused even if you couldn’t foresee their magnitude. In contract law, the famous case of Hadley v. Baxendale decided that a defendant who breached a contract to deliver a crankshaft was not responsible for lost profits that were not foreseen (contemplated) at the time of the contract and were not otherwise a “natural consequence” of the breach.

The important thing to note for the moment is that, whatever the limits, they are policy determinations, allocating responsibility for avoiding losses in ways thought best to serve the public interest. Because it’s a policy issue, the extent to which we permit plaintiffs to travel down the but-for path could also be understood as a definition of the scope of the duty the law has created. Consider, for example, the accountant’s liability to third parties. One could characterize the question as going to whether the accountant was a “direct enough” cause of their injuries or to whether we desire, as a matter of policy, to create a duty on an accountant enforceable by foreseeable reliers not in contract with him or her. The practical consequence of this distinction, between duty and proximate cause is that the definition of the duty is in the hands of the judge for such torts. But the question of causation is given to the jury. These distinct ways of seeing the same problem were the subject of the famous torts case, Palsgraf v. Long Island Railroad Co..

Also note that causation can sometimes be difficult to prove. Summers v. Tice is a tort case in which the plaintiff was shot in the face by at least one of two negligent hunters, Dick Cheney-style, but where it was unclear which shooter caused which injury. The court shifted the burden from the plaintiff to each hunter to prove that he was not the cause, lest the plaintiff be stuck unable to prove to a greater than 50% probability that a particular one of them had caused his injury.

Damages and Defenses

This entry has already gone on a bit too long. I’m aiming ultimately for a thin volume, after all. But the final elements of a lawsuit are showing that there were damages, calculating them, and also examining any defenses the law may provide. Your intuition will get you a long way here. But there are some subtleties, and so the nature of remedies will get its own post.

Defenses are generally policy-based limitations on a positively stated duty. They, like other aspects of the lawsuit, could easily be collapsed into the definition of the duty. For example, while it might generally be a violation of a publicly created duty to go onto another’s land without permission, I will not be liable for doing if my entry was to save a life. This is the defense of necessity. One could as easily say that a trespass is defined so as not to included necessary entries.

Conclusion

Obviously, there is much more one could talk about. My goal here is not to convey the information necessary actually to litigate a case or pass the bar. Rather, I want to provide the framework that will permit a reader to develop intuitions about what the law probably is and what it should be. Key to this is understanding legal argument, understanding the general atlas of the law, and understanding how law violations are proved. We now have at least have a sketch of these.