Posts Tagged ‘rule of law’

Affirmative action should be terminated

May 4, 2013

Above the entrance to the U.S. Supreme Court four words are carved: Equal justice under law. The message is perfect for a people that pursues inalienable rights to life and liberty and an imprescriptible right to property – even a society that once pursued such objectives very unevenly across the races.

It is tempting for some to request unequal treatment under law designed to benefit those treated badly in the past. Such indeed is a current occurrence in the United States with respect to certain ‘minority groups’. But what may be popular and widespread is fundamentally wrong.

Once equal justice under law has been established, it should never be violated again. For to violate the rule is to suggest that there is a better rule, which is untrue. No society can pursue the goals of life, liberty and property effectively in the absence of the rule of law. And those four words carved above the entrance to the U.S Supreme Court perfectly express the essence of the rule of law.

Hat Tip: Time to scrap affirmative action’, The Economist, May 4, 2013

In policing against domestic terrorism, probabilities matter

April 21, 2013

The United States is committed in principle to the rule of law. The rule of law rests in part on the principle that justice is blind to the color, ethnicity and religion of the individual. All individuals are presumed to be equal under the law. I am a supporter of the rule of law, most assuredly as it reaches out to conviction and punishment of those who trasngress before the law.

However, with respect to apprehension of potential criminals, I am much more equivocal, as in practice are a large number of Americans. Although, for sure, the future is uncertain, and some events may not easily be categorized in terms of probabilities, most individuals do form subjective Bayesian probabilities over important potential events. It is human nature so to do, especially when’s own safety is at stake.

Suppose, for example, a young white woman is walking down a street in Washington, DC, and she spots a group of individuals idling together on one side of the street. Would she be more confident of proceeding if that group consisted of well-dressed middle-aged white women, or of roughly dressed young black males, or of pony-tailed young Hispanics? Unless the woman was witless, of course it would matter, matter indeed a great deal. Why? Because past history signals to that young woman very different probabilities in walking closely past such variant groups. Should the police be more vigorous in patrolling in areas where middle aged white women tend to congregate? Or should they conserve their resources for the other groups? Common-sense offers a clear-cut answer to those questions.

The same issues arise with regard to policing against prospective terrorist attacks in affluent Western nations, including the United States. The radicalization of young Muslims in the West, in particular, but not exclusive to the children of the relatively well-off, is by now a familiar story.The London bombers of 2005 were middle-class Pakistani immigrants from Birmingham. Faisal Shahzad, the failed Times Square bomber was a naturalized citizen from Pakistan. The numbers are not large, and statisticians may claim that probabilities cannot be effectively drawn from such few instances. Instinct, however, advises differently.

Subjective Bayesian priors advise thoughtful people that authorities concerned to minimize future terrorist attacks within the United States are well-advised to concentrate their limited resources on monitoring foreign Muslim groups in the United States, to monitoring specific immigrant communities that have produced jihadists in the past, and to infiltrating mosques and other Muslim venues where fiery Imams are known to preach and rant. Such focused monitoring does not infringe the rule of law as long as due process is maintained in determining whether those apprehended indeed constitute a threat to society.

Some civil libertarians may beat their chests in rage at such a policy. If so, perhaps they should locate their own families in the middle of such communities and expose their own loved ones to limb dismemberment and violent death when a preventable act of terrorism eventually occurs, as occur it assuredly will in the absence of vigorous surveillance.

Hat Tip: ‘The Brothers Tsarnaev’, The Wall Street Journal’, April 20, 2013

Impose rule of law on ‘too-big-to-fail’ U.S. banks

March 11, 2013

A dozen U.S. mega-banks – 0.2 per cent in terms of numbers of all banks – currently control 70 per cent of all assets in the U.S. banking industry. These mega-banks – deemed to be too-big-to-fail, are treated entirely differently from the rest of the industry. They are exempt from the normal processes of bankruptcy and fear of failure. This dirty dozen and all its counter-parties are free to take excessive risks rightly denied to their competitors.

In the absence of the rule of law, the playing field is uneven within the banking industry, and Main Street remains fundamentally vulnerable to the whims of Wall Street. Dodds-Frank, funded by big bank campaign contributions, corruptly locked in the privileges of the few and deliberately exposed the U.S. economy to a repeat of the 2008 fiasco.

Three reforms would restore the rule of law to the banking industry, and would go far to restoring Main Street confidence in the financial system. They are not easy to introduce because the mega-banks will lobby vigorously against them. But a political opportunity exists because many voters remain outraged by the recent excesses of the dirty dozen. Sometimes, even in U.S. politics, informed votes remain immune to campaign finance.

First, roll back the federal safety net- deposit insurance and the Federal Reserve’s discount window – to apply only to traditional commercial banks. Exclude all non-bank affiliates of bank holding companies, and the parent companies themselves from the safety net.

Second, require all customers, creditors and counter-parties of all non bank affiliates to sign a legally-binding document accepting that there will be no government guarantee, ever, protecting their investments. A similar disclosure would also apply to bank deposits outside the FDIC insurance limit.

Third, restructure the largest financial holding companies so that every one of their corporate entities is subject to a speedy bankruptcy process and, in the case of banking entities themselves, that they must always be of a size that is too small to save. The aim must be, for every bank across the United States, that should it fail, it will be liquidated with finality – closed on Friday and reopened the following Monday under new ownership and new management.

Hat Tip: Richard W. Fisher and Harvey Rosemblum, ‘Hot to Shrink the ‘Too-Big-to-Fail’ Banks’, The Wall Street Journal, March 11, 2013

Why modern Robin Hood outlaws should be prosecuted

January 17, 2013

Many movies have been made in praise of Robin Hood and his Merry Anglo-Saxon outlaws who raided the coffers of rich Norman barons and knights in order to dispense their loot to down-trodden fellow-Anglo-Saxons during the absence, leading Crusades, of King Richard I, when his evil brother, Prince John, ruled England with a heavy hand.

Now that period of history was one of absolute dictatorship and our instincts naturally – and most probably justly – lie on the side of the severely oppressed. After all, William the Conqueror’s Normans were foreign invaders, who had seized Anglo-Saxon wealth at the point of the sword (and arrow). Rough justice requires an eye for an eye and a tooth for a tooth.

Aaron Swartz, who died by his own hand earlier this week, represents a very different kind of outlaw, even if much of the media is reporting his thefts in terms reminiscent of those episodes in Sherwood Forest. For Aaron Swartz was stealing from the rich to give to the poor within the environment of modern democracies operating under the rule of law.

In so doing, Swartz was eroding property rights. And property rights are the fulcrum of economic progress within the capitalist sector of any economy. Without clearly articulated and protected property rights, no modern economy can function. Contracts become impracticable, and a barter economy, in the absence of property rights, descends into a state of nature that we describe as a Hobbesian jungle.

In essence, if the Aaron Swartz’s of this world are allowed to prosper and multiply, they will take the advanced economies back into the Middle Ages of King Richard I and Prince John. I assure you that that is not a pleasant environment in which to fight for survival. It is not a world in which you would choose to live.

Aaron Swartz faced a lengthy jail sentence – as much as 30 years – for deploying computer hacking skills to download illegally millions of academic papers from an electronic library. Five years ago, Swartz had elected to become an outlaw by signing a guerrilla open access manifesto. He complained that the ‘world’s entire scientific and cultural heritage’ was in the process of ‘being digitalised and locked up’ by a handful of private corporations. He advised computer hackers to ‘take information, wherever it is stored, make our copies and share them with the world’.

Well, that is communism well beyond the vision of any Marx, Lenin or Stalin. When information that is costly to produce and process is distributed without charge to anyone who wishes to gain access, then assuredly such information will no longer be produced and processed. That is the nature of any market system.

Should governments then take over the role of markets in the production and dissemination of information, history tells us two things: (1) market-relevant new information will fail to appear; and (2) government-information will be produced and disseminated in a manner designed to destroy individual liberty and to promote tyranny.

So we should not judge Aaron Swartz as a Robin Hood attempting to ease the burdens of tyranny. Rather we should judge him as a promoter of communism, attempting to take down democracy and capitalism, and to replace them by absolutist government. For that crime, 30 years is a modest penalty. The gallows might be viewed as more appropriate.

In any event, Aaron Swartz delivered himself into judgment without any cost to society. And that decision ironically conforms with his personal philosophy. Aaron Swartz surely was not a hypocrite.

Hat Tip: John Gapper, ‘Aaron Swartz suffered from an illusion over research’, Financial Times, January 17, 2013

A.V. Dicey on Lord Leveson’s proposed repression of freedom of expression

December 10, 2012

“The present position of the English press is marked by two features.

First, ‘the liberty of the press’, says Lord Mansfield, ‘consists in printing without any previous license, subject to the consequences of law.’ Lord Ellensborough says:

‘The law of England is a law of liberty, and consistently with this liberty we have not what is called an imprimateur; there is no such preliminary license necessary; but if a man publish a paper, he is exposed to the penal consequences, as he is in every other act, if it is illegal.’

These dicta show us at once that the so-called liberty of the press is a mere application of the general principle, that no man is punishable except for a distinct  breach of the law.  This principle is radically inconsistent with any scheme of license or censorship by which a man is hindered from writing or printing anything which he thinks fit, and is hard to reconcile even with the right on the part of the Courts to restrain the circulation of a libel, until at any rate the publisher has been convicted of publishing it…Neither the government nor the Courts have…any greater power to prevent or oversee the publication of a newspaper than the writing and sending of a letter.  Indeed, the simplest way of setting forth broadly the position of writers in the press is to say that they stand in substantially the same position as letterwriters…. secondly, press offences, in so far as the term can be used with reference to English law, are tried and punished only byu the ordinary Courts of the country, that is, by a judge and jury.’

A.V. Dicey,  The Law of the Constitution. (1885/1982) pp. 153-155.

Jamie Dimon should kick some Washington butt

May 18, 2012

As the CEO of JP Morgan Chase, Jamie Dimon owes an explanation to the company’s shareholders for the recent trading loss of $2 billion. Although the loss is relatively small – one percent on the company’s  $200 billion portfolio – still it is large in absolute terms. The market has already punished shareholders by a $25 billion reduction in the value of JP Morgan Chase stock. If shareholders determine to sanction Jamie Dimon – the smartest man on Wall Street – for this event so be it. It is their right so to do, though one would think that they will be cautious not to remove such a skillful skipper from the tiller of their vessel.

No one else has any right to intervene in this intra-company event. JP Morgan Chase played no role in creating the September 2008 financial crisis. It stood magnificently aside as the real trash of Wall Street – Citicorp, Goldman Sachs, Bank of America, Wells Fargo and Morgan Stanley –  groveled before the Treasury Secretary and begged for public bail- outs for their dreadful companies.

Thanks to Jamie Dimon,  JP Morgan Chase needed no bailout. A bail out was forced upon the company by a weak and duplicitous Treasury Secretary, desperate to hide the names of the true villains from an unforgiving Street. The TARP loan forced upon Jamie Dimon was repaid in full in 2009. So there is no taxpayer or political interest in this $2 billion loss.

So why is Washington so interested in JP Morgan Chase (President Obama’s personal bank by the way)?  The answer is Jamie Dimon.  Although Jamie Dimon is a lifelong Democrat, and a major contributor to Democratic candidates, since 2009 he has become increasingly critical about President Obama’s mishandling of the economy, and financial regulation in particular. This irks Democratic politicians to the extent that they now desire to bite the hand that feeds them.

Jamie Dimon is highly intelligent, but not a diplomat. He does not suffer fools gladly and , God-knows, there is no deficiency of fools in the United States Congress. Hopefully, in the hearings, Jamie Dimon will finger crass stupidity whenever  it manifests itself across the Congressional tables. Because Congress is above the law, this will place him in danger of contempt charges. I trust that he will be sufficiently courageous as to shoulder such charges as a badge of honor.

If Jamie Dimon blinks in the face of intensely hostile political and media pressure, he will do a disservice to his country. In the market-place the natural response will be to take fewer risks even at the price of lower profits. This will imply fewer loans for small businesses and fewer high paying jobs in America.

“One can only hope that during the hearings, Mr. Dimon can expose his tormentors for what they truly are.  But the game is stacked against him and the knifing has already taken place in the media, making the hearings a bit like the final scene in the movie ‘Gladiator’.  The lesson Washington intends for all is clear: Cross us and we will make you pay.  Unfortunately the media and most of the spectators in the galleries are still cheering.” Lawrence B. Lindsey, ‘Why Washington Hates Jamie Dimon’, The Wall Street Journal, May 18, 2012

If you are able to inflict one clean punch, Mr. Dimon, make sure that it lands on Senator Carl Levin’s fleshy nose. Now that would be a memorable blow for economic freedom under the rule of  law!

China and the bad emperor syndrome

May 11, 2012

Francis Fukuyama (Financial Times, May 11, 2012) reminds us that, for more than 2,000 years, the Chinese political system has been built around a highly sophisticated centralized bureaucracy, designed to run a large society through top-down methods.  This bureaucracy has always been bound by rules and customs that made its behavior reasonably predictable and by a Confucian moral system that educated leaders to look to public interests rather than to their own aggrandisement.  This system in essence is the same one that operates today, albeit under the  Communist dynasty.

The Mandarin system, throughout Chinese history, has substituted for any notion of the rule of law – an independent legal institution designed to limit the discretion of government.  There is no concept of the rule of law embedded in China’s constitution or its jurisprudence.

Predictably, therefore, the issue that Chinese government has never been able to solve is what is referred to historically as ‘the bad emperor’ problem.  Unchecked power in the hands of a benevolent and wise ruler has many advantages over any other system of government. But, how can any society guarantee a supply of good emperors?  Inevitably, from time to time, bad emperors emerge. 

Three such bad emperors stand out in Chinese history: Empress Wu, who killed off much of the Tang dynasty aristocracy,  Emperor Wanli,of the Ming dynasty, who refused to come out of his palace to sign documents for nearly a decade, and Emperor Mao Zedung, of the Communist dynasty, who slaughtered more of his own people than any other human being in the history of the world.

The two dynasties in Chinese history that most resemble the Communist episode are the Qin (221-207 B.C.) and the Sui (A.D. 589-618). Both oversaw huge construction and great increases in wealth. Both also imposed ruthless tyranny, deaths from forced labor, the burning of the books and the burying of scholars and dissidents. The Communist dynasty, albeit emerging from the horrors of Mao Zedong, still shows no ability to control  for the potential  excesses of those who  follow in his footsteps.

The Communist dynasty surely now rules through shared responsibility by the standing committee of nine within the Politburo. Each president and each prime minister has a 10-year term limit. No one over the age of 67 can be considered for membership of the standing committee. Such rules, however, cannot control for the emergence of a ‘bad emperor’ in the format of a bad standing committee. Such arguably, indeed is the current situation, as the Chinese autocrats once again burn the books and bury the scholars.

Informal rules observed by a small clique of insiders can never substitute for a formal rule of law. In any system driven by the rule of men, the will of bad men may rule the people. China will never enter into the community of civilized nations until it recognizes this fundamental lesson of Western civilization and writes a constitution designed to check, even if cannot rule  out completely, worst case scenarios by placing all its leaders under the rule of law.

By turning  Mao Zedong’s portrait forever to the wall in the Great Hall of the People, and by ruling out forever any replica of his rule, China would l take one giant step out of the jungle and towards  civilization.



January 1, 2012

I write today to all those who read and to all those who comment on my columns, whether favorably or unfavorably.  You are all my comrades on our journey of exploration in a complex and very troubled world.  We learn from each other in a journey that searches for truth and honesty in a world where many do not pursue these goals. I wish all of you a very Happy and Healthy New Year, whoever you are and wherever you reside.

I am saddened by the reality that a sizeable part of my readers – those who reside in The Peoples Republic of China – are now denied access to these columns by a repressive dictatorship.  Shame on the dictators! A closed society will never fully thrive because it denies to its subjects the precious opportunity to flourish as human beings.

I dedicate my contributions during this coming year to THE PROGRESSIVES OF ALL PARTIES.  You are foremost in my mind as I craft each column. For when any one of you comes to realize that the progressive path is the wrong fork in the road, the time that I expend in crafting my thoughts into words becomes eminently worth while.

One cannot change the direction of a great nation quickly. It will take many years and a lot of luck to turn the tide back to the philosophy of the Founders. But I truly believe that one day American exceptionalism, grounded on the principles of private property, limited government and the rule of law once again will assume pride of place among a self-confident and self-reliant people.

Is democracy compatible with Islam?

September 12, 2011

The statistics on this issue are decidely discouraging.  Of the 50-plus countries where Muslims represent a majority of the population only four currently enjoy political liberty as defined by Freedom House.  Indonesia, and Mali have established democracy internally. Turkey depended enormously on Kemel Ataturk for its evolution from theocracy to limited democracy.  Iraq has had an uneasy democracy imposed upon it at the point of the American bayonet.  Turkey and Iraq lie within the heartland of Islam.  Indonesia and Mali are located on its periphery.  No Wahhabist Muslim nation is anywhere close to endorsing democracy.

Since many Muslims express a high regard for democracy in clandestine opinion polls, why do they have so little of it?  Nathanael Smith and I addressed that question in an essay published in Public Choice in 2009*.  Following detailed empirical testing of alternative hypotheses, we concluded that the decisive obstacle was a generalized unwillingness to allow religious freedom and a reluctance to accept the primacy of secular law over Sharia law. These are decisive obstacles to true democracy.

Some Muslims – especially the extremists who support al Qaeda – view a global Caliphate that combines religious with political authority and that holds sway over the entire Muslim world, as the ideal form of governance. The fact that there is no prospect whatsoever of recreating those  first four caliphs who followed the Prophet, makes no difference to the madmen who hear Mohammad’s voice in the twenty-first century air. But they are a miniscule minority of the world’s Muslims.

Much more important is Muslim reluctance to embrace any Western notion of the rule of law.  Islam is the only major religion to include specific injunctions about crime, punishment and family law.  These Sharia law commands are illiberal, indeed barbaric, in terms of twenty-first century philosophy.  The Koran mandates flogging for unlawful sex, requires that adultresses (woman only of course) should be stoned to death, and that petty thieves should suffer amputation of their limbs. With respect to inheritance, a daughter is entitled only to have half as much as a son.

Many Muslims refuse to acknowledge that rules of punishment passed down by an illiterate Prophet during the Dark Ages should be ameliorated in response to the Enlightenment and the subsequent history of Western Civilization. To this extent, many Muslims remain locked into the unlightened past.

Finally, the issue of  religious dominance cannot be ignored. Democracy is a system where individuals vote their preferences, either directly or through elected representatives. If such voters are constrained by the Supreme Power, they are not free to establish their majority preferences, where such preferences challenge Islam.  Apostasize and die – that is the Saudi Arabian creed. If God alone – as interpreted by one acknowledged Prophet – can adjudicate on what is right and what is wrong, human reason cannot prevail and democracy is doomed.

Even Turkey – the world’s most advanced Islamic democracy -is testing those limits at the present time. Given that Kemel Ataturk’s secular constraints are now severely loosened, the democracies must wait nervously to see whether the Koran or the People will determine that country’s fate.

*Charles K. Rowley and Nathanael Smith, ‘Islam’s democracy paradox: Muslims claim to like democracy, so why do they have so little of it?’ Public  Choice, June 2009, 273-299

Obama’s black man’s burden

September 1, 2011

Throughout the nineteenth century, leading European Empires – the British most notably of course – assumed willingly what was called ‘the white man’s burden’ when ruling their African colonies with noblesse oblige. To a considerable degree,  this was a reflection of the mother country’s sense of its own white exceptionalism. From its founding, the United States viewed itself – and was viewed by others – through a different lens of exceptionalism.  In this case, the sense of exceptionalism emanated not from the color of  the skin but from the characteristics and culture of the people:

“American exceptionalism is, among other things, the result of a difficult rigor: the use of individual initiative as the engine of development within a society that strives to ensure individual freedom through the rule of law.  Over time a society like this will become great.  This is how – despite all our flagrant short-comings and self-betrayals – America evolved into an exceptional nation.” Shelby Steele, ‘Obama and the Burden of Exceptionalism’. The Wall Street Journal, September 1, 2011

President Obama is fifty per cent black, and has chosen to represent himself  from that half of the color divide. It was ultimately a Republican government – and not individual initiative –  that saved blacks from the ignorance and prejudices of the white majority.  So the concept of exceptionalism embedded in America’s nineteenth century genius for freedom is an enormous stretch for this man to assume.  So it is not at all surprising that Barack Obama attained the nation’s highest office at a moment of nadir for the people’s belief in their own exceptionalism:

“Mr. Obama came of age in a bubble of post-60s liberalism that conditioned him to be an adversary of American exceptionalism. In this liberalism America’s exceptional status in the world follows from a bargain with the devil – an indulgence in militarism, racism, sexism, corporate greed, and environmental disregard as the means to a broad economic, military, and even cultural supremacy in the world.  And therefore America’s greatness is as much the fruit of evil as of a devotion to freedom.” Shelby Steele, ibid.

So it should be no surprise to the electorate that President Obama would display systematic hostility to American exceptionalism as widely understood.  He has applied presidential power, to the extent possible, to support the advance of big government, to advance wealth and income redistribution from successful to unsuccessful individuals in society, to scapegoat the nation’s financial institutions, and to subdue the spirit of capitalism. He has dishonored America’s traditional role in world politics by always leading from behind.  He has conspired to downgrade its military budget, and to challenge the rule of law where it obstructs the higher goals of rule by men. 

These challenges to exceptionalism reflect the passion of those on the liberal left whose primary objective has long been to expunge  the image of exceptionalism and to turn it instead into an image based on perfect social and economic equality. The problem that such a task imposes, for a people who, for the most part, continue to take pride in excellence, is that it threatens to eliminate completely the basis for any kind of  exceptionalism:

“But this leaves the left mired in an absurdity: It seeks to trade the burdens of greatness for the relief of mediocrity.  When greatness fades, when a nation contracts to a middling place in the world, then the world in fact no longer knocks on its door….To civilize America, to redeem the nation from its supposed avarice and hubris, the American left effectively makes a virtue of decline – as if we can redeem America only by making her indistinguishable from lesser nations.” Shelby Steele, ibid.

 For President Obama, America’s sense of exceptionalism is a real stretch. Not so for the majority of Americans in a still proud and optimistic nation. If President Obama is to have any chance of re-election in 2012 – indeed to be worthy of any consideration at all by the nation that he represents – he will have to shed that black man’s burden and return to bedrock American values.

Shelby Steele, a senior fellow at Stanford University’s prestigious Hoover Institution, is black.


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