Profits? O! the Humanity! or, High School Journalism Comes to the ACLU

So a Facebook friend of mine threw up a link to this article at the ACLU’s website, written in commemoration if not in honor of the 30th anniversary of Corrections Corporation of America. At the risk of understatement, the ACLU is not a fan of CCA or what it and its competitors do.

For those who don’t know, CCA is a corporation which runs prisons and jails, together with ancillary services. They’re a publicly traded corporation now, but they were founded by a couple of West Point grads and a few others. They’ve done rather well for themselves over the past decades. They’ve had their share of black eyes and stubbed toes – hardly surprising, given the industry they’re in and the nature of the players in it – but I’m not aware that the facilities they operate are predictably or measurably more brutally or cruelly or poorly run than those by any governmental entity or agency. Interestingly, the ACLU article doesn’t even allege that they’re measurably less properly operated than government facilities. Since the ACLU holds itself out as representing the Constitution and no other client, you’d think that systematic violation of prisoners’ rights under any provision of federal or state constitutions or statutes would not merely be mentioned but would be harped upon. 

What the ACLU does find objectionable, and goes into in considerable detail, is that horrors! CCA turns a profit and tries to do so. They quote from the corporation’s most recent Form 10-K, “filed with the Securities Exchange Commission” – ooooohhhhh!! capitalisssssstsssss! you can almost hear the author hiss, almost see the waves of fear and revulsion sweep over the author’s face – in which CCA points out, entirely correctly, that their business model relies for its continued viability upon relatively high levels of incarceration of criminals and that their continued profitability could be adversely affected by any governmental measure which changes that, from early release to general relaxing of sentencing practices to changes in prosecution patterns to underlying substantive changes in criminal law. 

The ACLU presents this statement in an SEC filing as if it were a business plan to crank up the incarceration of poor defenseless citizens. For starts the SEC is not the Trilateral Commission, or the Illuminati, or any other crypto-dictatorial operation. It enforces and administers those laws and regulations which relate to public transactions in securities, the operations of the exchanges where those securities are traded, and the companies whose securities are traded on them. That’s it. If your company’s securities are publicly traded you are required to file with the SEC certain periodic disclosures in which you describe specific things about your company, its operations, it finances, and the risks to which investors in its securities are exposed. That would necessarily include, to the extent knowable, a description of those things which could undermine the company’s viability. By way of example, Bobby Kennedy’s boy runs some “green” operation which has already lost well over a billion dollars, with no end in sight. Their most recent Form 10-K recites that their continued viability relies principally on keeping the government hand-out spigot wide open. Seriously, that’s their game plan. Well, of course. I haven’t read them, but I’d wager that Northrop Grumman’s filings will mention somewhere that any widely adopted program of disarmament would have disastrous consequences for their profitability. A corporation which is in the business of providing, for example, heating oil to a region of the country will be smacked hard by an unusually warm winter. A municipal water system’s revenue will be adversely affected by a wet summer. And so forth. All of which is to say that the observation that gives the ACLU such a delightful frisson of disgust merits a great big bowl of steaming “so what?” 

The ACLU then begins its entirely predictable screed about how we’ve been locking up so great a proportion of our population, in fact an increasing proportion of our population, blah blah blah. Notice the article traces this trend back to the 1970s . . . which the ordinary mathematician will pick up on was well before CCA was formed, and even longer before it became a major player. The author fails to mention that “get tough on Crime X” has been wildly popular as a policy position since the late 1960s. In fact it was precisely the opposite trend in penology – the pat ‘em on the hand and help them get in touch with their inner child school of criminal justice – which produced the enormous surge in crime and specifically violent crime during those years, and which sparked the lock ‘em up ‘til they rot school of thought. The ACLU also overlooks mentioning that at the same time we’ve been locking up criminals (and yes, Dorothy, illegal aliens are criminals by definition) at ever-increasing numbers the rates of almost all violent crime have plummeted. 

The not-quite-unspoken position of the author is that a great deal of the incarceration for drug-related offenses is a morally reprehensible thing. Maybe it is; maybe it’s not. I certainly can see a great deal of merit on both sides of that particular argument. But what is not at all subject to dispute is that it was precisely the draconian mandatory drug sentencing laws which allowed the federal government to break open the Italian organized criminal empires. The mafia goon who was looking at a seven-year hitch for extortion or arson or beating the living snot out of some shopkeeper was willing to sit that one out and tell the prosecutor to do his worst. Explain to him that he’s looking at 25-40 to be served at 85% for the pound of coke in his trunk and suddenly he begins to study really hard on whether omerta maybe doesn’t have its limits. I freely admit that the mandatory minimum sentencing wasn’t adopted to achieve that particular effect, but that’s lagniappe, so far as I’m concerned. And were the mandatory minimum sentences really so unreasonable at the time they were first adopted? Recall that inner cities were the fora for extraordinarily violent gang wars related precisely to drug dealings. What precisely were legislators supposed to do in the face of feel-good judges who took the position that it was all Just a Big Misunderstanding? You can’t “treat” someone who will line up an apartment full of people, including the neighbor kid who just happened to have stopped by to borrow his buddy’s new cassette of music, and blow 9mm holes in the base of their skulls. You can’t counsel someone like that into any condition fit for human society. 

The ACLU author points out that CCA spends a great deal of money on lobbying and supporting political candidates. Well, yes it does. So do those groups which oppose them for making a profit off of prison and jail operations. So do the prison workers unions. If what CCA were doing were uncontroversial and unopposed there would be no reason to try to convince anyone to let them have a crack at it. They’re no longer the only company in that business any more, either. Just by way of compare-and-contrast, Boeing spent monstrous sums of money pushing its aircraft as the replacement for the KC-135 tanker. They even had the competition re-opened when they initially lost out to Airbus. George Soros spends vast amounts of money to benefit his operations. Like when he poured millions into shutting down off-shore drilling in the Gulf of Mexico at the same time he was putting eye-popping bucks into the newly-discovered Petrobras offshore field in the South Atlantic, a field the economic viability of which will be much accelerated if competing deep-water operations are strangled.

 All of which is to say nothing more than that any large government contract or large government initiative is going to generate corresponding effort by those seeking to obtain or deny that contract for or to any particular operation or group, or to steer that initiative to its own benefit. It’s just in the nature of the beast, so long as the beast of government continues to look and act like the beast we currently have. 

In the end the ACLU article really can’t muster up much more against CCA than . . . well, ick! and how dare they take away our Government Jobs for the Boys. Mind you, I don’t carry a brief for CCA. Either they can do the job more cheaply than Brand X or the government itself, or they can’t. Either they can do the job in conformity within applicable constitutional and statutory constraints, or they cannot. If the answers to those are yes and yes, well big fat hairy deal, says I. If not, let someone else have a go at it. If no one can I suppose we’ll just have to bite the bullet and have the government in the business of warehousing people we’ve decided we don’t want among us, for whatever reasons. 

My Facebook friend, whom I’ve known for 24 years now, was just outraged at the thought of CCA making a profit off of jails. Why? I wanted to know. The very idea of making a profit from running a jail was “unacceptable, period.” That’s a pretty strong (and bald) statement, so I pushed back a little bit. Is it outrageous that civilian contractors make a profit from running military mess facilities overseas? Apparently it was; the military trains military cooks, after all. I wanted to point out that every training dollar diverted from training some guy to over-cook your bacon and under-cook your eggs, and instead put towards training the guy who’s going to provide you fire support as you clear a block house is a dollar better spent than it had been.  I decided to explore some other situations in which the government takes some task which is more or less intrinsically “governmental” and engages a civilian contractor to do it. Like transporting military stores, supplies, or personnel on civilian ships or aircraft. Or hiring a private contractor to do the landscaping around city hall, or a private company to pave the city streets. I cited him to the Princes of Turn und Taxis, who for generations ran – for their own profit – the postal system of the Holy Roman Empire. Closer to our own day, take a look at all those private contractors trucking the U.S. mail around; even the guy who stuffs the mailbox in front of your house with glossy coupon booklets is not a government worker, not outside the city limits. I pointed out to my buddy that in many countries the land line telephone systems are and have always been government-owned and operated, while ours never has been. Are those other countries inherently morally superior in that respect, and we irredeemably damned? Or how about other utilities: Is it inherently morally superior that the TVA belongs to the federal government and ConEd or Duke Power does not? If those arrangements are not morally reprehensible, what is so magic about administering a system of confinement, where it is the confinement itself which is the punishment? In other words, we no longer sentence people to the treadmill, or to hard labor busting rocks. You go to prison and that’s your punishment: you’re in prison as opposed to being on the street. End of story. 

More to the point, where is the constitutional defect in any of the above arrangements? Is getting locked up in a twelve-by-twenty cell with three other guys, a stainless steel toilet, and one’s own thoughts somehow more or less “cruel and unusual” depending on who signs the paycheck of the guy who toddles around to make sure the door’s locked tight? What due process right does a prisoner have to be superintended by some guy who’s in the state retirement system versus having a 401(k)? Is it a denial of equal protection of the laws that some prisoners are herded into and out of the showers by a guy who’s civil service and others by some guy who’s an at-will employee? I’m just not seeing it. 

My Facebook friend allowed that it was just . . . well, “unethical” for some company to “make a profit off human misery.” Errrmmmm . . . no one works for free; if you don’t believe me try cutting the wages of the government-employee prison guards. But to engage my friend more closely on his own argument’s terms, I’m not so sure he’s not looking at the horse from the wrong end. CCA is not “making a profit from human misery”; they’re making a profit providing me a profound relief from human oppression, in fact for promoting my own freedom. Those countries in which criminals run rampant and unpunished, or where the prison system – for them at least – is just a home-away-from-home, a place for them to continue plying their trades while someone else provides them three hots and a cot until they’re ready to go back out, are all uniformly miserable and poverty-ridden places. Read the descriptions of the blatnye in Solzhenitsyn or Dolgun or Bardach or Shalamov. Among the many, many oppressions of the ordinary Soviet citizen was the fact that the entire country was over-run with violent criminals who if anything received preferential treatment in the prison and camp systems. Since the Soviet Union’s collapse the same dynamic has played out as well. Among the many reasons why Sicily has always been poor as Job’s turkey is because it is so thoroughly dominated by the criminal clan system. Ditto the Balkan countries; the ordinary citizenry for centuries has been prey to well-organized and deeply-rooted criminal exploitation. In dear ol’ tolerant, drug-legalized Holland casual street crime is rampant. Oh sure, they might not knife you outright or just for fun, the way some of our street thugs will, but you’ve still lost your wallet and all its contents, and even if your mugger is caught, he’ll be back on the street and most likely have taken his next victim before you can even replace your driver’s license. Excuse me if I object to living in that sort of a society, and if I’m tickled pink that someone will come along and for a reasonable price stack these people behind stout walls and bars so I don’t have to worry about meeting up with them. The free-range criminal is the scourge of his fellow-men. Any system for removing them from our society for prolonged periods is not a system for inflicting human misery but rather a system to free the law-abiding from a pervasive system of terror. Moving that same argument one further step back, how about companies that specialize in disaster recovery? They don’t work for free. Aren’t they “profiting from human misery,” since without massive disaster there’s no work for them? I don’t, in short, think my friend’s “profiting from human misery” objection holds up to scrutiny. 

Well . . . so my buddy says, CCA is “not accountable”? To whom? Those contracts are extraordinarily detailed. The private operators are subject to state supervision and to state inspection, and last but not least they’re amenable to suit in federal or state court for neither more nor less the same causes of action as a governmental defendant would be. More to the point, who’s likely to be more sensitive to making sure his job is done right? Think it will be the guy who can get his entire company’s contract pulled, and maybe not just at that facility, if he screws up, or who can be fired at the drop of a hat and have to wonder how he’s going to make next month’s house payment? Or do we think it will be the guy protected by civil service rules and has to fear at most getting shuffled to some more out-of-the-way, even-scuzzier facility than the one he’s at? You can’t fire the government; you can’t even non-renew its contract. You can fire CCA; you can tell them that it was a nice experiment but you don’t really think it’s worked out as well as you had hoped. When was the last time a government got busted for not doing what it promised its people it would do? When do you think the last time CCA or some other private operator got sued for not doing what it promised? 

As mentioned, I am no advocate for CCA or anyone else. I’m also not thoroughly convinced that the core objection of the linked ACLU article – we lock up way too many people for way too penny-ante reasons – is not founded on some pretty compelling arguments. But none of those arguments have anything at all to do with whether it’s a good idea, a bad one, or indifferent, whether prisons are privately operated. The ACLU’s weighing in on this subject is indistinguishable from the ABA’s plumping for a frontal assault on the Second Amendment.

 

Unfortunately, Aleksandr Solzhenitsyn was Unavailable for Comment

The Boston Globe has a piece inspired by the recent suicide of Aaron Swartz, the chap who gave us RSS and Reddit.  He had tapped (literally, he plugged into the system itself, as opposing to hacking his way in remotely) into a database — JSTOR — owned by MIT and which contains millions of academic journal articles.  Hardly surprisingly, MIT does not make that database available to the general public for free (although I understand that free access is granted to some subset of its faculty and/or students; I can’t say I’m certain of the details).  Swartz’s laptop downloaded something like 4.8 million of them before he was caught.  He was charged with 13 federal felonies carrying up to 35 years in Club Fed.  The prosecutor offered him a plea bargain:  he’d cop a plea to all 13 charges, serve six months, and presumably some further period on probation.  He hanged himself instead.

I don’t carry a brief for thieves.  In fact, I don’t even practice criminal law.  In truth, our firm represents, among other clients, lenders.  From time to time those lenders will make construction loans to borrowers who then take the money and use it for everything from their other projects to chasing women to paying off their own credit cards.  Our state legislature defines those sorts of monkey-shines as “theft,” and stipulates that it they are criminally punishable as such.  Over the years we’ve got used to our local district attorney’s office staring blandly at us and informing us, “That’s a civil matter.”  So my initial reaction to the specifics of the Aaron Swartz story is that someone that brilliant should have asked himself, up front, whether and if so to what extent he was willing to accept the risks of what he was doing.  He sure as hell could have afforded a lawyer to ask what were some of the consequences; he was anything but indigent.

On the other hand, we do have the disturbing question of how it was that the prosecutor was willing to take six months when she’d cobbled together a 13-count indictment.  I mean, any act that merits 13 felony counts ought to carry a stiffer tariff than six months, and any act which is adequately expiated by six months in Club Fed (and he’d have got credit for any time served, by the way) ought not merit 13 separate felony charges.  On a more prosaic level, either this prosecutor feels confident enough of her 13 felony counts and her ability to make them stick that she thinks 35 years is within the realm of the possible, or she’s really concerned that she’s going to come away with little to nothing of that and so is willing to take less than the 11/29 that some drunk driver gets for his second offense.  No matter whether you look at it from the perspective of morality or competence there is a yawning chasm in this story which requires explaining, and which suggests many of the questions raised by the Globe article.

For purposes of this post, I’m less interested in the nostrums examined by the article than I am in the dynamic exposed by Swartz’s story, and its alarming resemblance to a system of “justice” which just about everyone outside Dear Leader’s administration would condemn.  The article quotes the Blogfather Glenn Reynolds from his article (linked to previously), “Ham Sandwich Nation: Due Process When Everything is a Crime“:  “What we really have is a plea bargain system with a thin froth of showy trials floating on top.”

You know what that system resembles uncomfortably closely?  The system described by Solzhenitsyn in The Gulag Archipelago.  Under the Stalinist system, the best evidence of wrong-doing was the confession.  Thus the entire system was designed to elicit the most confessions, and the interrogators were ranked, promoted, demoted, or run through the system themselves based upon how many confessions they extracted and how quickly.  It was part of prison lore when one should confess, and to what, and in what order, and how.  If one wished to avoid being shot, when/how/to what should one confess?  Whom else should one implicate?  Was there any difference in sentence based upon one’s confession?  [Zek joke:  Two prisoners are discussing their convictions and sentences.  One allows that he’s been sentenced to a “quarter,” i.e. 25 years.  The other asks him for what.  He answers, “Nothing at all.”  Response:  “You lie!! The sentence for nothing at all is ten years!”]  If one deprived one’s interrogator of a proper confession, one got cycled upward through the system.  One got a more senior, more experienced interrogator.  One got shifted to a punishment cell.  One got moved to Sukhanovka, whence only one person is known to have emerged both alive and sane (proud to say he was a 20 year-old American boy, Alexander Dolgun).

And what, exactly, is the plea bargain system other than a system for the extraction of confessions?  How do the motivations of the NKVD officers who beat Alexander Dolgun on his genitals, or who beat him until his pants legs stuck to his body from the dried blood, differ from those of your typical ink-seeking missile a.k.a. the American prosecutor?  Stalin rewarded his most prolific interrogators with promotion and privilege (at least if he did not have them shot; the NKVD itself was purged in 1937-38).  American prosecutors who most visibly show themselves “tough on” crime X are rewarded with job tenure, advancement, and political influence.  I will admit that there is the not-unimportant distinction that the “crimes” the NKVD was “investigating” were entirely made-up except in the rarest of cases, even on their own terms.  For example, pointing out how crappy a Soviet-made article was, especially in contrast to a Western counterpart, was a crime (Alexander Dolgun called out his interrogator for speaking highly of an American-made Parker pen . . . and was beaten nearly unconscious for it).  But the NKVD even dispensed with the fact of whether the prisoner had in fact done it.  On the other hand, how many people here have pleaded to a crime which they either did not do at all, or to which they have a valid defense, only because they’re looking at 29 years in hard-time if the jury doesn’t believe them or credit their evidence?  In our system the down-side risk of taking a position that one doesn’t believe in good faith is all, all on one side.

It’s that mis-match between the defendant’s calculus and the prosecutor’s which is at the heart of America’s systemic problem.  Acknowledging that the suggestions mentioned in the Globe article may somewhat mitigate the objectionable portions of the dynamic, I don’t think genuine reform is possible without giving the prosecutor’s office some substantive down-side risk.  I mean, who hears about the acquittals, except in the very prominent defendant’s case?  The prosecutor really doesn’t care how many cases are tried and lost outright, or how many times a charge of Really Bad/Serious/Awful Felony X is tried and what the jury comes back with is a conviction for Slap on the Wrist Misdemeanor Y.  What gets the ink, and the votes, and therefore the prosecutor’s attention, are the convictions.

What will get the prosecutors’ attention is losing money.  Which suggests that (i) some portion or all of the defense costs on an acquittal, or a conviction only of a lesser included offense, should be paid by the prosecution, and (ii) the funds to pay those should come from and out of the specific prosecutor’s office.  You could implement all sorts of sliding scales, from number of counts charged versus counts convicted, to whether a Class A felony is charged but only a Class C felony is convicted, or whatever.  The scale could even be adjusted so that the more times a specific prosecutor’s office gets popped, the greater the percentage of the defense costs they have to absorb.  It doesn’t have to be black-and-white, all-or-nothing.  But the prosecutor needs to have a powerful incentive, an incentive to ask himself each time he decides to charge someone, whether his decision is or is not going to affect his ability to put food in front of his children.  Because that’s sure as hell the kind of questions the defendant faces when he’s figuring out whether and to what he is going to plead guilty.

What’s Next? The AMA Endorsing “Reasonable” Euthansia?

The ABA has decided to weigh in on the effort to subvert one of the specifically enumerated rights set forth in the Bill of Rights.  Yep; an organization that is supposedly all about preserving the integrity of the Constitution, and which regularly goes to bat for all manner of purely invented rights which appear nowhere in the document, either expressly or by necessary implication — such as the “right” to kill one’s unborn child for no reason other than one’s whim of the moment — and which solemnly pontificates about the “right” of enemy combatants captured in the field to be run through the same criminal justice system, and with the same procedural “rights,” as the guy who pulls a smash-n-grab down at the local jewelry store on Main Street, has now decided that those nasty ol’ dead white guys blew it when they actually went and wrote down, in black ink on white paper, that the right of “the people to keep and bear arms shall not be infringed.”  The ABA is supposedly above mere politics.  The American Bar Association, like the ACLU, is not supposed to take sides against the Constitution.  For it to back a frontal assault on an enumerated right is no less outrageous, in its own context, that would be the American Medical Association’s endorsing a “reasonable” bill that provided for euthanasia of what a regime more honest than ours once described as “useless feeders.”

The bill endorsed — Sen. Feinstein’s laughably superficial effort to imposed a ban of a kind that has never stopped and will never stop a lunatic bent on mass killing — has absolutely zero to do with what is allegedly the ABA’s core mission:  the improvement of the American bench and bar.  The comments to the article are nearly uniformly hostile to the action, and I am pleased to note that a large number announce intentions to resign their ABA memberships.  I am a member of several sections of the ABA: the taxation, real property, probate and trust, and small business sections.  I do in fact get useful publications from those section memberships and of course were I no longer a member of the ABA I would not have that access.  On the other hand I would not be utterly deprived of the information; I’d just have to seek harder to find and digest it on my own or from alternative sources.

With this latest thrust, the ABA un-masks itself and reveals why it is one of the most pernicious organizations in the United States today.

Think It Can’t Happen Here?

It can, and it has.  The title of the linked article, “Ham Sandwich Nation: Due Process When Everything is a Crime“, by Glenn H. Reynolds, better known to the Blogosphere as the Blogfather or more technically as Instapundit, sums up the conundrum.  How meaningful is the notion of “due process of law” when the government (i) can make pretty much anything it pleases into a crime carrying multiple years’ imprisonment and millions of dollars’ fine as its punishment, and (ii) has zero, as in none at all, restraint on which persons it chooses to drag through the hedges backward, and how fast, and for how long?

I don’t practice criminal law, and so I’m not personally exposed to the prosecutorial dynamics that Reynolds describes.  I do know for a fact that it occurs, and not just at the federal level.  My friends who practice in that area routinely describe the kinds of over-charging and grand-standing which produces prosecutorial outcomes driven less by the answer to the question, “What harm has been done to the peace and dignity of the State and its citizens?” than by the questions of, “How much juice does this guy have and what kind of ink will the story get?” 

In our own little corner of paradise, if you bounce a $75 check at Tractor Supply Company you’re going to be arrested.  If you steal $500,000 of construction loan proceeds from a bank (which our legislature has specifically defined as within the theft statute, punishable by the amount misappropriated) by spending it on your own unencumbered project, or by chasing women, or by paying your credit card bills from Bass Pro Shops, our local district attorney will look at you and say, “That’s a civil matter.”  No it’s not, jackass; it’s a crime and at a half-million it’s well into Class B felony range.

Around here, if you get caught with a half-burned spliff in the ashtray of your car, your next stop is the grand jury.  If you’re moving cocaine by the brick, and your wife and the prosecutor’s wife happen to be buddies, when the drug squad drops on your house out of the blue, they’re not likely to find a single trace of the stuff.  If you’re the county mayor and a long-time elected official, and you gaze upon the employees’ health insurance add-on coverage premiums, withheld from the employees’ wages for the purpose of paying for additional insurance coverages beyond the basic package paid by the county and you plunder those premiums to pay ordinary operating expenses of the county because you and the county legislative body can’t get off your butts and balance a budget (or even pass one), and then the premiums get three months in arrears with threats of cancellation for non-payment being made, not only do you not get prosecuted, it’s not even reported in the local birdcage liner.

Don’t even get me started on the boondoggles of the various “drug interdiction” squads.  They’re the guys you see hanging about the interstates in brand-new vehicles with more stuff sticking out of them than you can say grace over.  No kidding; I was in the navy in the late 1980s and our battle groups got regularly trailed by Soviet “fishing trawlers” that never seemed to put a net in the water, yet had so many antennae poking out that they looked like a porcupine.  In our state, most of the cash they seize the specific squad gets to keep to fund itself.  I’ve heard from several people with first-hand knowledge that what I had suspected would go on in fact has gone on and continues.  They’re not interested in actually breaking up the drug transportation networks.  What they do is seize the cash, give the driver a nice lenient bond, and then when he skips make no terrible effort to go get him.  In the meantime they keep up-grading all their vehicles and gee-gaws, building brick-and-mortar headquarters offices well-furnished with all the latest gimcracks, hiring all their buddies, and getting nice raises and benefits.  Well.  Congratulations to us; we’ve now given law enforcement officials a direct, immediate cash interest in the continuance and expansion of criminal activity.  How’s that likely to work out, over the long run?  How long will it be until the drug cartels figure out that all they’ve got to do is set up patsies with sufficient cash to keep the Drug Task Force folks in new SUVs, write it off as a cost of doing business, and go on their merry ways?  Have they already figured it out?  Not to sound too tin-foil-hat about it, but have Arrangements Been Made?  Drop a dime on a particular vehicle, to the effect that it’s carrying $35,000 in small bills, then when the photo-op is going on quietly send through the $1.4 million, or the forty kilos of smack.  Based upon scandals that are known to have occurred in law enforcement, can anyone say in good faith that such a thing would not be thinkable?

Among Reynolds’s suggestions, I particularly like the suggestion of requiring the government to bear some portion or all of the defense costs for bogus charges which they have no reasonable basis to think can be proven beyond a reasonable doubt.  I question, however, whether that would truly work any change in behavior so long as District Attorney Schmuckatelly gets to send the bill up the chain for someone else to pay.  Make the prosecutor’s office pay for it out of that office’s budget, including the salaries of the district attorney general, his assistants, and all others in that office who exercise any discretionary power in respect of prosecutorial decisions, including the rent for the space, including pension benefits and insurance benefits, so that the stakes on either side of the game are more similar, and then you might see some greater attention paid to the issue of whose life do we choose to wreck.  It’s a sad commentary on human nature, but the basic truth is that people at all levels make different decisions when they think they’re spending someone else’s money.

Finally, I wanted to observe the irony of Reynolds’s opening his article with a quotation from Robt Jackson.  The man knew whereof he spoke.  As chief counsel for the IRS under FDR, it was Jackson who was instructed to bring criminal charges against Andrew Mellon, who’d been Sec’y of the Treasury under Hoover, for having claimed certain deductions from his personal income tax liability.  Jackson did it.  He actually indicted the former Treasury Sec’y and dragged him through the hedge backward and very, very publicly.  FDR got huge amounts of fawning press.  There was only one little ol’ problem with the situation:  The actions for which Mellon was prosecuted were expressly permitted as legal under the income tax laws then in effect.  And Jackson conceded as much (in writing, if I recall correctly), but went ahead with the prosecution.  His payoff a few years later was an appointment to the U.S. Supreme Court.  The whole sordid tale is told in Amity Schlaes’s The Forgotten Man.  I read it and my admiration for Jackson, whom I’d previously held in pretty high regard, evaporated.  I mean, that’s not even a close call; he should have been disbarred.

Unless and until something changes, we none of us have any greater protection from what Reynolds describes than our own obscurity.  Until then, we live in a piss-off-one-wrong-person universe, where all its takes is one person with enough juice and an axe to grind to go see the prosecutor, and the next thing you know you can’t make your mortgage payment because it was either that or pay your defense lawyer, or the forensic accountant, or the DNA analysis, or the independent investigator.

If We Had More Computers, All Our Problems Would Go Away

At least that’s what we’re told by Those Who Know Better.  E-filing of tax returns is going to save the whales, or the baby seals, or the Chesapeake Bay, or something like that.

Turns out what it does is enable massive tax fraud, by taxpayers, scam artists, and e-filers.  Gee, who could have seen that coming in a system which removes any sort of paper trail, any wet signatures, any verification, in fact, that anyone in the system is actually who that person purports to be?

For myself, any communication I undertake with Uncle Sugar in respect of my or my firm’s taxes is not only done on paper, but via certified mail, return receipt requested.  Sure enough, each year for the past three years I’ve got a letter, along about February, from the Social Security Administration, telling me I haven’t filed my W-3 and W-2s for the next preceding year.  And each year I pull out my file copies, together with the return receipt showing the date on which they received them, make copies of everything, and send it back along.  This past year, I even shoved a cover letter in, and as I explained to them, “anticipating the letter I expect to receive in February, 2013,” went ahead and enclosed copies of the 2011 forms as well.  Do I expect it will have done any good?  Scarcely.

The money quotation from the linked article:  “In sum, e-filing helps the IRS with audit selection, costs the Treasury billions through fraud, and transfers many costs of tax administration to you.”  Which makes it the quintessential government program.

Sounds Like a “Reasonable Restriction” to Me

Let’s see:  You’re in a country which is — at least insofar as the riff-raff are concerned — explicitly run according to the precepts of the Religion of Peace.  We ignore for the moment that the personal lives of the super-dooper wealthy, including pretty near all the members of the ruling family, more closely resemble something from the latter days of the Roman Empire, only with less restraint and vastly more money.  One of the precepts of the government is that public practice of any religion other than the Religion of Peace is a disturbance to public order, which is not that far-fetched, in that one of central tenets of the Religion of Peace involves the forcible conversion or extermination of the adherents of any religion other than the Religion of Peace.

 Thus, if you catch, say 40-odd Christians plotting — privately — to celebrate Christmas, well, you’ve done a good day’s work by arresting them and seeing to it that the gross provocation to the adherents of the Religion of Peace does not in fact occur.  Which is what just happened in Saudi Arabia.  This, folks, is crime prevention as it ought to be. 

The Saudis’ swooping down on a house of Christians because they just might be a-fixin’ to observe Christmas is, I humbly suggest, no more unreasonable a restriction on those folks’ freedom of conscience than the proposals by Dear Leader, his unpaid interns (for which read: the mainstream media), and his sycophants in Congress that my rights under the Second Amendment must be infringed (gosh; where have I seen that verb before?) because someone other than I may — just might — use the same freedoms that I enjoy in order to commit something that is and would be a crime no matter whether he used the same rights or something else.  I mean, Adam Lanza’s slaughtering 20 children and six adults (other than himself) would have been the crime of murder whether he did it with piano wire, a machete, a baseball bat, a full-automatic Uzi machine gun, or by tying their hands behinds their backs and shoving tennis balls down their throats.  He’s willing, perfectly willing, to commit mass murder, but Dear Leader expects him to flinch before a ban on scary-looking semi-automatic weapons?  Because the Lanzas of this world just maybe might use a scary-looking semi-automatic weapon to commit mass murder — just like those 40-odd Christians in Saudi Arabia might have provoked the Religion of Peace into yet another public rampage — my ability to defend myself and my family must be pruned back to a level thought “reasonable” by people who receive armed protection whenever they’re out and about.

Many years ago Justice Oliver Wendell Holmes, Jr., set up a rhetorical question suggested by a particular argument.  He then observed (I’d thought I’d run across this line in a Supreme Court opinion, but a quick Westlaw scan didn’t pull it up; maybe it was in an article, book, or interview), that “to ask the question is to answer it.”  To assert that a liberty interest guaranteed to me by the explicit language of the Constitution itself must be infringed because of what some unknown person, under unknowable circumstances, might hypothetically do if extended that same liberty, is to refute the assertion.

Dots, Connected

“No good deed goes unpunished” is a maxim that pretty much everyone except the irredeemably foolish learn at some point, if only temporarily.  “No good intention goes unperverted” would be the corresponding maxim of government.

The Community Reinvestment Act was passed in 1977, back in the waning days of blind faith in government “initiatives” to accomplish just about anything, with the stated goals of increasing the number of Americans who lived in their own house.  On its face this seems to be not just a morally commendable goal — “landlord” comes in neck-and-neck with “tax collector” and “kulak” for most-reviled occupation — but Good Policy as well.  There are hosts of desirable socio-economic data which are positively correlated with home ownership, and equal numbers of undesirable data which are negatively correlated.  So by increasing home ownership we increase the Good Things and decrease the Bad Things.  All at the margins, of course, but hey!, it’s still a twofer and every step forward is a step forward.  And all that, right?  So let’s throw it against the wall and see how much closer we can get.

How the statute worked was that it loosened the loan underwriting requirements that banks were otherwise required to observe in making residential loans.  “Loan underwriting” is the technical term for “those criteria by which a bank determines whether any particular loan is an acceptable risk.”  Much shorter and easier to remember, in other words.  Generally banks, the deposits of which are insured by the FDIC or its S&L counterpart, FSLIC, or those which are to be guaranteed by an agency of the federal government, such as the VA or the FHA, or which are to be purchased by an entity which is backed by the federal government, are required to make some sort of effort to figure out ahead of time whether any particular loan is likely to be paid back, and not to make the loan at all if the answer is too close to “no.”  There are a whole host of things that banks look at, such as income-to-fixed expense ratios, the amount of the loan expressed as a percentage of the collateral’s value, the prospective borrower’s track record in paying his other creditors, whether the borrower has, within a certain period of time before, sought the protection of the bankruptcy system, the prospective borrower’s other unencumbered assets expressed as some percentage of the prospective loan, etc. etc. etc.  Generally those lenders are required to verify what their borrowers tell them.  They do that by requiring the production of tax returns, bank or investment account statements, or obtaining information from unrelated third parties like appraisers of the proposed collateral, or credit reporting agencies which collate information about the proposed borrower.  All well and good, and proper when you consider that, however imperfect it may be in that function, the past is in fact the only thing we have to rely on in figuring out what the future is likely to look like.

The CRA explicitly provided that for certain borrowers, in certain locations, and under certain circumstances, a lender was permitted to look at a loan application that fell into the “don’t make this loan” territory and ignore the warning signs.

A quick aside:  Those folks who think that banks just made up all this stuff about loan underwriting requirements in order to deny loans to people actually able to pay the money back, just because . . . well, just because, are fools.  Banks do not make money if they do not make loans.  OK?  They owe the money on their deposits, including interest; those deposits are obligations on the bank’s books.  Banks cannot get money to loan without themselves borrowing it, from their depositors, or from the Fed, or from other banks.  The only way they can pay the interest is by charging interest and then actually collecting it.  If they make good loans, they stay in business.  If they make bad loans, they cannot pay their debts and, once they’ve exhausted their own capital, they go out of business.  Period.  Banks which willingly pass up good loans are leaving money on the table.  Banks which by bigotry exclude entire classes of borrowers or depositors because they’re . . . well, not people like us, create business opportunities for others who are savvy enough to court those good loan and deposit customers.  Like the Italian-American Immigrant Bank, which loaned to that group because they understood that Italian immigrants paid their bills.  You may have heard of them; they’re now known as Bank of America.  Don’t think I’m just making this up, either; Gary Becker won a Nobel in economics in part for his study of the economics of unjustified invidious discrimination.  He showed that actors who indulged their bigotry under circumstances where there was not some concrete basis for doing so (such as, for example, not serving a drunk stinking of his own piss and who also happened to be black, versus someone who just decided he wasn’t going to do business with the 20% of the town’s population that was black) paid a price for it, and that in a free market, without direct or indirect government subsidy of such behavior, it tended to go away because the people who paid the price realized they were paying it.

The mildly-common-sensical reader will immediately note a few problems with the thinking behind the CRA.  For starts, it treats the genuine economic considerations behind loan underwriting as if they in fact did not exist.  Telling Lender X that it may ignore adverse loan underwriting results for a specific loan application does not mean that the loan is now less likely to prove to be a bad loan.  Secondly, it assumed that because A and B are positively correlated, it must be because A causes B, where A is home ownership and B is positive socio-economic attributes.  This of course not only confuses correlation with causation (the first is a statistical phenomenon that can be determined based upon counting instances of A and B within a population; the second is a logical relationship the existence  and directionality of which can only be determined by experiment and examination of the specifics of the population in question), but it made the assumption that the direction of causality was from A to B.  Of course, what if it’s B that causes A, or what if A and B have no direct causal relationship but rather are both results of (that is, both are caused by, rather than cause) some other factor C?  Artificially increasing A is simply not going to produce more of B in either such case.

In 1995 the enforcement mechanisms under the CRA were significantly sharpened.  Now your examiners were authorized to determine how many CRA loans you ought to be making, and if they found you weren’t making enough, they could fine you.  Really.  No kidding.  You exposed yourself to liability to the government if you did not make sufficient loans to people who could not reasonably be expected to pay them back.  At about the same time, Fannie Mae and Freddie Mac decided, on their own, that they were going to increase the percentage of their total loan portfolios represented by “sub-prime” loans (in other words, loans made to people who weren’t likely to pay them back, including specifically CRA loans) to up to 50%.  You read that number right:  Fannie Mae decided that it wanted to have half of its loans consist of paper that was more likely than not worthless.

Well now.  What happens next?  In point of fact sub-prime loans, as a percentage of the total loan market, went through the roof.  And the race was on.

Audit of a bank’s CRA compliance was no empty threat.  Bank of America within the past few months paid $25 million to settle a CRA enforcement action brought by the DOJ.  That’s a lot of money to pony up because you tried not to lose money on bad loans.  But that’s the perversity of the incentive system we created.

Bank of America is of course a large bank.  But what about smaller banks, community banks?  Well, let’s say that I work for Community Bank X, and I know that my bank has a corresponding relationship with Fannie Mae.  That means that I know, for a fact, that every loan which I make which fits within the loan standards established by Fannie Mae, whatever those standards may be, I can originate and have sold and off Community Bank X’s books before the ink is even dry on the closing documents.  In other words, I know that, so long as I have a loan applicant who fits within Fannie Mae’s underwriting requirements, I can make that loan with zero effective risk to my bank.  Community Bank X only has a re-purchase obligation in the event the loan didn’t comply, at the front end, with whatever requirements Fannie Mae had in place at the time.

Let’s see how that plays out:  I have a loan applicant come to see me.  I can look at their application and just about guarantee that they’ll never, ever be able to repay this money.  But wait:  This application in fact does fit within the You-Gotta-Be-Kidding-Me program recently rolled out by Freddie Mac or Fannie Mae.  So I can make this loan and in less than 24 hours Fannie or Freddie will have taken it off my hands and if three years later the whole thing blows up, it doesn’t do so on my desk.  Do I make the loan?  Well, if I do not make the loan, and the applicant is a member of a pet constituency, or the proposed property is located in a CRA area, what I am doing is risking tens if not hundreds of thousands of dollars in defending either a private civil action alleging illegal discrimination or a DOJ enforcement action for failing to comply with the CRA or Fair Housing Act, or whatever.  Those risks are uninsurable, meaning the bank gets to pay to defend them and then pay out of pocket any liability.  Even if the bank wins the discovery process will absorb hundreds of thousands of man-hours and attorney’s fees and forensic accountant’s fees.  So do I make the loan?  Hell yes I make the loan.  Have I done anyone any favors?  No.  Is this person any more likely not to lose his home to foreclosure at some point down the line?  Not in the slightest.  But I’ve protected my bank from liability; we can even brag on our website about how we aggressively support the Community Reinvestment Act.

Note, by the way, that even if my lender is for whatever reason not subject to the CRA, or the loan in question is not a CRA loan, so long as the prospective borrower fits within whatever cock-eyed Fannie Mae loan programs are within the scope of my lender’s corresponding relationship with Fannie, if I refuse the loan my lender is still subject to liability.  And in truth how do I justify refusing to make a loan that someone solvent has already promised to buy off me so that my risk in making the loan is zero or close to it?

And now some folks have come along and demonstrated by precise examination that yes, in fact the CRA and its enforcement did increase the loan risk accepted by large lenders in CRA areas.  They conclude pretty plainly that the Community Reinvestment Act in fact materially contributed to the subprime lending bubble and therefore to the subsequent crash.  In fact they allow that because of the constraints of their data sampling it’s likely that their study understates the impact of that misconceived statute.  They only looked at large lenders who were in the midst of CRA examinations.  They observe, “If adjustment costs in lending behavior are large and banks can’t easily tilt their loan portfolio toward greater CRA compliance, the full impact of the CRA is potentially much greater than that estimated by the change in lending behavior around CRA exams.”  In other words, the study’s authors admit that their sampled lenders might have been engaging in Potemkin lending, but that they can’t exclude that the observable behavior extended outside their window of observation.

The above link is to Reason magazine; the actual study is not downloadable for free (except to certain people), but here’s the link for those who wish to pay.

By the way, the Community Reinvestment Act remains out there, unchanged, over four years after the disaster it contributed to exploded into the worst economic downturn the country has experienced since the Great Depression.  Just like the Belgian farmers still plow up, and occasionally get blown up by, old artillery shells from World War I, the CRA still harbors its lethally defective assumptions beneath the American banking system.

 

This is Why I Get Antsy

When I hear people talking about “reasonable restrictions” on the right guaranteed (not established, by the way) by the Second Amendment.

We are assured that no right is absolute.  We in fact can look about us and confirm that much for a fact.  We have all heard that my rights stop at the tip of your nose; which is likewise correct.  We are told that, in order to make a society of 310 million-odd people rub along in some sort of fashion, you’ve got to be willing to take some jack-planing to things you’d rather hold dear.  Also correct.

On the other hand, we are told that all portions of the Constitution are of equal dignity.  We are told that with the exception of express provision, such as the 21st repealing the 18th Amendment, or the 17th Amendment explicitly changing how senators are chosen, no provision of the Constitution trumps any other provision.  Most importantly, the same canons of construction apply across all portions of the document; we don’t — or at least we hold ourselves out as not doing so — craft certain rules of interpretation for certain provisions and then read others in a diametrically opposed fashion.

[And here a short rant:  What made the U.S. Constitution so radical was not its concept of separation of powers; was not the suggestion that there are some things which government may not do; it was not the practice of lodging sovereignty in an elected assembly rather than in the will of a crowned head.  What made the Constitution so radical was precisely that it was written.  It had substance and form, and the latter determined the former, not the other way around.  We hear continuous blather from the bench about respecting “substance over form,” which is nothing more than an ipse dixit declaration of a desire not to follow the letter of the law in order to achieve a particular result in a specific case (what the late Maurice Rosenberg correctly described as “judicial ad-hockery”).  Statutes are written for the purpose of establishing that certain forms of behavior are legal and certain other forms of behavior are not legal; that certain forms of actions will produce Result X and other forms will produce Result Y or at least Result Not-X.  When a judge announces that the case will be decided on a “substance-over-form” basis what he’s announcing is that he does not believe himself bound to his oath of office.  But I digress, slightly.  The reason that written constitutions were so abhorred by the would-be absolute monarchs is precisely because, until the U.S. Supreme Court decided that texts are “living documents,” pretty much everyone acknowledged that a written text means the same thing today that it did yesterday, and that “evolving standards of decency” (one of the most fat-headed expressions ever to ooze from the judicial pen) cannot change what the document says, and therefore cannot change what it means.  It was precisely this insight, which the American judiciary has now found so quaintly outdated, that drove the revolutions of 1848 across Europe.  The tyrants and would-be tyrants from Prussia to Vienna to St. Petersburg were terrified of written constitutions for precisely one reason:  They, like the modern American judiciary, did not care to be bound by what some bunch of dead guys wrote years ago.  The “living document” crew which holds that the text means what they say it means is the moral and intellectual twin of the absolute tyrant, and both are entitled to the same deference from a free people, which is to say zero.  Here endeth the screed.]

What happened last Friday was that a lunatic, exercising a constitutionally protected right, then used those otherwise protected actions to commit a number of actions which are already criminal offenses in every jurisdiction of the country.  In consequence of his actions, it is now proposed that the constitutionally protected rights of everyone else, none of whom is the person who shot up that school, be permanently and in blanket form diminished, ex ante

Oh don’t worry, we are told; these will be only “reasonable” restrictions on what isn’t an absolute right.  We must do this because we have to make sure that your ability to exercise your rights does not facilitate the commission of what is already a criminal offense by someone to whom you have no connection, and whose criminal actions will be neither assisted nor hindered by your exercise, or not, of any right you possess.  The rights of all must be diminished because a few, some of whom are identifiable in advance and others of whom are not so identifiable, might use those rights to commit a crime.  Not that they will do so, but they might.  Other actions which would result in the diminishment of the otherwise constitutionally protected rights of a much smaller number of people — specifically that subset of Americans consisting of those mentally disturbed individuals whose potential for violence has either already been demonstrated or who are sufficiently objectively diagnosable that you can point to them and say this guy is a ticking bomb — must be avoided because, well, to commit them to an institution would be in derogation of their constitutional right to personal liberty.  Well, yes, it would do so.

I am going to suggest that such reasoning is dangerous.  We also have a constitutionally protected right to practice our religion of choice.  That right is neither more nor less protected than our Second Amendment rights.  Some people — above all some adherents of the Religion of Peace — use their freedom of exercise to promote and even engage in criminal acts.  Like encouraging specific individuals to become active members of terroristic organizations.  Like using affiliated organizations to launder money in support of terroristic organizations.  Like acting as meeting places for members and active supporters of terroristic organizations.  All those actions are already criminal offenses, no matter by whom committed, or how committed.  Just like killing 26 people in a single rampage is a crime whether done with a firearm, a machete, a bomb (Timothy McVeigh, anyone?), a motor vehicle, a cigarette lighter, or an airplane. 

Now, it just so happens that of all the bewildering tapestry of religious practices in the U.S., there is one and only one in the organizations of which such terroristic activities are actively and systematically pursued (not even the nut-jobs at the Westboro Baptist Church launder money in support of, for example, Aryan Nation).  Of course, I am perfectly willing to assume that the overwhelming majority of the adherents of that Religion of Peace are not knowingly engaged in those activities . . . even if they might personally know some who are.  But the same logic which tells me that it is merely a “reasonable restriction” on my right to defend my family and myself that I get only seven shots to do so, rather than fourteen, or that I may not use a particular caliber bullet or a particular load to do so, would also support liquidating every congregation of the Religion of Peace, or restricting them to congregations of no more than, say, five, because well, you know, we can say for a fact that some of them have, and some of them are, and therefore that some of them inevitably will actively use their otherwise protected right to congregate and worship as they please to commit criminal acts.  We know that.

Alternatively, we know that at least some people who are accused of criminal offenses are in fact guilty.  Guilty as sin.  We know that at least some of them refuse to testify for no other purpose than to increase their likelihood of escaping the consequences of past criminal action and facilitating future criminal action.  Now, some of the folks who refuse to testify actually did not do the act for which they are charged.  We know that at least some of them refuse to testify for any number of reasons (including, by the way, the fact that they are guilty of other crimes for which they have not been caught or charged, but for which they can reasonably expect to get fingered if they ever expose themselves to cross-examination).  Now, I am assured that my having to make application to some government drone who will examine me to make sure that I’m not one of the — say, thirty or so — crazy mothers who during any given year will shoot up a school, movie theater, or mall (in a population of 310 million people, that thirty makes up 0.000001% of the population), before permitting me to exercise my constitutionally protected right to keep and bear arms, is nothing but a “reasonable restriction” on that right.  OK.  So let’s have a government office to which a criminal accused must apply before being permitted not to testify against himself.  He will need to convince them that, more likely than not, he did not actually do the deed for which he is charged in that proceeding, and that he does not intend to use his silence to cloak illegal activity of any other sort.  This office would of course be hermetically sealed off from the prosecutor’s office, but without that certificate he would not be permitted to exercise his right not to testify against himself.  But it’s only reasonable, right?  And don’t get me wrong, some of the people making that application would be some truly evil people.  Like Adam Lanza, had he survived.  I mean, why should we, the taxpayers and the public in general, have to spend all that money to pot the guy who actually did it, and take the risk that he walks to do it again?  I mean, I don’t have a constitutional right to get away with a crime; if I did have a right to get away with it, it wouldn’t be a crime because I’d have the right to do it without molestation by the state.  So the only constitutional right that’s being affected here is the right not to assist the prosecution in coming after me.  And seriously, if I actually did the deed, then how much truly important constitutional injury can be said to have occurred?

[Another short rant:  I will also note that the same logic which says that the U.S. government may tax me for my failure to do an act which it does not have the constitutional power to compel me to do (such as, for example, buy a specific kind of health insurance) also lends itself to other instances in which someone’s exercise of a constitutional right (such as the right not to buy health insurance) carries serious externalities.  Like the guilty criminal’s refusal to testify against himself, or the insistence on gumming up the works with some damned lawyer’s penny-ante objections about reasonable searches and seizures.  In fact, the right to be free in one’s person, property, and papers from unreasonable searches and seizures is a pretty onerous burden on the public.  So why don’t we just say that we’re not compelling you to testify against yourself; we’re just going to tax you for your failure to do so, on a sliding scale by the seriousness of the crime?  Of if you really want us to figure out where you’ve hidden the gun, instead of just producing it on demand, we’ll impose a tax on you for the cost of the search.  Oh, don’t worry; it will be a reasonable cost.  There will even be a panel of “experts” to figure what that cost is.  They’ll update it periodically.  You really have to be a judge to accept that sort of thinking without laughing so hard you blow snot out your nose.]

Or how about the freedom to form a political party and solicit votes from one’s fellow citizens?  There are places in this world, in Wonderful Enlightened Gun-Grabbing Europe, where certain political positions may not be publicly espoused, no matter the number who may agree with them in secret.  Try setting up a fascist party in Germany these days (hell, for that matter, try to get away in Germany or Austria with saying the Holocaust didn’t happen; that’s a criminal offense, and it’s not criminal stupidity, either, that you’ll be charged with).  Now, no one’s going to argue that Europe isn’t civilized (we don’t talk about how many Frenchmen, and Dutch, and Italians, and Greeks, and Poles, and Czechs, etc. joyfully collaborated in the extermination of the Jews, do we?), are they?  So if we can point to their gun prohibitions as being reasonable, then surely their restrictions on ass-hat political movements must also be reasonable, no?  And it’s not as though the American Nazis stand any chance of actually electing anyone (in marked contrast to the Europeans, but we don’t talk about the fascists’ electoral successes either), so why not just go ahead and ban them?  Won’t be any skin off my nose (oddly enough one of the few people whom such a ban would really hit would be ol’ Morris Dees; he might have to dip into his outfit’s quarter-billion dollar nest egg, almost all of which is held in private equity, by the way).  C’mon; it’s reasonable.  And we’re all about reasonable restrictions on constitutional rights these days, aren’t we?

Oh . . . where was I?  Yes.  Once you begin accepting the assertion that my exercise of my own constitutional rights must, in advance and without reference to any action or failure to act of my own, be restricted because someone unknown to me might, just hypothetically might, incorporate into his commission of a crime the same behavior that I in my fuddy-duddy law-abidingness am constitutionally protected to indulge, then you might as well hang it up.  You are not living in a system of limited government.  You are living in a system of government in which the only limitation placed on what the governing class does to you is your willingness to stand there and take it.  And that is why I get antsy when I see the likes of Dear Leader, Dianne Feinstein (a concealed carry permit holder), and their ilk begin to drool and pant at the thought of restricting the rights of Americans as guaranteed by one but only one (as yet) of the first ten amendments to our constitution.

Freedom to Contract, or Not?

Recently we had occasion to advise a client with respect to some specific provisions of U.C.C. Revised Article 9, namely those relating to retaining collateral in full or partial satisfaction of an obligation.  Section 620 provides a set of conjunctive conditions which are the “only” circumstances under which a creditor may retain its collateral in whole or partial satisfaction of a secured obligation.  One of those conditions is that the debtor must consent to the proposed retention.  He must do so in a writing which is “authenticated” (Article 9-speak for what most folks would call “signed”) specifically after default.  In other words, a secured party cannot require a debtor, in connection with originating the obligation, to pre-consent to the collateral’s retention, upon any circumstances.

As most people of more than just limited understanding are able to comprehend, the world works best when competent adults interacting with each other at arm’s length and as level pegs are permitted to arrange their mutual affairs to their mutual satisfaction, in the absence of fraud, duress, or undue influence.  This is necessarily so because, as Hayek pointed out, the range of circumstances under which people interact with each other, and the range of matters as to which they interact, are so infinitely numerous as to be beyond the scope of any human knowledge.  All you can do is set up some very basic, easily understood ground rules and let people make the best of it.

Our state’s legislature seems to a degree to have missed that memorandum.  Section 9-602 sets forth a laundry list of provisions of that Article that may be neither waived nor even “varied.”  Among them are the provisions of Section 620.  So not only can you not waive the requirement that the debtor consent to the collateral’s retention, but you cannot even vary the requirement that his consent be obtained post-default, nor can you, for example, change his affirmative approval requirement into a time-limited veto right.

That makes sense for certain kinds of debts and debtors.  Consumers, for example, or obligations secured by household goods.  The bargaining disparity between, say, Chase and Joe Bloggs is just so enormous that you really can’t expect ol’ Joe to know much about what he’s agreeing to or to be able to tell Chase to go pound sand.  But commercial borrowers, borrowing for commercial purposes and putting up commercial collateral?  Pray tell me what extraordinary protections those folks need.  Either they’re big enough boys to look out for themselves, or they’re not.

So much for Article 9 of the U.C.C.  There is another statute out there, which was specifically drafted to apply to large commercial actors, dealing with each other at arm’s length and both over-represented by counsel &c. &c. &c.  It’s the Federal Arbitration Act, which is codified in Title 9 of the U.S. Code.  Its provisions are construed not just strictly in favor of compelling arbitration, but mercilessly.  An agreement under that statute is enforced against anyone, even some 18 year-old kid who goes down to borrow him some money to get a beat-up ol’ car.  Like as not the loan paperwork he signs will contain a provision in which he agrees to arbitrate any dispute arising out of his purchase or the purchase money note, in some city halfway across the country, under rules which he has no realistic access to or understanding of, and which 99% of the lawyers he’d be able to go see to ask about it wouldn’t have any experience of, either.  All that notwithstanding, his agreement will be enforced against him to the hilt.

And what has our hypothetical 18 year-old kid given up?  The right to have any rule of law at all applied to his case.  The right to present any equitable claim or defense.  The right to present evidence in his favor, or to challenge evidence against him, based on any known rules of evidence.  The right to have a jury of ordinary citizens determine his rights and responsibilities relative to Mega Car Loans, Inc.  The right even to have a judge at any level review the substance of the award made by the arbitrator, who is not bound to follow the law, any law (and who, by the way, draws a not insignificant portion of his income from arbitration referrals from Mega Car Loans, Inc. and its peer organizations . . . and zero at all from our 18 year-old buyer). 

In short, our 18 year-old kid is viewed as competent to understand what he’s doing while throwing away the rights for which literally thousands of people have given their lives over the centuries.  In contrast, the businessman borrowing $1.5 million and who wants to pledge a half-million shares of a publicly-traded corporation as collateral is not viewed as being sufficiently savvy that he can be permitted to consent, in advance, to the creditor retaining so much of his collateral, credited at its current fair market value as determined by its most recent trading price on the NYSE, as is necessary to pay some portion or all of his obligation.

Discrepancies such as these are why anyone who pretends that the Law makes sense; or that the legal system is a “justice system”; or that, in practice, the determining of the rules under which each of us must live as he climbs out of bed in the morning is anything other than a raw struggle for power, each over the other, with those not blessed with intelligence, opportunity, energy, foresight, or other advantage are and will always remain the prey of those who are so blessed, is a fool or a charlatan, or some combination of both.  A public official, say a judge for example, who makes those representations to you is to be treated with public contempt because he making misrepresentations which he must know to be false.  A lawyer who tells you any of those things should prompt you immediately to return hom to inventory the portable articles of value.  A politician — judge or otherwise — who makes those statements needs to be pelted with rotten fruit.

Flash! Kaiser’s Troops Invade Belgium! (a series)

Well, guess what?  The National Association of Women Lawyers has just discovered that the demands of child-bearing and holding a family together are (i) murderously difficult, (ii) incompatible with life in BigLaw (i.e. an AmLaw 200 firm), and (iii) especially hard on women who would like to have children before the odds of having a Down’s Syndrome child hit 50/50.  They’ve just released their seventh annual “Survey on Retention and Promotion of Women in Law Firms.”

A couple of observations: 

First:  Their sample was the AmLaw 200, the 200 largest law firms in the United States.  All of 56% of the firms surveyed responded, which works out to be something like 112 firms.  That’s like evaluating the federal employment experience by surveying the president and his cabinet members.  It’s the equivalent of Field Marshal Haig trying to run the Western Front while never actually visiting the trenches, or even sending his staff officers up very much.  Even if they’d surveyed the 750 largest firms in the country that would still capture only a tiny slice of the total population of lawyers in general or female lawyers in particular.  This survey, in other words, is fascinating for the sorts of people who join (a word at which I get the involuntary shivers) outfits like the National Association of Women Lawyers; for the rest of the universe of lawyers, women, and women lawyers, not so much. 

Second:  In only one place does the survey mention the 600 pound gorilla in women’s lives, viz. the biological reality of child bearing, and then only in passing.  The study is full of data on women being “represented” in this, that, or the capacity within firm structures of sundry types.  [Why is it that a person, any person, who happens to have been born with a particular set of genitals is deemed to be able to “represent” everyone else also born with that same set?  I am not “represented” by any given redneck in whatever position you choose to name, nor by any left-handed person, nor by any person above a certain height, nor by any person with a particular educational background or holding a specific license.  Yet studies like this assume that anyone wearing a bra is somehow a proxy for everyone else wearing one.  I don’t understand.]  But there is zero examination or even mention of things which any wife or mother — lawyer or no — would find curious:  for each female lawyer in an “of counsel” position who is considered to be or not on the partnership track at her firm, how many children does she have? how old was she at the first birth? is she married to the father of her children? how old was she when she married the father? was this her first or a subsequent marriage? is her husband also a lawyer at a BigLaw firm? how old are her children? do any of those children have special needs?  Each and every one of those questions is going to have an enormous impact on how much of herself a woman can or is willing to give to a law firm.

Third:  The survey mentions “anecdotal” indication that women in “low status” positions like “staff attorney” (of which set women comprise 70%, the only category in which they are a majority) may enjoy lower stress, a better work-life balance, etc.  Really?  What sorts of follow-up questions would that sort of “anecdotal” evidence suggest to someone with the investigative smarts of, oh, say, a high school journalist?  Ummmmmm . . . did you choose to be a “staff attorney”?  For married lawyers, was this a choice which you made unilaterally, or did you and your husband “study on it” together and make the decision together?  Have you attempted to get out of the role of “staff attorney” at your current firm?  At another firm?  But this is what the survey contents itself with:  “Anecdotally, we understand some women staff attorneys are pleased with their situation: they work in a pleasant environment with intelligent colleagues, earn good wages, and can achieve the kind of work-life balance that simply isn’t possible for partner-track lawyers and partners in the large firm environment. Some even view their exclusion from a partnership track as beneficial, since they don’t face the same competitive stresses as associates and don’t have to concern themselves with firm ‘up or out’ policies.”  Well now.  No kidding?

Fourth:  The survey is full of calls for lawyering to become different, to be made more so that female lawyers can have it all.  The survey assumes without any showing that male lawyers can have it all.  This assumption is transparently bogus.  I still recall a classmate of mine who worked at one of the firms surveyed during a summer.  There were well over 150 partners at that office; not a one of them was married.  Not.  One.  Partner.  They were either divorced or had never married.  Since the assumption of this survey is that measurable outcomes ought to be indistinguishable among any sample of lawyers at BigLaw, irrespective of non-lawyer personal attributes, why is there no reporting of their “control group”?  It seems to me that anything which aspires to any sort of statistical validity ought to cite a control group.  What are the measurable outcomes for single males, for married males, for fathers?  What are the salary and bonus figures for male lawyers whose areas of practice, billing loads, pro bono activities, and family lives mimic their female colleagues’?  Anyone ask any of those fathers when the last time he saw his daughter’s softball team play?  When the last time he went camping with his boys?  Yeah, I didn’t think so either.

Statisticians refer to “levels of aggregation,” which is the technical expression for the analytical evaluations used to avoid the sort of meaningless results which you obtain when you lump dissimilar things together based on one or a few measurable attributes.  Income levels for all men and all women tell you nothing.  Even “all male college graduates” and “all female college graduates” tells you nothing because you’re comparing STEM fields, which are both self-selected and overwhelmingly male, with people who go through four years at the school of “education,” which is likewise self-selected and overwhelmingly female.  And so forth.  This survey has an enormous problem with levels of aggregation, a problem brought about in part through its minuscule sample size.

The survey assumes, in other words, that child bearing and family existence have indistinguishable effects on the workplace choices and outcomes of both males and females.  This is simply not the case and never has been, either in BigLaw, law in general, or any other occupation.  Whether you’re a farmer or a cabinet minister or a field geologist or a lawyer, someone has to take care of that baby.  Your average mother has been terrified now by years of horror stories of nannies, paedophiles, baby snatchers, and so forth.  She’s been guilted up for not breast-feeding.  She can’t stand in the line at a grocery store without having pictures of Hollywood trollops bragging about how they lost 45 pounds six weeks after giving birth to twins.  The simple truth is that for most families, under most circumstances, the voluntary choice of all parties is that the mother becomes the primary caregiver.  What this survey is complaining about is the workplace reflection of those voluntary choices made by extremely highly educated, accomplished, and well-paid (by any objective standard) women.  But those choices don’t match their political narrative, so they must be condemned.

Even moreso than the assumptions about family life and physiology, the biggest problem with the survey is once again an unspoken assumption.  It assumes that the AmLaw 200’s clients will permit those firms not to have a 24/7 approach to lawyering; that they will suddenly stop wanting everything by Monday 9:00 a.m. when they call at 2:15 p.m. Friday; that they will magically cease to have legal problems or opportunities which implicate sixteen distinct fields of law in 23 of the 50 states and four foreign countries; and, that those problems and opportunities can be made — from the law firm’s end of things — to have timelines and windows of opportunity that offer the kind of human existence which the vast majority of people, male and female, want for themselves.  Errrrmmmm, guys gals, I don’t know if anyone has explained this to you recently, but we’re a damned service industry.  Either we provide the service our customer wants or that customer is going down the street to find him someone who will.  You can lament the fact that 47% of law skool grads are women but only 45% of new associates are female all you want.  You can bemoan that only 30% of BigLaw considers its “of counsel” positions to be partnership-track eligible (even though female “of counsel” earn 95%+ of what their male counterparts do).  But you cannot change the world in which BigLaw has to keep the doors open.

The survey’s findings and exhortations assume, in other words, a universe of facts that does not exist and will never exist.  The survey concludes that female lawyers are exiting BigLaw in droves, and the higher up they go the more likely they are not to be there the next time you look.  The survey does not examine in any meaningful depth the simple question of why that should be so.  In short, this survey is a very nice illustration of the sort of irrelevance which results when you have a bunch of joiners artificially defined by a single attribute examine a tiny sample of women who have damned near nothing in common with 99% of other female lawyers except (i) a law license, and (ii) a vagina.