The Republican Congress and Health Insurance Companies: The Real Agenda

According to Wendell Potter, a former health-insurance company lobbyist, “the new law props up the employer-based system that insurers and large corporations benefit from so greatly. It also guarantees that private insurers will get billions of dollars in new revenue.”[1]  It is no accident that Obama’s health-insurance law works out this way. Potter points out that Republicans will back off from repealing the mandate, but will push for other changes. The reason is that the mandate is in the health-insurers’ interest whereas some other features of the law are not. Private insurance companies would like to keep the mandate that will guarantee them more customers.  At the same time, the insurers would like to go back to refusing to cover kids with preexisting conditions, canceling policyholders’ coverage when they get sick, and setting annual and lifetime limits on how much the insurers have to pay for medical care. Also, the insurance companies do not like having to spend eighty percent of their revenue from premiums on medical care, and the insurers would like to get more from the US government for private medicare plans.

Potter makes the point that it is not in the Republicans’ interest to take out the mandate; they will put on a show—acting against the mandate while being unsuccessful—while working behind the scenes to take out planks deemed unprofitable by the insurance companies. In fact, the Republicans could actually strengthen the mandate because the insurance companies want to increase the penalties for not becoming one of their customers. Interestingly, even if the courts throw out the mandate, the entire law must be deemed unconstitutional.  This caveat was undoubtedly drafted by industry lobbyists so they would not be constrained by the law without the benefit of the guaranteed expanded customer base.

Potter’s major point is that the Republicans will go with the interests of big business in a stealth manner (similar to the stealth lobbying done by the insurance lobbyists). The insurance lobbyists have already used surragates to fearmonger “death panels” to kill any reform that might hurt the bottom line. So we can now suspect that Sarah Palin’s Facebook post in August, 2009, accusing the Obama administration of creating “death panels” as part of health-care reform was not an accident even if it has been reported in Newsweek as an “offhand remark.” According to Newsweek, that remark was “as inaccurate as it was incendiary.” Furthermore, in what we can now surmise stemmed from the power of the industry with a vested interest, the remarked “helped incite weeks of embarrassing town-hall meetings for Democrats, which in turn nearly brought down” health-care reform (Newsweek, p. 58). The real power behind this roadblock was that of the health-insurance companys’ lobby. The combination of the industry with such a vested interest having the ability to sway the public and exact leverage over members of Congress and the President (witness Obama’s change on a mandate and the public option) ought to worry those people who believe in having a republic as the form of government and love liberty. Devious subterranean private corporate power is undoing our republic without us knowing it, but this is how the lobbyists such at Potter have designed their strategies. We are not supposed to see it.

1. Wendell Potter, “Repeal and Replace?” Newsweek, November 15, 2010, pp. 42-43; see also Jay Newton-Small, “What Does She Want?” Newsweek, December 20, 2010, pp. 38-47

The Affordable Care Act Running Up Against Federalism

In late 2010, Republicans were quick to declare that "ObamaCare was already on life-support in the wake of federal district court Judge Henry E. Hudson's ruling in Virginia that the Affordable Care Act’s (ACA) requirement to buy health insurance is unconstitutional. But in truth Virginia’s attorney general, Ken Cuccinelli, won only a partial victory. He sought to have the entire law overturned, but instead only the section creating an individual mandate was. This is perplexing to me, as the law contains a clause indicating that if any part is deemed to be unconstitutional, the entire act would fall. Clearly, the health insurance industry didn't want to be forced to pay out without being guaranteed the expanded customer base by the U.S. Government.  

According to Newsweek, "Judge Hudson was very explicit in his ruling that only the mandate that individuals have coverage and 'directly-dependent provisions which make specific reference' to it will be affected. Technically, this means virtually nothing but the mandate is eliminated. But as a practical matter, the requirements placed on insurance companies to make coverage more generous and available to everyone are economically dependent on the mandate. To keep the rest of the bill in place without the mandate would provoke the wrath of the insurance companies’ powerful lobby and set premiums on an upward-spiraling trajectory. On the upside, Medicaid would still be expanded so the millions of poor who are without health insurance will be insured."[1]  In my comparably small and insignificant view, this is the major significance in the entire law.

To Europeans much more so than Americans, generally speaking, healthcare is viewed as a right even for the poor as a matter of human rights. Lest the rich poo poo this right because theirs is secure, I can only shake my head in utter disgust; in a civilized society, even a person incapable of working has the right to survive. Not wanting to pay for this right when one enjoys other advantages of living in a society (e.g., police protecting one's property) is sheer selfishness.  I take the right to survival to be the kernel worth saving in Obamacare even if scrooges poo poo's the plight of their less fortunate fellow citizens while ignoring their own self-centeredness. Hudson also declined to prevent the law’s implementation while the courts sort out the constitutional question. The ACA has been upheld as constitutional by two district courts. According to Newsweek, "Hudson’s decision actually guarantees only one thing: that the constitutionality of the individual mandate will ultimately be decided by the Supreme Court. Legal experts are unclear which way the high court will go

The question of whether the mandate is constitutional hinges on whether it falls within the federal government's enumerated power to regulate commerce. In particular, the question is whether inactivity can be regulated. Failure to buy insurance is inactivity.  Is a decision to buy or not to buy to be counted as an activity?  Or is requiring Americans to carry health insurance a way of regulating how they pay for something that every American will use (i.e., health-care)?  It seems to me that this question has been overly simplied, whereas the past "logic" used by the U.S. Supreme Court to ok expansions in the commerce clause is notoriously invalid even as it has been generally accepted in American society.

Historically, the U.S. Supreme Court has not resisted ever deepening and broadening encroachments by the national legislature and executive on the States by means of the enumerated power of regulating interstate commerce.  In 1942, for example, the court held in Wickard v. Filburn—the most relevant precedent for this case—that a farmer growing wheat for his own chickens, above a maximum of growth allowed per acre at the time, was subject to federal regulation under the commerce clause because the resulting extent to which a farmer does not buy wheat to feed his chickens on the market affects the national market price of wheat. "This goes a step further than Wickard because it’s the omission of action that’s being defined as the interstate act," says Jonathan Turley, a constitutional law instructor at George Washington University. Critics of the mandate say that if you start defining choices not to buy things as actions that affect interstate commerce then there is no limit on what Congress can make you buy. In my view, the action/inaction distinction is not vital to whether the power of the U.S. Government is potentially unlimited under the commerce clause; <em>Wickard </em>itself evinces the potential unlimitedness in the power; even growing wheat for one's own use can be deemed as interstate commerce even though the wheat never even crosses the road.  It is the tenuous multiple links of inference that dwarfs even the action/inaction distinction. The legalese in the inferences has already supported Congress in using the interstate commerce clause to reach a variety of objects (Morrison and Lopez being the two exceptions, but even they allow for indirect effects to the commerce). As another example involving what one grows and consumes on one's property, in 2005 in Gonzales, the court held that the commerce clause entitles the federal government to outlaw California residents from growing marijuana for personal medicinal use. Of course, the government's purpose here was not to regulate commerce; the policy was against illegal drugs being used. This is precisely how the commerce clause can be stretched to cover virtually anything.

If the court throws out the health mandate, it might be just as well as the State governments really should be the ones to address health-care for the uninsured, given our system of federalism. If the mandate is declared to be unconstitutional, I would advise the justices to do it in a way that also exterpates the inferences of legalese that have for more than one hundred years enabled the federal government to encroach on the States--effectively ending the check on government that is afforded by federalism. In other words, the court could use the case as a means of setting definitive limits on the enumerated powers.  Otherwise, Congress will return to the clause for yet another encroachment using linkages--simply sidestepping regulating inaction. The case can occasion a wake-up call concerning the consolidation of governmental power at the center at the expense of the innate diversity that exists in an empire-scale polity. I doubt very much that the court will sound the alarm--seeing the forest through the trees--even if the mandate is declared to be unconstitutional. We simply are not good at looking at things in terms of the big picture; it is no accident that most members of Congress are lawyers.

1. Ben Adler, "Will the Supreme Court Rule on Health-care Reform?" Newsweek, December 15, 2010.

Military Sacred Cows: A Matter of Contrived Camulflage

"The most significant threat to our national security is our debt."

Micheal Mullen, Jount Chiefs of Staff Chairman, August, 2010.

The defense budget in 2010--$664 billion (not counting the Iraq and Afghanistan wars)--equalled that of the rest of the world combined.  One dollar of every five spent by the U.S. Government was for defense. The amount spent represents 80% growth since 2000. Why?  One reason: the big weapon systems oriented to fighting other empires (e.g., Russia and China). For example, $600 million for the littoral combat ship and $13 billion for amphibious landing vehicles (whose purpose has even been questioned by Sec. of Defense William Gates).  It would seem that the military contractors--the military industrial complex, moreover--are firmly entrenched and in control. That is to say, the defense spending is indicative of the influence of big business over government in the United States.  That this influence goes unhampered may tell us something about the leanings of our societal norms.

The House Republicans' "Pledge to America" formulated in 2010 promises to exempt the military from any cost-cutting that might be entailed in reducing deficit spending. Even so, Sen. Tom Coburn wrote, "Taking defense spending off the table is indefensible. We need to protect our nation, not the Pentagon's sacred cows."  This statement is significant because it gets at the problem of the debt and the influence of big business in government.  That is to say, it kills two birds with one stone.  Indeed, these two birds may well be the achilles heel of the United States as a viable entity or going concern.  The fatal flaw may well be within, rather than from an external threat.  This is the meaning of Micheal Mullen's statement above. To be sure, Republicans believe that defense is government's core function. Along with regulating interstate commerce, this is particularly true of the federal government.  It is less true, I would argue, of the state governments.  So the plank can be viewed as primarily federalist rather than in terms of limited government itself.  The probably-unfixable $14 tillion US Government debt and the consolidation of public governance in the U.S. into the federal government at the expense of federalism (and the checks therein) are related; both are indications of a basic inbalance that is unsustainable. In the face of this state of affairs, it is telling that the question in late 2010 was who should continue to get a tax.

Source: Michael Crowley, "The Sacred Cows," Time, December 13, 2010, pp. 55-58.

Obama Caving to Plutocracy

I contend that Obama caved on his campaign pledge (or promise) not to extend the bush tax cuts for the rich.  The added growth expected in 2011 from ALL of the cuts is just a half of a percent of GNP growth.  I have read that the rich save their tax cuts rather than use them in ways that stimuate the economy.  As for savings, banks have enough capital to lend (this isn't why they are still skittish in 2010).  That the vacuous argument that tax cuts for the rich will somehow create lots of jobs and save the economy from another recession has had any weight or credance really discourages me about American political discourse.  That Obama didn't "just say no" is also discouraging. 

On December 14, 2010, Pat O'Reilly said on his Foxs News show that the "far left" is in retreat because Ameriicans have rejected it.  He said even Obama has rejected the left. I think the left has vanquished itself.  Perhaps it could be said that the left is willingly impotent. Where is Al Gore?  Ralph Nadar?  Micheal Moore?  silence.  Only the sound of Obama caving. He should have refused to sign a tax cut continuation for the rich and said the Repubs could refuse to extend the cut for lower and middle income people--it would be the Repubs provoking the resumption of higher taxes for everyone rather than just on those who can afford them.  We need a Teddy Roosevelt or an Andrew Jackson. Teddy stood up to Standard Oil, and Jackson stood up to the Second Bank of the United States.

By contrast, Obama has operated largely in line with Wall Street (e.g., the bailout for the banks rather than foreclosed homeowners) and the health insurance industry (e.g. not even a public option, which was odious to the industry).  Barak Obama does not want to displease the powers that be; I suspect reelection has a lot to do with this state of affairs.  This raises the question: is there a counter in American politics to plutocracy?

The American Republican Party: For More Federalism or Less Government?

The stance of Sen. Jim DeMint (SC-R) in 2010 is emblematic of the ambiguity in the hierarchy of goals in the Republican party. DeMint can be taken as being primarily oriented to restoring the balance of federalism by having the federal government do less and the State governments more, at least in terms of domestic policy. This could bring the General Government back to its enumerated powers. Accordingly, Time magazine maintains that DeMint’s real target in 2010 was “a radical downsizing of the federal government.”[1] This downsizing includes “turning education policy over to the states and gradually dismantling safety-net programs like Social Security and Medicare.”[2]

Even so, DeMint may not have been assuming that the state governments would then create various degrees of “safety-net.” That is, his agenda could have been to get government out of the business of providing basic needs to those who might otherwise not survive. In other words, his primary goal could have been to reduce government itself, especially outside of defense and foreign policy. For instance, citing “creeping socialism in the U.S.”, DeMint wanted to “shrink government.”[3] He “was incensed by what he considered a growing public reliance on government largesse for things like housing, food and income, which to him was creating dependency and stifling free enterprise.”[4] The senator’s ideal here is distinct from his goal of downsizing the federal government in order to shift power to the state governments. A shift does not necessarily imply a reduction. It is precisely on this point that the Republican Party has been far too ambiguous. What is more important to the party: less government or restoring federal government?

Too often, the two goals have been conflated by Republican office-holders, as if restoring federalism means a reduction in government. It is possible, after all, that restoring social programs at the State level could result in more government. As Massachusetts demonstrates, the states are able to enact expansive social programs such as universal health-care. However, in a federal system, one size does not fit all; republics such as Texas and Oklahoma would doubtless have approaches to health-care that rely on far less government. So moving to toward a balance between the U.S. Government and the governments of the member republics of the Union may or may not mean less government. Whether government is more or less would depend not just on what Congress and the U.S. President want, but also on what the elected representatives and heads of state in the member states want.

Therefore, a Republican might say, I want a shift toward the states in domestic domains and I want my particular republic to have less government while the federal government focuses on defense, regulating interstate commerce, and foreign policy. I contend that such an integrated position is rarely, if ever, enunciated on behalf of the Republican Party. I suspect that the reality undergirding the GOP is less government, with occasional lip-service thrown to federalism.

1. Michael Crowley and Jay Newton-Small, “Leading the Rebel Brigade,” Time, November 29, 2010, pp. 34-37.

2. Ibid.

3. Ibid.

4. Ibid.

An Industry Undoing European Federalism: The Case of Cookies

In 2010, the EU Parliament passed a law to protect internet users from invasive “cookies,” which track computer usage at the expense of privacy. The 27 E.U. states had to implement the directive, but as this involved discretion, the business sector feared at the time that the states “might interpret the law differently, creating a nightmare of conflicting standards.” In other words, business can be intolerant toward federalism.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon. 

1. Paul Sonne and John W. Miller, “EU Chews onWeb Cookies,” The Wall Street Journal, November 22, 2010, pp. B1-2.

President Obama Absent at the EU-US Summit of 2010

I submit that most Americans are unaware that the EU has a Supreme Court, a Parliament and a Council/Senate.   Few Europeans are wont to admit that these institutions constitute a government, so perhaps we can’t be blamed here in America for not taking greater notice of the relatively new government across the pond.  So it is no surprise to read that President Obama decided to skip the 2010 EU-US summit in Europe.  The American president missed an opportunity to educate the American people not only on contemporary political Europe, but also on a potentially fecund new basis of comparison, from which both the U.S. and E.U. could benefit. 


The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Midterm Elections, 2010: Lessons Unlearned

The Republican surge that gave that party control of the US House of Representatives reflected a shift of some moderate independents, even as Republican leaders portrayed the election as “the American people” having repudiated the policies of the sitting U.S. President, Barak Obama. In other words, that 54% vote for a given Republican and 46% vote for the Democratic opponent does not mean that the 54% constitute “the American People.”

The other notable error associated with that election involves the media, which on multiple occasions ignored the margins of error in polls before the election. If one candidate is at 48% and the other is at 45% and the poll has a three point margin of error, it cannot be concluded that the first candidate is ahead of the second because the three point difference is within the margin of error.  As obvious as this point may seem, journalists of CNN, Fox, and MSNBC regularly ignored the margins of error in reporting polls even though the margins were shown on the poll being displayed. Yet like the Republican claims regarding “the American people,” the errors of the journalists went repeatedly uncorrected.  One is left wondering if there is any feedback loop in American politics or whether anyone is listening.

Democracy and Capitalism: On Managing Equality and Inequality

Both capitalism and democracy claim to maximize individuals’ freedom—capitalism in the economy and democracy in politics.  In spite of this superficial commonality, Henry Brands points out that democracy “depends on equality, capitalism on inequality. Citizens in a democracy come to the public square with one vote each; participants in a capitalist economy arrive at the marketplace with unequal talents and resources and leave the marketplace with unequal rewards.” [1] In fact, a capitalist economy cannot operate without inequality. According to Brands, “The differing talents and resources of individuals are recruited and sorted by the differential rewards, which reinforce the original differences.”[2]

Analysis:

It is difficult to concurrently embrace democratic equality and capitalistic inequalities because they have qualitatively different sources, at least theoretically speaking. Whereas Jefferson's democratic equality is based in natural rights that do not depend on being recognized by a government (a notion from John Locke), Adam Smith's capitalism is based on human nature. Whereas natural rights are based in what it means to be human as a self-aware being of a rational and sentimental nature, Smith's human nature is based on self-interest, which in turn is based on the instinct of self-preservation. Even though economic considerations may lead us to conclude that people are unequally able to preserve themselves, Thomas Hobbes argued that a basic equality exists in self-preservation because any person can be killed in his or her sleep.  In other words, none of us is immuned from the possibility of being killed.  However, this basic condition of equality seems very remote next to the inequalities that are enabled by differential wealth. Such differences in wealth may well be more than reinforced by capitalism.

Does capitalism reinforce the original differences in talent and resources by merely reflecting them, or does the system multiply them? For example, if a capitalist invests the surplus gained from her talents or resources to gain still more, are the original differences merely reinforced? A series of profitable decisions, for example, may display a multiplier effect. Furthermore, if the capitalist uses her surplus to restrict other capitalists from being able to exercise their talents and resources (e.g., cornering the market), is not more involved than reinforcement?

In terms of the impact on democracy of the widening inequalities of capitalism, the “one citizen, one vote” dictum may become a chimera. For instance, historically, employers and unions in New York pressured their employees/members to vote a certain way. It was not unheard of for candidates to buy votes outright. More subtly, the imprint of corporate interests can perhaps be discerned not only in the “third party” political advertisements, but also through surrogates whether in office or the media.  For instance, a health insurance company lobbyist revealed in 2010 that the “death panels” line thought to be sourced in Sarah Palin had actually come from the lobby in an effort to kill the public option in health care reform. Such an option was not in the interest of the concentrations of capital known as insurance companies.

In short, the exaggerated inequalities that come with the denouement of capitalism, particularly in its mature stage, compromise or even extirpate the basis of equality in democracy.  That is to say, greater and greater inequality monetarily puts a republic at risk. Indeed, the corporate form itself may be inherently antithetical to republican ideals.

1. Henry W. Brands, American Colossus: The Triumph of Capitalism 1865-1900 (New York: Doubleday, 2010), p. 5.

2.Ibid.

Corporate Analogies: Money-Making as War-Games as a Sign of Boredom

What to do when analogies go over the top. As an aspiring writer, I was chastised by more than one writing tutor for mixing analogies. The device can add color to otherwise drab prose to be sure, but too many colors at once can be daunting to even a captivated reader. Consider, for example, the following passage from Larry McDonald about the management at Lehman Brothers:

“In a way, Lehman was run by a junta of platoon officers . . . I think of them as battle-hardened, iron-souled regulars”[1] (p. 89). Richard Fuld, Lehman Brothers’ former CEO, was “our spiritual leader and battlefield commander . . . surrounded by a close coterie of cronies, with almost no contact with anyone else. . . . I suppose that was fine so long as the place was chugging along without civil war or mutiny breaking out, and continuing to coin money, which is after all the prime objective of the merchant bank.”[2] Fuld “worked within a tight palace guard, protected from the lower ranks, communicating only through his handpicked lieutenants.”[3] 

The full essay has been incorporated into On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, which is available in print and as an ebook at Amazon. 

1. Lawrence McDonald, A Colossal Failure of Common Sense: The Inside Story of the Colapse of Lehman Brothers (2010), p. 89.

2. Ibid., p. 90.

3. Ibid.

On the Nineteenth-Century Eclipse of Democratic Governance by Capitalism

I contend that a trajectory wherein capitalism came to eclipse or capture democratic governance occurred in the nineteenth century in the United States. President Andrew Jackson’s actions in the early 1830s can be viewed as a benchmark wherein government officials were still willing to relegate the interests of capitalists for the good of the whole. 

According to Brands, “Andrew Jackson embodied the democratic ethos, by both his humble origins and his reverence for the people as the wellspring of political legitimacy. Jackson waged political war on the pet projects of the big capitalists of his day, smashing the Bank of the United States, vetoing federal funding on roads and canals, and beating down tariff rates.” (1)  Actually, Jackson’s object was not to reduce the capitalists of his day; rather, he was attempting to protect the balance between the general and state governments in the federal system.

For example, President Jackson vetoed federal funding for the Mayville road because it was confined to the territory of Missouri. That is, the road did not cross state lines, so it did not involve interstate commerce directly. The state itself had jurisdiction. Had Jackson not vetoed the funding, then interstate commerce “regulation” as spending would have opened the floodgates to Congressional power. Jackson was also rejecting the argument that spending for the general welfare goes beyond the enumerated power domains. In refusing to fund the public works project, Jackson was not acting in the interest of the potential private construction bidders. Hence as a byproduct the president was standing up to capitalists in his effort to contain federal power from encroaching on the state governments.

Second, Jackson feared that having a bank of its own would give the general government in Washington too much power relative to the state governments. For example, the Second Bank of the United States could conceivably print an unlimited number of bank notes to fund its government’s spending “for the general welfare”—eviscerating the enumerated powers in the process. Jackson refused to fund the bank before his re-election. Thus he risked having the financial sector turn against him in an election season. The long term viability of the American federal system was worth more to him than his own continuance in office.

Notably, Jackson was willing to cross Wall Street (something notably absent in President Obama’s financial “reform” law) for the good of the republic’s governance system. Put another way, the president’s protection of the system of democratic governance wherein governments check and balance governments in federalism trumped the particular financial interests of capitalists. By the time of Lincoln’s tight re-election race in 1864, capitalists would find a president willing to use (and defraud) the government to benefit them financially.  The balance of power between capitalism and democracy had already shifted.

1. Henry W. Brands, American Colossus: American Colossus: The Triumph of Capitalism 1865-1900 (New York: Doubleday, 2010), p. 5

On the Politics of Hate Speech: Wilders in the Netherlands

Geert Wilders, head of the Party for Freedom (PVV) in the Netherlands, went on trial on October 4, 2010, in the Netherlands on charges of inciting hatred, less than a week after entering parliament as a linchpin in the coalition government. The far right political leader faced five charges of inciting hatred and discrimination against Muslims and people of non-Western immigrant origin, particularly Moroccans. “He divides, he creates hate, he creates conflicts between people,” said Mohammed Rabbae of the National Council for Moroccans. Wilders told the court he was being persecuted for “stating my opinion in the context of public debate,” adding: “I can assure you, I will continue proclaiming it.” In an opinion piece in a Dutch daily, he compared Islam to fascism and the Koran to Adolf Hitler’s book “Mein Kampf.”[1] Wilders also made the film “Fitna” in 2008 which portrayed the Koran as inciting violence and mixed images of terrorist attacks with quotations from the Islamic holy book.

I am staying out of the debate on Islam. Hence, I am not expressing an opinion on whether I agree or disagree with Wilders’ statements on Islam. I raise the matter of this case for its implications for free speech as it is practiced in political debate. The extreme-antisemitism of the Nazis resulted in some rather severe curbs on free speech in the state of Germany that would shock people in any of the American states.  While the EU is relatively restrictive on free speech, however, even in the US a person can not shout “fire!” in a crowded theater unless there really is a fire. The Wilders case is not being prosecuted as a “fire” case.  Rather, it is being portrayed as akin to hate crimes in the US, only in this case it involves speech in a political debate.  The Europeans may have been conflating a hate crime with an opinion in political debate.  Had Wilders urged people to kiss Muslims, his case would be much closer to a hate crime.  If a position in a political debate is itself to be treated as a hate crime, then politics itself is being criminalized.  This would be like saying that republican leaders who are against gay marriage and say it is sinful and akin to having sex with animals are somehow guilty of a hate crime. To say that something is odious does not in itself cross the line into urging people to kill those who believe in it or practice it. Were “dividing people” in a political speech or an opinion piece a crime, the republican party would find itself continually before a judge as one interest group after another feels marginalized by republican positions on particular issues. Political positions may well offend; that is the nature of politics. It doesn’t make it a crime. A clearer line between politics and crime needs to be drawn in Europe. Otherwise, prosecution will be increasingly used to cut out positions in the political discourse that some do not like. Politics is about conflict—hopefully resolving it. Part of the process may be identifying the conflict, and this may be perceived as dividing people when in fact there is already such a division. Where one side of a division is criminalized, the division itself cannot be known by society, and thus any resolution would be partial.  

Ideally, a division should be clearly and fully enunciated by each side, and then others not invested in either side will be sufficiently informed to be able to suggest viable and realistic solutions to the conflict. To ignore one of the positions would be to risk a solution that is merely partial and thus ultimately unsustainable.

1. Natalia Dannenberg and Gabriel Borrud, "Racial Hatred," DW., October 4, 2010.

Is States' Rights in the E.U. Racist?

Thousands of Romania’s Roma people (also known as Gypsies) headed for the wealthier Western E.U. states, setting off a clash within the European Union over just how open its “open borders” really were. Migration within the 27 states of the E.U. became a combustible issue during the economic downturn. The Union’s expansion that brought in the relatively poor states of Romania and Bulgaria in 2007 renewed concern that the poor, traveling far from home in search of work, would become a burden on the state governments of the wealthier states. The migration of the Roma also raised questions about the obligations of Romania and Bulgaria to fulfill promises their governments had made when they joined the Union. Romania, for instance, mapped out a strategy for helping the Roma, but financed little of it.

Nicolas Sarkozy of the E.U. state of France demanded in 2010 that the Romanian state government do more to aid the Roma at home. He vowed to keep dismantling immigrant camps and angrily rejected complaints from E.U. Commission officials that the French authorities were illegally singling out Roma for deportation.

Sarkozy, being oriented to state politics, tried to revive his support on the political right by deporting thousands of them, offering 300 euros, about $392, to those who go home voluntarily, and bulldozing their encampments.[1] The European Commission threatened legal action against the state of France over the deportation, calling it disgraceful and illegal. Perhaps it could also be called racist. If so, might Sarkozy’s action be comparable to a Southern state in the U.S. trying to kick black people out. That is, might Sarkozy’s action evince state rights perpetrating racism? Arizona’s immigration law requiring people being investigated by the police to show I.D. pales in comparison.  Might the association of state rights and racism have shifted from the U.S. to the E.U.? If so, it is doubtful that state rights would be marginalized in the E.U. as it has been in the U.S. on account of the association; the state governments in the E.U. enjoy more than enough loyalty by their citizens to defeat it.

More generally, this case illustrates the problems that the E.U. has had in enforcing compliance of the terms of the accession talks of new states. Prime facie, the case showcases the difficulty involved in integrating Europe, particularly as states such as Italy, Spain, France and Denmark have striven to keep out immigrants from Africa. The case of the Roma could be just the tip of the iceberg in how state rights may be fueled by racism to keep certain groups out. In other words, there could be a rather troubling pattern here, and Europeans may have been torn—looking to the E.U. to thwart the racism while supporting their state governments in keeping out “troubling” groups. It is part and parcel of the checks and balances in modern federalism that member governments can be called on their sordid policies even when they are popular within the particular states.

1.Suzanne Daley, “Roma, on Move, Test Europe’s ‘Open Borders’,” The New York Times, September 16, 2010.

Obama's Economic Stimulus: Insufficiently Focused

The $800 billion stimulus law had as much (or more) to do with improving the education system and rail lines, installing universal broadband, and modernizing electrical grids as reducing the unemployment rate.[1] Consequently, the best that can be said regarding the spending is that it probably played a role in keeping unemployment from getting even worse than it did. 

As an alternative, Barak Obama could have proposed something akin to Roosevelt’s Civilian Conservation Corps (CCC), which was a public work relief program for unemployed men between the ages of 18 and 24; the program ran from 1933 to 1942. The corps was primarily geared to providing work (and a pay check) to unemployed youth. The conservation and development of natural resources in rural areas of the U.S. was merely the application. The CCC was the most popular New Deal program among the general public, providing jobs for 3 million from families on relief.

Essentially, had providing an on-going paycheck to those on or off unemployment compensation been Obama’s priority, the president would have sought more labor-intensive uses for the $800 billion. A new CCC for men and women over 18 could have operated in many towns and cities throughout the U.S. In keeping with the enumerated powers in American federalism, the federal government could have made the funds available for states to use (or not use) as they saw fit.  Job retraining oriented to vocational areas least over-supplied could have gone along with the program.

In short, the $800 billion could have been more focused on the immediate problem of unemployment.  This would not have hurt Obama’s prospects for getting re-elected. I am not surprised that the republicans are able to portray the stimulus spending as ineffective with respect to jobs, though to ignore the unemployment problem or argue that a tax cut would somehow prompt companies to hire seems naïve at best.

1, Matt Bai, “Crisis Past, Obama May Have Missed a Chance,” The New York Times, September 8, 2010.

The U.S. Tea Party: Anti-War and Pro-States?

When he was the republican nominee for the U.S. Senate from Kentucky, Rand Paul claimed that there was not enough money in entitlement programs to counter the federal government’s deficit for 2010. Approximately 40% of the budget was military. Accordingly, the candidate said, “Part of the reason we are bankrupt as a country is that we are fighting so many foreign wars and have so many military bases around the world.”[1] The Tea Party is animated by opposition to the exorbitant levels of federal spending and indebtedness. Applying their frugality to foreign policy, the party could make a clean break from the neo-cons such as Dick Cheney.

According to Randolph Bourne, in War is the Health of the State (1918), “As a general rule, the longer a war lasts, the more centrally planned and government-controlled the entire economy becomes.” Robert Higgs wrote in Crisis and Leviathan (1992) that among the effects of WWI were “massive government collusion with organized special-interest groups; the de facto nationalization of the ocean shipping and railroad industries; the increased federal intrusion in labor markets, capital markets, communications, and agriculture.” Thomas DiLorenzo points to these quotes and adds that inflationary war finance “inevitably leads to calls for price controls, which inflict even greater damage on the private enterprise system by generating shortages of goods and services.”[1] Such shortages in turn can serve as an excuse for even greater central-planning powers.

The Tea Party could thus have good reason for opposing even a standing army. Rand Paul wanted the federal budget to be 80% national defense, yet this did not mean he was for giving the Pentagon a black check. “So I believe that the defense of our country may be the primary enumerated power,” he said, “Does that mean I believe in a blank check for the military? No.”[2] This, in short, is the argument for why the Tea Party could come out against the war machine while still viewing the federal government as being primarily occupied with providing the Union’s united defense and foreign policy. The accent on the military here has more to do with the U.S. Government being on the imperial, or empire, level than on any desire to increase defense spending.

Futhermore, the Tea Party being in favor of federalism could mean that social spending should be raised and spent by the several states individually, rather than by the general government. In being for this shift, the Tea Party would not necessarily be opposing social spending per se—only that which is at the empire-level of government of the United States. Rarely is this distinction made; it allows for the federalists in the Tea Party to accept even universal health-care in any state where the majority vote for it through their legislatures.

It is typically assumed that if someone opposes a federal program, one does not want it at all; it could be that the person is oriented to re-establishing federalism rather than being opposed to the policy itself. Although the Tea Party has been oriented to both, this need not be so. The Tea Party could be agnostic on whether a given state has a sustenance net while being against the U.S. Government having any involvement in entitlement programs. The question for the Tea Party would be whether there is any sustenance-floor to which any American has a right.

1. W. James Antle, “Rand Plan: Will the Tea Parties Turn Anti-war?” The American Conservative (August, 2010), 8-9. See Thomas Di Lorenzo, “Inflating War: Central Banking and Militarism are Intimately Linked,” The American Conservative (August, 2010), 16-18.

2. Ibid.

See "In Defense of the Tea Party."

Weening Businesses off Debt: A Difficult Recovery?

We might view the recovery from the financial crisis of 2008 as a systemic correction in which managers were weened off their reliance (i.e., addition) on debt. Of course, the key lies in holding to the correction rather than falling off the wagon. Perhaps there should be an AA for debt-ridden businesses.

The near credit-freeze that came to a head in September of 2008 meant that even in the ensuing recovery, managers at American companies would be hesitant to spend their companies’ cash reserves. $838 billion for S & P’s 500 Index in March, 2010, was up 26% from March, 2009. Accordingly, managers have been hesitant to hire. From late 2007 to late 2009, payroll employment dropped by nearly 8.4 million by July, 2010; only 11% of the lost jobs were regained.[1] 

Robert Gordon, an economist at Northwestern University, points to the shift in executive compensation more in the direction of stock options. This arrangement gives managers more incentive to cut costs more in recessions and hold off in hiring in recoveries so that profits might surge first. However, one could point to the mandatory delay stipulated in some executive’s options to buy stock as giving them an incentive to look to the longer term.  Lynn Reaser, another economist, points to the lack of available external credit even more than a year after the financial crisis of 2008. She argues that managers conserved cash because they couldn’t rely on outside financing. 

However, firms like Apple, Yahoo, and Google are debtless and doing very well, so I would question the premise that outside credit is something to be desired.  Managers betting on leverage typically allow their irrational exuberance to distort their debt-to-assets and debt-to-profit benchmarks. If managers have become more averse to debt, maintaining higher cash reserves is not a bad thing, even when little interest is made on the cash. Once the new level is achieved, then only replenishments would be needed, so the diminishment of a firm’s investing in equipment or new hires would be temporary—to build the reserves and then to keep them stocked.  Drawing on their firm’s cash reserves rather than asking a bank for a loan or selling bonds proffers more freedom and self-reliance—qualities that are valuable even though they are difficult to quantify.  

1. Robert J. Samuelson, “The Big Hiring-Freeze,” Newsweek (August 2, 2010), p. 26.

The U.S. Supreme Court Deciding Federalism Cases: A Structural Conflict of Interest

Regarding the US Supreme Court being the decider of last resort, Madison’s Report of 1800 reads in part, “this resort must necessarily be deemed the last in relation to the authorities of the other departments of the government; not in relation to the rights of the parties to the constitutional compact, from which the judicial as well as the other departments hold their delegated trusts.”  The government being referred to is the U.S. The parties to the compact are the states.  Therefore, the theory here is that the U.S. Supreme Court can have its say after the U.S. President and the Congress, but not as binding on the States.  John Breckinridge, who sponsored the Kentucky Resolutions in the Kentucky House, wrote, “Who are the judiciary? Who are they, but a part of the servants of the people created by the Federal compact?”[1] The Federal Courts are part of the US Government that was created by the states, so those courts can’t be the final deciders with respect to the states.

The complete essay is at Essays on Two Federal Empires.

1. James J. Kilpatrick, The Sovereign States: Notes of a Citizen of Virginia (Chicago: Henry Regnery, 1957), p. 75.

Immigration and Federalism in the U.S.: Should Border States Participate?

On July 1, 2010, on the precipice of another July 4th celebration, President Obama told an audience that immigration was, in sum, “broken.” Furthermore, “everybody knows it.”  Yet neither he nor the Democratic leadership in Congress had any expectation of passing an immigration law in 2010.  Into this void, Arizona had months earlier passed its own law aimed at tightening enforcement. The New York Times reported that in his speech in July, Obama “used the opportunity to repeat his opposition to Arizona’s new law requiring law enforcement officers to question the immigration status of anyone they stop for other reasons if they suspect that they are in the country illegally, calling it ‘ill conceived’ and ‘divisive’.” The President said, “We face the prospect that different rules for immigration will apply in different parts of the country, a patchwork of different immigration rules where we all know one clear national standard is needed… . Our task then is to make our national laws actually work, to shape a system that reflects our values as a nation of laws and as a nation of immigrants.”  Different rules sounds like different immigration policies—as in who can enter the US.  If the President meant this, then he had a point. However, if he was arguing that tailoring different enforcement mechanisms to different regions, it could be argued counterwise that e pluribus union in a federal system not only allows for it, but thrives by it. In other words, the empire-scale of the US warrants a diversity of approaches. Furthermore, a federal system enables and indeed is strengthened by it.

The complete essay is at Essays on Two Federal Empires.

A Recipe for Regulatory Recidivism: the MMS and FAA

In 2010, the Inspector General of the US Interior Department made public a report on the federal Minerals Management Service, which regulates the oil industry and profits from leases to it.  In addition to this glaring conflict of interest, MMS has apparently not only been “cozy” with the industry it is regulating, the two have been as one.   One inspector said, “We are all the oil industry.” 


The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

U.S. Senator Rand Paul on Civil Rights and the BP Explosion

U.S. Sen. Rand Paul (R-KY), was the Tea Party candidate who challenged the Republican establishment to win the party’s Senate nomination in Kentucky on May 18, 2010. A day later, he publicly criticized a plank of the Civil Rights Act of 1964. Specifically, he said in an interview with Rachel Maddow on MSNBC television that he supported the sections of the Civil Rights Act that applied to public accommodations but had concerns when it came to its applicability to private business. He had raised similar concerns earlier in the day about the Americans with Disabilities Act in an interview on National Public Radio. Asked by Maddow if a private business had the right to refuse to serve black people, Mr. Paul replied, “Yes.” In so answering, the new senator failed or refused to distinguish private property that is open to the public from private property, such as a person's home, that is not. 

In citing the rights inherent in private property, Mr. Paul, an eye surgeon, was refusing to recognize the “publicness” in a business being open to the public, as distinct from someone’s house, which is not open to the public. In other words, Mr. Paul was ignoring the qualification to private property that comes into play as soon as said property is opened to the public.  Such property is quasi-public precisely because it is open to the public.  Hence, society, through its government, has a right to dictate the obligations going with that element of publicness.  Mr. Paul would have been on firmer ground had he limited his statement to private clubs, such as country clubs, which do not receive public money and are not open to the public.  However, even here, if people associate in a way that hurts others by intentionally excluding them, there might be an argument in favor of subjecting them to the Act, though such an argument seems weaker than those for freedom of association and on private property not open to the public.

Rand Paul also said on ABC TV that President Barack Obama’s criticism of BP in the wake of the Gulf oil debacle sounds “really un-American.”  Paul said that the president’s response is part of the “blame game” that’s played in the United States. The game, he argued, leads to the thinking that tragic incidents are “always someone’s fault” when sometimes accidents just happen. Sen. Paul was ignoring that BP overrode Transocean in directing its employees not to use “mud” to maintain pressure in the well as cement “corks” were being inserted.  Also, managers at BP claimed to have the technology to stop any leak or spill when no such technology existed. In short, the managers at BP put the Gulf at risk in order to cut corners so as to earn more profit (as if $2 billion a month was not sufficient).  Rather than go after the mentality of shirking amid a “more, more, more” mentality wherein nothing is ever enough, Paul went after the representative of the victim–society as a whole.  That is to say, he added insult to injury by going after the victim rather than the culprit.  In so doing, he ignored key elements of the culpability.

Listening to the candidate on the Maddow show on MSNBC, I was more concerned by the way he chose to evade questions than by his failure to take “being open to the public” into account in his view on civil rights law. At one point, Rachel Maddow asked him, “yes or no,”  on whether he would exclude private businesses from the Civil Rights law.  He replied that he was against the violence that took place in the 1960s in association with Walgreen’s lunch-counters. Beyond not answering the question, Mr. Paul seemed to be continuing with what he wanted to say–ignoring the question entirely as a mere interruption to be dismissed. I noticed a few times that after Maddow did indeed interrupt him, he simply picked up with what he had been saying.  Could his ignoring the questions be related to his ignoring the “open to the public” qualification and the risky shirking of BP?  In other words, might it be that Mr. Paul simply does not see what is inconvenient to his world view?  If so, I contend that this character trait is far more alarming than even his evasions and his over-simplified view on private property and the oil spill.  If you have ever tried repeatedly to tell someone something only to have your statement ignored as the other person continues on with what he or she was saying, you know what I mean. Sadly, I suspect that Rand Paul didn't notice it. This character flaw is by no means limited to him. Nor is this an invitation for partisan aspersions on the Republican Party.

Rather, I suspect that not answering questions--even asking one's own instead of given any answer to a question outstanding--is a growing attitude in modern America. I have witnessed it myself in emailing people I don't know on matters involving an actual or potential commercial transation. Does the computer come with Office 2007? Reply: When you would like to come by to look at it?  But what about Office 2007?  Or take apartment hunting:  Are utilities included in the rent? Reply: Call me to make an appointment to see the unit. Nietzsche would have a field day with such a mentality that vaunts itself as superior by "virtue" of its own assumed dominance. The basis of Rand Paul's non-answer, in other words, could have been an attempt to dominate beyond his place on Maddow's show. In other words, his non-answers could have been refusals rooted in a will to power that was biting off more than it could chew on someone else's show.

In terms of having a will to power based on strength, many of the stations or offices in modern society that we view as being entitled to dominate are in fact weak.  Nietzsche points to the modern moralist's thou shalt not as an attempt by the weak to dominate beyond their innate weak constitution. He also points to the attempts of the modern manager to dominate in such terms (and the priest as well). In watching various personalities giving non-answers while being interviewed on television, I find myself wondering if they know they are doing it. If they do, they are indeed rascals; if they do not, their stygian pathology is much deeper than I am equipped to investigate. Perhaps the modern illness is malignant narcissism to such an extent in a personality that the delimited perspective eclipses even awareness of what oneself is doing.

Sources: 

1. The Rachel Maddow Show. http://www.msnbc.msn.com/id/37273085/ns/politics-decision_2010/

2. Adam Nagourney and Carl Hulse, "Tea Party Pick Causes Uproar on Civil Rights," The New York Times, May 20, 2010.

On the Differential Impact of Pro-Business Cultural Values on Financial Regulation in the EU and US

On May 18, 2010, the German state legislature banned naked short-selling of certain euro-debt and credit-default swaps, as well as some financial stocks because it was believed that “excessive price movements” could endanger the stability of the financial system. In an interview with Frankfurter Allgemeine Sonntagszeitung, Wolfgang Schauble, the Finance Minister at the time, said that the “financial market is only concerned with itself, instead of fulfilling its purpose and financing sensible, sustainable economic growth.” The legislation runs counter to a race to the bottom in which governments relax financial regulation to entice the banking sector. At the same time, however, the American state governments and that of their union seemed like apologists for the industry they are supposed to be regulating.  In fact, Tim Geithner, the U.S. Treasury Secretary, did not waste any time in criticizing the E.U. state for the legislation. While doing so, he dismissed the German Chancellor's proposal for a global financial transactions tax (the proceeds of which would go into an emergency fund to divert a collapse of the financial system). To be sure, while the European proposals were a healthy sign of government not enslaved by the money and power of big business, the problem of banks too big to fail still existing was not tackled. Furthermore, whereas Americans may be too insular, the Europeans may be unrealistic in their visions for global regulation. Indeed, many tend to conflate their own union with an international organization.

The full essay is at "Essays on Two Federal Empires."

Regulatory Capture Realized: The Oil Industry and the MMS Regulatory Agency

On May 11, 2010,  U.S. Dept. of the Interior Secretary Ken Salazar announced that he would separate the public safety and environmental enforcement side of the Minerals Management Services (M.M.S.) agency from its leasing and revenue collection function. While this move eliminateed the structural conflict of interest in the agency, it might not do enough to protect the regulatory function of the agency’s public safety and environmental enforcement roles.  The regulator can all too easily be coopted, or captured, by the firms it is regulating.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

Is the Moneyed Interest Oriented to Ending American Federalism?

James Madison wrote in Federalist #10, “a rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project, will be less apt to pervade the whole body of the Union, than a particular member of it.” That is to say, it is in the interest of the wealthy (and especially creditors) that federalism be replaced by a consolidated central government.

In the case of Shays' Rebellion in 1786 in Massachusetts, the debtors were soldiers who had not been paid by the Continental Congress yet still faced payments on their farms. Under such conditions, was stopping such payments an "improper or wicked project"? Moreover, in a republic wherein each citizen of age has one vote, is a tendency to equalize property (as opposed to a concentrating of wealth) so very improper or wicked? Perhaps whether such things are wicked depends on where one stands, though I suspect the good of the whole--the public interest--does not reduce to a partisan position based on self-interest.

Given the diversity that naturally exists in an “extended republic” the size of an empire, such as the U.S. or E.U., the one-size-fits-all interest of the rich is ultimately suffocating. Diversity over such a number of republics in a union must be allowed its breathing room or the pressure from the consolidation will prompt some of the republics to secede. In 2010, for example, there was a movement in Texas to leave the union because the sense was that law from Washington D.C. was not fitting for that republic.

The question is perhaps whether the financial elite can be oriented to the long term, and, thus public interest in the pursuit of a more paricular interest. Moreover, is the public good simply the aggregation of everyone following his or her own particular interest? Even if that works in an Adam Smith economy of competitive markets, does the same logic work for polities?  It could be argued, for example, that unlike a market, a polity requires leadership. The U.S. President can say the U.S. will move against Libya, but does it make sense to say that the American economy is moving as an entity when the market is simply the individual buyers and sellers? Furthermore, nations can explicitly stand for certain principles, whereas a market's principles such as efficiency are given, or inherent.

In the case of the United States, a decision is needed by the citizens on whether to continue to allow the propertied interest to enervate federalism or to reinvigorate the checks and balance in federalism wherein one government checks another. In the end, it is the public's comfort with concentrated power that is at issue. Historically, that comfort was pretty low, but may have subtly changed over decades wiithout being made transparent. One function of leadership in a polity is to act on behalf of such transparency and proffer a directionality.

The General Welfare Clause: Is the Power of Congress Constitutionally Unlimited?

Art. 1, Sec. 8. of the US Constitution: Congress “shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” Does this clause mean that the US Government can legislate in any way that benefits the Union? According to Thomas Woods, the general welfare clause “was a restriction on the power of the federal government: it had to exercise the powers delegated to it with an eye to the welfare of the country as a whole, not to the particular advantage of one state or section.” That is to say, the Congress could provide for the general welfare of the United States only within its delimited powers listed in the US Constitution.

The complete essay is at Essays on Two Federal Empires.

Regulating Commerce by Mandate: The Death of American Federalism?

The mandate to buy health-insurance may be an unconstitutional encroachment of the U.S. Government onto the liberty of its citizens. Furthermore, the rigid federal rules in the health-insurance reform law of 2010 may represent yet another way by which the state governments have been rendered servile in begging Washington for breathing room in a domain that may be rightly theirs, constitutionally (i.e., beyond the enumerated powers assigned to the U.S. Government). The bigger story in this jurdical piece on healthcare is perhaps whether American federalism itself was finally being extirpated and expunged in favor of consolidation. 

The full essay is at Essays on Two Federal Empires.

The Conflict of Interest in a Silent Oligarchy Being Engaged in Its Public Policy

Goldman Sachs, which had played a role in enabling Greece to hide its public debt, urged investors in March of 2010 to buy shares in two big health insurance companies, UnitedHealth Group and Cigna. The reason: their rates were sharply up and competition was down. According to The New York Times, the White House claimed, “ the Goldman Sachs analysis shows that while insurers can be aggressive in raising prices, they also walk away from clients because competition in the industry is so weak.”[1] Rate increases ran as high as 50 percent, with most in “the low- to mid-teens” — far higher than overall inflation. 

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

1. David Herszenhorn, “Obama Wields Analysis of Insurers in Health Battle,” The New York Times, March 6, 2010.

On the Health-Insurance Mandate: Nullification or Judicial Review?

A Republican U.S. President pushes hard for the U.S. Government to play a more active role in K-12 education under the rubric of “No Child Left Behind.” A Democratic U.S. President pushes hard for the U.S. Government to require residents to purchase health-insurance. Some of the same Republicans who cry foul on the insurance mandate insist that “marriage” be federalized through an amendment to the U.S. Constitution. From whichever vantage-point one cares to assume, political consolidation at the expense of federalism seems to be the name of the game in American politics.

Proponents of the health-insurance mandate have argued that Congress acted within its authority under the U.S. constitution’s commerce clause. However, Ken Cuccinelli, the attorney general of Virginia, argued the U.S. Supreme Court has never ruled that the clause allows Congress to require citizens to purchase a good or service in commerce. Cuccinelli’s complaint suggested that the Virginia law that outlaws the federal government from forcing state residents to purchase health insurance trumps the federal law because it is a matter assigned to the states under the Constitution’s 10th Amendment rather than enumerated to the purview of the U.S. Government. In other words, the supremacy clause pertains only to powers delegated to the U.S. Government. That government is not supreme where the states are sovereign. The latter is substantial in principle, even if not recognized in practice; all powers not explicitly granted to the federal government remain with the states or the people, according to the Tenth Amendment to the U.S. Constitution.

So it is rather perplexing that the State governments have generally been sleeping through federal encroachments since the time of the CSA-USA war in 1861-1865. As repeated efforts to thwart federal encroachment failed, I suspect the state governments have given up, though several of them seem to have woken up in contesting the federal mandate on health-insurance. Yet the objection is issue-specific, and thus not apt to lead to any fundamental realignment from consolidation back to federalism. Americans tend to be issue- rather than systemic-oriented, and this is reflected in the focus of their elected representatives. Unfortunately, this can mean that no one is left watching the store itself; everyone is debating the particular products on the shelves—and with carefree indifference to even the most relevant history. For instance, the history of nullification has apparently fallen off the shelf, at least with respect to any collective memory.

In 1830, Andrew Jackson sent federal troops into South Carolina because its legislature had decided that it could nullify federal law encroaching on its domains of governmental sovereignty. The South Carolina legislature relented (though its succession document would be retrieved in 1858, after the Congress had just passed another tariff on rice and cotton exports. Jackson’s message was that nullification of federal law would mean the dissolution of the Union.

Nevertheless, the governor of Virginia signed a bill into law in 2010 nullifying the federal mandate. The policy argument against nullification stresses that state opt-outs would reduce the size of the insurance pool and thus reduce the anticipated cost-savings. Similarly, Gov. Mike Rounds of South Dakota, a Republican, signed a bill into law on March 12, 2010 declaring that the federal regulation of firearms is invalid if a weapon is made and used in South Dakota. On the day before, Wyoming’s governor, Dave Freudenthal, a Democrat, had signed a similar bill for that state. The same day, Oklahoma’s House of Representatives approved a resolution that Oklahomans should be able to vote on a state constitutional amendment allowing them to opt out of the federal health care overhaul. In Utah, lawmakers embraced states’ rights with a vengeance in the final days of the legislative session that week. One measure said Congress and the federal government could not carry out health care reform, not in Utah anyway, without approval of the Legislature. Another bill declared state authority to take federal lands under the eminent domain process. A resolution asserted the “inviolable sovereignty of the State of Utah under the Tenth Amendment to the Constitution.” Alabama, Tennessee and Washington are considering bills or constitutional amendments that would assert local police powers to be supreme over the federal authority. Rhode Island, Vermont and Wisconsin — none of them known as conservative bastions — were considering bills that would authorize, or require, governors to recall or take control of National Guard troops, asserting that federal calls to active duty have exceeded federal authority.

Given the Nullification Crisis in the nineteenth century, the actions of public officials at the state level in the twenty-first century seem foolhardy. They were on much firmer ground in contesting the validity of the federal law through the federal courts, which can declare a law of Congress unconstitutional. However, this means is not without drawbacks.  In particular, there is a structural conflict of interest in having the federal high court decide a matter between the government of which the court is a branch and a state government. Not surprisingly, the U.S. Supreme Court has tended historically to interpret the U.S. Constitution in the federal government’s favor. It is like having a member of one of the teams as the umpire and finding that that umpire tends to rule in favor of his or her own team. The surprising thing is that onlookers are surprised when this happens.

“Everything we’ve tried to keep the federal government confined to rational limits has been a failure, an utter, unrelenting failure — so why not try something else?” said Thomas E. Woods Jr., a senior fellow at the Ludwig von Mises Institute, a nonprofit group in Auburn, Alabama. Article 6 of the U.S. Constitution indicates that federal law is superior over state law where there is a conflict, but this doesn’t make sense outside of the federal government’s enumerated powers—for otherwise why even enumerate? To rely on elections for the needed correction is not sufficient, according to Mises. “Whether the political impulse of states’ rights and nullification will become a direct political fault line in the national elections this fall is uncertain.” It is almost never asked: “Who is the sovereign, the state or the federal government?”—a question put by State Representative Chris N. Herrod, a Republican from Provo, Utah. Technically (but not in practice), both governments have governmental sovereignty in the American federal system; it is not an “either/or” question.

The question is perhaps whether a balance between the two systems of governmental sovereignty within the American system can be restored simply by reacting issue by issue. Is it possible, moreover, for the American people to embrace a constitutional moment wherein the architectonic of the system itself is the issue?

Sources:

Kirk Johnson, “States’ Rights Is Rallying Cry for Lawmakers,” New York Times, March 16, 2010. 

Alexander Mooney, “Virginia Governor to Sign Law Firing Back at Health Care Bill,” CNN, March 24, 2010.