A State Representing the E.U. at the G20

From August 29 through September 1, 2026, the G20 met in North Carolina in the U.S.; the E.U. was represented by one of its states, Ireland, because it was charged with chairing the sessions of the European Council of Ministers, which in turn plays a legislative role, as does the European Parliament, whereas the European Commission is the E.U.’s executive branch. Such international meetings as those of the G20 are attended by officials from executive rather than legislative branches of government. Accordingly, the economy commissioner, Valdis Dombrovskis, along with President von der Leyen should have been representing the E.U. at the meeting.

To label Ireland as holding the presidency of the E.U. for the second half of 2026 is utterly misleading. In actuality, state-level ministers of Ireland were chairing sessions of the European Council of Ministers, which is just one of several federal institutions of the European Union. The president of the E.U.’s executive branch could more accurately be referred to as the president of the E.U. itself, just as the head of the U.S.’s executive branch is styled as the president of the United States. Unlike the U.S., the E.U. went to excess in coining presidents throughout the federal level.

Within the false label of the Irish presidency of the E.U., even though Tánaiste Harris was the finance minister of the E.U. state of Ireland, his role at the federal level was legislative in chairing sessions of the Council of Ministers in which federal laws, rules, and directives were formulated and voted on. Because executive rather than legislative officials attend the G20, Dombrovskis, along with Von der Leyen, should have taken Harris’s place.

The oversight in sending a federal legislative official to the G20 meeting stems from the broader problem of the over-emphasis of the states at the federal level. In the U.S., the member-states are represented in the U.S. Senate, and even so only indirectly through popularly-elected delegates, which are called senators, rather than directly by state officials from the states’ respective executive branches. Whereas the U.S. states are only represented at the federal level in the U.S. Senate, E.U. states are represented at the E.U. level in both the European Council and the Council of Ministers. The most obvious reason for the additional role for the states is fear of encroachment by the E.U. on the prerogatives of the states, and all the Europeans had to do was to look over at the consolidating power over decades of the U.S. at the expense of its states. The concern is thus justified, but the founders of the E.U. may have gone too far.

For one thing, the economic and geopolitical interests of a state are not necessarily the same as those of the union that includes the state. So, a conflict of interest was possible in that, besides representing the E.U., Harris was scheduled to “hold bilateral meetings” with officials from the G20 countries (which are not “member states” as the G20 does not have a federal governmental system).[1] The word bilateral signals that the discussions were between Ireland, which is not in the G20, and the executive-branch officials of the G20 countries, so Harris would be pursuing Irish rather than European interests in those discussions. Aside from the fact that his presence at the G20 was to represent the E.U., it was not fair to other countries not in the G20 that Ireland was able to have bilateral talks at the meeting. It would be much simpler were the E.U. represented at international meetings by federal officials in the Commission. In short, the influence of the state governments at the federal level in the E.U. had become excessive.

---

1. “Simon Harris to Represent EU at G20 Finance Meeting in North Carolina,” Europe Says, 31 August, 2026.

U.S. Defense Contractors under Pressure

In a republic, which is characterized by representative rather than direct democracy and includes checks on even the elected representatives, private interests, such as corporations that manufacture weapons purchased by the government, undue the very legitimacy and public good of a republic when the elected (and appointed) public officials capitulate to those interests because those interests are of a part rather than the whole. The profit calculus of a defense contractor is not necessarily in line with the national interests of the country in which the corporation operates. Furthermore, acquiescing to the relatively narrow private benefit of corporations places an elected official in the position of possibly betraying one’s constituents and even the national security—the public good—of the whole, the country. It is in the political (and even financial) interests of such officials to hide or obscure their motives in voting on a defense budget by using “real threats abroad” as a subterfuge to increase defense spending going to contractors in payment for more weapons. The threats may be real or not. How would an electorate possibly know without access to classified information? Adam Smith wrote of his concern that governments and capitalists would collude to shortchange labor. The collusion can also be at the expense of an electorate and even a republic itself. In response to Elizabeth Willing Powel’s question on what sort of government the U.S. Constitutional Convention had just proposed, Ben Franklin is said to have replied, “A republic, if you can keep it.” The People may be at a considerable disadvantage without realizing it if distant collusion is financially and politically sufficiently concentrated and furtive under subterfuges of public-policy ideals.

During the summer of 2026, when the U.S. was attacking Iran militarily and supplying Israel with weapons, the stockpiles of the U.S. War Department’s munitions were being diminished to the point that the Pentagon began to pressure defense contractors “to accelerate production of weapons.”[1] Pentagon spokesman Sean Parnell issued a statement on August 8, 2026 directed to the companies to urge them to adopt a “pace the threat demands.” Deputy Defense Secretary Steve Feinberg had recently written to the CEOs “giving them no more than 21 days to submit plans to ‘drive significantly faster, more aggressive delivery schedules and/or increased production for critical capacities.’”[2] Although it makes no sense to drive schedules or to characterize them as aggressive, the corporate-speak and military-mindset melded into the same sentence symbolize a fusion that U.S. President Eisenhauer, the general who had led the Allied D-Day invasion in World War II, had characterized as the U.S. military-industrial complex. Even though Feinberg wrote to the CEOs, “Years-long development cycles are not acceptable. . . . We must dramatically accelerate our program schedules and expand our production capacity now,” it is more likely in the larger picture that the proverbial tails were waging the dog, meaning that the private companies generally called the shots, with the Congress and President complying.

With U.S. budget caps constraining defense spending by the federal government “from about $528.2 billion in fiscal 2011 to $496.1 billion in fiscal 2015, instead of a previously projected increase to roughly $598 billion,” for example, “the Pentagon’s top contractors sent an army of more than 400 lobbyists to Capitol Hill [in the spring of 2015] to press their case for increasing the nation’s spending on military hardware, in a massive effort costing tens of millions of dollars of [the defense contractors’] own funds from April to June alone, according to an analysis of public lobbying data by the Center for Public Integrity.”[3] Even though causation cannot be derived from positive correlation, private companies would not spend so much money—Lockheed Martin Corporation alone spent $3.5 million and sent 56 lobbyists to Congress on defense spending—were a payoff in terms of more federal spending for contracts not desired and even expected.[4] In December 2015, Congress approved $573 billion for defense ($496.1 billion for the previous fiscal year). As any farmer might say, such an increase is not chicken feed; neither, I might add, did it occur by accident, for the private corporations receiving defense contracts did not take kindly to the budget caps.

Similarly, in 2026, ramping up production of Patriot interceptors, for example, which had fallen from 2,330 before the attacks on Iran in 2026 to 1,030 when the cease-fire that April took effect, to between 759 and 827, a decrease of at least 65%, and of THAAD interceptors, which had fallen from 452 to between 232 and 262, was very much in the financial interests of the corporations making those interceptors. It was as if the Pentagon were saying to children playing outside on a hot summer day, you need to hurry up and finish your ice-cream cones so you can have more. Such an order is hardly an order. Just imagine adults furtively acquiescing to how much ice cream the children want ostensibly by pressuring them to quicken the pace of eating when actually the children have been paying the adults to spend more on ice cream.

Beyond the political and foreign-policy interests (and ideology) of the Trump Administration in supporting Israel both directly in its militancy in Gaza and Lebanon and indirectly by attacking Iran, the financial interests of the companies that sell military hardware to the Pentagon should not be glossed over, for without such interests, it is difficult to say how militaristic the U.S. Government would be abroad, even given the financial power of AIPAC. To be sure, Ukraine, a country still being invaded by Russia without provocation, was at the time very much in need of anti-missile interceptors. Within 24 hours of Feinstein’s statement, “13 people were killed and some 90 others were wounded [from] Russian attacks” on Ukrainian cities as the Kremlin intensified its bombardment.[5] It bears remembering, however, that the existence of normatively justified uses of American weapons abroad is a boon to defense contractors. Like the financial “lobbying” by AIPAC, which is difficult to justify in terms of legitimate uses of American military power abroad, justified uses of American weapons such as in Ukraine—a country being invaded rather than invading—do not mean that those companies do not have a disproportionate influence on how much money the U.S. Government spends on defense. In fact, contractor spending on political campaigns can leverage legitimate uses to pressure member of Congress and even the federal president to contract even for weapon production for more questionable uses.

---

1. AP News, “Pentagon Pushes Defense Companies to Boost Weapons Production after Concerns of Depleted Stocks,” APnews.com, August 8, 2026
2. Ibid.
3. Alexander Cohen, “Top Defense Contractors Spend Millions to Get Billions,” The Center for Public Integrity, August 5, 2015 (accessed August 9, 2026).
4. Ibid.
5. Malek Fouda, “13 Killed in Ukraine and 90 Injured as Russia Intensifies Overnight Bombardment Campaign of Ukrainian Cities,” Euronews.com, 9 August, 2026.

The European Parliament: Rejecting the Council’s Proposed Budget

On 16 June, 2026, the European Parliament rejected the European Council’s proposed budget for the E.U. not only because of the proposal’s €32.8 billion budget-cut, which would reduce the six-year 2028-2034 federal budget even below that which the Commission had proposed, but also because the Council had refused to address the issue of federal-sources of revenue, which was made increasingly salient by the increasing need of funds at the federal level. In seeking to keep the federal institutions dependent on money supplied by the states, the Council, which like the U.S. Senate represents states, can be viewed exploiting a conflict of interest at the expense of the ability of the E.U. to operate even within its given mandates. Put another way, the requirement that the Parliament pass any proposed budget can be viewed as a check on the state-centric Council’s proclivity to put the interest of the parts above the whole—the individual states above the Union.

Although the proposed federal budget by the Council represented a political compromise between states that wanted “substantial cuts” and other states that “asked for an increase of the budget for agriculture and regional funds,” enough of the Parliament’s representatives elected by E.U. citizens, rather than appointed by state governments, deemed the Council’s proposal as insufficient.[1] Those representatives were oriented to adequately funding extant federal programs rather than doing the bidding even of their own states. This translates into an orientation to the common good that is implied in collection action (i.e., the whole) rather than to the interests of parts. Because the €2 trillion proposal by the Commission had already been rejected as insufficient by the Parliament, the Council’s even lower figure can be interpreted as perplexing unless the states were making a statement that any federal branch is apt to overstate the E.U.’s funding needs so the Parliament’s rejection of the Commission’s proposal could and should be ignored.

Consistent with the alleged proclivity of federal governmental institutions to over-state the E.U.’s needed funding was the refusal of the Council “to touch the issue of the budgetary correction mechanisms known as rebates, revenues coming from taxes at the E.U. level, known as own resources, and the principle of making the budget conditional on the rule of law.”[2] Refusing to increase the E.U.’s own access to revenue independent of funds contributed (and thus controlled by) the state governments was essentially a decision to maintain power over the federal institutions and thus render the Union subservient to the states. At the time, MEP Carla Tavares told the press, “We need to make progress on own resources. . . . It is difficult to achieve a strong and renewed budget with cuts and without new own resources.”[3] In other words, the common good as funded federally would be diminished by the refusal of the state-centric Council to even consider new sources of own resources at the federal level. The distinctly state-level interest in maintaining (inordinate) power in the federal system was operating at the expense of the whole. The self-interested decision of the states in the Council to refuse to make budget-outlays conditional on rule-of-law being upheld in a given state also evinces an institutional (or structural) conflict of interest because using the budget so state governments do not disassemble rule-of-law provisions is in the interest of the whole (i.e., the European Union). One state government being able to backslide could easily domino across state-lines, and as all of the delegates at the U.S. federal Convention thought in 1787, allowing dictators at the state level would be incompatible with a democratic Union. So, the refusal of the Council to address the matter of conditionality can be viewed as putting the Union at risk. Fortunately, the members of Parliament were foremost oriented to the good of the Union rather than to protecting state prerogatives even at the expense of the Union.

One of the benefits of federalism is that the federal and state levels can act as checks on each other so as to preserve liberty against the threat of tyranny. The Parliament’s role in being a check on the use of the Council by the state governments to put the interests of the state government officials and their respective governments above the interests of the whole is thus vital in safeguarding the E.U.’s federal system and thus the E.U. itself. Moreover, putting the interests of parts above the whole of which they are parts is never a good idea, for the interests of a whole are not identical to the aggregate of the interests of the parts; the whole is more than the sum of its parts.

---

1. Eleonora Vasques, “EU Parliament Rejects Member States’ First Draft of Long-Term Budget,” Euronews.com, 16 June, 2026.
2. Ibid, italics added for emphasis.
3. Ibid.

A Big-State Governor Usurps the Role of the European Council's President

The governor of a large state, if speaking for the E.U., risks not only undercutting federal officials who can speak for the E.U., but also subtly orienting federal policy in the interest of that state rather than the entire union. It is important, therefore, that the president of the European Council be tasked with speaking publicly for the Council, rather than usurped.

On December 19, 2025, the president of the E.U. state of France stood at the European Council podium to announce, presumably speaking for the Council, “Either a robust and lasting peace is reached, with the required (security) guarantees, or we will need in the weeks ahead to find ways for Europeans to re-engage in a fulsome dialogue with Russia, and in complete transparency.”[1] Because Macron was not the chair, or president, of the European Council, it is impossible to know whether he is expressing his own opinion or that of the Council; his decision to make the announcement rather than defer to the Council’s president thus weakened the Council. President Putin of Russia had grounds to dismiss Macron’s statement direct talks between Europe will be needed if the American peace proposal falters. Simply put, Macron did not have standing to speak for Europe in terms of talks. Alternatively, he could have stated that his E.U. state would try to have direct talks with Putin, but the downside to that is that Putin could play the E.U. state governments against each other. Hence distinctively E.U. foreign policy would be worthwhile.

At the end of December, 2025, European Commission President Von der Leyen was on firmer ground in insisting that Ukraine’s accession to the European Union as a state was “a key component” of the security guarantees that Ukraine was then seeking as part of a deal with Russia. According to Von der Leyen, who unlike Macron can speak for the E.U., accession represents “a key security guarantee in its own right.”[2] Even though accession requires unanimity in the European Council, I contend that there is value in having a federal official speak for the E.U. on Ukraine becoming a state in the Union. For one thing, it provides a vision which the leaders in the state governments can either accept or reject. For another, Putin can count on Von der Leyen’s statement as coming from the E.U. itself, rather than just from a state government, whether pro or con on Ukraine entering the Union.

In short, the difference between Macron’s opportunism and Von der Leyen’s attempt to bolster Ukraine’s chances in becoming a state is significant. That the state governments hold so much power in the E.U.’s federal system renders making space for E.U. officials especially important, lest one or two big states essentially take over the Union in pursuit of their own geo-political interests. The E.U. has been vulnerable to this because it was, even in 2025, too bottom-heavy.

---

1. Michel Rose, “Macron Says Europe Will Need to Engage with Putin If U.S. Peace Talks Fail,” Reuters.com, December 19, 2025.
2. Maria Tadeo, “Von der Leyen Signals Push for Ukraine’s E.U. Accession as Russia Derails Talks with Attack Claim,” Euronews.com, December 30, 2025.

American Federalism and Equal Protection: Transsexual Children in Tennessee

On June 18, 2025, the U.S. Supreme Court ruled that a Tennessee law blocking transsexual children from being able to undergo puberty-blockers and gender-changing surgeries does not violate the Equal Protection clause of the U.S. Constitution. The court’s 6-3 opinion in U.S. v. Skrmetti was reported at the time to fall “largely along conservative-liberal lines.”[1] By this is mean ideological lines, both moral and political in nature. Such is grist for the mill for the broad judgment of an electorate, in what is otherwise known as popular sovereignty, which is superior to governmental sovereignty in a republic. Add in the fact that Tennessee is a member-state in a federal system in which the U.S. Supreme Court is on the federal level, and the broad judgment of the electorate takes on more significance to the extent that a federal system of an empire-scale union is in part supposed to take into account and protect interstate ideological differences that defy one-size-fits-all union-level policies. In other words, as cultural heterogeneity can be expected in going from state to state in an empire-scale union-of-states, efforts “from the top” to impose a single policy on every state do not allow the federation to breath. Political pressure could be expected to build over time if such a suffocating tendency eventuates, with the risk of dissolution increasing over time as if depreciation.

Because the U.S. Supreme Court can (and has) contributed to a one-size-fits-all compromising of federalism in favor of the General (i.e., federal) Government, Chief Justice Roberts wisely resisted the temptation (if he felt any) to decide the issue not only for the people of Tennessee, but also for the entire Union. “The voices in these debates raise sincere concerns; the implications for all are profound. The Equal Protection Clause does not resolve these disagreements. Nor does it afford us license to decide them as we see best.”[2] He was deferring to popular sovereignty. Because he did not find discrimination based on sex to exist in the Tennessee law and thus that it does not violate the Equal Protection Clause of the federal constitution, he was able to not only defer to an electorate to use its broad judgment, but also allow Tennessee some breathing room within the Union.

It is arguably more likely that the majority of the electorate in Massachusetts, for example, would be against the Tennessee law being adopted in Massachusetts, than that a majority of Tennessee’s citizens would vote to repeal the law. Both of these collective value-judgments being able to be codified into law is vital to the endurance of a federal system in an empire-scale union of states. Therefore, the strict scrutiny that sexual discrimination requires of any court should not be used as a crutch by which to “federalize” law in the United States or to replace the value-judgments of majorities of voters with those of justices. The fact that the decision fell along ideological lines means that value-judgments apart from jurisprudence were also involved in the decision, and thus that Roberts is correct that the contesting “sincere concerns” should not be resolved by fiat, but rather by means of ballots.

This is not to say that a federal court should sidestep cases that do involve significantly harmful sexual, religious, or racial discrimination on a minority, for majority rule is not absolute. Rather, the interests of an electorate and of federalism itself should be considered by judges and justices, especially when the law under the microscope has a legitimate purpose. In the present case, stopping children from blocking puberty is a legitimate societal goal because children are especially vulnerable to not being of mature mind on even themselves. Surgeries are of such consequence that this part of the law was not even contested. This means the law had at least some merit of intent and thus could not be rightly claimed to be intended to discriminate. Although historically some state governments have enacted laws intentioned to discriminate against Black Americans, that such laws were so blatant can be used as a litmus test for federal judges and justices to assess whether a law is inherently and intentionally discriminatory. Just because a particular law impacts only a group rather than everyone does not mean that the law necessarily violates the Equal Protection Clause. Put another way, just because a law costs or benefits only people who meet certain criteria, such as having a disease such as gender dysphoria, does not mean that unless everyone meets those criteria the law is unconstitutional.

In fact, the value of broad value-judgments being made by voters as the basis of a republic and the importance of not succumbing to one-size-fits-all-states trends by federal governmental institutions arguably warrant shifts in federal policy and jurisprudence. For instance, the use of referenda by governments so an electorate can assume an increased role on the level of value-judgments would solidify that foundation of American democracy, with elected representatives taking their cues from the broad strokes to implement them into specifics, whether laws or regulations. Furthermore, the U.S. Supreme Court could set a precedent whereby it is more difficult for that court to declare a state law unconstitutional under the federal constitution. That that court is a branch of the federal government means that there is at least an implicit conflict of interest on matters bearing on federalism, since justices are both nominated and confirmed by branches of the federal government. I once asked Sandra Day O’Conner why the court had not done more to counter this institutional conflict of interest. She replied, “It takes five,” meaning five justices to agree to do it, and that was a Republican-majority court!  That the U.S. is not a France or Germany with a large back yard, but, rather, of the same scale and federal-type as the E.U., is reason enough for the American state governments to flex their respective wings more so as to reflect or match the broad value-judgments of their electorates. On June 18, 2025, Chief Justice Roberts resisted the temptation to clip Tennessee’s wings and thus incrementally strengthened the federalism of the empire-scale union.

---

1. Josh Gerstein, “Supreme Court Upholds Tennessee’s Ban on Gender-Affirming Care for Minors,” Politico.com, June 18, 2025.
2. Ibid.

E.U. Defense: The State Governments Exploit a Conflict of Interest

Sometimes lemons can make use of political gravity to become lemonade. Of course, behind the lemons are human beings, who are of course innately economizers, political actors and moral agents. When accosted by proposals that additional governmental sovereignty be delegated from state governments to the federal level, state-government officials feeling the gravitas of narrow self-interest are inclined to resist even if the transfer is in the political and economic interest of the union as well as all of its states. I am of course describing a drawback that goes with state governments having too much power in a federal system, whose interests are not always identical with those of a particular state or even those that pertain to the state level as distinct from the federal level. I submit that a federal system in which such dynamics are ignored in favor of focusing on particular issues, such as the E.U.’s increased need for defense given Russia’s unprovoked invasion of Ukraine, can gradually slip “off the rails” toward dissolution or consolidation. By ceding the E.U. itself (i.e., the federal level) additional authority, including for revenues and expenditures, the European Council, which is composed of the state governors, could “kill two birds with one stone,” as that saying goes. Those birds would be unbalanced state power in the E.U. at the expense of a common purpose, and Russian President Putin’s military adventurism in Eastern Europe.

One casualty of excessive state power in a federal system is accountability that the federal institutions could exercise on state governments whose officials willfully violate federal laws and regulations. Those officials, I submit, are all too acclimated to turning the “lemon” of being held accountable in the federal system into “lemonade” by turning a proposal made by a branch of government at the federal level for more authority at the expense of the power of the state governments (and thus of their respective officials!) into a proposal to suspend the federal measure of accountability on the state governments. In short, the state governors would be saying to the federal officials: You want more federal power? We reject that and will exercise the requested power ourselves and we need you to waive a federal constraint, which some of us have been violating, in order for us to exercise the power. I contend that this is how the following can (and should) be interpreted and understood.

On February 14, 2025, the President of the E.U.’s executive branch, the Commission—a name that seems more imposing than The White House—announced that she would “propose to activate the escape clause in the [union’s] fiscal rules in a bid to ‘substantially’ boost member states’ defense investment.”[1] Alternatively, the federal president could have carried through with her earlier proposal to increase the E.U.’s own authority in defense, thus enabling the union to benefit in terms of security from collective action instead of each state doing its own thing. Arguably, such collective action would be necessary should the U.S. back off from defending the E.U. against potential and actualized threats from Russia.

From the perspective of a governor of a state in the E.U., the benefits from going beyond coordinating to pool military defense at the federal level are less important than gutting the federal requirement (in the Stability and Growth Pact, which is really a federal law rather than a pact) that state fiscal deficits be “under 3% of GDP and debt under 60% of GDP” of a given state.[2]  Seeking to obviate the Commission’s Excessive Deficit Procedure (EDP), which includes penalties, including fines, on violators, the governors meeting in the European Council had only weeks earlier stated a preference for putting the EDP on ice so the states could increase their defense spending (and not have to pay fines) instead of enhancing the Commission’s defense competency (i.e., enumerated power) at the expense of the remaining sovereignty that the states still had.

Eight states—Belgium, France, Hungary, Italy, Malta, Poland, Romania, and Slovakia—were in violation of the limits on deficits and/or debt. It is no coincidence that the governments of the E.U. states of Poland, Italy, Greece and the Baltic states had been requesting that the Commission review the required limits on state deficits and debt. It also no coincidence that at the “informal” session of the European Council held only weeks earlier, the state officials considered lifting the required limits to be “among the least controversial options on the table.”[3] Waiving being held accountable is of course not controversial for the people who would otherwise be held accountable. Relative to the Council, the power of the Commission and the Parliament individually and even combined was insufficient to object, citing both a federal system’s need that state governments be held accountable when they violate federal law and regulations and the defense-benefits from the collective action in energizing the E.U. competency on defense.

Put another way, to the E.U. state governors, removing the federal constraint on state spending that is not covered by tax revenue and resisting the delegation of additional governmental sovereignty to the federal government are more important—both for self-interested reasons—than strengthening both the union’s federal system, such that the federal level could effectively hold violating state governments accountable and thus make federal law real rather than mere parchment, and the union’s ability to stand up militarily as a unit rather than conglomeration to Putin, especially as the U.S. was sending clear signals of a desire to pull back from defending Europe from Russia. The triumph of narrow, private-benefit-delimited—self-interest over the good of the whole—in this case, Europe—and the related (i.e., not coincidental!) political weakness of federal officials to be a check on the exploitation of the conflict of interest at the state level are themselves (and especially together!) internal threats to the viability of the European Union. Lest the threat be presumed to be solely external, from Russia being militarily in the Ukraine, E.U. citizens could have done worse than exchange their binoculars for microscopes, at least for a while.  

1. Alice Tidey, “EU Commission to Activate Fiscal Escape Clause to Boost Defence Spending,” Euronews.com, February 14, 2025.
2. Ibid.
3. Ibid.

On the European Commission Boycotting Hungary’s Presidency of the Council of the E.U.

Whereas just one presidency applies to the U.S. at the federal level, the E.U. has several. There is a president of the European Commission, a president of the European Parliament, a president of the European Council, and a president of the Council of the E.U., the latter being held by a state government on a six-month rotating basis. On July 1, 2024, the E.U. state of Hungary assumed that role. Because that state’s government had recently been found guilty by the E.U.’s top court, the E.C.J., of blocking federal law within the state, the matter of Hungary taking its turn in chairing the Council of the E.U. was controversial at the time. Because Viktor Orbán, governor of Hungary, used the insignia of the presidency of the Council in making unauthorized diplomatic trips to Russia and China on the war in Ukraine, the European Commission, the E.U. government’s executive branch, took the unusual decision to boycott Hungary’s presidency. Shortly thereafter, the E.U.'s parliament followed suit with a resolution condemning Orbán's diplomatic trip to Moscow. I contend that Orbán’s foray into diplomatic relations even as he was taking on a major role at the federal level presents good evidence for why foreign policy should be federalized in the E.U. as it has been in the U.S., and for the same reason.

At the Constitutional Convention in 1787 in Philadelphia, Pennsylvania, delegates felt the need to delegate foreign policy and diplomacy to the proposed federal executive branch out of concern that the states would be used, and torn apart from one another, by foreign states pursuing their interests at America’s expense. It went without saying that a state-level official could not represent the union abroad. Besides not being able to speak for the other states and the union itself, a governor conducting foreign policy both for the union and one’s own state would have to contend with a conflict of interest where the interests of the union diverge from that of the official’s state. All of these problems were obviated by having the states delegate foreign policy to the federal level with the states still retaining residual sovereignty. It bears stating that the thirteen states that exited the British Empire in 1776 were sovereign states until they delegated some of their respective sovereignty to the federal level of the union in 1789.

In 2024, in the midst of Russia’s continued invasion of Ukraine, the federal level of the E.U. was involved in foreign policy, and yet a governor of any state government could also take on a role in foreign policy as that was a shared competency (i.e., both federal and state levels). That the governor of Hungary, Viktor Orbán, used the official logo of the Hungarian presidency of the Council of the E.U. in his “peace mission” to Russia and China days after he had assumed the presidency for Hungary signaled or implied a federal foreign-policy role was troubling enough. That he publicly stated, “China is the only world power that has been clearly committed to peace since the beginning” of the war even though the E.U. had dismissed the “Chinese peace plan” for “making a selective interpretation of international law and blurring the line between the aggressor and the aggressed” was too much for the E.U.’s executive branch.[1] That Orbán met with Russian President Vladimir Putin in Moscow, a person wanted by the ICC for war crimes against civilians in Ukraine, to “start a dialogue on the shortest road to peace” just days before Russia bombed a children’s hospital in Kyiv was also not missed by the Commission.[2]

As a result, the European Commission decided to boycott Hungary’s six-month presidency of the E.U. Council. In addition to going to Moscow and Beijing on peace missions, that Orbán had stated that he would use Hungary’s chairing of the Council to sideline the accession talks so to postpone statehood for Ukraine was likely another factor in the boycott. “In light of recent developments marking the start of the Hungarian Presidency, the President (Ursula von der Leyen) has decided that the European Commission will be represented at senior civil servant level only during informal meetings of the Council,” according to a spokesperson for the Commission.[3] The College visit to the Presidency also would not take place. 

Days after the Commission's boycott, the European Parliament passed a resolution condemning Orbán's diplomatic visit to Moscow. The resolution itself "stresses that during this visit, he did not represent the E.U., and considers the visit to be a blatant violation of the E.U.'s treaties and common foreign policy, including the principle of sincere cooperation; [and] underlines that the Hungarian Prime Minister cannot claim to represent the E.U. when violating common E.U. [foreign policy] positions."[4] That the governor of a state violated federal foreign policy in going abroad while president of a federal institution and two other federal institutions officially objected points to the serious need for E.U. reform concerning foreign policy in terms of the federal system. In other words, the federal system itself contained a fundamental problem in need of a solution.  

Essentially, Orbán was leveraging his temporary presidency of a federal governmental institution of the E.U. to conduct foreign policy at odds with the federal foreign policy against Russia and China. Even if he had been only been conducting bilateral diplomatic relations between his state and Russia and China, that his state government’s position would have conflicted with the E.U.’s position is problematic, for the belligerent foreign powers could have used Orbán’s state of Hungary to drive a wedge into the E.U. and thus weaken not only the defense of Ukraine, but also the E.U. itself as a federal union. Even just in terms of the union’s executive branch boycotting the presidency of the legislative Council of the E.U., the E.U. itself was weakened rather than unified at the federal level.

Most fundamentally, the state governments still had too much power relative to that of the union itself. Also, trying to conduct foreign policy at both the state and federal levels is just asking for trouble because they can work at cross-purposes and even confuse government officials of other countries. Russian officials, for instance, may not have known how much credence to give to Orban versus the condemnations by the Commission and the Parliament. 

Even by 2024, European integration had been tangibly realized in a federal union of states to the extent that one voice was needed on foreign policy, lest the E.U. compromise itself from within. Even though the economic domain had been the backbone of the E.U. coming out of the EC, it bears remembering that the European Coal and Steel Cooperative came out of the post-WWII need to keep an eye on Germany lest it remilitarize. A foreign-policy rationale is thus also baked into the E.U. as per at least one of the international European organizations that pre-existed the European Union. Put another way, the E.U. cannot be traced back only to the European Economic Community. Besides providing for smooth interstate commerce in a single market, peace in Europe is also a salient mission for the European Union, and in this regard being able to speak with one voice rather than divergent state and federal voices would be of great value were it operationalized rather than compromised.

---

1. Jorge Liboreiro, “European Commission Boycotts Hungarian Presidency over Orbán’s Trips to Moscow and Beijing,” Euronews, July 15, 2024.
2. Ibid.
3. Ibid.

4. P10_TA (2024)0003, “The Need for the E.U.’s Continuous Support for Ukraine,” 17 July 2024.

The Israeli Supreme Court’s Conflict of Interest as Unreasonable

Ironically, in making the ruling on New Year’s Day of 2024 striking down Prime Minister Netanyahu’s amendment to the country’s basic law that would have removed the judiciary’s authority of judicial review of laws based on their reasonableness, Israel’s Supreme Court too unreasonably exploited a conflict of interest. Basic Law, which is essentially constitutional law, includes the basic architecture of a government, such as how the executive, legislative, and judicial functions are related. Self-interest being a salient feature of human nature, we can assume that the governmental functionaries in each of those functions naturally seek to expand their respective jurisdictions relative to those of the other two. I contend that to give one or two of those areas the last word in altering the division of authority involves a conflict of interest. This applies to a constitutional court. Therefore, even though democracy is served by a judicial decision striking down an attempt by the executive and/or legislature to eviscerate the authority of the judiciary to act as a check, giving the latter the last word is fraught with entanglements. 

By eight to seven justices, the court ruled “that a government amendment to the so-called reasonableness law should not stand. The bill had stripped the Supreme Court of the power to declare government decisions unreasonable.”[1] That very officials who make government decisions in the Knesset passed the basic law can be seen as problematic. It was essentially a power-grab by the executive/legislative domains at the expense of the judiciary. Although the court “rejected the amendment because it would deal a ‘severe and unprecedented blow to the core characteristics of the State of Israel as a democratic state,’”[2] the naked power-grab could itself be viewed as unreasonable, even taking for granted the element of power-aggrandizing in governing. The court could also have ruled on the basis of there being an institutional and personal conflict of interest, but the court itself could be charged with the same offense in deciding the matter. It is just this conflict of interest that flew below the media’s radar (and got me to writing).

Even though the ruling did not expand the court’s authority, the decision arrested a decrease, and was thus in the personal and institutional interest of the judiciary in terms of power. Just as the majority in the Knesset had acted in its interests, the majority on the court did as well. The matter was thus a power struggle, and thus giving one side the final, definitive say is unfair. The ruling cites the importance of judicial review of laws passed by the Knesset as being in the broader interest of democracy in Israel, but the relatively narrow personal and institutional interests of the justices and their court could be expected to be exploited, and this may be the real reason for the ruling. To be sure, an independent judiciary is indispensable for the executive and legislative functionaries to be held accountable. Although they could argue that the voters could perform that function at election-time, elections do not include sending corrupt officials to jail, and the sitting Prime Minister was charged with corruption judicially at the time that he was steering the bill to passage (which counts as a personal conflict of interest). Even if the court’s democracy argument is solid, the personal and institutional conflicts of interest in the justices resisting a restriction on the purview of their judicial authority are inherently unethical and thus should be obviated if possible. 

The inherency is explained by just how inherent the self-interest to exploit a conflict of interest, whether personal or institutional, is in human nature.[3] Without doubt a conflict of interest that actually has been exploited is unethical because a private or relatively narrow benefit is put before a public or relatively broad benefit or duty.  

In judicial language, strict scrutiny should therefore be applied to unilateral decisions by legislative, executive, or judicial functionaries or “branches,” of government that self-aggrandize authority at the expense of one or two of the other “branches.” I recommend that such conflicts of interest be obviated by putting such matters to the electorate. So this is not merely a rubber-stamp of the majority parties, a 2/3 majority should be required to change Basic Law. Otherwise, we are left with the unsavory alternative of having the contending governmental interests play out their internecine power-struggles on the constitutional stage with one such interest having to have the final word, which is unfair to the other interests. In a democracy, after all, popular sovereignty is more fundamental than governmental sovereignty.

---

1. Rob Picheta, Amir Tal, and Lauren Izso, “Israel’s Top Court Strikes Down Key Part of Judicial Overhaul, Reigniting Divisions as War Rages,” CNN.com, January 2, 2024.
2.  Ibid.

3. Skip Worden, Institutional Conflicts of Interest, available on Amazon.

The FAA Deferred to Boeing on the 737 MAX Jet

After a misfiring-prone automatic stall-prevention device on the 737 MAX jet had caused two accidents in which 346 people died, an internal review at the U.S. Federal Aviation Administration, a regulatory agency, found that the regulators had relied too much on Boeing employees to conduct the safety inspections of the planes. Incredibly, Congress expanded the industry-reliance practice of the agency in 2018. Both the FAA and Congress were admittedly motivated by the added efficiency that such “sub-contracting” could bring. However, to focus on the economic benefit while ignoring the inherent (and obvious) conflict of interest in “sub-contracting” to the very companies that are regulated by the FAA is itself a red flag. A subservient or over-reliant regulatory agency cannot be a check on a company’s claims of not having sacrificed safety or even safety checks in order to focus more on profitability.  Of course, the political influence of a large company such as Boeing may have played a role in the FAA’s “back-seat” approach, but in this case the government’s own interest in stretching the coverage of its human resources may have been dominant. That such an interest could involve minimizing or ignoring outright such a blatant conflict of interest may point to a wider culture in which institutional conflicts of interest are presumed to be innocuous or even benign rather than too toxic to permit even if they have not been actively exploited.  

During the FAA certification process for the 737 MAX, Boeing didn’t flag the automated stall-prevention feature as a system whose malfunction or failure could cause a catastrophic event.”[1] The FAA’s report does not point to any fabrication on the part of the company. The problem is that “FAA engineers and midlevel managers deferred to Boeing’s early safety classification.”[2] No check on the company’s determination could be in such deference. It is astounding that managers at a regulatory agency could have neglected or ignored this basic point, which gets at the raison d’etre of any regulatory agency. C’est vraiment incroyable.

In fact, the company’s initial safety classification allowed “company experts to conduct subsequent analyses of potential hazards with limited agency oversight.”[3] The operative assumption in this practice seems to be that experts cannot be initially wrong, or that they could eventually catch their own errors, and that such experts are not subject to pressure from managers to get the planes in the air and generating revenue that can at least cover payments on the planes themselves.

Even worse, the FAA classified certain Boeing employees as “designated agency representatives.”[4] Employees of a regulated company cannot represent the regulatory agency, for such a designation is itself an institutional conflict of interest. It is, in effect, to designate one wolf as a police-wolf around a hen house! How can this not be obvious? I submit that only in a permissive culture can such blind-spots thrive. The FAA’s practice of designating some employees of regulated companies as being able “to act for the agency” was set up by the FAA and “endorsed and expanded” by Congress with “the aim of freeing up government resources to focus on what are deemed the most important and complex safety matters.”[5] Was not something that had killed hundreds of people an important safety matter? FAA managers might retort, “But we didn’t know this except in hindsight.” Exactly. This is precisely what minimizing or ignoring a huge conflict of interest can do.

See Institutional Conflicts of Interest, available at Amazon.

---

[1] Andy Paztor, Andrew Tangel, and Alison Sider, “FAA Left 737 MAX Review to Boeing,” The Wall Street Journal, May 15, 2019.

[2] Ibid.

[3] Ibid., italics added.

[4] Ibid.

[5] Ibid.

Regulating Wall Street after a Financial Crisis

On Columbus Day 2011, The New York Times observed that the regulations known as the Volcker rule, “intended to limit trading when the bank's money is at risk, a sweet spot for banks, is seen as a centerpiece of the sprawling financial overhaul of the Dodd-Frank Act of 2010. In anticipation, the nation's biggest banks, like Goldman Sachs and Bank of America, have already shut down their stand-alone proprietary trading desks.”[1] Even so, the long and tortuous route by which any regulation is written was leaving its own mark in the sense that promising loopholes were finding their way into the rule. In other words, the regulated would have a disproportionate influence on the writing of the regulations. This conflict of interest is dangerous from the standpoint of not being vulnerable to another financial crisis in which the greed on Wall Street knows no bounds. 

Regulators were leaving room for “significant changes,” according to the Times. Wall Street was “lobbying furiously to tame the Volcker Rule, holding roughly 40 meetings with various regulators, warning that the changes will eat into profits at a difficult time for banks.” Those banks were undoubtedly threatening to charge more to their customers if the rule weren’t weakened. “In essence, the [rule] would upend the banking industry's lucrative, yet risky trading system, forcing powerhouse investment banks to resemble sleepier brokerage firms.” It is difficult to see Morgan Stanley and Goldman Sachs readily becoming mere market-makers and deposit and loan banks without a fight. To be sure, Lloyd Blankfein did insist that his bank was only a market maker when he testified before Sen. Levin’s Senate committee after the credit freeze of 2008.

At the time the Volcker Rule was being proposed, it was already apparent that there would be some wiggle-room for the banks. "Unfortunately, this initial proposal does not deliver on the promise of the Volcker Rule or the requirements of the statute," said Marcus Stanley, policy director of American for Financial Reform, an advocacy group. In the proposal, “a number of controversial exemptions emerged. While the regulation prevents big banks from placing bets on many stocks, corporate bonds and derivatives, it exempts trading in government bonds and foreign currencies. The proposal also provided a path for getting around the ban, for instance, when banks hedge against risk that comes from carrying out a customer's trade. Market-making and underwriting are excused, too, though the line is often fuzzy between these pure client activities and proprietary bets.” Lastly, the proposal would allow “banks to hedge against theoretical or ‘anticipatory’ risk, rather than just clear-and-present problems.” Armed with their lawyers and astute financial wizards, Wall Street banks could conceivably continue with business as usual.

Trading in government bonds and foreign currencies, and hedging even theoretical risk presumably with anything constitute an obstacle course that any Wall Street banker could run without breaking a sweat. With so much on the line and public scrutiny less potent at the regulatory stage, the financial-sector lobbyists could be expected to achieve just enough and then some. Once again, systemic risk would not be a factor, and history could repeat itself.

See: Skip Worden, Institutional Conflicts of Interests, available at Amazon.

1. Ben Protess, “Banking Industry Revamp Moves Step Closer to Law,” The New York Times, October 12, 2011. 

U.S. Attorney General Barr's Decision on the Mueller Investigation of President Trump: On the Invisible Personal and Institutional Conflicts of Interest

On March 24, 2019, U.S. Attorney General William Barr sent to Congress his summary of Robert Mueller's report on whether President Donald Trump's 2016 campaign had colluded with the Russian government and whether the president had obstructed justice. According to Barr, Mueller had found no evidence of collusion. As for obstruction, Barr wrote that Mueller "did not draw a conclusion one way or the other as to whether the examined conduct constituted obstruction."[1] On this point, Mueller himself had written that 'while this report does not conclude that the president committed a crime, [the report] also does not exonerate him."[2] Mueller had laid out evidence and arguments on both sides of the question of obstruction, and Barr determined that the "evidence fell short of proving [that the president] illegally obstructed the Russia inquiry."[3] The New York Times went on to call this "an extra-ordinary outcome."[4] 
Barr did not detail his reasoning in deciding the matter of obstruction. According to the New York Times, he "appeared to be focusing on the question of whether investigators could prove that [President Trump] had 'corrupt intent' in instances where the available evidence about his motivations was ambiguous."[5] But in focusing on a lack of evidence that the Trump campaign reached any agreement with the Russian government on sabotaging the election, legal experts said," Barr "left out other reasons the president may have had for wanting to stymie a wide ranging investigation: It could uncover other crimes and embarrassing facts."[6] In other words, Barr's parameters may have been too narrow. 
The way Barr framed the contours for his decision might not have been an accident, given his personal conflict of interest. More important than this, I submit, is the continuing institutional conflict of interest facing the Justice Department in investigating its boss, the chief executive. After Congress had received Barr's summary, U.S. Sen. Lindsey Graham pointed on Fox News to former Attorney General Jeff Session's personal conflict of interest (Sessions had been part of Trump's campaign that was being accused of collusion with the Russians). Unfortunately, the senator mentioned neither Barr's personal conflict of interest or the broader institutional one facing the Justice Department. Such denial may have been partisan in nature, but I contend that institutional conflicts of interest tend to get a pass in American society. In the case of the Mueller investigation, Americans as a people put the conflicts of interest aside in looking forward to the conclusions from within the Department of Justice. This point, I submit, ought to be viewed as extraordinary. I turn now to the conflicts of interest.
According to The New York Times, when Barr "stepped in to make the determination," he brought "the specter of politics back into the case."[7] I submit that any Attorney General would, and I submit should trigger partisan suspicions in making a determination on a matter in which the chief executive (i.e., the president) is being investigated. 
As for the personal conflict of interest, even though Barr "had taken over the Justice Department [just a month earlier] pledging to defend its independence," he "ended up clearing a president who [had installed] him in the post."[8] This is significant not just because President Trump had been emphasizing loyalty (and dismissing the disloyal) from his subordinates in the executive branch; any pledge of independence represented a personal conflict of interest for Barr and an institutional conflict of interest for the Justice Department, as neither were legally independent of the chief executive, the boss. 
In fact, President Trump's choice of Barr was likely tied to the Mueller investigation. Barr had written a memo as a private citizen to Justice Department officials in June, 2018 insisting that special council Mueller's obstruction inquiry was "fatally misconceived." [9] A president's use of executive powers are beyond the reach of criminal law, regardless of the motive.[10] Such uses include firing a subordinate and directing the Justice Department to close a case. It is just human nature to be motivated to direct the department to close a case against the person himself. Even so, Barr argued that "Trump asking then-FBI Director James Comey to let go of the investigation into former national security advisor Michael Flynn and later firing Comey [were] within [the president's] powers as head of the executive branch." and thus not subject to being investigated, according to Trump's Attorney General before he was nominated.[11]
That Barr's memo would have gone unnoticed in the Trump administration and especially in President Trump's subsequent decision to nominate Barr for Attorney General is too incredulous to be taken seriously. In appointing Barr, the president was essentially securing his rightful control of the branch under him. This point alone gives us an indication of the gravity of the institutional (and constitutional) conflict of interest in the Justice Department investigating its boss, the president--the chief executive, which includes chief law enforcer. 
It stands to reason that none of the departments under the chief enforcer can enforce the law on the chief. I contend that President Trump was exploiting this conflict of interest to give the public the appearance of a credible investigation having been done with the president coming out clean. This appearance, if taken seriously, ignores the underlying conflict of interest that should be recognized as blatant. 
The Justice Department cannot investigate its boss, the president, without risking the extortion of the institutional (and perhaps personal) conflict of interest. That is, the executive branch investigating its boss constitutes a conflict of interest that essentially eliminates that branch as being able to perform such an investigation, at least in terms of credibility. Unfortunately, the American people ignored or dismissed the conflict of interest by relying so much on Mueller's report and Barr's subsequent determination. 

To be sure, Congressional oversight exists when another party controls the U.S. House or Senate (or both), but this renders the judgment subject to political forces, or at least as being viewed as partisan. Facing the conflict of interest within the Justice Department and the political oversight of the U.S. House, Mueller may have chosen the latter anyway, laying out whatever evidence he had for and against obstruction. He doubtlessly knew of Barr's memo, which likely reflected the attitude at the top of the department towards the investigation of any obstruction of justice. 
In general, the American people have risked a corrupting government structure in being so naive about institutional conflicts of interest within the U.S. Government. Simply put, corruptible conflicts should be deconstructed. For example, an alternative to department in the executive branch should be created or chosen when the chief executive is the subject of the investigation. Congressional oversight could be used if another party than the president's controls at least one chamber. An alternative would need to be created should Congress lack the political will to launch an oversight investigation. That this has not been done says something unfortunate about how Americans view even constitutional conflicts of interest.   

See Institutional Conflicts of Interest, available at Amazon.

1. Eli Watkins, "Barr Authored Memo Last Year Ruling Out Obstruction of Justice," CNN.com, March 24, 22019.
2.Mark Mazzetti and Carol Benner, "Mueller Finds No Trump-Russia Conspiracy but Stops Short of Exonerating President on Obstruction," The New York Times, March 24, 2019.
3. Charlie Savage, Mark Mazzetti, and Katie Benner, "Barr's Move Ignites a Debate: Is He Impartial?" The New York Times, March 26, 2019.
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid.
8. Ibid.
9.Watkins, "Barr Authored Memo."
10.Savage, Mazzetti, and Benner, "Barr's Move Ignites a Debate."
11.Watkins, "Barr Authored Memo."

Regulating Smoking in China: A Socialist Conflict of Interest

Government ownership and control of a means of production is the standard definition of socialism even if some linguistic revisionists want to redefine the term as merely the control of a business or industry. In short, a government must own the economic enterprises to meet the definition of Socialism rather than merely government regulation of private businesses. Socialism, I contend, involves a structural conflict of interest that a government that both owns an controls an enterprise, industry or even an entire economy may be tempted to exploit for its own ends rather than the public good. The key here is the regulating of that which is owned. Specifically, where a government as owner enjoys the benefit of profit or surplus, that government has a financial interest that can be against the restriction of the produced product. Such a monopolistic restriction could admittedly be warranted by public health or safety, but the gain could also be private in the sense that it is limited to the government and even the personal financial interests of government officials. In other words, the public good can be distinct from a government’s own financial (and related political) interest even as that government is charged with acting in the public interest in part by owning and regulating state enterprises. It is the pivot between the public and private interest that sets up the conflict of interest because the human urge is to go with a narrower, private interest at the expense of the public good. In other words, the very possibility, even likelihood given human nature, that a government would exploit the wider distribution of benefits for the narrower one (i.e., to the government itself) is the basis of a conflict of interest. I argue elsewhere that even the mere possibility renders even an as-yet unexploited conflict of interest inherently unethical. Here, I examine the matter of public health in China as a case of a socialist (in part) government that has had a conflict of interest. 

Three hundred million Chinese were smokers in 2010. This number is roughly equivalent to the entire U.S. population in 2000. In 2010, the addiction killed an estimated 3,000 people a day in China; this translates into 1.2 million tobacco-related deaths for the year. One out of three cigarettes smoked worldwide was smoked in China. It was estimated that smoking would kill about a third of Chinese men under 30. On May 1, 2011, the Chinese government banned smoking in indoor public places. However, the law contained no penalties. According to Time magazine, the law was not likely to have any effect.[1]

The reason for the lenient regulation may have had something to do with the powerful China National Tobacco corporation, a state-owned and controlled enterprise. In 2010, taxes and profits from the monopoly were roughly 7% of the government’s revenue.[2] That gave government officials an incentive to protect the enterprise's revenue and a disincentive to issue regulations that could be expected to reduce the consumption of cigarettes in China even if a reduction were in the public interest. This combination of incentive and disincentive is an earmark of a conflict of interest, the basis of which is the human instinctual urges behind the combination. 

This may be why more incentive typically exists to protect and increase revenue coming in than to minimizing costs even if they exceed the revenue. Even if the government’s expense in covering health-care costs for the 3,000 Chinese a day who died of smoking in 2010 exceeded 7% of the government’s total revenue, even a partial loss of revenue would likely be resisted by government officials.  Attention to revenue can dwarf that to costs especially where no market competition exists because extracting more revenue is relatively easy whereas cost-containment is still difficult.
Ethically, the government officials otherwise tasked with regulating so as to protect the public health in China and thus preventing deaths from smoking suffered from the personal (if kickbacks were involved) and institutional conflict of interest wherein the government’s financial interest and public-health goals were in conflict. That is to say, the officials not only had their own ethical dilemmas to resolve; there was also a larger institutional problem akin to a house being designed to be at odds with itself. The part of the government oriented to protecting and even increasing the revenue may have had disproportionate influence beyond that of the public-health department because the narrower the benefits are, the greater the incentive. Seven percent of the state's revenue doubtless got more attention from the state itself than its broader public-health measures, including those that made it more difficult for people to smoke in public. 

See related essay: Socialism Where You Might Least Expect It.

See related book: Institutional Conflicts of Interest:Business & Public Policy.

1. “A Smoking Ban without Teeth,” Time, May 20, 2011.
2. Ibid.

A U.S. Senator Aiding a Contributor While Averting a "Fiscal Cliff": Turning a Crisis into an Opportunity

The law passed by Congress on January 3, 2013 to avert the across-the-board tax increases and “sequester” (i.e., across-the-board budget cuts) was “stuffed with special provisions helping specific companies and industries.” While many of the provisions would increase the U.S. Government’s debt, at least one would decrease it. Is the latter any more ethical because it is in line with the more general interest in reducing the federal debt? Put another way, does the end justify the means?  Do good consequences justify bad motives?  These are extremely difficult questions. The best I can do here is suggest how they can be approached by analysis of a particular case study.

In the legislation, a provision reduced the Medicare reimbursement rate for a radiosurgery device manufactured by the E.U. company Elekta AB. The cut was pushed by a competitor, Varian Medical Systems. Senate Majority Leader Harry Reid asked Sen. Max Baucus, chair of the Senate Finance Committee, to write the cut into the legislation. While both senators could point to the public interest in the debt-reduction result of the cut, their relationship with Varian makes their motives suspect. Specifically, they may have exploited personal conflicts of interest that eclipsed a more expansive duty to the wider (i.e., not private, or personal) public interest. 

While it is perhaps simplistic to relate campaign contributions to a senator’s subsequent action, it is significant that Varian spent  $570,000 in 2012 on lobbying. The company added Capitol Counsel, which had contacts to Sen. Baucus. Vivian already had connections to Reid through Cornerstone Government Affairs lobbyist Paul Denino, a former Reid deputy chief of staff. Additionally, the leading beneficiary of the contributions of Varian executives and the company’s PAC over the previous four years was Sen. Reid, whose committees received $21,200. Varian’s lobbyists added $42,700 more to Reid’s campaign.[1] While Sen. Reid’s subsequent urging of the reimbursement rate cut could have been unrelated to these contributions and contacts, the senator’s involvement compromises him ethically. Put another way, it is at the very least bad form, or unseemly. It implies that companies making political contributions and hiring lobbyists connected to public officials do so (or worse, should do so) to have special access to those particular officials to turn upcoming legislation to the companies’ financial advantage. Even if the public also benefits, it can be asked whether the companies deserve their particular benefits. In the case of Varian, it may be asked whether the company deserved the cut in the reimbursement rate going to Elekta.

As could be expected, spokespersons at both companies sought to argue the merits of their respective cases in the court of public opinion.  It is more useful to look at the regulators’ rationale for increasing the reimbursement rate for Elekta’s  “Gamma Knife” in the first place. Originally, the knife and Varian’s linac machines were lumped together by the Centers for Medicare and Medicaid Services (CMS) under the same CMS code. In 2001, the Centers separated the devices in terms of data collection so an analysis could be conducted on whether the devices should receive different reimbursement rates. The Huffington Post reports that the reimbursement rate for the Gamma Knife was increased because “it typically requires only one treatment, while the linacs often require multiple treatments.” Also, “Gamma Knives machines are more expensive to obtain and maintain due to the storage of radioactive cobalt and regulation by both the Nuclear Regulatory Commission and the Department of Homeland Security. Linacs don’t use nuclear material and are regulated by the Food and Drug Administration.”[2] So, due to the cost and use differential, CMS  increased the Gamma Knife reimbursement in 2006 to $7000. From the standpoint of the criteria of regulators, the data-collection and analysis method and the rational rationale are legitimate. In contrast, because neither the use or cost differential had changed by January 2013, the cut in the reimbursement rate cannot enjoy such legitimacy. Hence it is possible that exogenous factors, such as the political influence of Varian’s lobbyists and campaign contributions, were behind the change. From the standpoint of the previous rate differential, the change cannot be justified. Neither Sen. Reid nor Sen. Baucus could justify their actions (and motives) by the substance of the case. However, they could still appeal to the salubrious budget-cutting effect as justifying their involvement.

The question here is whether the favorable consequences of the cut on the government’s subsequent deficits mitigates or reduces the shady scenario of a senator acting on behalf of a company that had contributed to his or her campaign. I would advise a member of Congress to avoid even the appearance of a conflict of interest. If the result in this particular case is in the public interest (i.e., reducing the deficit), does this positive consequence justify the senators’ actions and even the questionable appearance?  It’s a no-brainer that the senators would immediately point to the public interest in the consequence, but does it effectively remove the taint of immoral political conduct (and perhaps motive)?

The link between the company-senator relation, the senators’ action in which the company stands to benefit financially in a material way, and the financial benefit to the company can be distinguished ethically from a good consequence to the public. A bystander would naturally view the consequence to the public as salubrious even while having a sentiment of disapprobation toward the company’s own benefit as well as the senators’ action and relation to the company. In other words, the favorable impact on the public does not remove the stain on the company and the senators. To be sure, that stain would be greater were the public harmed rather than helped, but even with the positive general consequence the senators may have acted for the private benefit. Also, their action could have come from other senators, hence obviating the ethical problem. In short, the public interest does not remove either senator from the ethically problematic situation in which they decided to occupy.  Even if their motive had been solely for the public interest, they violated the appearance of unethical motive and conduct.

“The end justifies the means” is a slippery slope in terms of what the human mind can rationalize as legitimate. Great harm has been seemingly justified by great ideals. Even in the face of the ideals, the harms provoke a sentiment of disapprobation by the observer (excepting sociopaths). This suggests that the ideals cannot completely justify unethical means.  It may indeed be that unethical means are necessary in some particular cases, but this does not render the devices ethically pure. Ethical principles do not know practical compromise. Rather, people do.

---

1. Paul Blumenthal, “Varian Medical Systems Used Fiscal Cliff Deal to Hurt Competitor,” The Huffington Post, February 8, 2013.

2. Ibid.