Strength in Numbers: The European Union in Foreign Policy

One of the chief benefits of having an empire-scale union of states is the sway, or influence, abroad that comes with strength of numbers. Dwarfing the foreign-policy of a state government, and even of an informal bloc of a few states plus others outside the union, an empire-scale united-policy enacted to influence other countries can make the delegation of the additional governmental sovereignty to the federal level worth losing some state power abroad. I contend that this lesson can be gained by examining the European-Russian relation during the month of May in 2025.

On May 14, 2025, the E.U. “agreed to impose a new round of sanctions against Russia, threatening to slap on another one if the country continues to refuse the 30-day unconditional ceasefire proposed by the White House and the ‘Coalition of the Willing’.”[1] The White House refers to the U.S., another empire-scale union of states, but the “coalition” is a more nebulous construction; it consisted of three E.U. states plus Britain, which had seceded from the E.U. and was thus separate. One of those states, Germany, threatened Russia with immediate sanctions only to see Putin continue his military invasion of Ukraine. When a person’s “line in the sand” is so easily and quickly crossed, that person should re-evaluate one’s own vantage-point for what it is. Even a small bloc of states plus a former state is not sufficient to stop a Russian bear in its tracks. It is no accident, therefore, that the E.U. lost little time in announcing its own sanctions against Russia. The lesson is that the state leaders should have put the E.U. commission in the driver’s seat in the first place, rather than demonstrate the need for collective action that the E.U. could provide.

Macron of the E.U. state of France said on May 12, 2025 that an “unconditional ceasefire is not preceded by negotiations” but he could do little to back up that statement, given that Putin had just dismissed an immediate unconditional ceasefire without paying any price.[2] That an informal coalition, or bloc, had “previously demanded a full ceasefire a precondition to starting negotiations” meant nothing to Putin.[3] Continuing to make military progress on the ground in Ukraine, he had no incentive to respond to the bloc, but to the extent that Russia could suffer from sanctions from the E.U., Putin would have more reason to take an ultimatum seriously.

That the governors of three E.U. states chose to exercise their retained power in foreign policy rather than go through the Commission points to a vulnerability of the European Union from foreign policy being a shared competency while the state governments hold most of the governmental sovereignty in the union. It is very tempting to a state leader to grab media attention by taking the lead in a foreign policy that the E.U. could do with more power internationally.

There is also the conflict of interest in a bottom-heavy federal system wherein state leaders resist delegating enough authority to the federal level so it can function effectively, especially with regard to international relations. The E.U. had a foreign minister at the time, and a federal president, and yet three state leaders decided to spearhead a push for Russia to agree to an immediate ceasefire anyway. Their approach was doomed from the start because Russia could easily dismiss the threats from a few states even though the U.S. was on board on an immediate ceasefire.

So, it is problematic that once the E.U. effectively took over from the bloc of a few states, the need for the state level institutions to take a lesson and be willing to give the E.U. more authority to make and enforce foreign policy, as by applying qualified-majority voting to such policy, was not grasped in the public media and discourse. Lest there be any doubt concerning the power of a small bloc of (large) E.U. states, Dmitry Medvedev wrote on social media: “Macron, Metz, Starmer and Tusk were supposed to discuss peace in Kyiv. Instead, they are blurting out threats against Russia . . . You think that’s smart, eh? Shove these peace plans up your pangender arses.”[4] Ouch!  I submit that the E.U. announcing additional sanctions would not be taken as the blurting out of threats was taken, in part because of the much greater power of the E.U. vis á vis Russia. Macron, Metz, and Tusk looked like the three musketeers, with Starmer as a former fourth, relative to the E.U.’s institutions.

Unfortunately, the state level of governance had held back those institutions from being able to leverage the “power in numbers” in foreign policy that could otherwise be realized by the Commission with oversight by the Parliament and the European Court of Justice, and with a check by the involvement of the states at the federal level. Too much of a check by the latter, including taking the lead and ignoring the shared competency of the Commission, was detracting not only from a more perfect union, but one that could have enough sway internationally to operate as a real check on Russia as well as Israel.

Put another way, as the Trump administration was warming up to Russia and Israel, the world could ill-afford to have the Europeans resorting to informal blocs of a few E.U. states due to institutional clutching of power at the state level and a lack of leadership there for the good of the whole (E.U.) over state politicians’ self-interest for power and stardom. The breakdown of the international order, with the UN being politically impotent to stop Russia or Israel in their excessive aggression, means that Europeans could ill-afford continuing to allow their state officials to styme action at the E.U. level on the world stage.

Euroskeptics have feared the advent of a huge “federal state” without realizing that hamstringing E.U. institutions on competencies that are shared with the states only hurts the European Union itself. In other words, compromising a federal system because it is wrongly assumed that for such a system to exist (and thus that the E.U.’s system has not been federal from the start), there must be a massive state at the top, leaves Europe vulnerable to a real massive state—that of Russia.

This is not to say that Europe must also have a massive state; ironically, that the E.U. has a federal system enables there not to be a massive state covering the E.U.’s territory, for dual-sovereignty can and should be balanced such that neither the federal nor the state level dominates the whole federal system. In his book, Federal Government, Ken Wheare denies that such a balance is necessary to an ongoing and stable federal system of checks and balances. I disagree. Under his theory, the federal level of the E.U. could gain so much authority that the state governments are utterly dominated and still the federal system would work. I disagree. Whereas the U.S. federalism could be better balanced by having the states empowered to act as a check on the federal institutions, E.U. federalism could be better balanced by having the federal level gain additional competencies, with the states benefitting from the resulting collective action while still having enough sovereignty to check the federal institutions. Whereas the U.S. could benefit by increasing the formal involvement of the state governments in foreign policy in Washington, the E.U. could benefit by increasing the formal involvement of the E.U.’s president and foreign minister in crafting and enforcing foreign policy to defend Europe from aggressive powers abroad, whether they are empires in themselves or sovereign states.

It is telling that a year before Macron returned to his state capital of Paris empty-handed (just as Merz headed back to Berlin empty-handed) after Putin had dismissed the state-level demand for a ceasefire in Ukraine, Macron had given a major speech on the need for Europe to defend itself. “In the next decade,” he had said, “the risk is immense that [Europe] will be weakened, even relegated.”[5] The clear conclusion for us in contrasting those two events is that the state governments should formally allow the E.U. to take the lead in foreign policy rather than have state leaders attempt to “steal the thunder” by charging out in front as if by instinct with the federal officials tasked with foreign policy only able to look on. Yes, Virginia, the E.U. does indeed have a federal system, but this does not mean that transferring more governmental sovereignty on foreign policy (and defense) to the federal level would necessarily turn Europe into a federal state as Euroskeptics fear; the sort of federal consolidation that has occurred over centuries in the U.S. can be avoided even as Europeans lend greater balance to the E.U.’s federal system.

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1. Jorge Liboreiro, “EU Agrees New Sanctions on Russia and Threatens More If Putin Refuses Ceasefire,” Euronews.com, 14 May 2025.
2. Ibid.
3. Ibid.
4. Shaun Walker, “Vladimir Putin Rejects Ceasefire Ultimatum Proposed by European Leaders,” The Guardian, May 10, 2025.
5. Clea Caulcutt, “Macron Warns Europe ‘Can Die’ in Alarmist Speech on Protectionism, Geopolitical Threats,” Politico.com, April 25, 2024.

Certifying a U.S. Presidential Election: A Constitutional Conflict of Interest

That it should go without saying that a constitution providing a government with its basic framework and procedures should not contain any conflicts of interest makes it all the more astonishing when an actual constitution is found to contain a obvious yet undetected conflict of interest that could be exploited by an institutional or officeholder and yet is easy to obviate, or fix. The implication in such a case is that a society can be too comfortable with institutional conflicts of interest without realizing that if such a conflict is exploitable, it is likely that it eventually will be even if not right away. Because U.S. President Don Trump’s pressure on his vice president, Mike Pence, on January 6, 2021 to refuse to certify the votes of the electors in some of the states did not result in any serious proposals to have another office than the vice presidency preside, a societal tolerance for even known conflicts of interests in general and in a constitution more particularly can be inferred. I submit that such a tacit willingness to continue with the status quo can eventually put even a republic itself at risk.

Speaking on January 6, 2024, U.S. Vice President Kamala Harris referred to her constitutional duty of presiding in a joint-session of Congress tasked with certifying the election that she had lost as something she took very seriously. The American people should not have to worry about whether a vice president might exploit the presiding role by resisting or thwarting a peaceful transfer of power. “Today was obviously a very important day,” she said, “and it was about what should be the norm and what the American people should be able to take for granted, which is that one of the most important pillars of our democracy is that there will be a peaceful transfer of power.”[1] Such a transfer lies at the core of representative democracy, so it is important that any risk of any impediment, whether an opportunistic person outside of a constitution or something lying in a constitution itself, be minimized. It is not, in other words, a minor matter.

Simply tasking the loser of an election with presiding over the counting of votes and the announcement of the winner should give anyone pause. At the very least, no one should be duty-bound to perform such a function—which can be thought of as “rubbing one’s face” in the affair, which can feel humiliating to the person.

Furthermore, politically, whether a vice president is a candidate for president as Harris was or is pressured to do the partisan or personal bidding of a president as Pence had been, having a partisan office preside is itself problematic not only for the presidency itself in terms sheer credibility, but also for a vice president in terms of the election process itself. Simply put, the vice president who is running for president or for another term as vice president is an active player in the contest and thus should not preside over the tabulation and certification of the results. As simple as this is to grasp, it must be difficult for enough Americans that the problem has been allowed to persist.

This is especially damning because the conflict of interest is easy to remove. The chief justice, or any justice, of the U.S. Supreme Court would be a natural fit for the presiding role as the judiciary is not (supposed to be) partisan. Put another way, a sitting president pressuring the vice president to declare some state slates of electors invalid is more likely than pressuring the chief justice to do that same. Institutionally, given the separation of powers in the U.S. Government, reaching out to the chief justice would be much more difficult than trying to pressure a vice president of one’s own administration. Having the chief justice, who swears in presidents, preside over the Congressional counting of the Electoral College votes for president as both the sitting vice president and Speaker of the House look on makes so much sense that it is sad state of affairs when the status quo is almost mindlessly retained even four years after the conflict of interest could have been exploited, with a riotous mob of partisans literally breaching the Capitol to convey additional pressure.

Putting the loser of an election in the position of having to publicly announce the victor is the smoke that points to an underlying constitutional conflict of interest; a mob pressuring a loser on a presidential ticket to abuse the presiding role of the vice president is more like fire than smoke. That the ensuing public discourse did not contain a proposal of a constitutional amendment assigning the task to the chief justice of the U.S. Supreme Court reflects very badly not only on the elected office-holders (and the media), but also on the American people, as it is government ultimately by the people. Perhaps a people gets the government, and constitution, that they deserve, for institutional conflicts of interest should be obviated whether in government, business, or in non-profit institutions.

Neither institutional relations nor processes should contain conflicts of interest that can be exploited because human nature is itself rather inclined to exploit them because of the instinctual urges that manifest as self-, office-, and institutional-interest even at the expense of the interest of the whole. Even though governments and economic systems tend to be based on such interests, the latter don’t have to be encouraged by the ongoing existence of institutional conflicts of interest. Continuing with the status quo can itself be thought of as a choice—one that reflects a certain underlying set of beliefs and assumptions that are valued, and even the extent of basic awareness.  Having seen not only smoke, but even fire, a people can indeed be faulted for having insufficient awareness, and this verdict is perhaps even more damning than that which concerns the naivete concerning human nature being able to withstand conflicts of interest without exploiting them in the long run. The sting of these verdicts hurts all the more when an institutional conflict of interest can be obviated relatively easily with a solution that is, or should be, obvious. Because power is that which is channeled in a political constitution, risking the exploitation of a conflict of interest that is in a constitution is not a smart choice if a viable, ongoing republic is desired.

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1. Aditi Sangal, “Congress Certifies Trump’s 2024 Election Win,” CNN.com, January 6, 2025.

The U.S. Supreme Court Reining in Regulatory Agencies: Implications for the Imperial Presidency

In Loper Bright Enterprises v. Raimondo handed down by the U.S. Supreme Court on June 28, 2024, a majority of the justices overruled Chevron v. Natural Resources Defense Council, which had been the precedent giving regulatory agencies considerable discretion in coming up with specific regulations, given the penchant of the Congress to write vague laws. In the overturning case, a group of fishermen had objected to having to pay for government observers to board the fishing boats to monitor the fishing. On the merits, it does seem unfair for regulatory agencies to charge the regulated to be regulated. In overturning Chevron, however, Loper has much broader implications, chief among them being in terms of separation of powers—specifically in reining in the expanding power of the executive branch, here at the expense of the judiciary.   

Chevron had “required courts to give deference to federal agencies when creating regulations based on an ambiguous law.”[1] Loper could stimulate thought on whether Congress must necessarily promulgate law using vague language. Certainly Congress is capable of being quite specific when writing in loop-holes, or “carve outs,” for particular companies or industries in exchange for political campaign contributions. Moreover, from hearings, Congressional committee staff are surely capable of narrowing the discretionary area in which regulators can exercise considerable power that is essentially that of law-making. So one effect of Loper could be a shift of power from the executive to the legislative branch.

The decision also stood to “shift the balance of power between the executive and judicial branches.”[2] Although CNN goes on to claim that the decision “hands an important victory to conservatives who have sought for years to rein in the regulatory authority of the ‘administrative state’,” strengthening the role of the judiciary to look at administrative rulings is not in itself pro-business, as a judge could come down on an agency as being too lenient to an industry. The notion of regulatory capture, wherein whether from relying on data from a regulated industry or in exchange for lucrative future jobs in the industry for regulators, especially given government salary levels, means that giving courts more of a role in being able to evaluate and overrule agency rule-making and decisions could be a needed check against compromised regulators. At the same time, it is true that because the Supreme Court is the head of the judicial branch of the federal government, a decision that shifts power from one or two of the other branches to the judiciary puts the Court in an institutional conflict of interest (and the justices in personal conflicts of interest as their power would likely increase). Perhaps Congress should have been the branch to decide on the role of the judiciary with respect to the agencies in the executive branch.

Shifting power from the executive branch to the two other branches, especially the judiciary in this case, can also be viewed as a mild correction to the steadily increasing power of the U.S. presidency. In The Imperial Presidency, Arthur Schlesinger traces the increasing power that has come at the expense of the other two branches. The claim of such a correction may be problematic, as reining in regulatory agencies is not the same as reining in a president’s power, such as in exercising the bully pulpit in being able to speak directly to the American people directly as well as through a president’s surrogates. Also, a president as commander in chief and in promulgating foreign policy is unaffected.

It can even be argued that as presidents have typically been oriented to proposing broad policies for Congress to enact through law, that a president’s attention has been minimal in running the administrative agencies—essentially in supervising the cabinet secretaries in their administrative roles at their respective agencies. Such overseeing geared to specific regulations is, I submit, a function that presidents should attend to even more than proposing policies for Congress to enact. In other words, presidents should resist the sensationalistic allure of forming and publicly and privately “selling” policies or ideas for new programs to the extent that the time and effort of a president is monopolized thereby such that functioning as head of the executive branch, which implements law, is slighted. It could even be argued that the latter function should be primary. Were it in fact primary, then Loper would indeed be capable of redressing the historical trend of the imperial presidency to some extent because taking an active role at the regulatory stage would be a significant part of the actual power exercised by presidents. As of 2024 at least, Loper did not really touch the problem of the imperial presidency increasingly compromising the balance of power between the three branches of the U.S.’s federal government.

If democracy is ever at risk in the U.S., it would likely succumb to the hubris of an imperial president rather than to lawmakers in Congress writing laws with more specificity or judges overruling regulatory rulings. According to General Haig, President Nixon considered sending military forces to the Capitol to stave off impeachment during Watergate. Decades later, in December, 2023, protestors of the Congressional counting of the presidential votes of the states’ electoral colleges headed over to the Capitol from President Trump’s rally at the White House and successfully delayed the counting. On the very same day as its Loper decision, the U.S. Supreme Court handed down a ruling on another case—a decision that “limited the power of prosecutors to pursue obstruction charges” against the January 6^th protesters at the Capitol.[3] To the extent that that ruling could enhance the imperial presidency itself, June 28, 2024 at the Court may actually have been a net-gain for the presidency.

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1. John Fritze, “Supreme Court Overturns 1984 Chevron Precedent, Curbing Power of Federal Government,” CNN.com, June 28, 2024 (accessed June 29, 2024).
2. Ibid.
3. John Fritze et al, “Takeaways from the Supreme Court’s Decision on January 6 Charges and What It Means for Donald Trump,” CNN.com, June 28, 2024 (accessed June 29, 2024).

Exfoliating a Hero: On Lincoln's Unconstitutional Overreaching

Lest we get carried away and inadvertantly enshrine our leaders with mythic laurals, it is worthwhile to peel back our societal "remembering" of past figures, such as Abraham Lincoln, who have become larger than life.

Lincoln was a moderate, promising merely not to spread slavery. In his address after being sworn in, he promised not to go after slavery where it existed. Accordingly, radical abolitionists complained. Even so, the 1860 campaign had been viewed, at least in the south, as a referendum on the southern way of life. Lincoln received only 40% of the vote; he was not even on the ballot in ten states.  There were just 33 states in the union at the time. Lincoln's victory suffered from a deficit of legitimacy in some quarters. In fact,he was burned in effigy at a state capitol in the south. With free Kansas becoming a state, the slave states felt that their respective abilities to defend their way of life in the general councils of the union would become even more truncated or dilute. Berift of a sense of influence on general matters that concerned themselves, the confederating republics felt they had no alternative other than secession.

On Feb 18, 1861, Jefferson Davis became President of the Confederate States of America. At his swearing in, Dixie, which had been composed by a northerner, was played. The two sides in the continental dispute were closer than they perhaps realized. Both Lincoln and Davis, for example, were from Kentucky originally.  According to the Confederate constitution, Davis had a line item veto and would have had a six year term had the confederacy lasted that long. Astonishingly, international slave trading was outlawed. Even so, there were fundamental differences involved in the dispute. Ironically, had the southern states freed the slaves before firing on Fort Sumpter--depriving Lincoln of his motivational tactic midway through the way--perhaps something resembling the southern way of life in a loose confederacy would have prevailed. The United States would have been left to consolidate to its heart's content.

On the way to his inauguration, Lincoln declared that he would rather be assassinated than to see even one star removed from the flag. Such a stance reflects the "all or none" mentality that accompanies political consolidation. In spite of Lincoln's line in the sand, the War between the Confederated States and the United States began at 4:30am on April 12, 1861.  Technically, it was a war between a federated alliance and a federal government. The opening act was bloodless, even as the war to come was the bloodiest in American history. Siloh alone matched the casualties at Waterloo, and there would be 27 more to come. 51,000 men lost their lives in the three days at Gettysburg alone. The contest between the old and new federal forms exacted a heavy toll in human loss and suffering. Who would have thought that contending distinctions in political theory could be so bloody. Of course, might does not in itself make right, although the passion of the unjustly oppressed can bring about victories disproportionate to the relative lack in number. Furthermore, in this particular case, the respective populations in the federations and the industrialization of several of the union's states gave the forces of modern federalism an advantage not necessarily sourced in the nature of the type.

At the time, the union states had a combined population of 21 million while the confederacy had only 9 million, 4 million of which were slaves and thus not in the fight. In spite of the fact that so many southerners volunteered to enlist that a third of them had to be sent back home, the confederacy was perhaps destined to lose the bellum given the tremendous disadvantage in terms of population. That the conflict lasted until 1865 may point to the extent of resentment that had been allowed to build up throughout the slave states against what was viewed there as an “intrusive” federal government. For example, the devisive tarriff that had nearly caused South Carolina to secede in 1832 was reimposed by the U.S. Government in 1858. As in 1832, the tax was to finance northern industrialization. The states producing cotton and/or rice were left not being able to defend their interests in Washington. Accordingly, that distant government was viewed as encroaching and increasingly foreign. The root of the festering dispute went far beyond the issue of slavery.

To the confederate citizens, the cause involved the rights of their republics as well as their property rights. Slaves, being viewed as property by their "masters"--a decadent conception of slavery unknown to ancient understandings--were thus in play as part of the wider and deeper southern concern with self-determination, which the southerners identified with their respective countries and associated ways of life. Even Lincoln's Emancipation Proclamation, which took effect on January 1, 1863 (almost two years into the war), applied only to slaves in the states that had already left the union (rather than to the five slave states that had remained).

The confederate states were not subject to U.S. law as long as they were part of the confederacy rather than the union. Lincoln's proclamation was thus extra-constitutional, and thus without immediate effect other than to motivate an increasingly weary northern citizenry and armed forces. To be sure, Sherman freed slaves as he blazed a trail to the sea. However, even without the proclamation, he would have deprived the confederates of their "property" along with their other means until they surrendered. Slavery was not outlawed in the United States until 1865, when the thirteenth amendment was ratified by the states (the former confederate states excluded even though they had been re-afixed to the union).  There was some duplicity involved in, "Welcome back to the union! But unfortunately your vote doesn't count yet because you don't agree."

Fundamentally, the "north" and "south" interpreted the United States differently. This is what the war was really about, and the issue went all the way back to the contentious debates in the constitutional convention in 1787. The delegates had hotly debated whether the proposed General Government would consolidate power via "general welfare" spending and the potentially unlimited taxation, irrespective of the question of slavery. The people who wanted to secede viewed the U.S. as more like a confederation than a modern federal government. That is, confederates viewed their states as countries and the U.S. more as an alliance having only strictly defined enumerated powers that a national government. Robert E. Lee, for example, was offered command of the union army. He refused and went with Virginia. He could not draw his sword, he said, against his native country. Virginia had to come first; there was never any question about that. Such a view of Virginia and the other republics was to fade even as they still retained residual sovereignty at least into the twenty-first century.

In general, the southerners feared that the federal government would usurp more and more power from their countries; as things turned out, the fear was not without foundation. Even then, Lincoln declared war against the confederated states even though the U.S. constitution clearly stipulates that Congress is the governmental body in the U.S. Government that declares war.  As the president is the commander in chief, there is a conflict of interest in that office also declaring war. So technically speaking, the war was not constitutional, and thus legal.  Lincoln also suspended habeus corpus, though the constitution allows for this in time of rebellion.  To keep the Maryland from seceding, he locked up thirteen of the state's legislators without trial. 

Chief Justice Taney, who had four years earlier concurred with the Dred Scott decision, said that Lincoln had gone too far beyond the constitution in the powers he was exercising. Taney was on firm ground on the declaration of war. Even so, astonishingly, the president simply ignored the chief justice. From the standpoint of an independent judiciary with teeth, Lincoln was laying a precedent very dangerous to the republic.

Because the judiciary has no means of enforcing its decisions by force, the branch depends on the other branches, and, indeed, the people, resisting the temptation to contravene a judicial decision. The basis of the resisted temptation rests on the court's legitimacy, for the judiciary has no troops of its own. In fact, Bickel refers to the court as the “least dangerous branch” for this reason. Lincoln’s precedent in simply ignoring the court put at risk the system of checks and balances that resides in the separation of powers in the federal government. Fortunately for us, Lincoln’s treatment of the Chief Justice's effort to hold the executive branch within its proper constitutional sphere, as though Taney were a mere bystander, has largely been forgotten.  Yet the expediency of an imperial presidency has indeed been on display since Lincoln as Congress has gradually lost power to the commander in chief. The danger is real, and Lincoln's precedent could yet be used by an ambitious commander in chief who has his or her eye on another country to invade. 

Ironically, Lincoln’s unconstitutional actions at the beginning of the war ironically to save the union could be viewed as confirming the charges made by the confederates against the encroaching nature of the federal government.  Lest we miss the lesson as we remember the bloody war 150 years later in 2011-2015 from the standpoint of the victors, we might take note of the susceptibility of power itself to consolidate, ultimately in one person—indeed, even in a hero. The consolidating proclivity is as much a danger in the modern American empire today as it was in ancient Rome.  

Source: Ken Burns’ The Civil War (PBS)

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.

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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 Senate Trial of President Trump: Riddled with Conflicts of Interest

At the beginning of a U.S. Senate trial on whether to remove an impeached U.S. president from office, the senators take an oath to be impartial jurists. The impartiality is important because the senators are theoretically to listen to the partial U.S. House prosecuting managers and the president’s defense lawyers. Were the senators themselves partial, they would simply reflect the two sides that make their respective cases. In the trial of Donald Trump, I submit that few if any senators had any intention of being impartial and thus as serving as a jurist rather than as an extension of the prosecutors or defense. In effect, the verdict is left to whichever political party controls the Senate. I contend that having the Senate try presidents is problematic due to a conflict of interest.

To be sure, removal from office requires a two-thirds majority so the verdict cannot be made only by one party—especially if it is other than that which the president heads. Yet to reply in such a scenario on the party that the president heads brings in a conflict of interest. Such a conflict is particularly pronounced when the president’s party controls the Senate. In such a case, even the rules of the trial, which are decided by majority vote, can be expected to be skewed in favor of the defendant (i.e., the president). It is simply too much to ask human nature to be impartial whether in setting up the trial or in acting as an impartial jurist in such a conflict of interest. This is why I contend in Institutional Conflicts of Interest that conflicts of interest are inherently unethical (i.e., even they are not exploited for personal or institutional gain).

The gravity of the conflict of interest can be easily detected when it is being exploited in rather obvious ways. Sen. Lindsey Graham (Republican), “a close ally of the [Republican] president, criticized Democratic House managers’ arguments at the trial in recent days, calling Thursday’s presentations ‘like way too much. [1] Graham made the comment when the prosecutors were making their opening statement, so the implication is that he was already not impartial for he did not wait until even the conclusion of both opening statements to make his statement. The sheer brazenness suggests that senators of both parties may have regarded the oath of impartiality as a sham. Indeed, even the labeling of the prosecutors as Democrats and the defense attorneys as Republicans can tell us that political partisanship dwarfed the oath.

In the trial of President Trump, the party he headed at the time controlled the Senate. Given this conflict of interest, it is not surprising (sadly) to find the trail schedule modified to suite the president. After he complained about low television viewership-levels on Saturdays being “Death Valley in T.V.,” the Senate’s majority leader announced that the first day of the president’s defense attorneys’ opening statement, which was on a Saturday, would only be for a few hours. The defense was “planning a more robust presentation for Monday and Tuesday.[2] To be sure, two Democratic Senators running for president had campaign events scheduled for that Saturday night, but I submit that the majority leader was more attentive to the defendant’s wishes than to campaigning senators of the other party—the one that the president does not head. The defendant was able to schedule his own trial.

The president’s reach extended even to whether the trial would have witnesses! Former National Security Director John Bolton could have provided a first-hand account of the president having admitted to holding appropriated military aid to Ukraine until the Ukraine president publicly announced that his government was launching an investigation into Trump’s likely presidential rival in 2020, Joe Biden (and his son). But the president’s majority party in the Senate refused to allow the witness nonetheless, even as the president’s defense argued that the prosecutors had not provided first-hand account testimony from an impeachment witness in the House (which in turn is debatable).

Impartial jurists of the president’s party argued as if they were part of the defense that calling witnesses could run into the obstacle of the president claiming executive privilege. One of the prosecutors, a member of the opposition party, replied that the U.S. Chief Justice, who was presiding over the trial, could make such a determination, but such a rule could be overridden by a majority vote (the president’s party being in the majority) by the Senate.[3] Here again the institutional conflict of interest is evident. Senators of the president’s own party could vote to override the Chief Justice to block witnesses in the trial.

Even in terms of documents that the president had refused to provide to the U.S. House in its impeachment investigation, the Senate’s majority looked the other way. Rep. Sylvia Garcia, a prosecuting manager, said in the opening statement, "The House investigative committees sought a total of 71 specific categories of documents from six different agencies and offices. President Trump blocked every single one of these requests, all of them." Between Dec. 27, 2019 and Oct. 10, 2019, Garcia said, “House investigative committees issued subpoenas to the State Department, the White House, the Office of Management and Budget, the Department of Defense and the Energy Department. Some agencies initially suggested that they might comply. Some turned over documents to the Trump administration so they could be turned over the Congress. But in the end, the president turned over nothing in response to the House impeachment inquiry,” she said.[4] Surely national security would not have been compromised in all of those documents, yet the Senate exploiting the conflict of interest would tell future presidents that supplying documents critical of the administrations can be avoided. What then of the legislative check on the executive branch?

Was the trial of President Trump even a trial without witnesses, potentially critical documents, and even an impartial jury? To the extent that the defendant could get his way even in the voting on the trial’s rules, could the trial be viewed as valid? Apparently it was. Not even the Chief Justice could enforce the oath of impartiality. Senators having made statements showing prejudice for or against the defendants could perhaps have been disqualified. The two-third majority could then perhaps have been applied to senators with an open mind, although silence does not necessary mean that a person is impartial. Also, presumable the Senate could override the ruling on particular senators or forbid such rulings, as no one likes to be excluded. Again we would find a conflict of interest in the disciplined being able to overrule the impartial judge.

Hamilton suggested at the constitutional convention that the U.S. Supreme Court decide whether an impeached president should be removed from office. It was felt, however, that such a role would put the impartial court into the political realm, especially to the extent that the justices are biased toward the defendant one way or the other. Justices are nominated by presidents, after all. I contend that such bias would be less intense than in the U.S. Senate because judicial reasoning and judgment can temper the influence of politics in the Supreme Court even though ideological bias is likely present generally (though it may be indirect, rather than direct as in the Senate). Put another way, the defendant’s party controlled the Senate, but the justices would be less likely to take orders from the defendant, especially given the Court’s reverence for the institution of a trial (e.g., witnesses, impartial judges and thus scheduling). In contrast, senators may tend to view a trial of a president as fitting within the framework of a political debate, wherein no one is impartial and “horse-trading” to get votes to exploit a conflict of interest are acceptable. Imagine a jury of a criminal trial making deals in deliberation such as, “You vote guilty and I’ll see that you get a car loan.” In the Senate, the majority (and minority) leader could privately promise something of political or economic value to a senator of the same party who would otherwise vote to allow witnesses. Indeed, if enough majority-party senators are not impartial, setting the rules of the trial is also a conflict of interest. In the Trump trial, the majority leader was opposed to witnesses even before he took the oath of impartiality. Rather than having the Senate establish the rules, the U.S. Supreme Court could do so in order to obviate the conflict of interest, which is especially pronounced when the Senate votes on rules (such as whether to allow witnesses) during the trial!

What about having the American electorate act as the jury? Is there any basis to assume that We the People would be less partisan? The biases in the Senate may be a muffled representation of a polarized electorate. Additionally, the electorate was largely not following the trial, let alone listening to the opening and closing statements. In the case of the Trump trial, the next presidential election would be in less than a year. In a presidential election, a myriad of factors come into play--the articles of impleachment being just two. Less knowledge of the case is needed; the matter is more one of an overall judgment of the incumbent (as well as the challenger). Lest it be argued that the regular elections be sufficient to hold a president accountable, such reliance would do nothing to purge the U.S. of a criminal such as Nixon mid-term in order to stop the bleeding. It may be that a majority of the senators assessed the two articles of impeachment against Trump as not sufficient to justify removing the president from office, but given the institutional (and possibly personal) conflicts of interest, the electorate cannot be confident. Judging from the smile on the majority leader's face just after he met with a republican senator previously in favor of allowing John Boltan to testify, I believe that horse-trading went on regarding the setting of at least one of the trail's rules. If it sounds strange that jurists in a trial would do such a thing even on whether to alter the trial rules, remember that institutional conflicts of interest can operate like black holes in that the gravitational force is powerful and light cannot escape.

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1. Rebecca Ballhaus, “Lindsey Graham Says Bidens' Actions Need More Scrutiny,” The Wall Street Journal, Jan 24, 2020.

2. Natalie Andrews and Rebecca Ballhaus, “Impeachment Schedule for Today and Tomorrow,” The Wall Street Journal, January 24, 2020.

3. Linsey Wise, “Schiff Calls Fears of Witness Fights Delaying Trial ‘Nonsense’,” The Wall Street Journal, January 24, 2020.

4. Linsey Wise, “Demings: Trump’s Obstruction Was ‘Categorical, Indiscriminate, and Historically Unprecedented’,” The Wall Street Journal, January 24, 2020.

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.

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[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 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.

Corporate Political-Campaign Contributions as Decisive in Anti-Trust Enforcement

On August 31, 2011, “the [U.S.] Justice Department sued to block AT&T’s $39 billion takeover of T-Mobile USA, a merger that would create the nation’s largest mobile carrier. 'We believe the combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower-quality products for their mobile wireless services,' said James M. Cole, the deputy attorney general.”[1] The New York Times claimed at the time that it was “arguably the most forceful antitrust move” by the Obama administration.[2] To be sure, there were “few blockbuster mergers with the potential to reshape entire industries and affect large swaths of consumers.”[3] However, one could cite the UAL merger with Continental and Comcast’s acquisition of NBC as accomplished mergers. It is more likely that the housing-induced recession made the administration reluctant to risk a major company looking for buyer going bankrupt. I would not be surprised if the vested interests of major mergers and acquisitions “played the bankruptcy card” as leverage with the Justice Department. Moreover, the political power of mega-corporations in the U.S. can be expected to have come into play.

To be sure, the U.S. Department of Justice was capable of flexing its political muscle. Nasdaq withdrew its $11 billion bid for NYSE Euronext, the parent company of the Big Board after government lawyers warned of legal action. However, conditioning Comcast’s purchase of NBC to the latter giving up control of Hulu, an on-line movie/television conduit, evinced a strange indifference to a much larger distribution company (Comcast) having a vested financial interest in some of the content (i.e., NBC programming).

The Justice Department looked the other way on a rather obvious conflict of interest potentially operating at the expense of the consumer (assuming people want to watch more than NBC programming on cable). Of course, cable is not the only distribution channel for television programming. Customers dissatisfied with Comcast’s vaunting of NBC programming (and even possibly restricting other content) could go to DirecTV, for example. However, conflating distribution and content seems a bit like the repeal of the Glass-Steagall law, which had prohibited the combination of commercial and investment banking (and brokerage) from 1933-1999. The law reflected the belief that institutional conflicts of interest can and should be avoided even though not every instance of a commercial-investment firewall could be expected to succumb to the immediacy of the profit motive.

In short, the Obama administration could have gone further in its antitrust actions. While admittedly not as pro-business as the preceding administration, the Obama administration’s tacit acceptance of mega-corporations may translate into an insufficient defense of competition. It should not be forgotten that Goldman Sachs contributed $1 million to Obama’s election campaign in 2008. For the president to actively promote competitive markets would require him to bite the hands that have been feeding him. In other words, there is a conflict of interest involved in allowing corporations to make political contributions while the government officials are tasked with replacing oligarchies with competitive marketplaces.

1. Ben Protess and Michael J. De La Merced, “The Antitrust Battle Ahead,” New York Times, August 31, 2011. 
2. Ibid.
3. Ibid.

Corporate Appointees in the West Wing: A Counter-Productive Way of Holding Business Accountable

Presidents in governments are called to be leaders, which means advocating a vision of change from the status quo. Otherwise, they are merely administrators. So it would be counter-productive for a U.S. president to fill his administration with people financially invested in the status quo. Yet President Obama did just that, in spite of the fact that his rhetoric envisioned radical change in health insurance and still regulations on Wall Street to prevent another financial crisis. In short, he not only let the regulatees in the room, but also gave them important roles with power that would affect their respective industries.

For example, President Obama's chief of staff, William Daley, had been a top executive at JPMorgan Chase, where according to The New York Times, he was paid as much as $5 million a year and supervised the Washington lobbying efforts of the nation’s second-largest bank. Daley also served on the board of directors at Boeing, a large military contractor, and Abbott Laboratories, the global drug company, which had "billions of dollars at stake in the overhaul of the health care system." Although some argued that the White House needed someone on the inside who had the ear of business, the conflict of interest in having someone so tied to vested commercial interests decide on who gets into the Oval Office and determine the President's agenda ought to be troubling. Just one year earlier, a Wall Street reform bill had been passed that sidestepped the question of whether banks too big to fail should be allowed to exist and did nothing to address the fact that executive compensation had been so out of step with performance in the years leading up to the financial crisis. Also, the enacted health-care reform law, Obamacare, included a mandate and excluded a public option as per the interests of the heath insurance lobby. Even the appearance of a conflict of interest like this one is enough to spur us on to investigate it even though Obama's time in office has passed. That there were more blatant conflicts of interests in Obama's choice of appointees should raise even more of a red flag. Was he blind to them (unlikely), or did he intend to stay within the status quo in spite of his rhetoric against health insurance companies and investment banks? Put another way, if he really intended to offer an alternative to private insurance companies and constrain Wall Street firms in the wake of the financial crisis, putting corporate insiders in key offices would be counter-productive. Of course, he may have meant to hold back on his rhetoric, given all the financial inducements that the corporate sector could offer. Obama was much richer leaving office than he was when he entered the White House.
Larry Summers, whom Obama appointed as his chief economic advisor, had been instrumental in the Clinton Administration in keeping derivative securities from being regulated. How could Summers advise on a solution when he was against regulating the financial sector, at least where most needed (CDO's), and had actually played a role in causing the financial crisis? Simply in his choice of Summers, Obama sent a signal that he was a creature of the status quo (and its powerful adherents). 
Timothy Geithner, whom Obama nominated to be Secretary of the Treasury, had been president of the New York Fed, a job that not even Geithner saw as regulating. The big banks had had a formal say in his assuming that role--Citigroup being his sponsor. It is no surprise that he played a major role in AIG paying Goldman Sacks dollar-for-dollar on the CDO swaps even though AIG was essentially on life-support with federal money. So he would be an unlikely pick for a president who wanted systemic change involving the relationship between the federal government and Wall Street. Mark Patterson, Geithner's chief of staff, had been a lobbyist for Goldman Sachs, and Lewis Sachs, a senior advisor at Treasury, had been head of Tricadia, which bet against the CDOs (mortgage-based derivatives) it was selling to clients.
William C. Dodley, President of the New York Federal Reserve after Geithner left to become Treasury Secretary, had praised financial derivatives (including sub-prime-mortgage-based) before the financial crisis and, not coincidentally, had also been the chief economist at Goldman Sachs.
Gary Ginsler, Obama's head of the Commodities Futures Trading Commission, had been an executive at Goldman Sachs. He had helped ban the regulation of financial derivatives, including those based on risky sub-prime mortgages.
Mary Shapero, Obama's head of the Securities and Exchange Commission (SEC) had been CEO of an investment banking self-regulation body. As a MBA student, I volunteered to help a professor with his research on NASD self-regulation. I was attracted by the application of systems theory to the notion of industry self-regulation. In hindsight, I was very naive concerning the propensity of a self-regulatory body to hold to the public good, rather than take the industry's own interest as a starting point and perhaps even devolve to enable a few bad participants with the self-regulatory body serving as a cloak. Even at the industry level, money talks; securitizing especially sub-prime mortgages was very profitable for investment banks through the first seven years of the twenty-first century.
Campaigning on September 29, 2008 in heat of the financial crisis, Obama said, "The era of greed and irresponsibility on Wall Street and in Washington have led us to a financial crisis." That is, "A lack of oversight in Washington and on Wall Street got us into this mess." Even so, as president he signed the Dodd-Frank Financial Reform Act, which in hindsight has been recognized as moderate at best, for it left the conflict of interest at rating agencies, executive compensation, and CPA firms largely entact. Obama resisted adding strings to the TARP federal funds for the big banks, such as restrictions on executive compensation and employee bonuses even though the E.U. enacted new restrictions. Furthermore, as of mid-2010, no financial firm or individuals therein had been prosecuted under Obama for fraud--not even Countrywide. In short, Obama as president fell well short of the "Real Change" mantra of his campaign. As one person observed at the time, Obama put together a Wall Street government. To think that real change could come from such a status-quo of appointees is so incredulous that Obama's very claim of real change could only be taken in hindsight as a false selling-point not unlike the traders at Goldman Sachs who were telling even good clients that the bonds based on sub-prime derivatives were safe even as the traders privately regarded them as "crap." Whether misleading the American people or good clients, the culprit is private advantage over public good via deceit. 
In the case of Obama, I suspect the answer can be found in following the money. Goldman Sachs contributed $1 million to Obama's presidential campaign. Also, he was considerably richer after his two terms in office. I suspect that he had discovered that he could say one thing in public and do another thing in private. It may be that representative democracies are susceptible to becoming invisible plutocracies with a patina of democracy to satisfy the masses while the representatives and the business executives make out quite well working together.

For more on institutional conflicts of interest, see Institutional Conflicts of Interest, available at Amazon.com

Sources:

 Eric Lipton, “Business Background Defines Chief of Staff,” The New York Times, January 6, 2011.
"Inside Job" (2010), Sony Pictures Classics.