Notes From Babel

Archive for June 2009

Distrust of Government Does Not Imply Trust in Markets

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This recent post from E.D. Klain points out one of the subtle yet critical flawed assumptions about conservatism: that distrust in government means placing trust in markets. In a way, the assumption is natural, and perhaps in some ways correct. Certainly, we have to put our “trust” somewhere, in the sense that public choices have to be made in one place or another. But markets are not to be preferred to government on the basis that they yield better results. They certainly do in some areas, and we hope for the best in others. The real reason we ought to prefer markets, however, is because markets are fair. Fair as in blind, anachronistic, non-empathetic. Process-oriented rather than ends-oriented. Markets produce a brand of fairness as close as possible to the sort produced by nature itself. Thus, markets will harm you in near the same way as a tornado will. It’s nothing personal. And in either case, you are about as likely, and have about as much cause, to shake your fists at the sky than at some person.

The real problem, of course, is not that liberals make this erroneous assumption (i.e., that markets somehow possess some superior ability to produce substantive fairness), but that conservatives do. When we begin to think that we can have our heaven on earth, whether through a centralized government or through an idealized “market” that will give us our hearts’ desire, we are headed for disappointment.

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Written by Tim Kowal

June 26, 2009 at 5:17 am

The Booming (Public) Service Industry

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John Derbyshire shares the details of a few of New York’s 1,325 six-figure pension recipients:

• James Hunderfund, an employee of Commack school district, will retire September 1 with a monthly pension of $26,353.75. (Nothing hunderfunded about his pension plan, ho ho.)

• Richard Brande of Brookhaven-Comsewogue will also be heading for the golf course September 1 with a monthly pension of $24,222.43.

• William Brosnan cleans out his desk at Northport-East Northport July 1, and for the rest of his life will trouser a monthly pension of $19,058.80.

No offense to these guys — well, not much offense — but they are small-town education bureaucrats. Not only will they be getting annual pensions in the quarter-million-dollar range for the rest of their naturals, they are getting these numbers by law. If New York State’s pension-fund managers goof on the investments, or the market craters, we taxpayers have to make up the difference.

It’s not just edbiz either, though of course edbiz exhibits the greatest outrages. (Can’t we please just GET RID OF PUBLIC EDUCATION?) Local-gummint seat-warmers are on the same gravy train.

• Dvorah Balsam of Nassau [County] Health Care Corp., annual pension $191,380.32

• Stanley Klimberg of Long Island Power Authority: $191,380.32.

• Gerald Shaftan, Nassau Health Care Corp. again, $181,457.76.

These folk are all, as no doubt they would be proud to tell you, “public servants.” The idea behind that phrase is that they are like butlers or housemaids, placing themselves willingly at the beck and call of us, the sovereign public. So how come we, the sov. pub., spend our twilight years clipping coupons in rusting trailers in the Ozarks while our servants enjoy the beach condo in Maui?

From the looks of it, CEO’s and public servants might soon be passing each other in their government-controlled compensation elevator ride.

Written by Tim Kowal

June 20, 2009 at 6:37 am

Posted in Politics, Rants

Words Are Cheap

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From Fox News:

The Senate has unanimously passed a resolution apologizing for slavery and racial segregation in the U.S. and sent the measure to the House.

Something about that just seemed rather silly. And then this made it obvious :

The resolution passed Thursday includes a disclaimer saying that nothing in it supports or authorizes reparations by the United States.

Oh, you mean the apology was all a stunt. That makes sense. Apologize away, so long as it doesn’t cost anything.

[A much more thoughtful post on the subject from Stephen Bainbridge here.]

Written by Tim Kowal

June 19, 2009 at 6:16 am

Posted in Rants

It’s Not a Bad Risk Just Because You Lose Sometimes

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Said Obama:

“A cascade of mistakes and missed opportunities” over decades led to the present problems, the president said. “It was easy money, while it lasted.” But, he added, “These schemes were built on a pile of sand.”

But who knew it was a “pile of sand”? Surely, there were those who thought it was too good to be true, that the gravy train would end at some point. But who was going to tell willing lenders and willing borrowers not to transact, not to keep driving the economy up, not to increase homeownership, based on some wonk’s grumpy prognostications? Certainly not politicians. Indeed, lenders would have been called worse names were they to have imposed some arbitrary normative notions about risk to justify turning down loans. The math, best as anyone could tell, was solid enough. The market, according to our then-best understanding of how it worked, determined what happened. We now understand that the market doesn’t hold up under the fancy math that seemed to work so well. But we didn’t know that then. We kept playing what our best understanding indicated was the smart bet. We doubled down on eleven and split aces and happily collected our winnings. Now that it’s turned out there were jokers in the deck, we’ll have to rethink our strategy. That will happen the same way every other wealth-generating idea has occurred: through the market. The market ferrets out cracks in economic systems and recalibrates itself towards efficiency. We don’t need government to find holes in economic theories any more than rain needs it to find holes in a leaky roof.

[Clarification: A reader pointed out that my post might be misunderstood to mean that little or no fault belongs to the crooked mortgage brokers and other unscrupulous practices within the financial industry. Perhaps I should be more careful: I do not mean to ignore such sordid practices, or suggest that they are an acceptable brand of “self-interest” that fuels market activity. On the other hand, that was not what Obama was referring to. He was talking about systemic flaws in the finance industry that created what seemed to be “easy money.” I took that to mean, for example, that someone should have intuitively known that the Gaussian copula function that led to the mortgage-backed-securities debacle was implicitly flawed, and done something about it. (A great article on that here.) That formula, and the basic urge to capitalize on it, were not borne of some excessive greed. By all indications, it allowed us to tap into a great amount of seemingly reliable wealth. Who would have listened to admonitions against such manifest destiny?]

Written by Tim Kowal

June 18, 2009 at 5:01 am

Vexatious ADA Litigants Back in Business in California

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On Friday, the California Supreme Court gave vexatious wheelchair litigants their groove back in Munson v. Del Taco, Inc., overturning an earlier 2006 decision in Gunther v. Lin that required a showing of intent in order to qualify for the minimum $4,000-per-infraction awards. Gunther had held that California’s Unruh Act, the California civil rights law, required a showing of intentional discrimination: the mere fact of disparate impact on a suspect class was not enough. However, in 1992, the Legislature amended the Civil Code to make violations of the ADA also a violation of the Unruh Act. Thus it happened that, when serial plaintiff David Gunther paid a visit to Lin’s Jack-in-the-Box restaurant, he experienced the following violations of his newly incorporated civil rights: uninsulated pipes under the bathroom sink, and a mirror mistakenly left by an employee (without Lin’s permission) higher than the required specifications.

As the Santa Ana Court of Appeal noted, ADA violations are hyper-technical, and practically impossible not to violate at some point or another:

Other ADAAG’s [ADA Architectural Guidelines], however, do not implicate any intentional conduct at all, such as the requirement that the pipes underneath the sink in a public restroom be wrapped with insulation, or the remarkable requirement that any visual alarms be exactly 80 inches above the highest floor level within the space or exactly six inches below the ceiling, whatever is lower. For example, a customer using a wheelchair who entered a public restroom before a contractor had finished working on a remodel of it and had gotten around to wrapping insulation on the pipes under the sink would find a restroom in “violation” of the ADA even though the owner was remodeling the restroom precisely in order to ensure that wheelchair customers had equal access to its toilet facilities.

In fact, the ADA itself does not even permit private litigation. That would seem, well, stupid. And so the court charitably declined to impute such stupidity onto our own Legislature.

And it was precisely because it was so easy for businesspeople—particularly small businesspeople—to inadvertently violate the ADA that Congress limited the circumstances under which they might be sued for such a technical violation. Under the ADA, a private individual suing a businessperson has no right to damages absent intentional discrimination. . . .

By contrast with the federal ADA, California’s section 52 allows private parties to seek damages, and in fact even provides for an automatic minimum penalty—now up to $4,000—when the statute is triggered.

. . . .

To interpret what is now subdivision (f) of section 51 to provide for automatic penalties for even the most technical violations of the ADAAG’s would contravene the rule that no statute should be interpreted so that it becomes redundant, in this case the statute made redundant being section 54.3. . . .

. . . .

Private enforcers of the ADA are presented with a choice between the strict liability regime of section 54.3 or the regime requiring intentional discrimination of section 52. The alternative interpretation, as a number of federal courts have already indicated (e.g., Doran v. Del Taco, Inc. (C.D.Cal. 2006) 2006 WL 2037942), has led to unconscionable abuses.

Indeed, in Gunther, there was no intentional discrimination. Gunther even conceded as much.

There is also no question that defendant Lin never intended to violate the ADA. In his answer to Gunther’s complaint Lin claimed that Gunther had entered the restroom “before our handyman had finished his work” of wrapping insulation around the pipe under the sink. Moreover, normally the restroom never has mirrors for anybody (because the mirror was subject to vandalism); an employee simply hung one by mistake.

The Supreme Court noted that Gunther’s reading of the statute was a reasonable one.

As a purely linguistic matter, therefore, another reasonable interpretation of section 51, subdivision (f) is that it makes all violations of the ADA violations of section 51 but, together with section 52, authorizes a private action for damages under the Unruh Civil Rights Act only for ADA violations involving intentional discrimination. This is the reading embraced by the Gunther court

But Gunther’s reading was not the one most likely to jibe with the Legislature’s likely intent. Instead, the Court delved deep into the legislative history and tracked the various changes over the past decades to glean the Legislature’s intent in incorporating the ADA into California’s civil rights regime. The Court concluded that, while there were several reasons suggesting that the Legislature intended plaintiffs to base their claims on Civil Code section 54.3, which would require a showing of intent, the better supported conclusion was that the Legislature purposely overlapped the statutes–even though this meant that no litigant in his right mind would go forward with a claim that required a showing of intent when he could choose to plead one that didn’t.

On the other hand, the Legislature recently enacted new legislation to curb potential abuses.

Most pertinent here, the new legislation (applicable to claims filed on or after January 1, 2009 (§ 55.57)) restricts the availability of statutory damages under sections 52 and 54.3, permitting their recovery only if an accessibility violation actually denied the plaintiff full and equal access, that is, only if ―the plaintiff personally encountered the violation on a particular occasion, or the plaintiff was deterred from accessing a place of public accommodation on a particular occasion‖ (§ 55.56, subd. (b)). It also limits statutory damages to one assessment per occasion of access denial, rather than being based on the number of accessibility standards violated. (Id., subd. (e).)

Munson at 21.

But what exactly does the new Civil Code section 55.57 require to turn away those would-be vexatious litigants?

(a) Statutory damages under either subdivision (a) of Section 52 or subdivision (a) of Section 54.3 may be recovered in a construction-related accessibility claim against a place of public accommodation only if a violation or violations of one or more construction-related accessibility standards denied the plaintiff full and equal access to the place of public accommodation on a particular occasion.
(b) A plaintiff is denied full and equal access only if the plaintiff personally encountered the violation on a particular occasion, or the plaintiff was deterred from accessing a place of public accommodation on a particular occasion.
(c) A violation personally encountered by a plaintiff may be sufficient to cause a denial of full and equal access if the plaintiff experienced difficulty, discomfort, or embarrassment because of the violation.

Ah, yes. That will send those serial plaintiffs packing. I’m sure they will be quite at a loss wondering how in the world they might try to convince a jury that a poor chap in a wheelchair sustained sustained “difficulty, discomfort, or embarrassment.” Handy work indeed.

As Oliver Wendel Holmes said, “if my fellow citizens want to go to Hell I will help them. It is my job.” It is now a job that our California Supreme Court seems perfectly comfortable performing, if this case is an indication.

All this raises the more interesting question that I will try to tackle in a subsequent post, which is, how does a court, such as the Munson Court here, muster up the motivation to overturn a perfectly well-reasoned decision, like the Gunther one, in order to open up floodgates of vexatious litigation? It does seem like this is one of the “5%” of really tough cases that is susceptible to more than one outcome.
(Gunther’s attorney, a colorful fellow, was less equivocal, calling Gunther “a results-driven, ass-backwards judicial activist decision from the start.”)

At any rate, if it takes some sort of “activism” to get to the outcome from where legal analysis ends, what sort might be appropriate, or at least, more appropriate than others?

Written by Tim Kowal

June 17, 2009 at 3:57 am

Yes, Mr. President, Some People Really Do Still Think Big Government Is A Bad Thing

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In pushing his health care agenda, Obama responded to Republican opposition as follows:

“Right now a number of my Republican friends have said, ‘We can’t support anything with a public option,’ ” he said. “It’s not clear that it’s based on any evidence as much as it is their thinking, their fear, that somehow once you have a public plan that government will take over the entire health care system.”

Two thoughts: First, perhaps folks wouldn’t be so worried about Obama’s government “tak[ing] over the entire health care system” if he wasn’t already taking over everything else.

Second, Obama is right to note that the question is not whether the government can provide a viable, universal health care solution. We already seem oddly comfortable after having jumped from one paper trap (mortgage-backed securities, credit default swaps, Gaussian copula functions, etc.) into another (massive federal borrowing leading to impending hyper-inflation). So I doubt we will have have trouble finding the stomach to print the money it will take to make Obama’s government health care utopia happen. At least until the bottom falls out.

But the critical objection is not that we are losing sight of economics principles, but of first principles–of self-determination, hardiness, individualism. I quoted this bit from Mark Steyn a few weeks ago, but it is worth the repetition:

But forget the money, the deficit, the debt, the big numbers with the 12 zeroes on the end of them. So-called fiscal conservatives often miss the point. The problem isn’t the cost. These programs would still be wrong even if Bill Gates wrote a check to cover them each month. They’re wrong because they deform the relationship between the citizen and the state. Even if there were no financial consequences, the moral and even spiritual consequences would still be fatal.

Health care is indeed a problem. And unchecked human greed is at the root of much of it. Greedy people are the source of a lot of the world’s problems (and a lot of the world’s successes). Of course, government is nothing more than the legitimized exercise of will by a small group of people. And while we at least know that CEOs are in it for the money, we can never be quite sure what in the world a politician has his eye on. In that way, while greedy, unscrupulous individuals are bad, we can be certain that politicians are much, much worse.

Thus, why do we believe so easily that the solutions to our problems lie in government? Of course we should “fear” your creeping government, Mr. President. That is the natural order of things.

Written by Tim Kowal

June 12, 2009 at 5:05 am

Miranda Goes Mobile

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The Weekly Standard reports that the Obama Justice Department has ordered FBI agents to read Miranda rights to high value detainees captured and held at U.S. detention facilities in Afghanistan. While one could hardly complain about spreading the United States’ gold standard of criminal justice, this practice seems like it could become problematic. Miranda informs suspects that they “have a right to remain silent,” and that they “have a right to an attorney.” Actually, they probably don’t have such rights, as they are non-citizens outside of the United States. But once the government tells someone they can expect something, it has the practical effect of becoming a right vested for all eternity. See, e.g., welfare.

H/T Bart DePalma

Written by Tim Kowal

June 11, 2009 at 5:16 am

Posted in Constitutional Law