Topic: Law and Civil Liberties

Rule-of-law and U.S. Competitiveness

Policies such as Sarbanes-Oxley are reducing America’s competitiveness, but an equally worrisome problem is the erosion of the rule-of-law.

Stability and equal treatment are among the characteristics of an advanced legal system. Unfortunately, America’s legal system is now riddled with uncertainty, since investors and companies have no way of predicting outcomes.

The New York Sun has a column noting how America’s justice system is now an obstacle rather than an inducement to international investment:

[T]he American share of global initial public offerings declined to 5% from 50% in the last five years. Foreign companies are being scared away in part, both reports conclude, by soaring costs of American law.

The highwater mark for securities lawsuits was reached in 2005, with over $9 billion in class action settlements. The zeal of American prosecutors in corporate scandals is also of a different order of magnitude. In 2004, government fines in America totalled $4.74 billion, over 100 times more than in Britain, which had a total of $40.48 million. Sarbanes-Oxley, the federal law that imposes higher accountability standards on corporate boards, has almost tripled auditing costs for small public companies.

Perhaps the most chilling parts of the Bloomberg-Schumer report are the surveys of foreign business leaders who suggest, overwhelmingly, that they no longer trust American law. For most of the last century, trust in American commercial and securities law was one of our greatest competitive advantages. Investors flocked to our markets because securities laws guaranteed transparency and honesty. American contract law was the gold standard for world business, in part because of a long tradition of judges rigidly applying guidelines of liability and damages.

Economist Douglass North received a Nobel prize in part for his work on the vital role of legal stability in economic prosperity. An “essential element of the concept of justice,” legal philosopher H.L.A. Hart observed, “is the principle of treating like cases alike.” That’s why law is the foundation of freedom — people know where they stand. They can act freely instead of looking over their shoulders all day long.

But that trust has now capsized. Companies are afraid that if a few employees out of thousands do something wrong — even if not material to the bottom line — the company faces the prospect of ruin. An indictment, not a conviction, could put a company out of business. Why roll the legal dice in America when legal systems in Britain and elsewhere focus on punishing the individual wrongdoer, not shooting everyone in sight?

It’s impossible to measure how much distrust of law has contributed to declining competitiveness. But the evidence is all around us. Just talk with foreign business leaders.

The main victims of this trend, however, are employees and their pension plans. Drying up of markets means that countless people lose job opportunities and that innovation moves offshore. Trust, once lost, is hard to regain.

Tort reforms limiting damages don’t get close to the heart of the problem. American justice has a deeper flaw — it no longer reliably distinguishes right from wrong. Instead, decisions are made on an ad hoc basis, jury by jury, without predictable boundaries.

A Man’s House Is His Castle?

A guy sits down to watch the World Series, drink beer, and clean his World War II-era firearms. A quiet, relaxing evening in his own home. He could not fathom that the “Mobile Emergency Response Group and Equipment Team” would soon be on the scene to “neutralize the threat” he is posing to the community. The ”Team” forces him out of his apartment with flash bang grenades, chemical gas canisters, and rubber bullets.

The details are set forth in this recent judicial ruling.

Yet another example of the disturbing militaristic mind-set that pervades too many of our police agencies. Unnecessary provocation and violence. Unfortunately, the judiciary essentially approves, even lauds, the police work, but nevertheless issues a tiny $1 rebuke because the agents failed to obtain an arrest warrant during this “standoff.”  

Now the city has a budget of $3 billion, but it decides to appeal instead of paying out a measly four quarters. From the point of view of the government attorneys, it was apparently crucial to spend who-knows-how-many-taxpayer-dollars to defend police power and to keep the warrant requirement precedent off the books.

The Constitution is supposed to be “the supreme law of the land,” but consider how much regard the police showed to the right to keep and bear arms and the right to be secure in our homes against unreasonable searches and seizures. Anyone who thinks this is an “isolated incident” should study this, this, and this.

Amazing Grace, How Sweet the Story

Amazing Grace is a beautiful song, but I’ve never been entirely comfortable with it. I didn’t like that line “saved a wretch like me.” I don’t think I’m a wretch. Nor are most of my friends.

But once I learned the story behind the song (with a little help from my friends at the Mackinac Center), I became more sympathetic: John Newton, who wrote Amazing Grace, really was a wretch. Now a new movie is going to bring that story to millions of people.

John Newton was a slave trader and by his own testimony an infidel. He was converted to Christianity but continued in the slave trade. Eventually, however, he renounced that vile life and became an evangelical minister in the Church of England and an abolitionist. “Was blind but now I see,” indeed.

Among the people who heard his preaching was a young member of parliament, William Wilberforce, who was inspired to lead a long campaign for the abolition of slavery – from his maiden speech in 1789 to the final passage of the Abolition Act a month after his death in 1833.

This is one of the greatest stories in history. And now it is the subject of an impressive new movie. I’ve only seen the trailer, but the production values are obviously good, and I’m told that the movie is great. Michael Apted directed. Ioan Gruffudd (best known as Horatio Hornblower) plays Wilberforce. It also features the fine British actors Albert Finney, Rufus Sewell, Ciaran Hinds, Michael Gambon, and Toby Jones. It opens on February 23.

The story of Newton, Wilberforce, abolition, and Amazing Grace is very popular among evangelical Christians. It’s an unambiguous advance for human freedom and dignity in which evangelicals played central roles. And that’s why the movie is produced by Bristol Bay Productions (owned by Philip Anschutz, a billionaire conservative) which also produced Ray. Anschutz owns another film company which produced The Chronicles of Narnia.

If God’s amazing grace caused John Newton to give up slave trading, then who could object? But you don’t have to be a Christian to appreciate what promises to be a well-made movie about this great triumph of liberty.

And for those of us who struggle in the vineyards year after year, trying to secure the blessings of liberty to ourselves and our posterity, the story reminds us that humanity has made great progress toward freedom, that each battle for freedom can be long and seemingly futile, but that the goal is worth time and money and effort.

I was once challenged by a Chicago School economist, who thinks everything can be measured, to name the most important libertarian accomplishment in history. I said it was the abolition of slavery. OK, name another, he replied. “The bringing of power under the rule of law,” I suggested. He wanted to know how you would measure that. But even without a caliper we can see the importance of that accomplishment. We can also see that neither of these is yet a final victory.

May Amazing Grace inspire us to continue working, as long as it takes, to liberate men and women from the arbitrary rule of others and to constrain power with the chains of law.

Cross-posted from Comment is free.

If You’re in New York and Can Spare a Little Time, You Could Spare a Life

Former Cato Institute interns and New York residents Constantino Diaz-Duran and Chris Kilmer are organizing an effort on behalf of an Egyptian student they’ve never met who faces a terrible penalty for writing his opinions on his personal blog. The event will take place Wednesday, January 31 starting at 3:30 pm at the Egyptian Consulate in New York at 1110 2nd Avenue, between E. 58th and E. 59th.

Kareem is scheduled to be sentenced on Thursday.  A respectful message to the Egyptian government – whether in front of the Consulate or by email, fax, or phone – encouraging them to do the right thing and let him go could save a young man’s life.

Please Help This Young Man

This case is extremely important.  The fates of a young man and of freedom of speech are at stake.  Abdelkareem Nabil Soliman will be sentenced on Thursday for alleged crimes in Egypt, including insulting the president.  Please read about his case at http://www.freekareem.org/.

Please send a respectful letter by fax or email to the Egyptian Embassy requesting that the Egyptian government correct the error of arresting him and allow him his freedom.

Criminal Justice in Georgia

Here’s the problem with consensual crimes, plea bargaining, and mandatory minimum sentencing …

This guy shouldn’t be in jail at all, but he’s in a Georgia prison serving a ten year sentence.  The case of Genarlow Wilson is also a dramatic illustration of the bizarre mentality of too many prosecutors.  Which is not to say that the legislators are very far behind them.

More here and here.  

Boston Tea Party? REAL ID Party!

Our nation has many gentle rivalries. As a northern California native, I have always known that I’m slightly superior to our friends in So Cal. (LA-LA land’s ignorance of our disdain validates it wonderfully, by the way.)

Maine people have a similar feeling toward their neighbors in Massachusetts (even while they root for Boston’s professional sports teams). This is among the things I enjoyed discovering this week as I traveled to the far northeast for some lively discussion of the REAL ID Act.

On a panel I was privileged to join at a community center in Augusta Wednesday night, George Smith, executive director of the Maine Sportsmen’s Alliance, stood to share his opinion of our national ID law and what Maine should do about it. A Norman Rockwell painting come to life, he spoke with all the directness (and accent) of a lifelong Mainer. Summarizing, his message was this: They had their Boston Tea Party. Let’s have a REAL ID Party!

All the spirit and independence that makes me so proud of Americans — without sparing that family rivalry for even a minute!

The result of George’s work — along with the Maine Civil Liberties Union and a bipartisan consensus of the state’s political leaders — was near unanimous passage of a state resolution refusing to implement REAL ID. Maine is now the first state to reject the REAL ID Act, and the tide against the bill is beginning to run. 

(For some equally stirring rhetoric in defense of liberty and against a national ID, here’s New Hampshire Representative Neal Kurk (R-Weare) on the REAL ID Act last year. New Hampshire is one of many states likely to join Maine in rejecting a national ID.)

I have tried to supply the intellectual arguments for rejecting a national ID in my book, Identity Crisis: How Identification is Overused and Misunderstood. I was pleased to offer Smith and a number of Maine’s political leaders copies of the book.