Mugabe Eats Cake, Zimbabweans Eat…

My Cato colleague Marian Tupy is currently traveling in Africa and unable to blog, so I thought I’d post this snippet from from a New York Times story that would be dear to Marian’s heart:

JOHANNESBURG, Feb. 21 — President Robert G. Mugabe of Zimbabwe turned 83 on Wednesday to the strains of the song “God Bless President Mugabe” on state-controlled radio, along with an interview on state television, a 16-page paean to his rule in Harare’s daily newspaper and the prospect of a grand birthday party — costly enough to feed thousands of people for months, his critics argued — on Saturday.

Zimbabwe’s economy is so dire that bread vanished from store shelves across the country on Wednesday after bakeries shut down, saying government price controls were requiring them to sell loaves at a loss. The price controls are supposed to shield consumers from the nation’s rampant inflation, which now averages nearly 1,600 percent annually.

Mugabe is a piece of work: Not only has his thugocracy destroyed the civil society necessary for a healthy nation and economy, not only has his monetary policy imploded the Zimbabwean currency, not only will history remember him as (in the words of Nobel laureate Archbishop Desmond Tutu) a “caricature of an African dictator,” but he has the audacity to stage a phony national celebration of his birthday.

Hat tip to the NYT for the great headline, photo, and endquote.

The Man Who Would Not Be King

Today is the 275th anniversary of George Washington’s birth, although the federal government has instructed us to observe Washington’s Birthday (not Presidents’ Day) on a convenient Monday sometime before the actual date. There’s a reason that we should celebrate George Washington rather than a panoply of presidents. As I wrote last year:

George Washington was the man who established the American republic. He led the revolutionary army against the British Empire, he served as the first president, and most importantly he stepped down from power….

[Washington] held “republican” values – that is, he believed in a republic of free citizens, with a government based on consent and established to protect the rights of life, liberty, and property.

From his republican values Washington derived his abhorrence of kingship, even for himself. The writer Garry Wills called him “a virtuoso of resignations.” He gave up power not once but twice – at the end of the revolutionary war, when he resigned his military commission and returned to Mount Vernon, and again at the end of his second term as president, when he refused entreaties to seek a third term. In doing so, he set a standard for American presidents that lasted until the presidency of Franklin D. Roosevelt, whose taste for power was stronger than the 150 years of precedent set by Washington.

Give the last word to Washington’s great adversary, King George III. The king asked his American painter, Benjamin West, what Washington would do after winning independence. West replied, “They say he will return to his farm.”

“If he does that,” the incredulous monarch said, “he will be the greatest man in the world.”

And so he was. For more on Washington, check out Monday’s podcast.

Habeas and GITMO

There was an important habeas ruling from the D.C. Court of Appeals yesterday.  The Bush administration likes to deflect questions about its policies with rhetoric like “terrorists shouldn’t be clogging our courts with complaints about bad food at Guantanamo.”  The legal stakes are actually quite serious and will affect not only aliens imprisoned outside the United States but Americans as well.  As the report notes, the legal action will move up to the Supreme Court eventually. 

For Cato work related to the writ of habeas corpus, go here and here (pdf).

Prior coverage of this matter here and here.

Philip Morris v. Williams and Class Actions

Yesterday, the Supreme Court decided–five to four–to strike down a punitive damage judgment against Philip Morris under the Due Process Clause.  (Cato, for the record, filed this brief in the case, written by deterrence theorists Steven Shavell and A. Mitchell Polinsky). For commentary on the case, see here and here.  You can watch me talk about the case on CNBC here.

For my money, the most interesting, and potentially far-reaching, implication of the decision is for class actions seeking punitive damages.  

On page 5 of the slip opinion, the Court says that “the Due Process Clause” prohibits a State from punishing an individual “without first providing that individual with ‘an opportunity to present every available defense.’”

That quoted language (from a non-punitives decision, Lindsey v. Normet) hasn’t appeared in the Supreme Court’s other punitive damage cases.  Its appearance here is significant, because Lindsey’s broad, bright-line language is often invoked by defendants in very large class actions, even those that don’t involve punitive damages.  Their argument goes like this:  When courts ”certify” (authorize) a very large class action, they violate due process if the very scale of the suit prevents defendants from raising individualized defenses that are otherwise available under the statute.  Expect Williams to be cited extensively by class action defendants, particularly in class actions seeking punitive damages.

It’s fairly easy to see why Williams is such a boost for these defendants by looking at the Ninth Circuit’s recent decision in Dukes v. Wal-Mart–which upholds a trial court order certifying 1.5 million gender discrimination claims, seeking $11.5 billion in punitive damages and lost pay. 

As the trial court acknowledged, individualized hearings on employees’ claims—the usual practice in later stages of Title VII cases—were impractical in a class action of the mammoth scale envisioned.  The trial court therefore allowed liability and remedies to be proven based on statistical evidence and formulas, barring defendants from making individualized showings that particular employees weren’t discriminated against in fact.   

Wal-Mart, in turn, argued its due process rights had been violated, because it had been deprived of defenses to which it was entitled.  ”In an individual case,” said Wal-Mart, it could present individualized evidence “to establish a complete defense to liability or preclude the entry of a backpay or punitive damage award.” The Rules Enabling Act guarantees the availability of that kind of defense in a class action to the same extent it is available in an individual case.  Given the punitive damage request, Wal-Mart argued, due process prohibited the court from depriving Wal-Mart of its entitlement to raise such individualized defenses.

Williams gives Wal-Mart much more ammunition than past punitive cases to argue this point on appeal to the Supreme Court.  To be sure, the Court’s aside that “it may be appropriate to consider the reasonableness of a punitive damages award in light of the potential harm the defendant’s conduct could have caused” (emphasis added) throws a possible lifeline to the Dukes plaintiffs.  That allows them to argue that a “rough” statistical measure of the harm that “could have been caused” to individual class members is all the proof necessary to anchor punitive damages in large antidiscrimination classes.  Indeed, the trial court in Dukes envisions exactly such a probabilistic measure at the remedies stage of the trial:  “[O]nly those class members who can make a showing that they were either actually harmed by the discriminatory policy or were at least ‘a potential victim of the proved discrimination’ are eligible to recover [lost pay and, therefore, punitive damages].”

This expansive reading of “potential harm” is, however, inconsistent with the Supreme Court’s careful caveat in BMW v. Gore.  There, the Court said that “potential harm” that can anchor a punitive damages award is confined to additional harm to persons who have actually been injured – for example, added harm that was “likely to result” if a defendant’s wrongful scheme hadn’t been prematurely interrupted.  That’s quite a bit narrower than the expansive concept of “potential harm” used in Dukes, which embraces guesstimates about whether any injury occurred at all.

As a result, Willliams, read in the context of previous cases, scores trouble for large-scale punitive damage classes.

Fine-Tuning Competition

The Washington Post reports today that the Justice Department has ordered Arcelor Mittal (the world’s biggest steel company) to sell off its Sparrows Point mill in Baltimore “to preserve competition in the eastern U.S. tin mill market.” 

Prior to the Arcelor-Mittal merger last year, three firms supplied most of the tin mill products (steel used for food, paint, and aerosol cans, etc.) consumed in the eastern United States: U.S. Steel, Mittal, and a Canadian subsidiary of Arcelor.  Post-merger, only two firms supply most of the tin to that market and the Justice Department deems that to be a threat to competition. 

Interestingly, just eight months ago, the U.S. International Trade Commission voted to continue antidumping restraints against tin mill products from Japan, citing a domestic industry that was vulnerable to a recurrence of injury from imports in the foreseeable future. 

So, while the Justice Department forces companies to break up to promote competition, the ITC sanctions duties to quell it.  If both agencies took long sabbaticals, I suspect the competition thing would resolve itself.

European Nations Fail to Ease Regulatory Burdens

The European Commission is notorious for cranking out new red tape, so it is somewhat ironic that the bureaucrats have been lecturing member nations to reduce their regulatory burdens. Presumably, the Commission thinks that supra-national regulations are good, whereas national regulations are bad. This does not make much sense, but it is a bit of a moot issue since national governments are refusing to make binding commitments for deregulation. As the EU Observer reports, the economic costs of excessive regulation are substantial:

EU industry ministers have dealt a blow to the European Commission’s “better regulation” agenda by refusing binding targets to cut national bureaucracy which accounts for half of the bloc’s administrative costs. … The commission believes red tape reduction would boost the EU economy with the equivalent of 3.5 percent of GDP and free up an estimated €150 billion for investment. But although there has been a lot of rhetoric in favour of the initiative, it is proving difficult to implement both at EU and national level. … While the UK, the Netherlands, Sweden and Denmark argued in favour of the national red tape cuts, most other delegations were against any fixed goals. Mr Verheugen admitted the commission has no power to force the governments into anything more than they have agreed - given that national legislation and competences are at stake.

War of the Amateur Education Analysts

Here’s Apple’s Steve Jobs on education policy:

“I believe that what is wrong with our schools in this nation is that they have become unionized in the worst possible way,” the Apple CEO told a school-reform conference in Texas on Saturday. “This unionization and lifetime employment of K-12 teachers is off-the-charts crazy.”

But it’s not a news story.  This is from a column by Wired’s Leander Kahney, who goes on to say: 

Jobs knows a lot about schools; he’s been selling computers to them for more than 30 years. But don’t you love it when a billionaire who sends his own kids to private school applies half-baked business platitudes to complex problems like schools? I’m surprised Jobs didn’t suggest we outsource education to the same nonunion Chinese factories that build his iPods.

It’s amazing to see a thoughtful technology writer heap derision on education reform as if the innovation and creativity in the highly competitive technology field somehow can’t happen elsewhere.  Schools have “complex problems” … .  Designing and marketing consumer electronics is pat-a-cake?

Luckily, Tim Lee is on the case.  Writing at Technology Liberation Front, he says:

In his conclusion, Kahney chalks up our poor educational performance to “enormous economic inequality and the total absence of social safety nets.” I wonder if it’s occurred to Kahney that one of the major contributors to economic inequality is our quasi-feudal education system, in which access to a good school is tied to your parents’ ability to purchase a home in a good school district (or to afford tuition at a private school)? The whole point of school choice is to give low-income parents the same opportunities that wealthier parents now enjoy—to send their children to the school that works best for their own child. If Mr. Kahney is concerned about inequality, supporting school choice should be a no-brainer.