Several examples help to illustrate this point, including flag-desecration laws, hate-speech laws in the United Kingdom and Canada, U.S. college and university speech codes, the Cairo Declaration on Human Rights in Islam, and the Megan Meier Cyberbullying Prevention Act, currently before the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security. Although seemingly unrelated, these measures rely on a common assumption, namely that governments should provide emotional well-being to their citizens, even at the expense of free expression. This assumption discounts the emotional well-being of other citizens, neglects countervailing social considerations, and hands arbitrary power to governments.

The result is not more happiness, but a race to the bottom, in which aggrieved groups compete endlessly with one another for a slice of government power. Philosopher Robert Nozick once observed that utilitarianism is hard-pressed to banish what he termed utility monsters—that is, individuals who take inordinate satisfaction from acts that displease others. Arguing about who hurt whose feelings worse, and about who needs more soothing than whom, seems designed to discover—or create—utility monsters. We must not allow this to happen.

Instead, liberal governments have traditionally relied on a particular bargain, in which freedom of expression is maintained for all, and in which emotional satisfaction is a private pursuit, not a public guarantee. This bargain can extend equally to all people, and it forms the basis for an enduring and diverse society, one in which differences may be aired without fear of reprisal. Although world cultures increasingly mix with one another, and although our powers of expression are greater than ever before, these are not sound reasons to abandon the liberal bargain. Restrictions on free expression do not make societies happier or more tolerant, but instead make them more fractious and censorious.

A new Congressional Budget Office report estimates that a set of tort reform measures — including caps on awards for non-economic and punitive damages — would have lowered total national health care spending in 2009 by $11 billion, largely by reducing so-called defensive medicine. Damage caps, though, would result in patients losing the benefit of the market oversight and penalties associated with malpractice underwriting. Capping liability could have the unintended consequence of reducing private market efforts to investigate the risk characteristics of the individuals they insure and of hurting patients.

A careful reading of the report shows that a significant portion of the problem can be attributed to fee-for-service physician reimbursement, a system that fails to discourage spending on services that have "marginal or no benefit to patients." The findings suggest an alternative to caps on damages: moving Medicare recipients into managed-care arrangements where defensive medicine is controlled. The advantage of using managed-care arrangements over caps is that this would allow medical professional liability insurance underwriters to continue to provide both oversight and penalties for negligence and substandard care.

The medical malpractice industry provides valuable private market oversight of physicians. Underwriters review each physician annually, examining a clinician's claims history in detail and investigating myriad possible practice-related issues. Premium surcharges penalize physicians with a history of negligence or substandard care; claims-free physicians are rewarded with premium credits. In some cases, as in anesthesiology, some insurance policies dictate very specific evidence-based standards of care that must be used for coverage to apply. These financial arrangements create incentives among all physicians for risk management.

Physicians rejected by state-regulated "admitted" companies for substandard care are forced into the surplus lines market. There, they bear additional costs, including carrying a deductible and a much higher annual premium — generally between one-and-a-half to five times higher.

Once in the surplus lines market, the high cost provides a strong incentive to physicians to take steps to reduce their perceived risk so that they can return to the admitted market. Often specific remedial actions are required, particularly of those physicians with substance abuse problems. Some surplus lines companies offer risk management services on a case-by-case basis.

Some physicians are in the surplus lines market because they perform fairly unique or risky procedures that companies in the admitted market do not have the expertise to underwrite. The surplus lines industry plays a role when doctors are just getting experience with a new procedure, as with the introduction of laparoscopic gallbladder surgery (cholecystectomy) and bariatric procedures (including gastric bypass and lap band). Underwriters keep an eye on claims and verify a physician's training to be sure it is adequate, managing the risk associated with the introduction of new medical procedures.

Decisions about the tasks physicians take on are best made with information about the magnitude of the underlying risk to patients. In the surplus lines market, malpractice insurance underwriters convey this information to physicians through their brokers in the form of pricing options for insurance. One option may include surgical coverage while another option, with a lower premium, would not cover surgery. This creates the appropriate incentive for physicians to consider the risk associated with their practice patterns.

All of this protects consumers. The potential for surcharges or cancellation of policies offered by admitted carriers and the higher cost of obtaining insurance in the surplus lines market create an incentive for physicians to practice care that meets medical community standards.

Rarely, in the very worst cases, physicians will be denied coverage in the surplus lines market. It may be because the physician is such a danger to the public that there is no viable restriction that would permit the physician to continue in practice. Even when a state medical board fails to sanction a physician who should not be practicing medicine, denial of malpractice insurance precludes affiliations with most hospitals and other provider organizations, protecting consumers served by those providers. In the seven states where medical malpractice is mandated for practice, all consumers benefit from these protections.

Medical professional liability insurance companies use experts to assess the validity of claims against a physician. This not only works to preserve the reputation of a falsely accused physician, but pushes the entire tort system toward more accurate penalties. More accurate penalties for negligence and substandard care create incentives better aligned with society's objective of quality care.

The oversight, risk management, serious financial penalties for negligent and substandard care, efforts to assess the validity of claims, and policy exclusions on practice associated with medical malpractice underwriting and insurance improve safety in the provision of medical care. By setting up appropriate incentives, medical professional liability insurance can be viewed as contributing to consumer protection in the market for physician services. Putting caps on damages would inhibit these efforts and hurt consumers.

Recently, Sen. Thomas Carper, D-DE, and Rep. John Conyers, D-MI, scoffed at the idea that they should read the health care legislation working its way through Congress (hey, it's only a matter of life and death). That attitude has inspired the "Read to Vote" campaign — designed to get congressmen to pledge to "read every word of every bill before casting my vote."

Read to Vote's efforts earned them a condescending Washington Post editorial last month, complaining that their proposal "would bring government to a standstill." (Heaven forbid.) "To read all 1,427 pages of Waxman-Markey," the Post fretted, "it would take at least 12 hours — tough on a tight legislative timeline."

Is reading the cap and trade bill tough? Tough. If you're planning to regulate every industrial process in America, you may have to do some heavy slogging.

True enough, the bills Congress passes have become increasingly impenetrable over the years. In Abraham Lincoln's first State of the Union, he worried about the growing complexity of federal law, but noted that, with a modest effort at revision, "all the acts of Congress now in force [could fit in] one or two volumes of ordinary and convenient size." Today, the Senate Finance Committee's 1,502-page health-care bill would take up more than that much space by itself.

Worse still, most of the actual "law" in this country — the rules that citizens have to follow, at pain of fine or imprisonment — is generated by unelected administrative agencies, which use broad authority delegated by Congress to add over 75,000 new pages to the Federal Register every year.

It's said that the Roman emperor Caligula posted new laws high on the columns of buildings so citizens couldn't read them and figure out how to avoid their penalties. He could have achieved the same effect by covering the country with such a dense thicket of rules that no one could tell what the law commands.

Legend has it that Caligula also made his favorite horse a senator. Considering how lightly most of our legislators take their constitutional obligations, you could probably do worse.

In February 2003, the New York Times reported that both parties had hired lawyers to run seminars for congressmen, explaining the requirements of the McCain-Feingold campaign finance law they had just passed. "I didn't realize what all was in it," said Rep. Robert Matsui (D.-CA); "A real education process," echoed Rep. Thomas M. Reynolds (R.-NY).

If congressmen can't be bothered to read a law that directly affects them, should we be surprised that they're not planning to read the health care bill, which won't?

But, even assuming we could force legislators to read the bills, would that lead to better government? Maybe not. Carper had a point when he said that modern legislative language "is so arcane, so confusing…[that] it really doesn't make much sense."

If congressmen had to read what they passed, they might draft shorter, more comprehensible bills. But one way to do that is by punting yet more lawmaking authority to the permanent bureaucracy, which can then issue its own mammoth set of unintelligible rules. That hardly solves the problem.

A better idea can be found in a resolution recently introduced by Sen. Jim Bunning, R-KY, requiring all new legislation to be posted online for 72 hours before consideration. That could put the distributed intelligence of the web to work, ferreting out the many devils in the details of proposed laws.

However, that's still just treating symptoms. Federal law has become incomprehensible because Congress has inserted itself into every area of American life. As James Madison explained, though, Congress's constitutional powers are "few and defined…. [to be] exercised principally on external objects," like foreign policy and international trade.

Read the bills? It's more important for congressmen to read the Constitution. They'll be pleased to learn that it's short and written in plain English.

Who exposed this latest bit of corruption at ACORN? -- The FBI? The local police? A congressional investigating committee? The mainstream media? No, no, no, no. It was a 20-year-old-girl named Hannah Giles and a 25-year-old law student and investigative journalist named James O'Keefe.

I first met Ms. Giles almost a year ago in her home town of Miami. Through mutual friends, she contacted me to see if I could help her get an internship with a policy group in Washington. She ultimately interned this summer at the National Journalism Center and the Center for Freedom and Prosperity. Having heard about the various charges of voter and housing fraud that ACORN had been previously charged with, she decided to learn more.

ACORN claims it provides assistance to people who are trying to obtain housing and set up businesses in low-income areas. Given ACORN's sleazy record, Ms. Giles began to wonder if ACORN would also give help to those who were trying to start illegal businesses.

She contacted James O'Keefe, whom she had never met. Mr. O'Keefe, despite his youth, had already established a reputation as a highly competent and enterprising investigative journalist. Mr. O'Keefe, like President Obama, had studied Saul Alinsky's "Rules for Radicals," but his goal was to turn the tables and use the "rules" against the radical left.

Ms. Giles suggested to Mr. O'Keefe that she pretend to be a prostitute and that he play the part of her pimp to see if ACORN would help them set up a house of prostitution. Mr. O'Keefe liked the idea and agreed to work with Ms. Giles.

Using a hidden mike and camera, they first went to the ACORN office in Baltimore, and were quite stunned that the ACORN officials offered to help them -- even though they made it very clear that they wanted to set up an illegal house of prostitution and bring in underage girls from Central America to work in the house. (The video tapes of their meetings in ACORN offices can be found on www.biggovernment.com.)

Emboldened by their first success and wanting to make sure the Baltimore ACORN office was not a fluke, they then went to ACORN's office here in the District, then to Brooklyn, San Bernadino, Ca., and other cities around the country. They were given detailed legal instructions on how to avoid problems with the police and tax authorities while running an illegal operation in each location, and even made other offers of help. They funded all of their travel and other expenses out of their own pockets without any organizational support.

Lawyers, who have reviewed the tapes, believe the ACORN officials may have violated dozens of laws and regulations, and perhaps even the Racketeer Influenced and Corrupt Organizations (RICO) statutes against racketeering and organized crime. After Glenn Beck and Fox News showed the Baltimore tape last Thursday, ACORN officials, clearly not knowing the extent of the O'Keefe-Giles investigation, claimed that the Baltimore officials were rogue employees and fired them.

The next day, when the D.C. tapes were released, ACORN fired two more employees, and the Census Bureau said it would no longer contract with ACORN. Mr. O'Keefe has been working with the noted journalist Andrew Breitbart to expose what he and Ms. Giles uncovered. Mr. Beck, Sean Hannity, and others at Fox News and elsewhere have taken up the story and have had Mr. O'Keefe and Ms. Giles on their shows.

ACORN officials have already made false charges against Ms. Giles and Mr. O'Keefe, and the media organizations that have been exposing ACORN's activities. The Senate voted 83 to 7 on Monday to partially defund ACORN. As more tapes from more locations are released and ACORN's claims of not being thoroughly corrupt are shattered, it will be interesting to see the reaction of those in Congress, the administration and the media who have continued to be supportive of ACORN despite all of its past corruption.

Will they protect the taxpayers or the criminals?

Ms. Giles and Mr. O'Keefe are true American patriots -- they did not wait around for the authorities or Congress to do something. They spotted a problem and they took action on their own at considerable personal expense and risk (though they are now being protected) to expose wrongdoing. The American Founding Fathers would be proud of Ms. Giles and Mr. O'Keefe because they understood that more often than not, government is the problem not the solution -- and the Founders knew that the American Experiment would fail if citizens did not repetitively act to protect both their liberties and pocketbooks.

We can hope that Ms. Giles and Mr. O'Keefe will serve as role models for millions of other young Americans who see that the present generation in Washington is stealing their financial future and liberty. All too many in the mainstream media have climbed in bed with government rather than doing their duty to expose governmental wrongdoing. By using the new technologies, smart amateurs with courage and good judgment are becoming effective investigative journalists.

But now the auto industry is worried about the inevitable post-subsidy drop in sales. Jeremy Anwyl, CEO of the automotive research group Edmunds.com, observes: "Nice party, but the hangover is awful."

There's also an impending downturn in the auto repair industry. There will be fewer used cars to sell and service because the clunkers program required the traded-in vehicles to be crushed. And if you rushed to buy a new car, there's a good chance you and others had to put off some other purchases.

The green eyeshade folks say the government shouldn't waste money like this in the future. But in the new ultra-Keynesian, post-budget deficit age, we need to think outside of the box. We need to expand the ambit of cash-for-clunkers.

Let's start big. The housing market remains in the doldrums. So why not a housing "cash-for-hovels" program? Trade in your old, environmentally poor house for a new, energy-efficient home and get a voucher for the value of your current property, plus $50,000. The developer would be responsible for putting the wrecking ball to your old residence; the government would keep the land for subsequent resale.

With the rise of the Kindle, online books are a reality. So we need a bucks-for-books program for dusty old books, which have occasioned the death of so many trees. Buy a Kindle and get a $20 check for every book you turn in while purchasing the new online version. Amazon.com would be responsible for creating central collection points, where books would be dumped after being torn in half to render them unusable.

The program also could be adapted for the antique and collectibles markets. A great deal of money, time, and resources are wasted as people shop in person and troll online for goods produced long ago — meaning no jobs are created today.

Turn in your antique painting, chess set, silver service, china cabinet, stein, armoire, jewelry, and more, and the government could pay you the value of your item plus provide a voucher for 10 percent of the purchase price of a modern replacement.

Uncle Sam would take title of the goods, for possible display at the Smithsonian. Constructing several new buildings to house the government's new acquisitions would generate additional jobs.

Let's not leave out airplanes. With the downturn in air travel, there is a surplus of older, less fuel-efficient aircraft. The government should provide a (large) check whenever an airline trades in an old aircraft for a new (preferably Boeing) plane. The discards could be used by the Pentagon for target practice. We'd have a stronger national defense as well as less pollution, reduced fuel consumption and more jobs.

Finally, let's eliminate the build-up of fatty, and calorie-filled snack products in cabinets and refrigerators across America in a cash-for-calories plan. Bring in your potato chips or candy and get a check for their value, plus a coupon for use towards the purchase of apples, carrots or Brussels sprouts. Surrendered foods would be used by the surgeon general in an educational campaign against obesity.

And why stop with economics? Let's apply the concept to Capitol Hill. Toss out your clunker of a congressional representative and then — and only then — get some federal pork for your district. Talk about a clunkers program that would benefit America.

The reverberating town-hall meetings are a legacy of the 1765 meeting in Boston where Samuel Adams and the Sons of Liberty organized against King George III and, not having access to the Internet, later started the Committees of Correspondence that alerted all the colonists to insistent royal threats to their personal liberties. During a secret meeting in Virginia, Jefferson helped organize such a committee in his state.

Here and now, as the president decrees that health-care costs must be cut severely, Medicare officials — before there is a final bill from Congress — have been planning to slash payments to many specialists.

"Cardiologists would be especially hard hit," reported The New York Times on Aug. 21, "with cuts of more than 20 percent in payments for electrocardiograms and 12 percent for heart stent procedures."

Said Dr. John C. Lewin, chief executive of the American College of Cardiology: "Cuts of this magnitude could cripple cardiology practices and threaten access to services for millions of patients."

It is because of the life-saving work of cardiologists, over the years, that I am alive and able to write this — and applaud the 150 cardiologists and more than 1,500 patients who organized a health-care rally in downtown Orlando, Fla., on Aug. 21 to protest these Medicare cuts scheduled to take effect Jan. 1. The cuts involve (NYT, Aug. 21) "a variety of standard heart procedures, in some cases by more than one-third" in addition to the two I cited.

Three days before, at a town-hall meeting organized by the wives of two Louisville physicians to directly protest the portents of Obamacare, the invited keynote speaker, Wesley Smith, an internationally known advocate for human rights in health care, expected to talk to maybe 100 people. At least 1,000 Kentucky citizens were there for an event conceived only two weeks before.

According to Senate Majority Leader Harry Reid, those citizens must have been among the "evil-mongers" drowning out national debate with "lies, innuendo and rumor." But Smith tells me that no organization put together the Louisville protest. "People showed up because they are very engaged as citizens about one of the most important domestic policy initiatives in recent times."

To many of us, including doctors, it is the most important issue. Marc K. Siegel, a practicing internist and an associate professor of Medicine at New York's BYU Langone Medical Center — with which my doctors are associated — writes:

"For generations, we doctors have promised our patients that medical advances will allow us all to live longer, more comfortable lives. Now that these results are finally arriving, 'health-care reform' — or 'insurance reform' (as our would-be health czar now calls it) — could snatch the rug out from under us."

If the president succeeds in having Congress enact into law a national federal council to decide the most cost-effective medical care, those national standards will necessarily override which specific care can be most effective for each individual patient. Is expressing that concern, even loudly — about being lost in the abstract whole — what House Speaker Nancy Pelosi calls "un-American" as she scorns these citizen eruptions by latter-day sons and daughters of liberty?

Obviously, there is great need to make health care more equitable, but what Obama's Democratic loyalists are leading us toward has been clearly and ominously described by Michael Gerson ("When Planners Decide Life," Washington Post, Aug. 21).

To counter inefficient, costly medical decisions, Gerson writes, by imposing a national structure "gives government extraordinary power. And the approach taken by planners is, by necessity, utilitarian — considering the greatest good for the greatest number. (Such) decisions cannot be made on a human scale."

We are all individuals!

Siegel adds on a very human level: "Anyone who's been saved from cancer by the latest targeted chemotherapy treatment, had a lung or breast cancer diagnosed early by a CT scan or MRI or returned from the brink of a heart-related death thanks to the newest drug-treated stent understands that some expensive care is well worth the price."

Throughout our history, we've been tested by Jefferson's question: "Who will govern the governors?"

Many on the political left, and even some in the mainstream media, complained about the peaceful protests of hundreds of thousands of Americans who held "tea parties" on tax day. Yet they lightly dismiss truly destructive actions by leftist advocacy groups, many of whom take Saul Alinsky's book, Rules for Radicals, as their bible. Mr. Alinsky wrote, "In war [i.e., war for an ideal or goal], the end justifies the means"; thus almost any action is acceptable for one's cause.

The Capital Research Center (CRC) has just released a well-documented report on the activities of the little-known Neighborhood Assistance Corp. of America (NACA). It specializes in intimidating banks and their executives, even including spouses and children, as part of its political shakedown operations. Its founder, Bruce Marks, even refers to himself as "a banking terrorist."

You may have wondered why so many bankers made loans and mortgages to people who clearly were unqualified. NACA has engaged in aggressive street protests and demonstrations, including spreading information about the personal lives of bank executives and their families, with the goal to pressure banks to lend more in poor neighborhoods.

One may agree or disagree with NACA's goals, but if its tactics had been used by free-market, limited-government organizations, one can imagine the outrage from the left and mainstream media. It is now clear that because NACA has had a number of successes in getting banks to lend to the unqualified, its activities have contributed to the financial crisis, yet it is not being held accountable.

According to CRC, "NACA typically extracts self-serving concessions from banks, forcing them to provide it with funds that it then uses to make mortgage loans to low-income borrowers. NACA rolls the fees it earns servicing these loans back into its campaign of bullying banks."

The Association of Community Organizations for Reform Now (ACORN) is the most notorious of the radical, left-wing activists' groups. It has been charged with numerous voter fraud schemes (in 12 states), extensive tax evasion and racketeering, among other crimes. The Wall Street Journal reported that ACORN, while claiming to give voice to minorities and the poor, is really "a union-backed, multimillion-dollar outfit that uses intimidation and other tactics" to advance a "highly partisan agenda."

CRC reports that "ACORN even indoctrinates students in the taxpayer-supported schools. In New York City, it runs the ACORN High School for Social Justice. ... ACORN schools have transported students to the nation's capital to protest tax cuts." ACORN has a record of forcibly breaking up meetings, including even those of congressional committees. Its activists have harassed motorists and posted "Wanted" signs for corporate executives and yelled obscenities at their families. (Detailed documentation of the activities of NACA and ACORN may be found on the CRC Web site, www.capitalresearch.org.)

ACORN affiliates have received taxpayer-funded grants, which they have ultimately used to hire professional protesters to demand more government spending. In contrast, the left and its media allies had a hard time understanding and tried to avoid reporting how those who showed up for the tea parties were not professional, paid protesters but were Americans who were just fed up with Washington, including its double standards.

How would MSNBC and the New York Times react if free-market groups started hanging "Wanted" posters for Internal Revenue Service officials and employees who clearly serve as instruments for job destroying policies? Inflation is a tax that hits the poor particularly hard and is caused by the Federal Reserve creating too much money and credit. What would happen if monetary-reform groups adopted Alinsky tactics and started picketing the homes of Federal Reserve members and harassing their spouses and children?

Many regulations issued by government regulators do not meet basic cost-benefit tests, thus costing Americans jobs and lowering real incomes. If limited-government groups began sit-ins in these regulatory agencies, many in the media would pillory them as destructive and irresponsible, unlike the adulation they give many sit-in protesters who demand more government regulation.

The right of peaceful protest is guaranteed by the U.S. Constitution. Yet, unfortunately, too many in the media have a double standard, disparaging those whose peaceful protests are in favor of limiting government, while often praising those who engage in property destruction, the politics of personal destruction, harassment and even violence, while demanding more from taxpayers and special rights for favored groups. Such hypocrisy undermines both economic freedom and civil society.

Yet Secretary of State Hillary Rodham Clinton wants Congress to ratify the Law of the Sea Treaty, the ultimate in paper guarantees. LOST, which essentially creates a second United Nations, is an artifact of the collectivist New International Economic Order popular in the 1970s, but it is being resold as a guarantor of freedom of the seas.

The convention obviously doesn't do anything to prevent piracy. Moreover, the recent contretemps between the U.S. and Chinese navies demonstrates that LOST's navigational guarantees are no more certain.

The USNS Impeccable, an unarmed spy ship, was operating 75 miles from China's Hainan Island. Chinese vessels harassed the U.S. vessel and ordered it to leave, causing the U.S. Navy to send in a supporting destroyer.

Territorial waters extend just 12 nautical miles, but LOST empowers nations to exercise control over resources in the 200-mile Exclusive Economic Zone. Washington contends that U.S. ships are allowed to conduct activities "in waters beyond the territorial sea of another state without prior notification or consent," according to Defense Department spokesman Stewart Upton. Beijing disagrees.

Washington would seem to have the better argument, though China's contention that peaceful uses of the ocean do not include spying is plausible. Alas, LOST fails to offer the clear, unambiguous protection of navigational freedom as claimed by its proponents.

LOST largely codifies customary international law, which favors free transit. However, the treaty only offers a paper guarantee. Even if LOST recognizes the Impeccable's right to spy, it offers no practical protection of that right.

If China - or Brazil, Malaysia or Pakistan, which also purport to forbid intelligence gathering within their exclusive zones - believes it to be in its interest and ability to prevent foreign passage, it won't spend a lot of time parsing ambiguous LOST provisions before acting. Geopolitical interest and military capability, not juridical technicalities, will triumph.

The problem is likely to grow as Beijing develops a blue-water navy. Last month, Director of National Intelligence Dennis C. Blair told the Senate Armed Services Committee: "In the past several years, they have become more aggressive in asserting claims for the [exclusive zones] which are excessive under almost any international code." Despite China's adherence to LOST.

Although the treaty's navigational benefits are more theoretical than real, LOST has significant downsides. Most important, the so-called Part XI governing seabed mining was amended in 1994, but the result is only less bad.

LOST was crafted to redistribute wealth from First World democracies to Third World autocracies. The International Seabed Authority would regulate private ocean development, mine the seabed itself through an entity called the Enterprise, and pay off favored nations and groups. Those objectives remain unchanged.

Moreover, treaty proponents talk excitedly about new litigation opportunities created by LOST. Professor William C.G. Burns of the Monterey Institute of International Studies wrote that the convention "may prove to be one of the primary battlegrounds for climate change issues in the future." He dismissed the argument that the document does not authorize such litigation: "While very few of the drafters of [the United Nations Convention on the Law of the Sea] may have contemplated that it would one day become a mechanism to confront climate change, it clearly may play this role in the future."

Environmental activists also look forward to using LOST Article 207, which directs countries to "adopt laws and regulations to prevent, reduce and control pollution of the marine environment from land-based sources." Treaty advocates publicly claim the provision is merely hortatory.

Yet the mandate already has sparked litigation between Ireland and Britain. Moreover, Citizens for Global Solutions and the World Wildlife Federation argue that the convention will stop Russia from polluting the Arctic. They have yet to explain how LOST would bind Russia but not America.

No wonder Bernard H. Oxman of the University of Miami warned LOST backers to shut up about their plans. He explained: "Experienced international lawyers know where many of the sensitive nerve endings of governments are. Where possible, they should try to avoid irritating them."

Finally, the United Nations proclaims that LOST is not "a static instrument, but rather a dynamic and evolving body of law that must be vigorously safeguarded and its implementation aggressively advanced." If you like activist judges at the national level, imagine what you will get at the international level.

Before the Senate approves the Law of the Sea Treaty, members should consider the tradeoff they would be making. The convention offers paper benefits but imposes real costs. It's a deal only a pirate could love.

Government helps make markets work, and work better. Effective mundane markets exist within the institutions of property, contract, and law — institutions well-ordered governments support. Prudent regulation helps contain the harmful spillovers of productive activity. But there is little danger the waffle market will go haywire in the absence of intense scrutiny by government authorities. The lightly regulated markets of mundane capitalism deserve our continued trust because their quiet efficiency so rarely betrays it.

Political markets — less enabled by government than made by it — operate according to fundamentally different, and less trustworthy, principles. Propped-up by subsidy, structured by central diktat and created ex nihilo by edict, political markets may arise from noble aspirations but in the end are instruments always of the privileged and powerful.

Take contemporary financial markets. (Please!) These are not so much regulated by government oversight as they are constituted by the convoluted web of regulation that dictates who may sell what to whom and on what terms. The shape of our financial markets has emerged from the gradual accretion and rare subtraction of political intervention. But it is now brutally clear that financial markets are not stable simply because they are framed by law and watched by bureaucrats. It is not so hard to see why.

In political markets, the battle for competitive advantage is in part a battle over the rules of the game. That, in turn, is a battle for the hearts of minds of regulators, who generally know less, and are far less motivated, than the industry insiders they regulate. It is no surprise when regulators come to confuse the interests of the powerful (for whom they might someday wish to work, after all) with the interests of the public. As we have recently witnessed, the heavily regulated nature of our financial markets did not keep them from going haywire and taking the entire economy down with them. Appointing a better breed of bureaucrat fixes nothing. Even now, in the morning of the Obama era, Washington remains convinced that the country is best served by "rescuing" its self-immolating Wall Street wards.

It is the failure of this capitalism that accounts for the suffering of millions and explains our bitter decline. Yet President Obama asks for more. The controversial cap and trade scheme for limiting CO2 emissions is perhaps the most striking example. A cap and trade system would introduce a new market fabricated by government to regulate the entire economy of mundane markets. Cap and trade is based on the political invention of scarcity. But the problem of determining the ideal supply of emission permits is much like the Federal Reserve's problem of determining the ideal quantity of government money. In both cases, bureaucrats must appeal to dubious mathematical models and pronounce on questions that remain the subject of raging scientific controversy. When the Fed produced the wrong answers, it helped inflate the housing bubble, which led to the ruin of our economy. Do we trust the government climate bureaucrats to do better?

Each element of a political market invites political wrangling. Obama's budget assumes the government will rake in over $600 billion from auctioning the initial round of emissions permits. But carbon-heavy businesses, already suffering from the recession, are lobbying hard to be given permits for free. Industries that fear they will be hurt by the increased cost of emissions will push for an oversupply of permits, to keep permit prices low. Companies that reckon a high emissions cost will give them an advantage over their competitors will favor a low cap that keeps permit prices high. But the higher the price, the more those harmed by them will clamor for exemptions and rebates, and many will get them. The reality of cap and trade will be a typical political market: an expensive ramshackle compromise of competing forces.

But this can look pretty good if you think your team can win the political game. Jeff Immelt, the CEO of GE, is certainly excited about the opportunities Obama's innovations in political capitalism offer his well-positioned corporate behemoth, which wields considerable influence in Washington. "The interaction between government and business will change forever," Immelt recently wrote in a letter to shareholders. "In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner." And GE, Immelt is sure, will profit nicely.

That's political capitalism, that's corporatism, in a nutshell. And that's the kind of disreputable market system that got us into this mess.

Naomi Klein made waves two years ago with her book The Shock Doctrine, in which she claimed that conservative governments use crises to ram through free-market policies. As she put it in an interview: "The Shock Doctrine is a political strategy that the Republican right has been perfecting over the past 35 years to use for various different kinds of shocks. They could be wars, natural disasters, economic crises, anything that sends a society into a state of shock to push through what economists call 'economic shock therapy' – rapid-fire, pro-corporate policies that they couldn't get through if people weren't in a state of fear and panic."

And that's just what we're seeing today – only in reverse.

Last year the US economy was hit with one shock after another: the Bear Stearns bail-out, the Indymac collapse, the implosion of Fannie Mae and Freddie Mac, the AIG nationalisation, the biggest stock market drop ever, the $700bn Wall Street bail-out and more – all accompanied by a steady drumbeat of apocalyptic language from political leaders.

And what happened? Did the Republican administration summon up the spirit of Milton Friedman and cut government spending? Did it deregulate and privatise?

No.

It did what governments actually do in a crisis – it seized new powers over the economy. It dramatically expanded the regulatory powers of the Federal Reserve and injected a trillion dollars of inflationary credit into the banking system. It partially nationalised the biggest banks. It appropriated $700bn with which to intervene in the economy. It made General Motors and Chrysler wards of the federal government. It wrote a bail-out bill giving the secretary of the treasury extraordinary powers that could not be reviewed by courts or other government agencies.

Now the Obama administration is continuing this drive toward centralisation and government domination of the economy. And its key players are explicitly referring to heir own version of the shock doctrine. Rahm Emanuel, the White House chief of staff, said the economic crisis facing the country is "an opportunity for us". After all, he said: "You never want a serious crisis to go to waste. And this crisis provides the opportunity for us to do things that you could not do before" such as taking control of the financial, energy, information and healthcare industries.

That's just the sort of thing Naomi Klein would have us believe that free-marketers like Milton Friedman think. "Some people stockpile canned goods and water in preparation for major disasters," Klein wrote. "Friedmanites stockpile free-market ideas." But that is exactly what American left-liberals have been doing in anticipation of a Democratic administration coming to power at a time when the public might be frightened into accepting more government than it normally would. For instance, the Centre for American Progress, run by John Podesta, who was President Bill Clinton's chief of staff and President-elect Obama's transition director, has just released Change for America: A Progressive Blueprint for the 44th President.

Paul Krugman, the Bush-bashing New York Times columnist, endorsed Emanuel's enthusiasm: "Progressives hope that the Obama administration, like the New Deal, will respond to the current economic and financial crisis by creating institutions, especially a universal healthcare system, that will change the shape of American society for generations to come."

Arianna Huffington had called Klein's book "prophetic". As the Obama team began drawing up plans, she proved just how right she was, declaring: "A crisis is a terrible thing to waste. And it might be this particular crisis that will make it possible for the Obama administration to do some really innovative, bold things on healthcare, on energy independence, on all the areas that have been neglected."

None of this should surprise us. It's crazy to think that most governments will respond to a crisis by reducing their own powers and deregulating the economy, as Klein would have us believe. Political leaders naturally respond to crisis by riding in as the man on the white horse and taking control.

As Rick Perlstein, liberal historian, wrote: "The Oval Office's most effective inhabitants have always understood [that a crisis is the best opportunity to make radical change]. Franklin D Roosevelt hurled down executive orders and legislative proposals like thunderbolts during his first hundred days, hardly slowing down for another four years before his window slammed shut; Lyndon Johnson, aided by John F Kennedy's martyrdom and the landslide of 1964, legislated at such a breakneck pace his aides were in awe. Both presidents understood that there are too many choke points – our minority-enabling constitutional system, our national tendency toward individualism and our concentration of vested interests – to make change possible any other way."

Robert Higgs, the libertarian historian, is less enthusiastic. In Crisis and Leviathan, he demonstrated that government growth in the US has not been slow and steady, year in and year out. Rather, its scope and power tend to shoot up during wars and economic crises.

Occasionally, around the world, there have been instances where a crisis led to free-market reforms, such as the economic reforms in Britain and New Zealand in response to deteriorating economic conditions. Generally, though, governments seek to expand their power, and they take advantage of crises to do so. But they rarely spell their intentions out as clearly as Rahm Emanuel did.

What accounts for the rise in income inequality since the 1970s? According to most economists, the answer lies in structural changes in the economy — in particular, technological changes that have raised the demand for highly skilled workers and thereby boosted their pay. Opposing this prevailing view, however, is Princeton economist and New York Times columnist Paul Krugman, winner of the 2008 Nobel Prize in economics. According to Krugman and a group of like-minded scholars, structural explanations of inequality are inadequate. They argue instead that changes in economic policies and social norms have played a major role in the widening of the income distribution.

Krugman and company have a point. For the quarter century or so after World War II, incomes were much more compressed than they are today. Since then, American society has experienced major changes in both political economy and cultural values. And both economic logic and empirical evidence provide reasons for concluding that those changes have helped to restrain low-end income growth while accelerating growth at the top of the income scale.

However, Krugman and his colleagues offer a highly selective and misleading account of the relevant changes. Looking back at the early postwar decades, they cherry-pick the historical record in a way that allows them to portray that time as an enlightened period of well-designed economic policies and healthy social norms. Such a rosy-colored view of the past fails as objective historical analysis. Instead, it amounts to ideologically motivated nostalgia.

Once those bygone policies and norms are seen in their totality, it should be clear that nostalgia for them is misplaced. The political economy of the early postwar decades, while it generated impressive results under the peculiar conditions of the time, is totally unsuited to serve as a model for 21st-century policymakers. And as to the social attitudes and values that undergirded that political economy, it is frankly astonishing that self-described progressives could find them attractive.

In the 2000 case of Rice v. Cayetano, the Supreme Court held that a race-based scheme allowing only statutorily defined "Hawaiians" to vote for OHA's trustees was unconstitutional. Despite Rice, and despite Justice John Marshall Harlan's dissenting statement in Plessy v. Ferguson 112 years ago that "[o]ur Constitution is color-blind, and neither knows nor tolerates classes among citizens," OHA continues to view Hawaiian citizens through racial lenses. This practice has spawned numerous lawsuits, including the present legal crisis in which the state's authority to manage its land for the good of all of its citizens has been replaced with a court-imposed duty to hold the land for the benefit of one racial class.

Specifically, after nearly 15 years of litigation, the Hawaii Supreme Court blocked the sale of 1.2 million acres of land (29 percent of the state's total area) based on a mistaken interpretation of a joint resolution that Congress passed in 1993 to apologize for the 1893 overthrow of the Kingdom of Hawaii. While the Apology Resolution was itself based on a slanted view of history - the propagation of which may yet lead to the creation of race-based state government (see the Akaka Bill, a subject for a different article) - the larger point is that the court rewrote the terms by which Hawaii became the 50th state.

But nothing in the Apology Resolution remotely supports the idea that somehow Congress impaired (retroactively!) the property rights in question; the Resolution does not address either Hawaii's sovereign powers or its title to state lands. Further, the Newlands Resolution of 1898 (the law annexing Hawaii to the United States), as well as the Admission Act of 1959 and subsequent federal legislation, foreclose the premise that "Native Hawaiians" may have valid claims that an injunction against land sales preserve.

That is, the United States obtained full sovereignty over the disputed lands when it annexed Hawaii, and the new state government assumed that sovereignty when Hawaii joined the Union. The Hawaii Supreme Court's decision, committed in the name of federal law, thus violates both state sovereignty and federal law! Moreover, the proposition that OHA gets a veto over the transfer of state lands merely because it purports to represent the interests of those who make race-based claims to those lands is an affront to the Equal Protection Clause of the Fourteenth Amendment.

Some argue that "Native Hawaiians" are a special class who, like Indian tribes, are allowed special treatment based on racial classification. But Hawaiians are not American Indians in the constitutional sense. The term "Indian tribes" has a fixed meaning, limited to "dependent nations" at the time of the Founding. Such tribes must have an independent existence and "community" apart from the rest of American society, and a separate government structure for at least the past century.

Hawaii, by contrast, is the most integrated and blended society in America. Only ten percent of "Native Hawaiians" have at least fifty percent Hawaiian blood - and only two of the nine OHA trustees have Hawaiian surnames. No, Indian law is a unique compromise with pre-constitutional realities - one based on political rather than racial classifications - that is inapplicable to Hawaii.

In short, the Apology Resolution neither amended nor rescinded the federal laws that gave Hawaii full control over the disputed lands. But even if it did, race-based claims to those lands should be dismissed as unconstitutional.

The Supreme Court announced in Rice the unwavering principle that "[t]he Constitution of the United States ... has become the heritage of all the citizens of Hawaii." Let's hope that it builds on that sentiment in Hawaii v. OHA. Hawaii should be allowed to transfer state lands for the benefit of all its citizens - thus eroding racial divisions and treating all Hawaiians with the legal equality to which they are entitled.

The Bush administration has spent close to a trillion dollars to keep the managers of big companies in the driver's seat. Instead of a free-market policy of letting the market determine winners and losers, the administration says Bear Stearns, AIG, Citigroup and other big Wall Street firms are "too big to fail." They can take dramatic risks and the taxpayers will cover them.

For the first time, the government is supporting mortgages and consumer borrowing — up to $800 billion worth. As critics complain that banks have lured consumers into mountains of unaffordable debt, the government is seeking to shore up credit cards, auto loans and other consumer debt.

Timothy Geithner, president of the New York Federal Reserve Bank, has been a key player in these bailouts. He is Obama's choice to be Treasury secretary. Obama himself wants to extend the government's new programs to support specific companies, including the major car manufacturers, bailing them out at a cost that would begin at $25 billion.

In all these cases the government is seeking to support existing businesses. That isn't laissez-faire. It isn't what free-market advocates support. But it is what Bush is doing and Obama wants to continue.

Corporatism has a history in American economic policy, but it has generally been advanced as a guiding philosophy only in other countries. Corporatism was seen as an alternative to both the egalitarianism of the French Revolution and the laissez-faire economics of Adam Smith, with the state working closely with the different elements of society, especially labor and business.

As the Nobel laureate Edmund Phelps wrote: "The fundamental corporatist idea was to retain the private income, private wealth and private ownership of firms that (were) so central to capitalism (and found in avant-garde examples of market socialism too) but to remove the brain of capitalism — to curtail and to modify the mechanism of experiments and discoveries undertaken by unorganized entrepreneurs and financiers on which capitalism relied. . . . Corporatism sought to interpose the interests of the whole society in a range of decisions affecting the directions taken in the business sector."

We've always had some elements of the corporate state in America — subsidies, tariffs, monopoly privileges, regulatory cartels — but we've prospered because of the freewheeling entrepreneurship and creative destruction that characterizes most of our economy.

In a few short months, the Bush administration has turned the focus of our economy to corporatism. Every day brings another story about businessmen seeking their profits in Washington, not the marketplace:

• Life insurance companies are seeking to buy savings and loan institutions in order to qualify for a piece of the $700 billion bailout fund.


• Realtors and homebuilders are asking for mortgage subsidies, tax credits and interest-rate "buydowns" to stimulate demand for their product.


• Recently "the health insurance industry said" — a pretty corporatist phrase right there — that it would support regulations requiring insurers to accept all customers, regardless of illness or disability, as long as Congress would require every American to buy insurance.


• After Congress turned down a bailout for the car companies, the firms are asking the Bush administration to fund them on its own authority.

Meanwhile, Obama advisers are saying that if the federal government invests billions of dollars in businesses, it should get some influence on company policies regarding foreclosures, lending, executive compensation, environmental effects and product lines.

So politicians would be making important corporate decisions, which means less attention to meeting consumer demands and more emphasis on satisfying outside interest groups.

Some bailout advocates want to go even further.

Jonathan Cohn of the New Republic suggests that the federal government use its new power over the auto companies to fire a General Motors vice chairman who has expressed skepticism about the catastrophic effects of global warming, and congressional Democrats wanted to forbid the firms from filing lawsuits against state environmental regulations.

That's corporatism for you: Big, established corporations get taxpayers' money as long as any dissenting scientific or political opinions are suppressed.

Socialism is dead even in Moscow and Beijing.

The real choice Americans face is whether we want a free market or a corporate state.

Unnecessary--because the stock exchanges had already implemented most of the SOX changes in the rules of corporate governance in their new listing standards, the Securities and Exchange Commission (SEC) had full authority to approve and enforce accounting standards, the requirement that CEOs certify the financial statements of their firms and the rules for corporate disclosure.

The Department of Justice had ample authority to prosecute executives for securities fraud. The expensive new Public Company Accounting Oversight Board (PCAOB) is especially unnecessary. Its role is to regulate the few remaining independent public auditors, but it has no regulatory authority beyond that already granted to the SEC.

Moreover, the audit firms still have a potential conflict of interest because they are selected by and paid by the public corporations that they audit. A much more effective change would have been to have each stock exchange select, monitor and compensate the auditors of all firms listed on that exchange. The PCAOB may also be unconstitutional, because it is a private monopoly that has been granted both regulatory and taxing authority.

Harmful--because SOX substantially increases the risks of serving as a corporate officer or director, the premiums for directors and officers liability insurance and the incentives, primarily for foreign and small firms, not to list their stock on an American exchange. The ban on loans to corporate officers eliminates one of the more efficient instruments of executive compensation. And SOX may also reduce the incentive of corporate executives and directors to seek legal advice.

Inadequate--because SOX failed to identify and correct the major problems of accounting, auditing, taxation and corporate governance that have invited corporate malfeasance and increased the probability of bankruptcy.

What to do?

At a minimum, Congress should clarify that the criminal penalties in SOX require proof of malign intent and personal responsibility for some illegal act. The major potential problem of the act is the awesome threat that senior corporate managers may be held liable for an illegal action that the senior manager did not direct, condone or even know about. No large organization can operate under such a threat.

Congress has wisely refrained from applying this standard to government managers even though the General Accounting Office (GAO) reported in 1998 that "significant financial systems weaknesses ... prevent the government from accurately reporting a large portion of its assets, liabilities and costs."

Any SOX cleanup legislation should address the problem of delisting by foreign and small firms from the American stock exchanges, maybe by exempting such firms from the regulatory requirements. Such delisting reduces both the information about and the liquidity of the firms delisted. The current application of SOX to foreign firms represents a significant extraterritorial extension of U.S. regulations that is also likely to cause other problems.

A wise Congress would also eliminate the expensive new and wholly unnecessary PCAOB, preferably before it establishes new precedents and creates some new special interest. This should probably be accompanied by amending SOX to shift the authority to select, monitor and compensate the independent public auditors from the audit committee of the corporate board to the stock exchange on which the corporation is listed.

A Congress that is both wise and brave would repeal SOX--lock, stock and barrel. Sox adds no necessary authority to those previously granted, creates the potential for substantial harm and does not address the major policies that lead to problems in the U.S. corporate economy.

The U.S. cannot afford to have another lost decade. Or to see the dreams of another generation of Americans who had been told to take responsibility for their financial health by investing in the stock market dashed by failed monetary and fiscal polices.

Today, the most urgent task facing President-elect Barack Obama is stabilizing financial markets by instituting policies that foster economic growth and prevent the type of boom and bust cycle that has just wiped out a decade's worth of wealth accumulation.

Mr. Obama's task is made all the more difficult because there has been a perfect storm of bad policies and practices. Laudable goals, such as fostering more homeownership, went terribly awry. Financial services regulation has failed at its most basic task, protecting the soundness of the system. And a dysfunctional compensation system has given corporate managers incentives to take excessive risks with investors' money.

None of the policies and practices that are now widely criticized suddenly appeared in the past decade. But they were kindling for a financial firestorm that needed only an accelerant and a spark. Both were provided by a policy of easy money that came in response to the bursting of the dot-com bubble in 2000-01, the ensuing recession, and the Sept. 11 attacks.

At first Fed easing was in order. The central bank needed to counter the "irrational exuberance" of the dot-com bubble. And by May of 2000 the Fed had done that by raising the fed-funds target to 6.5%. That needed to come down when the bubble burst. Aggressive cutting brought it to 2% in November 2001.

The problem is the rate remained at 2% or less for three years (for a year it was at 1%). During most of this period, the real (inflation-adjusted) fed-funds rate was negative. People were being paid to borrow and they responded by often borrowing irresponsibly.

Consider subprime mortgages. In 2001, there was $190 billion worth of subprime loan originations -- 8.6% of total mortgage originations. In 2005, there was $625 billion worth of subprime originations -- 20% of the total. In the same period, the percentage of subprime mortgages securitized -- loans that were packaged and sold to investors -- rose from just about 50% to a little more than 81%. (These numbers all trailed off slightly in 2006.) The great easing in monetary policy ended (with a lag) when the Fed began raising rates in June 2004.

The subprime saga follows a familiar pattern. Easy credit begets a boom and then the inevitable tightening of credit bursts the bubble. What is not familiar is the scale of the devastation wrought in this boom-bust cycle.

Never before had financial markets evolved such a complex superstructure of interlinked securities, derivatives of all kinds, and special-purpose investment vehicles. Professor Gary Gorton of the Yale School of Management has best described that complexity in his paper "The Panic of 2007," published by the National Bureau of Economic Research. He makes clear that as this system evolved there was not a sufficient guard against systemic risk.

No president could want these events to repeat themselves on his watch. But they could be repeated.

The economy now confronts deflationary forces. If past is prologue the Fed will concentrate on those deflationary forces for too long and rekindle an asset boom of some kind. The fiscal "stimulus" being contemplated by Congress could be another economic accelerant. If both the fiscal and money stimulus efforts kick in just as market forces also kick in, we're likely to see another unsustainable boom that will be followed by a bust.

The incoming administration must think about that possibility because the timing of boom and bust cycles seems to be shortening. The next bust could come five or six years from now -- or about in the middle of an Obama second term. Should that happen, Mr. Obama would be unable to blame Republicans for the mess and would be tagged as the second coming of Jimmy Charter.

To avoid such a fate, Mr. Obama needs to stop the next asset bubble from being inflated by imposing a commodity standard on the Fed. A commodity standard (such as a gold standard) imposes discipline on a central bank because it forces it to acquire commodity reserves in order to increase the money supply. Today the government can inflate asset bubbles without paying a cost for it because the currency isn't linked to the price of a commodity.

With a commodity standard in place, the government would also have price signals that would alert it to the formation of a bubble. Why? Because the price of the commodity would be continuously traded in spot and futures markets. Excessive easing by the Fed would be signaled by rising prices for the commodity. In recent years, Fed officials have claimed that they cannot know when an asset bubble is developing. With a commodity standard in place, it would be clear to anyone watching spot markets whether a bubble is forming. What's more, if Fed officials ignored price signals, outflows of commodity reserves would force them to act against the bubble.

The point is not to deflate asset bubbles, but to avoid them in the first place. Imposing a commodity standard is a practical response to the repeated failures of central banks to maintain sound money and financial stability. What would be impractical is to believe that the next time central banks will get it right on their own.

Even the most interesting-sounding cases—such as the "fleeting obscenity" case, Federal Communications Commission v. Fox Television Stations, which one could be excused for thinking has something to do with the First Amendment—somehow come down to technical questions of administrative law.

One seemingly "boring" case, however, involving anti-dumping regulations of all things, is the opposite: What on the surface is a dry parsing of statutory definitions in the end implicates not just larger issues of international trade but also antitrust law, energy policy, national security, and the government's role in ordinary commercial activity.

On Tuesday, Nov. 4, while most of the country understandably had its attention elsewhere, the Court heard argument in United States v. Eurodif. The case is an appeal from a ruling of the U.S. Court of Appeals for the Federal Circuit holding that contracts with foreign companies to enrich uranium are outside the scope of U.S. anti-dumping law (and their corresponding tariffs) because they're "service" as opposed to "sales" contracts.

The decision reversed the Commerce Department's determination to the contrary and prompted a petition for certiorari from United States Enrichment Corp., a government spinoff that dominates the domestic enrichment market and would be hurt by competition from abroad. Although the U.S. solicitor general also requested cert (in which circumstance review is not uncommon), Eurodif is the first time the Court has accepted an international trade case in six years (and only the eighth time in the last two decades).

Why, then, is this case of such importance that it warrants the Court's intervention? Not to put too fine a point on it, but in these uncertain times, Eurodif stands at the crossroads of our political debates over how to grow the economy while doing right by workers. If foreign service contracts are all of a sudden subject to regulatory premiums, not only will international trade be hit, but all companies that have lowered costs by outsourcing parts of their operations will face legal uncertainty—and consumers will pay higher prices.

Goods And Services?

"Dumping" is similar to the antitrust concept of "predatory pricing," whereby a company allegedly sells goods at less than their "fair value" to drive its competition out of the market and then obtain monopoly profits. (Both dumping and predatory pricing claims are controversial as a matter of economic theory, but that's a different article.) In the context of international trade, an exporter of goods who prices them at less than this so-called fair value "dumps" those goods on the importing country.

Under the U.S. anti-dumping law, 19 U.S.C. §1673, the Commerce Depart­ment may impose duties on "foreign merchandise [that] is being, or is likely to be, sold in the United States at less than its fair value" when such "dumping" causes or threatens to cause material injury to a domestic industry. In 2001, Commerce determined that low-enriched uranium (LEU, a critical component for nuclear power) from France was thus being dumped and imposed a duty on LEU imports.

The controversy is that American utility companies—the respondents in the case, along with the French enrichers—acquire most of their LEU not by buying it abroad, but by "separative work unit" orders. In these transactions, a utility delivers to the enricher a quantity of unenriched uranium (known as a "feed," which it has acquired elsewhere) and then pays for the conversion of feed into LEU. So what they effectively purchased from France here is enrichment services, not goods in the sense of "foreign merchandise"—or so the respondents successfully argued to the Federal Circuit.

A Dangerous Position

Numerous economic studies have shown that anti-dumping law is facially contrary to free trade. It protects domestic special interests from the rigors of global competition and results in higher prices for U.S. businesses and consumers.

In this case, any duties added to LEU would drive up the cost of one of the more reliable sources of energy—just as the nation wants more noncarbon-based energy for financial, environmental, and even geo-strategic reasons. The ultimate result of these duties may be to harm all U.S. citizens—individuals who face their own hardships in this economic downturn and shouldn't be forced to subsidize USEC through higher utility bills.

USEC argues that the Commerce Department should be allowed to impose anti-dumping duties on service transactions when those transactions result in the importation of a tangible product—even though they do not involve the sale of that product at less than fair value. The government adds that the purpose of anti-dumping law is to protect U.S. industries and their workers from "unfair" competition, even if a sale of goods hasn't occurred.

These attempts to extend anti-dumping law to service transactions have four principal dangers:

• Judicially amending the law. A ruling in the government's favor subjects imports of services that result in tangible products to duties when the applicable statute unambiguously declines to cover services. A new Congress with a new president may choose to change the law, of course, and it might do so in response to this case, but that's a policy decision that shouldn't be imposed on the nation by the courts.



• Retaliation. The government arbitrarily hurts our trading partners, who could in turn burden the export of U.S. services—a large and growing part of the economy.



• Unpredictability. The government position creates uncertainty about which transaction Commerce considers when it determines whether dumping has occurred—the service order or the subsequent sale of merchandise. The government could then pick and choose among transactions on which to base complaints, perhaps focusing on outsourcing to India or China, as a way to maximize receipts from duties.
  
  If importers do not know whether Commerce will look at the service transaction or the downstream sale, they cannot know which price to set to avoid dumping tariffs. U.S. companies that produce goods through foreign contracts would suddenly be more vulnerable to dumping claims based on the price negotiated for the manufacturing alone.



• Maintaining a monopoly at consumers' expense. Commerce is acting to protect a government monopoly to the detriment of the free market system and more open trade. Ever since USEC was privatized in 1998, it has been trying to use dumping laws to exclude European companies (including filing this case in 2000). Both the nuclear enrichment industry and the overall economy would be better served by open competition than by a monopolist's attempts to insulate itself from more efficient providers.

Hurting Consumers

Contrary to the claims of some protectionists, anti-dumping law does not bolster America's national security. Instead it increases procurement costs, diverting funds from other worthwhile programs and stifling innovation among domestic companies. Although the United States may have a security interest in maintaining domestic enrichment capability, any subsidies that USEC requires should come from the normal appropriation process and not through a hidden tax on all foreign LEU.

For that matter, it is unclear why such enrichment needs to be done by a government monopoly rather than by regulated private energy companies akin to defense contractors.

The government and USEC lob final volleys to the effect that without a decision in their favor, Russia—not a party to these proceedings, but home to enrichers that will be affected by this case—would ramp up LEU production, crowding out U.S. investment in enrichment capabilities (while keeping its stocks of weapons-grade uranium instead of converting them to nonmilitary uses). But it is Congress' job to rewrite statutes that might be harmful to national security, not the courts'—and here, the president already has statutory authority to regulate, for security reasons, the trade of any property in which a foreign country has an interest.

Fundamentally, we should not enforce laws that impose higher prices on American consumers. Nor should we take steps that undermine the competitiveness of American companies doing business abroad. But that is exactly what the government is doing when it demands that special duties be placed on imports that supposedly are priced "too low."

The Court seemed of two (or nine) minds during oral argument, but if it finds in the end that uranium enrichment is subject to tariff, the entire range of foreign service contracts will be exposed to anti-dumping abuse. Such a decision could raise costs throughout global supply chains, as the Obama Commerce Department uses anti-dumping laws to punish outsourcers.

That would be an unfortunate result. Eurodif may not have received much attention on Election Day, but given the threat to U.S. business and all our interest in promoting commerce during difficult economic times, it is one of the term's most important cases. Those who want true competition and benefits to consumers should hope that the government loses and, accordingly, that freer trade wins.

Believers in patterned principles hold that there is some preordained social order that is more just than others. Accordingly, the function of the state is to use the levers of powers to manipulate behavior to achieve the desired outcomes. These patterned principles stand in opposition to historical principles of justice, which are content to establish the rules of the game and then let the legal moves by individual players determine the social outcomes. For Nozick, the key rules were rules of justice in acquisition (to set up the initial property rights) and justice in transfer, whereby those rights (and others derived from them) could be exchanged or combined through voluntary transactions.

Because Nozick was no utilitarian, he did not dwell on the powerful efficiency features of this system, which shine through for ordinary real estate transactions. The key function of the legal system is to minimize the transactional barriers and increase the velocity of voluntary exchanges, all of which generate mutual gains for the parties. So long as one is sure that the given distribution of resources is obtained by legal moves from the original position, don't worry about the relative positions of one person vis-à-vis the others. Don't, in other words, use state coercion to create a distinctive pattern of rights deemed ever so desirable in the eye of some political beholder.

Congress, alas, is a pattern junkie. In his perceptive Wall Street Journal op-ed, How Government Stoked the Mania, Russell Roberts noted that the current congressional fixation called for a relentless increase in homeownership relative to renting, with certain minimum fractions allocated to low-income families. Pray tell, what patterned principle dictates that we should have 12% of all mortgages made to low-income borrowers in 1996, 20% in 2000, 22% in 2005 and 28% by 2008?

None. It is always easy to invent reasons, but they are all wrong. Homeowners, we're told, will take better care of their property and have a permanent stake in their communities. Perhaps. But then again, landlords, if left to their own devices, will select tenants with good habits in order to preserve the value of their real estate. They will bounce out bad tenants in order to keep the good ones in place. Their efforts could easily generate the desirable traits the pattern player hopes to get from beleaguered homeowners, who are likely to run down the leveraged property in their possession, knowing that lenders will bear the financial loss.

The grand objectives articulated by Congress--and to be fair, by Republicans who preach the virtues of the "ownership society"--are not freebies that can be satisfied at no real cost. Quite the contrary. Once Congress set in place a destructive lending policy, we could count on private parties to issue bad loans from which they profited, knowing that dear old Fannie and Freddie would happily pay face value for paper that everyone knew was worth a whole lot less.

But Congress lived in a dream world. It forgot that the quality of the paper would deteriorate as its ambitious social objectives let its underwriting go south. So, too late in the game, we learn from yet another case where Congress should have done good by doing nothing at all. Let people rent or buy in unsubsidized markets and then watch with supreme indifference what residential patterns emerge. That distribution would have been a lot less toxic than the brew generated by our fevered political leaders. So says our frustrated libertarian.

Such populist sentiments are often based on misunderstandings about the role of corporate executives in the economy and the vigorous competition that exists for these highly skilled leaders. In the past, federal regulatory efforts based on such misunderstandings have generated unintended consequences, which have damaged the economy and hurt the ability of the market for executives to self-regulate over time.

The labor market for executives and the associated pay levels are already subject to high levels of regulation. Indeed, U.S. corporations are subject to more stringent executive pay disclosure requirements than corporations anywhere else in the world. Before additional regulatory and legislative efforts are unleashed, policymakers should examine the rationale for current pay structures and the strong links between executive pay and corporate performance.

The misperceptions that drive regulatory efforts are grounded in the idea that the market for executives is not competitive and that pay levels do not reflect supply and demand for talent. Critics claim that executives essentially set their own pay through their influence over the boards of directors of corporations. This "myth of managerial power" leads some policy makers to conclude that greater government regulation is necessary because the market is "rigged." However, a large body of empirical research documents that labor markets for executives are indeed competitive, and that pay levels track corporate performance.

This study examines the market forces that set the parameters of executive compensation, the process that boards use to determine pay packages, and the data that indicate the efficient workings of the current "pay-for-performance" model. It also discusses the adverse consequences of imposing rules and regulations on an executive compensation system that has helped to generate great wealth for shareholders and millions of jobs for American workers.

Most people, quite properly so, would argue the Mississippi sheriff has no business arresting people for a legal act committed in New York, even though it would have been illegal if committed in Mississippi.

Unfortunately, some prosecutors in the U.S. federal government are now acting like the rogue Mississippi sheriff described above when it comes to gambling, securities and tax laws in foreign countries.

Each country has the right to make its own laws which cover its own territory, but it does not have the right, absent a specific treaty or agreement, to enforce its laws on legal acts committed elsewhere. The United States has rankled other governments and has been accused of violating human rights by using agreements to share information on terrorism to prosecute individuals for other crimes that are not necessarily crimes outside the United States.

The United States has many tax treaties and legal assistance agreements (MLATs) that specify what information may be shared between countries, for what purposes, and under what conditions. However, now the United States is accused of greatly overstepping the bounds. Much of the current row stems from the alleged misuse of passenger manifest lists the U.S. demands from airlines flying into the United States.

Examples of overreach are plentiful. Internet gambling is legal in the United Kingdom, but that did not stop U.S. government officials from detaining U.K. gambling company executives who were just visiting - not doing business in - the United States. These executives had been engaged in legal activities in their own country. If some in the United States have decided to play on the London Internet, rather in U.S. casinos, that is an issue for U.S. authorities and their own residents, and should not involve London-based companies that were not specifically targeting the U.S. market.

UBS, a global bank, has recently warned its private bankers not to travel to the United States, because a Swiss private banker for UBS was detained by U.S. authorities as part of a broad tax evasion probe. Switzerland and other countries have different tax laws than the United States and different criteria as to what constitutes a tax felony.

The U.S. has no business going after bankers in Switzerland who have not committed felonies in the U.S. The legality of their actions in Switzerland is up to Swiss authorities to decide. The extent to which U.S. citizens or residents are engaged in illegal tax evasion is an issue between them and the U.S. government. The U.S. Justice Department is now also trying to force UBS to reveal the names of 20,000 of its clients, which could put UBS in violation of Swiss bank secrecy laws.

There are many good reasons for Switzerland and other jurisdictions to have bank secrecy laws. The Swiss originally passed them to protect German Jews and other anti-Nazi Germans from inquiries made by the Gestapo. Over the years, many who live under repressive regimes have been able to protect themselves and their property only because there were places outside their own countries with bank secrecy.

Swiss bank secrecy is not absolute, and the Swiss authorities do make the information known if there is probable cause to believe a specific mutually agreed crime has occurred and the proper legal procedures followed.

If the United States continues to unreasonably pressure the Swiss and other banks located in reasonably cooperative jurisdictions, many account holders will merely move their accounts to less cooperative jurisdictions, which will only benefit the terrorists and real criminals.

U.S. banks and U.S. government authorities normally do not engage in blanket financial information sharing with foreign governments - despite the demands of the French and some others. Most foreigners are not subject to U.S. withholding or taxes on their portfolio interest, dividends and capital gains earned in the United States - nor should they be, because to do so would drive needed foreign capital out of the United States.

Blanket financial information sharing among governments is subject to enormous abuse. As is well known, even the most competent governments frequently lose, or have stolen from them, confidential data, which is misused by thugs within governments and criminal groups in general.

The U.S. government is certainly not on the moral high ground on taxes, as long as it continues to tax gains only due to inflation (caused by the government) and not on real income; tax people on their global rather than U.S. income; tax those who live outside the country on non-U.S. income; and demand compliance with a tax code so long, complex, and contradictory no one can understand it or even be sure he or she is in compliance with it.

The United States needs the cooperation of the United Kingdom, Switzerland, and most other governments in the war on terrorism, but if it uses sensitive information it obtains to prosecute other crimes, particularly those where there is not dual-criminality, it may destroy the necessary cooperative relationships. This destructive overreaching puts everyone at greater risk.

On June 3, Californians will vote on Proposition 99, a ballot initiative sponsored by groups representing cities, counties, redevelopment agencies and other pro-condemnation interests. It purports to protect property rights against eminent domain, but it actually provides almost no protection.

Two San Gabriel Valley cities illustrate the dangers of unbridled condemnation authority. Baldwin Park plans to use eminent domain to demolish more than 500 homes and businesses and transfer the land to a politically influential developer who plans to build a mall. La Puente is trying to use eminent domain to take over a small shopping center, displacing 13 small businesses. The city claims that the area is "blighted" — making it eligible for condemnation under state law — even though there is no evidence of dilapidation.

Both of these "takings" of private property would probably be permitted under Proposition 99, because it protects only owner-occupied residences against condemnations with the purpose of transferring property to "private persons." That leaves renters — 42% of Californian households — unprotected. If the buildings they live in are condemned, renters can be forced out even if their leases haven't expired. Owners of farms, small businesses and homeowners who have lived in their residences for less than one year also would remain vulnerable.

Even the protection for homeowners covered under Proposition 99 is likely to be ineffective, because the measure allows the condemnation of owner-occupied homes if they are "incidental" to a "public" project. This means that homes could still be taken for transfer to private developers if the proposed project allocated some space for a "public" facility such as a community center or library.

Government officials also can say that their true purpose is promoting "development," thereby circumventing the ban. Or they could argue that the new owners of any condemned properties are "public persons," by virtue of business-government "partnerships" for local development.

Also on California's June ballot is Proposition 98, which really would forbid "economic development" condemnations and other abuses. Absent Proposition 99, Proposition 98 would likely become law — as have anti-Kelo initiatives in 10 other states. Proposition 99 would invalidate any other eminent domain referendum passed on the same day so long as 99 receives a greater number of votes than Proposition 98. Many voters are unlikely to realize this.

Economic development and blight takings often transfer property from the poor and politically weak to the politically powerful. Since World War II, from 3 million to 4 million Americans have lost their homes to such condemnations.

Many of the eminent domain laws passed since Kelo — including California's 2006 law — are likely to be ineffective. Legislators have passed bills that only appear to protect property rights. The most common allow economic development condemnations under the guise of alleviating blight, which many states define so broadly that almost any neighborhood qualifies, as in the dubious La Puente case.

An August 2007 survey by the Saint Consulting Group found that only 21% of Americans know whether their state has enacted eminent domain reform legislation since Kelo, and only 13% know whether that legislation is likely to be effective. Proposition 99 is a particularly skillful attempt to exploit political ignorance to block effective eminent domain reform. Californians shouldn't fall for it.

In some cases, unscrupulous lenders loaded billions of dollars in sub-prime debt on families that couldn't afford it. But if those acts were fraudulent, appropriate legal remedies are readily available to bring the wrongdoers to justice. What is more likely, however, is the flip side of that equation: Borrowers simply got in over their heads or misrepresented their finances in order to grab loans requiring little or no down payment. Yet if the Democrats in Congress get their way, those borrowers will be rewarded for their irresponsibility — not to mention the losses imposed on lenders who were pushed by Congress to provide mortgage capital to poor credit risks.

James Madison saw this mess coming centuries earlier when he penned the following in Federalist 44: "Laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation." Ditto, wrote Chief Justice John Marshall in Ogden v. Saunders (1827), lamenting the tendency of states to rewrite contracts under the Articles of Confederation: "The power of changing the relative situation of debtor and creditor, of interfering with contracts … had been used to such an excess by the State legislatures, as to break in upon the ordinary intercourse of society, and destroy all confidence between man and man. The mischief had become so great, so alarming, as not only to impair commercial intercourse, and threaten the existence of credit, but to sap the morals of the people, and destroy the sanctity of private faith."

That's why a clause barring states from "impairing the Obligation of Contracts" was added to the Constitution. Madison recognized that each "legislative interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the preceding laws." Those words, also from Federalist 44, were prophetic. The "long chain of repetitions" began in 1933 with that year's passage of the Minnesota Mortgage Moratorium Law. Mindful of the problems facing farmers during the Great Depression, the Minnesota legislature authorized a state court to exempt property from foreclosure even though the debtor had defaulted on his contractual mortgage obligations. In Home Building & Loan Association v. Blaisdel, the U.S. Supreme Court by a 5-to-4 vote condoned Minnesota's misbehavior. That appalling 1934 decision was the precursor to today's fiasco involving subprime mortgages.

The resultant moral and legal dilemmas were crystallized pithily by Marcus Tullius Cicero 2,000 years ago. What is the meaning, Cicero had asked, of an "abolition of debts, except that you buy a farm with my money; that you have the farm, and I have not my money?" He might have added that so-called compassionate laws suspending private debt collections and delaying legal proceedings have predictable consequences: a loss of confidence in government, diminished trust in the good faith of contracting parties, and a reluctance to extend credit.

That logic was evidently lost on Chief Justice Charles Hughes, who had little sympathy for the Minnesota lender, Home Building & Loan. Hughes explained that "official reports" showed that lenders "are predominantly corporations, such as insurance companies, banks, and investment and mortgage companies. [They] are not seeking homes or the opportunity to engage in farming. Their chief concern is the reasonable protection of their investment security." There you have it, a new hierarchy of rights, based on class, found nowhere in the Constitution: Corporate shareholders and employees are second-class citizens, whose rights can be sacrificed to protect homeowners and farmers.

The loan in the Blaisdell case was legal when made, and such loans continued to be legal after enactment of the Minnesota Mortgage Moratorium Law. Mortgages were encouraged by the state for the benefit of homeowners and farmers. Minnesota's policy was to promote mortgages, and, absent fraud, fulfillment of mortgage contracts entailed no illegal act by either creditor or debtor. The parallels to today's subprime loans are unmistakable.

Blaisdell and its progeny essentially excised the contracts clause from the Constitution. States and the federal government now have broad leeway to alter private contractual arrangements with little regard for the disfavored parties whose rights have been extinguished. Never mind that the retroactive impairment of private contracts flouts three of the central premises underlying a free society.

The first is the principle of private autonomy: Respect for the rights of each individual means that all persons must be at liberty to dispose of their property and their labor as they wish. By allowing people to order their affairs through contract without government intervention, the Constitution fosters individual self-determination. When government unilaterally does away with private contracts, it intrudes upon personal liberty. That's why the Framers crafted the contracts clause: To promote personal liberty by grounding economic transactions on the right of free exchange, insulated from legislative pressures and majority whim.

The second is the rule-of-law ideal: Government must announce its rules in advance, avoid applying the rules retroactively, and ensure equal treatment under the law. As a result, individuals will be able to predict with fair certainty how each rule will be implemented, and plan their affairs accordingly. If existing contracts are altered by government edict, planning by private actors will be undermined. If rules are applied selectively or discriminatorily, the potential for abuse is obvious: Legislators will be tempted to use the coercive power of government to advance the interests of those with political muscle, or exact retribution against unpopular groups.

And the third is the separation-of-powers principle: The contracts clause was designed, in part, as a check against concentrated government power. Under our system of government, the legislature's task is to address broad political issues prospectively, not to examine in specific cases whether the laws have been properly applied and obeyed. The judiciary's function is to review individual cases after-the-fact, but not to design prospective rules that address questions of policy. In that sense, the contracts clause prevents the legislature from assuming the institutional rule of the courts — reserving to the judiciary the job of resolving individual contractual disputes.

Now, granted, the contracts clause applies to the states, not the federal government, but there are two constitutional amendments that provide an equivalent check on the feds: First, the Tenth Amendment limits the federal government to its enumerated, or specifically listed, powers. Second, the due-process clause of the Fifth Amendment prevents the federal government from retroactively abridging the terms of settled, lawful transactions. Those amendments were cavalierly ignored in 1933 when the New Deal Congress and President Franklin D. Roosevelt abrogated all contractual gold clauses, effectively dissolving numerous long-term leases just as Minnesota had dissolved numerous mortgages.

Instead of a cost-of-living escalator, many lessors had protected themselves against inflation with a gold clause — a common provision at the time — which gave the lessor an option to demand payment in gold rather than dollars. Big mistake. Ostensibly to maintain government reserves of the metal during the economic emergency of the Great Depression, the president and his fellow New Dealers erased existing lease provisions and gutted the rights of property owners as if they never existed. Lessors were not permitted to replace their gold clauses with different escalators; they were not allowed to renegotiate their leases; they received no compensation for the diminished value of their property.

Incredible? Perhaps so. But in 1935, a bitterly divided U.S. Supreme Court rubber-stamped Congress's 1933 foolishness in three companion cases that became known as the Gold Clause Cases. Chief Justice Hughes, writing for the majority in Norman v. Baltimore & Ohio Railroad Co., the lead case, applied his expansive vision of judicial supremacy: "We are under a Constitution, but the Constitution is what the judges say it is . . . ." Hughes concluded that Congress could override private contracts to the extent necessary to regulate the value of money — a federal power expressly enumerated in the Constitution. When Congress abrogates contracts and confiscates property, however, even if purportedly executing an enumerated power, "this is Nero at his worst. The Constitution is gone." Those were the trenchant words spoken extemporaneously when Justice James Clark McReynolds read his dissent from the bench.

Whether it was the canceling of Depression-era mortgage and lease obligations or the compelled waiver of the rights of today's sub-prime lenders, our leaders in all three branches of government have been all too willing to disregard the constraints imposed on them by the Constitution. Only principled and consistent judicial engagement can restore proper respect for the Constitution as it was written.

More broadly, the media again remind us of how drugs, commercialism and the threat of terrorism have spoiled the world's preeminent athletic event. Columnists lament the passing of a purer age, when doctors trained to run four-minute miles in their spare time, when competition was its own reward and a medal brought national glory rather than celebrity endorsement contracts. These Cassandras habitually predict the demise of the Olympics as modern society wreaks havoc on the sacrosanct traditions of the ancients.

But this prediction is based on bad information; politicians' fears that the games may somehow legitimize human-rights abuses reflect romanticized history. Since the end of the cold war, the Olympics have thrown off the corrosive chains of ideological battle and reverted to the values of the original games, among which were the dominance of the personal over the national, the economic over the political and the athletic over the larger concerns of the state.

The standard view of the Greek Olympics as a halcyon festival bringing amateur sportsmen together in the name of peace and brotherhood is a remnant of nineteenth-century Romanticism, which was institutionalized by aristocrats like modern-games founder Pierre de Coubertin. Hitler, who staged the 1936 Berlin Games as a testament to the German people — and invented the torch relay in the first place — was taken in by a similar Olympic vision of nationalism via physical perfection.

But the ancient reality could not have been further from these modern misconceptions. Greek armies routinely violated the Olympic truce and battle sometimes took place in the Olympic sanctuary itself. Individualism and athletic prowess were valued much more than mere participation, and wealth superceded ideology.

Pindar, the lyric poet whose victory odes tell us much of what we know about the early Olympians, wrote at the behest and patronage of wealthy athletes, who sought personal glory — not the vindication of their city-state and its political system. And the great champion Alcibiades used his prestige to gain fame and riches, often at the expense of Athens' "national interest."

Further, the ancient heroes were Panhellenic — Athenian kids cheered for a Spartan Michael Phelps — and the victors' olive wreaths were intrinsically worth about as much as the medals to be doled out in Beijing.

The modern games, as they developed during the cold war to allow politics to overshadow sports, broke with their predecessors. Mexico City hosted the 1968 Games amid the tumult of student uprising — and police reactions not unlike the Tibetan crackdown — around the globe. Black Power made its presence felt on the victory podium with a barefoot gloved-fist protest. Subsequent Olympiads reflected the expansion and retrenchment of communism in Africa, Asia and Eastern Europe, along with guerilla warfare and counterrevolution in Latin America.

The games of 1972 succumbed to the most dastardly terrorism ever visited upon the Olympic movement, with the murder of eleven Israeli athletes and coaches in Munich. The 1976 Montreal festival, which left a trail of debt that Quebec taxpayers have only recently paid off, saw the first of a series of boycotts, this time by thirty African countries protesting apartheid.

As the Soviet Union and its vassal states succeeded in using the games as a showcase for ideological superiority, and the Western world lay mired in stagflation and cynicism, the Olympics lost their ancient bearings.

Though nobody knew it at the time, the 1988 Seoul Olympics were a watershed. These games followed the tit-for-tat superpower boycotts in Moscow and Los Angeles and were the first to be free from major political turmoil since Tokyo 1964. More importantly, they represented the last Olympiad of the cold war, with the Berlin Wall falling the next year, followed by the dissolution of the Evil Empire, German reunification and the New World Order of globalization.

The twentieth century took us through almost continual political upheaval — not least within the Olympic movement — with most of it defined by the bipolar cold-war mentality and the specter of nuclear Armageddon. With that edifice of pretension eroded, the Games were free to become athletic spectacles again. In place of monumental East-West clashes, the fall of the Berlin Wall gave rise to an Olympics of interpersonal rivalry and a return to the desire for individual achievement.

Under today's conditions of globalization — cultural homogenization, economic interdependence, decline of the nation-state even with respect to our enemies in war — international athletic competition assumes an ever-more-parallel course to that of world society at large. As with all sporting events, the Olympics of the past two decades have become exponentially more entertainment oriented. Even the proliferation of crass commercialism is a positive step because it returns the Olympics to the role they fulfill best: providing a forum for the world's best athletes to compete for fame and riches, while showing the rest of us a good time.

The Olympics now bring us the absolute best, without regard to color, creed or the Iron Curtain. The nature of the Olympic movement, meanwhile, has returned to the entertainment, ritual and athletic value of the original games. Gone is the sham of amateurism, as athletes are once more individuals, not tools of the state.

Tradition meet meritocracy; Coubertin meet Milton Friedman. The conventional punditry aside, the symbiotic relationship between sports and society has thankfully returned to its original, proper status under the ancient Greeks.

Thus returning to the Beijing dilemma, history demonstrates that the Governator — a former Mr. Olympia no less — has it right: spotlight the horrific actions of Chinese authorities but don't use sports for political purposes. And remember that it is the unaccountable grandees of the International Olympic Committee who created this mess in the first place.