I thank everyone who has posted comments on my article on Friday responding to Professor Reno, and I have a few responses.

To Rick: I agree that complex regulations often benefit large firms because large firms, but not their smaller competitors, can hire sophisticated counsel that allow the large firms to work around, or at least cope with, complex regulations, thus giving them a competitive advantage over their smaller competitors. But if the small firms can’t cope with the regulations, and the large one can do so but only by paying higher transaction costs, then neither group of firms is freer than it was before.  On the contrary, both are less free. It’s just that the reduction in freedom is greater for the small firms than the large ones.

To Jim: You say that my argument is a “smokescreen” and that economic conservatives are not really interested in stopping inefficiency but simply want to cancel social welfare programs wholesale, probably because they hate the poor. This type of argument, by failing to engage intellectually with the point being made and by attributing bad faith to the other side, rarely advances the discussion. For example, how useful would it be if I said that the only reason you posted this response was that you know that my position is unanswerable and that your own is bankrupt, and so you had no option but to resort to calling me a liar? You see how silly this sort of thing is.

To Mattb: I agree that complex economic regulation is an invitation to rent-seeking and crony-capitalism, and that it tends to substitute political connections and lobbying for the discipline of the market. Roberta Romano at Yale has some excellent papers suggesting exactly what you recommend: that regulations should come with five or ten year sunset dates so that some government actor should have to make a conscious decision at some point to renew them, weighing their actual costs and benefits in the light of actual experience.

To Thomas M. Cothran: Consequentialism is a position in moral philosophy, an account of what in general makes actions right or wrong. We’re not talking about that here. We’re talking about when the government should intervene in the market, which is a different and more complex question. For example, everyone recognizes that there are some things that are immoral that the government ought not make illegal (e.g., having lustful thoughts, or not calling your mom on Mother’s Day), and that there are some things that are appropriately made illegal that are not in themselves immoral (e.g., selling securities using a writing that does not conform the prospectus requirements of the Securities Act of 1933). A person can think that government policies should be evaluated on the basis of their consequences without thereby being a consequentialist in morals.

As to your examples, governments ban the sale of kidneys but not the sale of blood, and we prohibit prostitution but not (or at least not anymore) fornication and adultery. It is not a simple question of the moral quality of the actions involved. The question turns on whether government action in these various areas would do more harm than good.

The irreplaceable James Taranto devotes his Best of the Web Today column to a wide-ranging and highly illuminating discussion of the politics of abortion in the United States. Taranto is not quite fully pro-life, but he is very close, and his piece is one of the best analyses you’ll ever read on the political aspects of abortion and its legal regulation. A few samples:

Here is incontrovertible proof that . . . the murder trial of Philadelphia abortionist Kermit Gosnell has received insufficient media coverage: On Friday, Snopes.com was compelled to publish a page confirming that the story is real, not merely an urban legend.

What accounts for the media’s lack of interest in a trial that not only is sensational but implicates the most divisive social and political issue in America? PJMedia.com’s Roger L. Simon has the answer: “The trial of Dr. Gosnell is a potential time bomb exploding in the conventional liberal narrative on abortion itself.” . . .

A funny thing happens when you dissent from Roe v. Wade: You come to see that there’s not much else by way of intellectual content to the case for abortion on demand. . . . [T]hese days the appeal to the authority of Roe is pretty much all there is apart from sloganeering, name-calling, appeals to self-interest and an emphasis on difficult and unusual cases such as pregnancy due to rape. . . .

When you dissent from Roe v. Wade, you notice that people committed to the pro-abortion side almost never acknowledge that the question of abortion poses a conflict of rights or of legitimate interests. Try to pin them down as to where they’d draw the line–at what point in fetal development does abortion become unacceptable? It’s pretty much impossible. The court in Casey said abortion could be restricted after 23 to 24 weeks, earlier than Roe’s 28 weeks, but groups like Planned Parenthood oppose restrictions on late-term abortion, too. All they care about is “a woman’s right to choose.”

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Christopher Roberts, amplifying in a blog post on his fine article on Wendell Berry’s reversal on same-sex marriage, quotes Berry as saying of contemporary Americans that “we are talking about a populace in which nearly everybody is needy, greedy, envious, angry and alone.” This, of course, is an empirical claim, and there is, to be blunt, practically no empirical evidence to support it. On the contrary, social scientists who study these matters empirically (there is now a subdiscipline of economics called “happiness studies”) generally find that a large majority of Americans (and people in other countries too, in fact) are very happy or pretty happy on a daily basis. See the speeches by Federal Reserve Chairman Ben Bernanke discussing the literature here and here.

Now, when people make broad empirical generalizations, especially about other people, and do so without considering any actual empirical evidence, they usually tell us more about themselves than about the people they are putatively describing. They unwittingly reveal their own subjective impressions of things and thus their own emotional states. What we learn from Berry’s remark, therefore, is that he must be a rather dour fellow. Ironically, he thinks everyone else is unhappy, but pretty much it’s just him.

Christopher Roberts says repeatedly that we ought not dismiss Berry, but, in my view, that’s exactly what we should do. Social criticism has to begin with getting the facts right. If it doesn’t, it’s generally a self-indulgent waste of time.

That’s not say, of course, that such unmoored speculations never produce any benefits at all. In this case, for example, Berry’s rumination gave me some wry amusement, increasing the overall level of happiness among Americans and thus making him even more wrong than he was before. Unintended consequences are sometimes happy ones.

In an article in First Things last year, I argued that the legal institutions of capitalism exist not to advance any particular purpose but to facilitate the advancement by individuals of their various, often conflicting purposes. I made this argument in the course of disagreeing with Alasdair MacIntyre, who seems to think that capitalism exists to make people wealthy and indeed presupposes that the accumulation of wealth is the final end of human life. I mention this because I am always pleased when one of my arguments is reinforced by a striking example, and I have just such a one today.

As this article in the Wall Street Journal explains, Missy Franklin, a seventeen year-old from Colorado who won the gold medal in the 100-meter backstroke last week, has steadfastly refused lucrative endorsement contracts. Why? Because she wants to preserve her amateur status so that she can swim competitively in college. In other words, she prefers competing to money. Happily, the economic freedom of capitalism includes not only the freedom to make money but also the freedom not to make money, if one so chooses. That’s an important lesson. If most people in Ms. Franklin’s position choose the money, that just shows that they have desires and views about the human good different from hers.

I can imagine some scolds arguing that, although Ms. Franklin’s is the better course, many young people with her opportunities would go for the money because they are seduced into doing so, and thus there should be legal limits on offering phenomenal young athletes endorsement contracts. (more…)

I thank Greg Forster for responding to my post on Public Discourse about hotels offering in-room, pay-per-view pornographic videos, and I am happy to continue the conversation. I have three main points.

First, Forster misstates my position in one important respect. With regard to the open letter from George and Yusuf asking hotel executives to cease selling pornographic videos, I never said that “this is probably a fight not worth picking,” as if I thought that George and Yusuf were in any way wrong to send the letter. What I said was that “I fear … that their request … will not produce the result they hope.” There’s a big difference between expressing doubts about the success of a project, which I did, and expressing doubts about the desirability of the project, which I did not. Some fights are worth having even if the chance of success is small. George and Yusuf’s project falls in this category.

Second, Forster is right that my information about the economics of in-room, pay-per-view pornographic videos is old. I was relying on a market study I saw sometime in the 1990s when I was still practicing law. (more…)

Over at Public Discourse today, Christopher Tollesfsen has a very fine essay on various issues related to the HHS contraception mandate. Although I agree with most of it, I disagree on two very minor points. Here’s the first:

A Catholic hospital forced to provide contraceptive coverage could … seek to hire only those personnel who it was confident supported the mission of the Church, including its pro-life, pro-family mission. (That Catholic hospitals and universities have not done this is perhaps their greatest failing in their apostolic work, a failing that has contributed to the current HHS crisis in various ways.)

In some ideal sense, such a proposal may well make sense, but according to this page at the site of the United States Conference of Catholic Bishops, there are about 600,000 full-time employees of Catholic hospitals and related entities in the United States. Although I happen to agree with the Church’s teaching on contraception, I recognize that this places me in a very small minority (probably no more than two or three percent) of my co-religionists and an even smaller minority among the general population. I rather doubt that there even are 600,000 people qualified for the jobs who affirm the Church’s teachings on contraception. To be sure, this is in part due to the abysmal catechesis that the Church has provided Christ’s faithful for the last forty-five years, but wide and deep support for contraception is now—pardon the term—one of the facts of life, and it will not change anytime soon. Thus, even if it were legal, attempting to staff Catholic hospitals with people who agree with Humanae Vitae is utterly impracticable. It would be great if more people agreed with us, but until that happens, we need political strategies adapted to the situation of a small minority in a pluralistic liberal democracy.

Here’s the second thing I disagree about in Tollefsen’s post:

Perhaps [Catholic hospitals and universities] could request of their employees a “run” on the available contraceptives, and then publicly destroy, in protest, everything that had been obtained.

I have great respect for Christopher Tollefsen as a philosopher, and everything he writes is worth reading, but this proposal is simply harebrained. Because the financial capacity of the employees of Catholic hospitals and universities is small relative to the size of the contraception industry, and because the ability of that industry to expand production is very substantial, there is no chance that this proposal would reduce the availability of the products in question or increase their prices. In general, buying the products of companies in business to make money by selling such products is unlikely to harm those companies. On the contrary, it merely enriches those companies and impoverishes the people foolish enough to participate in such a scheme. Nor would such  a public spectacle change anyone’s mind about the morality of contraception. For the time being, I happen to work for a Catholic university, albeit one extremely unlikely to adopt Tollefsen’s proposal. If my university surprises me, however, and requests that I hit the local CVS to buy up all the condoms and then join my co-workers in a great Bonfire of the Rubbers, I intend to take a pass.

Note: In an earlier version of this post, I had said that if a Catholic hospital attempted to hire only Catholics supporting the Church’s teaching on contraception, it would likely violate the federal employment laws. That is not correct. As my colleague Professor Michael Moreland kindly pointed out to me, under Title VII, religious employers like Catholic hospitals may restrict their hiring to members of the relevant religion, which is a different thing from the ministerial exception, which exempts religious employers from  legislation concerning all forms of discriminiation, not just discrimination on the basis of religion, in connection with the hiring of ministers and similar employees. Yet another proof of what happens when lawyers talk about the law outside their area of legal expertise.

I have often written in this space criticizing the American Catholic bishops, but today, after reading their response to the Obama administration’s risibly cosmetic revision to its contraception mandate, I can say with delight that the bishops make me proud to be a Catholic.

The key point is that the bishops have not been fooled by the administration’s absurd canard that, if we merely say that an employer is not required to purchase contraceptive coverage for its employees but then require the insurer to provide the employees with such coverage free of charge anyway, the employer is not purchasing the coverage. As the bishops put it, such “coverage is still provided as a part of the objecting employer’s plan, financed in the same way as the rest of the coverage offered by the objecting employer.” In other words, as I argued yesterday, it’s the same system as before, except that President Obama says that it isn’t, and we’re supposed to be fools enough to believe him.

Moreover, I owe the bishops an apology, for in an earlier post, I had said that the bishops were wrong to frame this issue as one of religious freedom for religious institutions. I argued that if the relevant practices are wrong in the way the Church says they are, then it is wrong for the government to force any employer—not just religious employers—to fund them. I said that the bishops should not limit their objection to the rule’s application to religious employers but should object to it in much broader terms.

In fact, this is exactly what the bishops had been saying all along, as the latest press release makes perfectly clear:

We objected to the rule forcing private health plans … to cover sterilization and contraception, including drugs that may cause abortion…. [W]e explained that the mandate would impose a burden of unprecedented reach and severity on the consciences of those who consider such “services” immoral: insurers forced to write policies including this coverage; employers and schools forced to sponsor and subsidize the coverage; and individual employees and students forced to pay premiums for the coverage. We therefore urged HHS, if it insisted on keeping the mandate, to provide a conscience exemption for all of these stakeholders—not just the extremely small subset of “religious employers” that HHS proposed to exempt initially.

From the very start, the bishops had this right. Shame on me for trusting the accounts in the mainstream media and not reading the bishops’ own statements.

The bishops conclude that “the lack of clear protection for key stakeholders—for self-insured religious employers; for religious and secular for-profit employers; for secular non-profit employers; for religious insurers; and for individuals—is unacceptable and must be corrected.” Hence, “Rescission of [the] mandate [is the] only complete solution.”

So here we have the Catholic bishops preaching the word out of season. It is a good day to be a Catholic in America.

So now we see how the Obama administration proposes to preserve the religious freedom of religiously-affiliated employers like hospitals, schools and charities while requiring all health insurance plans to include abortion-inducing drugs, sterilizations, and contraception. According to the “fact sheet” released this afternoon by the White House, “Religious organizations will not have to provide contraceptive coverage” or “subsidize the cost of contraception.” Nevertheless, the insurance companies with which religious employers contract to provide health insurance for their employees “will be required to provide contraception coverage to these women free of charge.”

This is economic nonsense. Insurance companies have no money to pay for such benefits for the affected employees except from premiums they charge the employers who purchase coverage for their employees. So, one way or another, the employers are paying for the products to which they object. For example, suppose that, under the old rule, a religious employer would have had to pay $5,000 per employee annually for coverage including contraception. Under the new rule, the employer may elect to buy a policy that says that it omits such coverage. But the insurer has to provide the coverage anyway, and it may not charge the employee for it. How will it pay for the coverage? Obviously by building that cost into the price it charges the religious employer. Hence, the new policy will cost the employer the same $5,000 per employee that the old one did.

Under the old rule, the employer had to pay for abortion-inducing drugs, sterilizations, and contraception. Under the new rule, the employer has to pay for abortion-inducing drugs, sterilizations, and contraception, but President Obama will say that it doesn’t, and we’ll believe him. That fixes everything. And to think, some people accuse President Obama of empty rhetoric.

By now everyone knows about the Obama administration’s decision to require all employers, including religious ones like Catholic hospitals, schools, and charities (though not houses of worship), to include in their employee health insurance plans abortion-inducing drugs, sterilizations, and contraception. Everyone knows too about the entirely justified outrage of the Catholic bishops and other religious leaders at this gross invasion of religious freedom.

Of course, some people have argued that the real story here is not about religious freedom but the ever-expanding role of government. Thus, Daniel Henninger argues that the Catholic Church is merely feeling the kind of intrusive government regulation that businesses, doctors, schools and others feel all the time. I think this is right too.

There is, however, another point here, intermediate between the religious-freedom point and the big-government point, and it is one that the Catholic bishops ought to care about. Thus far, the bishops have argued that, since the Church believes that abortion, sterilization, and contraception are morally wrong, it is wrong for the government to force the Church’s institutions to fund such things through its health insurance plans. By what logic, however, does the Church restrict this argument to just religious institutions? If these practices are morally wrong in the way the Church clearly says they are, how may the government force any employer who objects to them to funding them? Do the Catholic bishops believe that the government may legitimately compel people do wrong, unless such people are religious institutions? If the board of directors of an S&P 500 company, or an entrepreneur with a small business, decides that the company’s health insurance plans ought not cover abortion-inducing drugs, sterilizations and contraception, does the government have a right to compel that company to include such things in its health plans nonetheless? It’s hard to see how any consistent Catholic can say this. If an action is wrong, compelling someone to do that action is wrong too, no matter who the person subject to the compulsion might be.

It is no doubt politically astute for the Catholic bishops to frame this issue as one of religious freedom; they already seem to gaining traction by doing so. Moreover, an across-the-board exception for anyone objecting to the government mandate may well be politically unattainable, and if so, it may be imprudent to argue for such an exception. But that doesn’t change the moral principle at stake. By framing the issue in the way they have, the bishops have made the issue seem like one of religious freedom peculiar to religious institutions. The real issue, from a philosophical point of view, is one of freedom of conscience applicable to all persons and all institutions.

The Center for Law and Religion at St. John’s University School of Law in Queens, New York, which is under the direction of First Things contributor Professor Mark L. Movsesian, is sponsoring a colloquium this spring with an extremely impressive set of speakers, including United States Supreme Court Justice Antonin Scalia and Professors Philip Hamburger (Columbia Law School), M. Cathleen Kaveny (Notre Dame Law Schoo), Joseph H.H. Weilder (New York University School of Law), and Ayelet Shacher (University of Toronto Faculty of Law). Although not open to the public generally, the colloquium is open to academics of any discipline. More details are below. (more…)

In his column today On the Square, Professor Reno considers a recent editorial from the Wall Street Journal and concludes that he can detect “a fundamental agreement between free market libertarians and postmodern relativists” because free-market libertarianism “denies … that human beings have a natural end beyond economic self-interest.” Happily, Professor Reno is not offended when I disagree with him, and so I say quite frankly that he has misread the editorial and then grossly misinterpreted it.

The editorial was criticizing a proposal by Rick Santorum to expand the child tax credit from $1,000 to $3,000 per child, not because the editors think government should be neutral on the question of whether people should have children but because they think special provisions in the tax code are the wrong way to encourage such behavior. This is apparent on the face of the article, for after the sentence Professor Reno quotes, the article continues as follows:

Mr. Santorum is essentially agreeing with liberals who think the tax code should be used to pursue social and political goals. Yet a major goal of tax reform is to make the tax code less of a political free-for-all. The best tax code is one that raises the revenue the government needs with the least amount of economic harm and misallocation of resources.

The idea here–and it’s a very familiar one–is that social and political ends should be pursued through other forms of legislation, not the tax code, because tax law provisions that aim at social or political ends usually fail to achieve them and often create other costs in the process. For example, the child credit (whether $1,000 as under current law or $3,000 as under the Santorum proposal) is almost certainly too small to have a meaningful effect on how many children people have (and thus fails to achieve its stated goal), and its existence complicates tax returns and is an invitation to fraud (as when divorced parents each attempt to claim the credit for one and the same child).

One can dispute whether the tax code is or is not the appropriate instrument to pursue social and political policies, but to interpret someone who says that the tax code is not the appropriate instrument to pursue such policies as saying that we ought not have such policies at all is, at best, gross misinterpretation. Even the staunchest of libertarians, such as Milton Friedman, are on record saying that other forms of legislation, such as transfer payments, are the way to pursue such policies. To take a further step and say that, if a person thinks that government ought not meddle in certain issues, the person must hold some kind of philosophical relativism on such issues, is just silly. For example, I’m sure that Professor Reno thinks that the government should stay out of most religious controversies. Does this mean he thinks that there is no objective truth in religion? I’m pretty sure he doesn’t. The question of whether there is an objective truth, or an objective right or wrong, on a certain issue is one thing; the question of whether the government should be involved in affecting people’s behavior in relation to that issue is quite another. The whole idea of limited government is that there are certain issues, including very important ones, with which government should not be involved.

Over at Future of Capitalism, Ira Stoll suggests that, with Hurricane Irene making landfall, we can expect to hear the usual complaints about, and defenses of, price gouging:

If the usual pattern holds, opportunistic politicians will soon be out denouncing price-gouging connected with Hurricane Irene, while opportunistic free-market economists will soon be out placing op-ed pieces defending prices as the best way to allocate scarce resources and to assure their delivery when and where they are needed….

The New York attorney general, Eric Schneiderman, is … getting into the mix, with a letter reminding businesses that state law “forbids those who sell essential consumer goods and services from charging excessive prices during what is clearly an abnormal disruption of the market.”

This strikes me as one of those things where self-regulation works pretty well. If a retailer sets a price too high, he may not sell what he wants to sell, and he may alienate customers. On the other hand, forcing retailers to keep prices low might just assure that scarce supplies sell out quickly to hoarders or resellers.

I yield to no one in defending capitalism (see here and here, for example), and while I appreciate Stoll’s point that a price-gouging retailer will likely suffer reputational harm and destroy goodwill with his customers, I would point out too that there is a good capitalist argument against price gouging.

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The Center for Law and Religion (CLR) at St. John’s University School of Law, which is under the direction of First Things contributor Professor Mark L. Movsesian, has launched a very impressive new blog called the CLR Forum. It includes a Scholarship Roundup, which comprehensively compiles the latest law-and-religion scholarship in American law reviews and foreign journals, as well as books from law and other disciplines, and a Commentary section by CLR faculty and student fellows on law-and-religion issues. There are also useful links to law and religion research centers, blogs and news sites, as well as information about CLR programs and faculty publications. For more, see this message from Professor Movsesian.

In anticipation of the tenth anniversary of September 11, Dean Reuter of the Federalist Society and John Yoo of the University of California, Berkeley’s School of Law (Boalt Hall) have assembled and published a collection of essays, Confronting Terrorism: 9-11 and the Future of American National Security, dealing with some of the most important national security issues of the day, including targeted killings, surveillance, interrogation, the Patriot Act, civil liberties in wartime, the Constitutional separation of powers, and more.

The contributors, who represent a diversity of viewpoints, are all absolutely first-rate and include John Ashcroft, Bob Barr, Michael Chertoff, Alan Dershowitz, Viet Dinh, Richard Epstein, Victor Davis Hanson, Arthur Herman, Charles Kesler, Andrew C. McCarthy, Ed Meese, Michael Mukasey, Theodore Olson, A. Raymond Randolph, Dean Reuter, Anthony Romero, Paul Rosenzweig, Laurence Silberman, Nadine Strossen, Marc Thiessen, Jonathan Turley, and Jonathan Yoo. The book is now available, including on Amazon.com.

Ilya Shapiro and Caitlyn W. McCarthy, both of the Cato Institute, have a short paper in the John Marshall Law Review on the Citizens United case, addressing in particular the issue of whether corporations should count as “real persons” for First Amendment purposes.

Reviewing the Supreme Court’s treatment of the constitutional rights of corporations in a variety of contexts, Shapiro and McCarthy convincingly show that the Court has never thought that corporations have constitutional rights in exactly the same way as individual human beings do. On the contrary, the Court has consistently recognized that corporations, though not identical to human beings for constitutional purposes, should be accorded some constitutional rights in order to protect the constitutional rights of the individuals who manage and own them.

For example, corporations clearly have Fourth Amendment rights against illegal searches and seizures and Fifth Amendment rights against government takings. If they didn’t, the police could storm corporate offices whenever they wanted and seize whatever they pleased (Fourth Amendment), and governments could take corporate property without paying compensation or even giving the corporation a hearing (Fifth Amendment)—and these outcomes would clearly impair the constitutional rights of the individuals who manage and own the corporation. On the other hand, corporations do not have Fifth Amendment rights against self-incrimination, even though the individual human beings who are corporate officers, directors, or shareholders do.

The real issue in Citizens United is thus not whether corporations have constitutional rights just like individual human beings do (of course, they do not), but whether giving effective protection to the First Amendment rights of the human beings who own and manage corporations requires recognizing such rights in the corporation itself. For more on that question, see not only the paper by Shapiro and McCarthy, but also this blog by UCLA law professor Eugene Volokh.

Many people think that CEOs of public companies are systematically overpaid. David F. Larcker and Brian Tayan, both of the Stanford University Graduate School of Business, disagree. In a paper recently posted on the Social Science Research Network, they argue as follows:

While it is true that certain individual executives in the U.S. receive compensation that is unmerited based on the size and performance of their company, the compensation awarded to the average CEO is much more modest than [some critics of CEO pay] suggest. Based on data from the 4,000 largest publicly traded companies, the average (median) CEO received total compensation of $1.6 million in fiscal year 2008. This figure includes salary, bonus, the fair value of equity-related grants, and other benefits and income. This does not seem like an unconscionable level of compensation for an around-the-clock job with tremendous responsibility.

Larcker and Tayan don’t mention it, but I would add that, although $1.6 million a year is a huge figure relative to what most people make, it is nevertheless a good deal less than what many sports stars, singers, and actors make, and even a good deal less than what many elite investment bankers and lawyers make. That is to say, it is good deal less than the income of many other people who are not the subject of public opprobrium because of their level of compensation.

Larcker and Tayan’s paper is derived from their new book, Corporate Governance Matters, which promises to be a good read.

Joseph Stiglitz, a winner of the Nobel Prize in economics and a professor at Columbia University, writes in Vanity Fair that income inequality in the United States has become so extreme that the people may soon rise in the streets the way they have in Tunisia and Egypt. That’s rather hysterical, of course, and most of Stiglitz’s column is simple assertion unsupported by the kind of argument that characterizes his scholarly publications (to be fair, he is writing in Vanity Fair, after all). In the key paragraph, however, Stiglitz does make a serious argument, and since it’s important, often-repeated, and wrong, I call it to your attention:

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I love empirical confirmation of my views, especially when I wasn’t expecting it. You may recall that I recently wrote an article for On the Square defending the Supreme Court’s decision in Brown v. Entertainment Merchants Association, which struck down on First Amendment grounds a California statute that prohibited the sale of certain violent video games to minors without parental consent. One argument that never occurred to me was that some games affected by the statute might actually be good for minors to play. But, it turns out, this is actually the case.

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Does economic competition destroy ethical behavior? I ask because I came across in my reading today this insightful short paper by Harvard economic Andrei Shleifer in which he argues that, yes, in some cases, competition destroys ethical behavior, but, in the long run, competition promotes such behavior.

The argument for the first proposition is that, in some cases, unethical behavior can lower a firm’s costs (e.g., using child labor) or increase its revenues (e.g., universities commercializing faculty research), and so, once one firm in a market begins engaging in such behavior, other firms must follow suit, even if the people controlling them regard the behavior as wrong. If they don’t, they will suffer a competitive disadvantage that could eventually put them out of business.
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These pages are generally above following the likes of the Casey Anthony trial, but now that it’s over, I call to your attention a very wise editorial by Alan Dershowitz in today’s Wall Street Journal in which Professor Dershowitz explains why the result in the trial was correct. The whole is well worth reading, but here is one part I particularly like:

A criminal trial is never about seeking justice for the victim. If it were, there could be only one verdict: guilty. That’s because only one person is on trial in a criminal case, and if that one person is acquitted, then by definition there can be no justice for the victim in that trial.

A criminal trial is neither a whodunit nor a multiple choice test. It is not even a criminal investigation to determine who among various possible suspects might be responsible for a terrible tragedy. In a murder trial, the state, with all of its power, accuses an individual of being the perpetrator of a dastardly act against a victim. The state must prove that accusation by admissible evidence and beyond a reasonable doubt….

This daunting standard finds its roots in the biblical story of Abraham’s argument with God about the sinners of Sodom.

One reason I like this passage is that it takes up an argument I have been pressing recently in these pages, namely, the difference between law and morality. When the question is no longer, What should I do?, but What should we, as a society, do?, and moreover, to answer that question we set up procedures and officials and enforce their decisions, including against people who may disagree with them, all manner of new considerations become relevant. This is why there is, and should be, a big difference between what’s moral and what’s legal. But go read Professor Dershowitz, because he says a lot of smart things on this topic.

Here’s a story that amuses me no end. In an op-ed in the Wall Street Journal, Patrick J. Reilly, the president of the Cardinal Newman Society, complains about two recent decisions by regional offices of the National Labor Relations Board allowing certain professors at Catholic colleges to form unions. The colleges, St. Xavier University in Chicago and Manhattan College in New York, had argued that such unions would interfere with their autonomy as religious institutions and thus that application to them of the relevant provisions of the National Labor Relations Act would violate their religious freedom guaranteed by the First Amendment. Having lost at the NLRB’s regional offices, the colleges are appealing.

Mr. Reilly agrees with the colleges and thinks that the NLRB’s action is a “serious overreach by the government,” but he recognizes one of the ironies here: “Colleges that have deliberately watered down their Catholic identity, in part to help themselves compete for governmental aid” are now arguing that their religious mission is so critical to what they do that a faculty union would disrupt it. Mr. Reilly is more charitable than I am, so I will say what he doesn’t: Given the extremely meager religious content of much of Catholic higher education nowadays, the colleges’ position is going to be a tough sell.

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Joe Carter notes that the Obama Administration is considering whether to require health insurers to pay for contraceptives. Even leaving aside moral objections, this is great foolishness from an economic point of view.

To simplify matters, assume that the insurance pool contains 500 male-female couples and that they all buy their insurance jointly as couples. If they all use the same quantity of contraceptives every year, then each couple will incur the same annual contraceptive costs, say, $100. If the insurer does not cover contraceptives, each couple is out $100 a year for these costs. If the insurer does cover contraceptives, then it can expect to pay out an additional $50,000 per year in claims (500 couples times $100 per couple), and so it will have to raise its premiums. How much? By at least $100 per couple, but in fact a bit more, because it costs something to process the extra claims and related paperwork. So each couple will see its insurance premiums rise by, say, $105 per year. Hence, at the end of the year, although the couples got their contraceptives “for free” under their insurance policies, they in fact paid for them in the form of higher insurance premiums. Indeed, they paid more in increased insurance premiums than they would have paid had they bought their contraceptives directly.

Of course, not everyone uses contraceptives, and among the people who do, not everyone uses the same amount. The real effect of requiring insurers to cover contraceptives will thus be that everyone’s insurance premiums will go up, but some people will benefit from this, and some will be harmed. In essence, those who use an above average amount of contraceptives will be benefited, and those who use a below average amount will be harmed. Hence, generally speaking, the winners will be young, sexually-active heterosexuals, especially unmarried people, and the losers will be older people, chaste people, people who want to conceive a child, and gays and lesbians. Why should these latter people subsidize the sex lives of the former people? I can see no plausible justification for this.

The stated reason for the policy is that some people don’t have access to contraceptives because they can’t afford them. Given how cheap contraceptives are, it would seem to me that the number of such people must be relatively small, but we can let that pass. The bigger point is that, if the Obama Administration thinks that we need a new public assistance program for people too impecunious to purchase their own contraceptives, there are cheaper and fairer ways to accomplish this. For example, we could allow people below a certain income level to receive a credit against their income taxes for their annual contraceptive expenses. We could call this program a Pill Grant.

The truth of the matter is that “Pill Grants” would never pass because the American people have the good sense to think that, with limited exceptions, people should pay their own way in life, and there is little reason for some Americans to subsidize the sex lives of other Americans. If, however, the true nature of the program can be disguised by wrapping it up in an insurance policy, it has, unfortunately, a chance of becoming law because most people will not realize what’s happening.

The Treasury Department announced yesterday that it was selling off its last stake in Citigroup and that it would make (note, make, not lose) about $12.5 billion on the $45 billion investment it made in Citigroup at the height of the financial crisis in 2008. That’s about an 11% annual return on the taxpayers’ money.

I mention this because, among my many faults, I like to say, “I told you so.”

Back on September 26, 2008, when Congress was considering what is now known as the Troubled Asset Relief Program (TARP), I argued in this space that the principled, economically conservative position was to support, not oppose, the plan. I argued, in short, that the conservative position is not that government should never intervene in markets but that it should not intervene when it is economically inefficient to do so. This, of course, is most of the time, but there are exceptions, including when government overcomes a collective action problem to quell a market panic, and since TARP would do just that, government intervention was warranted, even on conservative principles. I stand by that argument. As Warren Buffett recently wrote in an op-ed in The New York Times, “Just as there is a fog of war, there is a fog of panic—and overall, [the government’s] actions were remarkable effective.”

I also argued that TARP would likely make money, not lose money, by buying the various kinds of mortgage-backed securities for which the market had then frozen. Technically, that point is moot, since TARP became a program of equity investments in banks, not an asset-purchase program, but the Federal Reserve, via its MBS Purchase Program has bought about $1.25 trillion worth of mortgage-backed securities, and, so far, it has made money, not lost it, on those transactions. Furthermore, as the government’s return on its Citigroup investment shows, even the converted version of TARP has turned out pretty well. The investments in the large banks that TARP was primarily designed to save have earned money for the taxpayers, and even taking account of investments that the government made in other financial firms (many of which, I admit, were not warranted), the final cost of TARP to the taxpayers will likely be about $25 billion, only a tiny fraction of the $700 billion invested.

In his Thursday Column, Rusty Reno comments on a new book by Victor Lee Austin and makes some enlightening comments about authority (later amplified here). With the exception I note below, I do not disagree with Rusty, but I think the discussion would profit by expressly distinguishing several different kinds of authority.

For example, sometime we treat someone as an authority because that person has knowledge we recognize that we don’t. Let’s call this epistemic authority. Thus, if you have cancer, you go to a reputable oncologist, and if you need a complicated will drawn up, you go to a skilled trusts-and-estates lawyer. If you’re smart, you generally do what such experts tell you to do because they really do know better than you do. One problem with such authorities, however, is that they tend to overstep their bounds. Hence the famous physicists who opine on nuclear weapons policy.

The problem here is (more…)

I thank Joe Carter for noticing an essay of mine on Two Bases of Morality in Catholic Theology originally published in Dappled Things, and I thank both Joe and the various others for taking the time to comment on that essay. Before I respond to those comments, let me provide a little background.

In contemporary academic philosophy, there are three main kinds of moral theory. There is virtue theory or eudaimonism, which is the way the Greeks thought about morality and which is nowadays associated with Aristotle. There is utilitarianism, which was invented in the modern period and is associated with Bentham and Mill, although it has roots in Hume. And there is deontology, which was also invented in the modern period and which received its classic expression in Kant.

Thus, Rosalind Hursthouse begins her important book On Virtue Ethics by stating, “‘Virtue Ethics’ is a term of art, initially introduced to distinguish an approach in normative ethics which emphasizes the virtues, or moral character, in contrast to an approach which emphasizes duties or rules (deontology) or one which emphasizes consequences of actions (utilitarianism).” Almost every contemporary introduction to philosophical ethics repeats this classification. See, for example, Anthony Kenny’s A New History of Western Philosophy. This is such standard stuff nowadays that if you type “deontology” into Google and then continue with the letter “u,” Google will suggest “deontology utilitarianism virtue theory” as a possible search for you.

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