Just curious about the Supreme Court’s Windsor v. U.S. decision

I’m glad the Edith Windsor won her case. I think she deserves it.

The Supreme Court found that not allowing a survivor of a same-sex marriage (as recognized by Canada) to claim the U.S. Federal estate tax deduction that is available for survivors of heterosexual marriages violated the equal protection clause of the Constitution (Amendment 14).

For those who agree with me on the outcome of this case, but also wish to continue to apply different tax rules to high and low-income earners through a progressive tax code, I’m curious to hear why you think holding these two positions is consistent and why the latter position doesn’t violate the equal protection clause of the Constitution.

By the way, I don’t believe the problem is what the state defines as marriage. I think the problem is that we have a state so entwined in our lives that what it defines as marriage matters.

In this case, if there was no estate tax, there would have been no court case for the Supreme Court to rule on.

I have just one follow-up question for the Ms. Windsor. I’m curious if when her spouse was alive if she filed suit to be able to file a joint Federal income tax return to enjoy the same marriage tax penalty as heterosexual marriages.

Law’s Invisible Hand

Jim Manzi, in his book, Uncontrolled, writes about how the invisible hand orders more of our lives than just commerce. It exists in all systems with human interaction, including common law (p. 52):

The common law’s noble lie/leap of faith is that practitioners serve some concept of justice; its invisible hand is that a series of disputes in which both sides pursue self-interest under a regime of competent regulation produces, over time, outcomes that tend to support a society capable of creating public order and material abundance.

Recommended links

Is there something wrong with the Administration’s Constitutional vision? Ilya Shapiro thinks so. In the Wall Street Journal, he highlights three recent Supreme Court decisions holding government within the limits of the Constitution. What surprised me is that two of the decisions were unanimous.

From the piece:

As the world awaits the Supreme Court’s ruling on ObamaCare, there’s a larger story that the pundits are missing: the court’s rejection of the Obama administration’s increasingly extreme claims on behalf of unlimited federal power.

This term alone, the high court has ruled unanimously against the government on religious liberty, criminal procedure and property rights. When the administration can’t get even a single one of the liberal justices to agree with it in these unrelated areas of the law, that’s a sign there’s something wrong with its constitutional vision.

I couldn’t agree more with Luigi Zingales’ observation, also in the Wall Street Journal, that increasingly the most talented aren’t getting ahead in the U.S. due to early stage crony cancerism.

The most boring and interesting book

I finally got around to reading Hernando de Soto’s book, The Mystery of Capital, based on a recommendation from W.E. Heasley. I recommend it.

I realize the book has been out for a while and I’m very late to this party, but better late than never.

Before I read this book, I had a firm belief that law was an emergent order of an evolutionary process of humans interacting with each other, where different dynamics of interaction were constantly tested in the crucible and the most effective interactions emerged.

In other words, we stop at red lights because that practice keeps us alive, not because it’s a written law. If we were to erase the written law from the books tomorrow, we’d still stop at red lights.

But de Soto gives a good history of emerging law in the United States compared with other countries that are not as successful as the U.S.

U.S. “lawmakers” didn’t seek to overwrite the ‘law of the land’, or the law that had emerged through local and private arrangements from various landowner and gold claim organizations, for example. Lawmakers primarily sought to serve as a backstop for those local arrangements.

In not-so-successful countries, elites ignore the ‘laws of the land’ and try to overwrite them with their own idea of what’s best. But, it turns out that their untested ideas don’t work and people do their best to ignore them.

I’ve witnessed this same phenomena in business management. Company leaders often ignore bottoms-up successes and push their own ideas. Usually those ideas are based on their own untested preferences and they usually end up getting fired because they don’t work.

This bottoms up process was illustrated well with de Soto’s story from Indonesia. While there to launch his book, some Indonesian cabinet members invited him to discuss how they could find out “who owns what among the 90 percent of Indonesians who live in the extralegal [ignoring formal law of property ownership] sector.”

He told the story of his trip to Bali:

As I strolled through the rice fields, I had no idea where the property boundaries were. But the dogs knew. Every time I crossed from one farm to another, a different dog barked. Those Indonesian dogs may have been ignorant of Indonesian law, but they were positive about which assets their masters controlled.

I told the ministers that Indonesian dogs had the basic information they needed to set up a formal property system. By traveling their city streets and countryside and listening to the barking dogs, they could gradually work upward, through the vine of extralegal representations dispersed throughout their country, until they made contact with the ruling social contract. “Ah,” responded one of the ministers, “Jukum Adat (the people’s law)!”

Discovering “the people’s law” is how Western nations built their formal property systems.

I’d like to take a survey of U.S. population to see what percentage of people know that U.S. property law derives from local and private arrangements made by individuals. I bet it’s low. Most people believe law comes from judges and lawmakers, which is about like believing that language comes from English professors.

As W.E Heasley mentioned in the comments of this post, we shouldn’t confuse legislation with law. The best legislation usually derives from the people’s law. Ineffective legislation overwrites the people’s law.

Dumb or Deceptive?

I was planning to write a post about how Obama’s recent characterization of the Supreme Court was either dumb or deceptive. But, I discovered that I don’t have too. Stephen Presser did a fine job at CNN in his opinion piece, Obama should know better on Supreme Court’s role.

Presser writes:

Setting aside the point that the ACA did not pass with an overwhelming majority [as Obama claimed], but by a party-line vote in the Senate and seven votes in the House, and without the support of a single member of the Republican Party, the most astonishing thing about Obama’s diatribe was the fundamental misunderstanding of our constitutional tradition it revealed.

Since 1788, in the famous defense of the Constitution set forth by Alexander Hamilton in the Federalist Papers, it has been understood that it is the task of the Supreme Court to rein in majoritarian legislatures when they go beyond what the Constitution permits.

This is not, as Obama implies, judicial activism, or political activity on the part of the justices. This is simply, as Hamilton explained, fidelity to the Constitution itself, fidelity to the highest expression of “We the People of the United States,” the body whose representatives ratified that Constitution.

Judicial review is not usurpation — it is the manner in which the rule of law is preserved in this nation. It is certainly true that sometimes courts, and even the Supreme Court, have erred in their interpretation of the Constitution, and some legislative acts that clearly were permitted by the Constitution have been struck down. But if the ACA’s individual mandate is rejected, this will be fully within the legitimate exercise of judicial powers.

Call me crazy, but I think our elected officials should have a good understanding of the roles of the various branches of government and the key underlying principle of the Constitution — checks and balances on power.

It would be great if the media asked political candidates seeking Federal office to explain the roles of the Executive, Legislative and Judicial branches of the Federal government and how they can check and balance each other so we know if we are voting for someone who will follow his or her oath to preserve, protect and defend the Constitution or if we are voting for someone who views the Constitution as little more than a distraction or worse.

With everything there are trade-offs. No matter what the Supreme Court decides, I believe a positive outcome of this episode is that America is getting a much-needed lesson on checks and balances of power and maybe that will encourage voters to carry out more due diligence on their candidates.

Justice Roberts makes a poor question subustitution

Here’s a great follow-up from David Henderson at EconLog to his previous post, my post on the government subsidy fallacy, and Bryan Caplan’s post on Kahneman’s new book.

In it, Henderson criticizes Justice John Roberts comment regarding government decency standards:

All we are asking for, what the government is asking for, is a few channels where … they are not going to hear the S-word, the F-word, they are not going to see nudity.

As Henderson correctly points out, the question isn’t whether “we” want cuss words and nudity on TV, but whether the government has the authority to tell us that we can’t.

Most people might think, but if most people agree, then I’m okay with the Federal government doing that.   However, the government was not designed to acquire powers simply through what I think sounds good or a public opinion poll.

It was designed to have its power modified via Article V of the Constitution: Amendment.

Why do you stop at red lights?

I recently asked a co-worker this question when we were talking about law.  It went something like:

Me:  Why do you stop at red lights?

Her:  Because it’s the law.

Me:  You mean the law as in the rules on the books?

Her:  Of course.

Me:  Do you drive the speed limit?

Her:  Well close to it.

Me: But over it, right?

Her:  Well, yeah, doesn’t everybody?

Me:  Okay. Are you still sure that you stop at red lights because it’s a rule that’s written down?  You just admitted that you don’t follow another written down rule.

Her:  Not really.  So, why do I stop at red lights?

Me:  I’m going to give you a choice.  I can give you the answer and the way you look at the world may change.  Or, I will not give you the answer and you can go on believing the world around you behaves in a way that it does not.

Her:  Okay, quit the Matrix b.s. and tell me for crying out loud.

Me:  Well.  There’s a couple reasons you stop at a red light.  One is your own safety.  You know that you don’t stop at green lights.  And you know that nobody else does either.  So, if you ran red lights, the direct consequences could be great and you could do you and others serious harm.  The main reason you stop at red lights is because it pays off well for you to do so.

Her:  Okay.

Me:  Another reason is that at some point in time, the color red became associated with stopping in traffic.  No central body sat around and said red lights will be the standard for that.  It emerged somewhere as a practice and stuck.  As far as I know, most traffic laws are passed by city and state governments.  Yet, somehow, without a centralized standards committee on traffic signaling, red emerged as the signal for stopping and green for go.  And it’s just not in the U.S.  It’s pretty much everywhere there’s traffic — other countries, railroads, airport runways, boats and so forth.  So, that’s why you stop at the color red.  (This website claims that the traffic signal was adapted from the railroad by an innovative officer in Michigan).

Her: Okay.  So what’s your point?

Me:  My point is that you, like most people, think you stop at red lights because “it’s the law”.  It is in a sense, but not the sense you are thinking.  You are thinking of legislation, or the law that some governing body has written down on paper.

However, if we investigated all legislation, we’d probably find many “laws” that we break.

You stop at red lights because “it’s the law” in the sense that it’s an evolved social norm.  This norm evolved to help keep us safe.  And it works.  Do you know how I know it works?

Her: I bet you’re going to tell me.

Me: Because we still practice it and it more or less keeps hundreds of millions, if not billions of people safe.  I’m guessing if we looked into history, we might find that there were other things tried, but they didn’t work as effectively.

Roundabouts and cloverleafs, for example, also seem to be effective ways to handle intersections in traffic, the real estate and additional construction cost probably doesn’t make them as cost effective as traffic signals.

Laws are really developed in the crucibles of human interactions and emerge as social norms, customs and practices.

They rarely emerge from legislators or judges, even though most people think that’s exactly where they come from.

Her:  Gee.

This conversation was inspired by this lecture from Don Boudreaux:

The video is worth your time.  If you don’t have that kind of time to sit at the computer, then you can also download an EconTalk podcast from 2006 that’s essentially the same material.

Listen to it if you want to escape the Matrix.

Litmus test: Morality of law

Cover of "The Law"

Can the eye on the cover see the unseen?

In his latest column, Walter Williams quotes French economist/philosopher Frederic Bastiat.   Bastiat provided a great litmus test for judging the morality of a law and government action:

See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Bastiat added in his book The Law:

When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law.

Anthony Case and Our Courts

Based on my limited knowledge of the Anthony case, I agree with Alan Dershowitz’s take in today’s Wall Street Journal.

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.

Even if it is “likely” or “probable” that a defendant committed the murder, he must be acquitted, because neither likely nor probable satisfies the daunting standard of proof beyond a reasonable doubt. Accordingly, a legally proper result—acquittal in such a case—may not be the same as a morally just result. In such a case, justice has not been done to the victim, but the law has prevailed.

Few appear to be pleased with the outcome of the trial.  But the reasons for displeasure are different.

For those who agree with Dershowitz, the displeasure stems from the lack of hard evidence to prove the state’s case beyond a reasonable doubt.  But, they understand that the reasonable doubt standard is there to protect all of us from a potentially oppressive state.

For those who believe the purpose of the courts is to wield moral justice (i.e. what we emotionally feel ought to be done), the Anthony verdict is displeasing because it doesn’t appear to deliver that moral justice.

Why this horrible tragedy has reached the fever pitch for the moment over all the other horrible tragedies out there is beyond me.  But, maybe it will serve to educate some folks on the true purpose and valid limitations of our courts.

The Fatal Conceit

Why are there are more of us humans now than 100, 300 or 10,000 years ago?

Some reasons are external and beyond our control.  For example, we benefited from the Earth not having collisions with large asteroids or comets recently.

Other reasons are in our control.  It’s those reasons that F.A. Hayek writes about in his book, The Fatal Conceit.

In the book, he explores the idea that over time, through many trials and errors, humans discovered ways of interacting with one another that result in more of us.  Those ways of interaction that produce more of us aren’t necessarily right or wrong and were not developed by design.  They just happen to work or not.

We naturally use those ways in our daily interactions.  Why did you give a friendly wave to the driver that let you merge into traffic?  Why did you stop at the stop sign?  Why did you pay for the coffee?  Why did the coffee shop sell it?  Why did you leave a tip for the waitress?  Why did you not take the tip that was still on the table from the previous customers?

We know those interactions as law, tradition, social norms, human rights, beliefs, etiquette, prudence, respect, benevolence, propriety and property rights.  These interactions evolve over time based on what works and what doesn’t.  We each learn these standards from trial and error and socialization with older generations and sometimes we contribute to their evolution when we try something different and it works.

Those ways of interacting have allowed each of us to live a more prosperous life as we benefit every minute of every day from voluntary actions of an extended order — or a large number of people we don’t know, haven’t met and may never in our life time see.

Hayek’s Fatal Conceit is the belief by some that a small group can design and control the evolution of this thick and ancient web of human interactions to achieve intended consequences, without incurring negative unintended consequences.

The fatal conceit is why a politically and economically centralized Rome died out and centralized companies die off.

I recommend reading Hayek’s The Fatal Conceit.