On July 3, I posted my critique of an email sent to me by Clifford Winston, a well-known and productive economist at the Brookings Institution. Cliff then sent me his response, which I published on July 5.
Here is my response to Cliff. The quotes from him are highlighted. Mine are not.
To the best of my knowledge, economists have not reached a consensus on defining government failure. A plausible definition of a government failure, which is useful for my purposes because it lends itself to empirical measurement and does not limit its scope, is a policy intervention that significantly wastes resources. Those resources include firms’ compliance costs and the cost of taxpayers’ funds to pay for government’s implementation and enforcement of the policy.
That does sound reasonable when we’re thinking of governments as legislators and as bureaucrats. If we could reasonably think of judges and justices the same way, then I would agree with Cliff. But I don’t think of them the same way. You’ll see why soon.
Economists tend to think of government failure as applying to elected officials in the legislative and executive branches who formulate and implement public policies at various levels of government. I have synthesized many studies (see the following books free and free in certain cases) that have assessed the effects of those policies and found enormous evidence of government failure. Such studies have been useful for policy debates. For example, evidence on the effects of Civil Aeronautics Board regulation of airline fares on interstate routes that found those regulated fares were higher than comparable unregulated routes in California and Texas supported the case for deregulating the airline industry to correct government’s regulatory failure.
I agree and, as I have written elsewhere, economists including Alfred Kahn but also other lesser-known economists were very important in making the intellectual case for deregulating airlines.
Although economic efficiency is important for policymaking, there are far more counterexamples to the airline case. For these, empirical evidence identifies a government failure that supports an efficient policy reform, but policymakers are unwilling to consider that reform. For example, agricultural subsidies to farmers and Agri-business are hard to justify on economic grounds and urban rail transit’s social benefits are exceeded by its huge subsidies, yet money continues to be funneled into those enterprises. Apparently, there is something more important than efficiency that enables those subsidies to grow. That “something” causes government failure and impedes any efforts to reform policy to significantly reduce that failure. It is certainly possible to speculate on what that “something” is, but I don’t know of any causal evidence to support such speculations.
I agree with his examples. But although Cliff doesn’t know of causal evidence, I do. Strong concentrated interest groups get together and get large benefits per person or per firm, while the much larger costs are borne in smaller amounts per consumer and/or per taxpayer. We have lots of evidence on that.
Of course, elected officials and their surrogates are not the only people in government who make policy. Judges and Justices also make policy. For example, policy toward abortion over the last fifty years was not the result of an act passed by Congress and signed by the President. The nation’s abortion policy was shaped first by the Supreme Court’s decision on Roe v. Wade and more recently by the Dobbs decision. Similarly, affirmative action policies by public and private colleges and universities will have to conform to the Supreme Court’s recent decision to undo the Bakke decision.
I think Cliff is mixing two things here. It’s true that judges and justices sometimes make policy. And they shouldn’t. What they should do is read the rules and see if the particular legislation conforms to those rules. Here you can see Cliff’s and my very different views of the proper roles of judges and justices.
Thus, in the context of government failure, how should we assess SCOTUS decisions and determine if they are likely to result in government failure? How can we reduce the chance that the decisions are likely to result in government failure? Two immediate objections to this exercise are that SCOTUS is supposed to be narrowly constitutional providing a check within the structure of governance, and that SCOTUS makes legal not economic decisions. In other words, it is inappropriate to assess SCOTUS rulings as possibly failing like we have assessed other government policy failures.
Here Cliff, to his credit, understands the objections. His last sentence is a little ambiguous. If by his last sentence he means that the objection is that it’s inappropriate to assess SCOTUS rulings the same way we assess other government policy failures, that is, by an efficiency test, then yes, I think he understands the objection. If he means that the objection is that we shouldn’t judge judges, then no, almost no one has that objection.
However, I agree with Richard Posner’s perspective that a case is just a policy (my insert) dispute, which opens up the playing field to assessing the case by cost-benefit analysis and by other empirical approaches that are commonly used to assess government policies. To be sure, Justices are not trained in economics, but does that mean economics should be ignored in assessing their decisions, especially if it could identify a more socially desirable resolution of a policy dispute? Economic efficiency considerations are not ignored in assessments of other government policies; what makes assessments of the public policies facing SCOTUS different?
A case is a policy dispute, but it’s not “just” a policy dispute. It’s also about whether the rules were followed. Here Cliff and I are diverging a lot. But wait, there’s more.
If the constitution gave unambiguous guidance that was aligned with socially desirable outcomes, then it would be dispositive. However, the constitution is not always unambiguous; Justices interpret it in different ways and have increasingly done so in accordance with their ideologies (see chapter 7 free in certain cases for empirical evidence); and the Constitution, just like transit operations, has not kept pace with changing demographics and other societal changes.
Did you catch that qualifier in the first sentence? This is why I think Cliff is advocating that judges be central planners. It’s not enough for him that the constitution gives “unambiguous guidance.” It also, in his view, must be guidance “aligned with socially desirable outcomes.” Forget about the fact that we don’t even know what “socially desirable” means. Hum a few bars from many posts by my EconLog colleague Pierre Lemieux here. Even if we did know, Cliff would have the judges rule on that basis even in the face of unambiguous guidance.
Take an extreme example. I, David R. Henderson, am not allowed to be U.S. President. The requirement that I be born an American is about as unambiguous as the U.S. Constitution can get. Imagine that 80% of Americans thought, as I do, that I would a better president than Donald Trump or Joe Biden. Imagine also that by Cliff’s own “socially desirable outcomes” standard, he agrees with those 80 percent. I run and win. In my view, the U.S. Supreme Court should prevent me from taking office. Actually, SCOTUS wouldn’t have to. A lower federal court would do the job. In Cliff’s view, the courts should allow me to take office. Who is right, Cliff or me?
Unlike other areas of economic policy, there is not accumulated evidence that SCOTUS rulings have added to government failures. As noted, I have not seen SCOTUS rulings assessed using that benchmark. One might speculate that because elected officials’ policies fail so often, when SCOTUS has a case involving the government, it is likely to reduce a government failure.
In any case, my view is that empirical economic analysis could and should be used to help reduce the chance that SCOTUS decisions will result in government failure. As noted, Justices are not trained in economics or empirical methods, so expert panels could and should be formed to help Justices to reach more informed decisions. The paper I sent to David raises and responds to several objections to expert panels: (1) Economists also are ideological; (2) Economist and non-economist experts may disagree; (3) Experts can submit amicus curiae briefs; (4) Expert panels are inconsistent with the role of the Supreme Court; (5) The Supreme Court makes legal not economic decisions; (6) The legislative branch should convene expert panels; (7) Lawyers control the evidentiary process; (8) Expert panels would amount to academic seminars; and (9) Other reforms of the Supreme Court are available.
I don’t object to SCOTUS asking economists to help them understand the effects of various laws or rules. What I object to is SCOTUS acting as if it is not constrained by what the Constitution says.
Assuming expert panels were advising the Supreme Court and the Justices respected their insights and took their advice seriously, could those panels bring evidence to a case that might affect the Justices’ thinking and understanding of arguments and amicus briefs so as to reduce the likelihood of government failure? Let me first add that the cause of government failure is probably better understood in polices that arise from Supreme Court cases than from policies instituted by elected officials. That is, I do not have evidence that explains why policymakers assign a large welfare weight to farmers and transit operators, but I do have evidence suggesting that some Justices’ ideologies could enable them to justify assigning a dispositive welfare weight to a woman who does not want to provide her services to a gay couple, or providing a higher welfare weight to a pregnancy than to the fate of that baby post-birth.
“[C]ould those panels bring evidence to a case that might affect the Justices’ thinking and understanding of arguments and amicus briefs so as to reduce the likelihood of government failure?”
Sure. But in my view it has to be in the context of following the rules.
That said, in the web designer case, the expert panel would stress the economic costs to all the parties involved, the non-economic benefits to the web designer, the bargaining issues involved, and consider any spillover effects of either allowing or disallowing the web designer’s discrimination. This is not a straightforward exercise, and it could reveal some important effects. In the final analysis, I don’t know where the assessment would land, but I think it could clarify the relevant welfare effects of the policy dispute and the most desirable resolution and scope of application for the decision among a set of options (e.g., subcontracting the web design or cake, what types of services constitute speech, and which don’t).
As Frank Barone says in the TV show “Everybody Loves Raymond,” Holy Crap! Whatever you think about the role of courts, Cliff flunks basic economics. Contrary to what he says, this is a completely straightforward exercise. The web designer can decide whether the business she loses by not catering to certain groups is a worthwhile cost to pay to exercise her tastes. Let’s say, now that the case has been resolved, she sets up her business and says, “Oh, gee, I’m missing a lot of business and I think I would like to get that business, even if it means saying things I don’t believe?” The great thing about the SCOTUS decision, not just based on following the rules but, as Cliff says he wants us to think, based on economic efficiency, is that it allows for that. Either way we get efficiency.
In the Dobbs case, it would have been useful for Justices to hear from an expert panel that attempts to resolve a variety of relevant issues, many of which can and have been addressed empirically, such as: (1) the effect of abortion access on women’s lives and health; (2) risks to women who cannot get timely and appropriate healthcare in case of urgent medical issues like miscarriages or ectopic pregnancy; and (3) risks to women due to confusion and legal doubt among health care providers after Dobbs. The expert panel also could provide insights on the difficult problems of assessing the effects of abortion on the unborn child as well as the fates of children resulting from un-terminated pregnancies after Dobbs.
Yes, it would have been useful if the Justices were legislators. It’s not useful for them qua Justices. And, by the way, what we’re seeing at the state level is a whole lot of legislatures and some groups of voters tangling with these issues. And, for Republicans who oppose legalizing abortion, talk is no longer so cheap, as the 2022 Congressional elections showed.
Finally, the education loans and college admissions cases are ripe for an expert panel’s empirical analyses of the effects of those policies and assessments of alternative policies that might be more socially desirable.
Here and in the previous paragraph, Cliff is not making his case. He’s simply begging the question: that is, assuming that judges should make policy. Of course if they should make policy, these are important things for them to know.
In sum, my view is that the Supreme Court is making public policies, which like other policies have economic and non-economic effects; thus, Justices should have the benefit of assessments by experts of those possible effects, which may reduce the chances that the justices’ rulings result in government failure.
Yes, that is Cliff’s view. The question is whether his view is correct.
Cliff then turns to my objections and answers them.
I leave out the possibility of looking at the Constitution, seeing what it says, and judging accordingly. My response: I indicate my reasons above that relying on the Constitution alone is not necessarily going to lead to desirable outcomes. In particular, I agree with Posner’s 1987 article that “law is not a self-contained field of knowledge whose methods of reasoning can by themselves solve human problems in ways that best serve our society.” Expert panels are not necessarily appropriate for every case before SCOTUS, but I think Justices often could benefit from more effective help by experts. In cases where the Constitution is explicitly silent or ambiguous on the matter, neither determining judicial intent nor ascertaining original meaning is an exact science that must be practiced only by Justices.
We both agree that, if we can define “socially desirable outcomes,” relying on the Constitution alone is not going to lead us there. Cliff is arguing as if I haven’t admitted that. I have. My point is that that’s not what judges should be doing. If you think Cliff is right, how would you handle the hypothetical I gave above, where I, not born as an American citizen, am voted in as president?
Notice also how Cliff hedges on his earlier argument. Here he talks about “cases where the Constitution is explicitly silent or ambiguous on the matter.” But earlier he wanted not just unambiguous guidance but “unambiguous guidance aligned with socially desirable outcomes.”
On the web designer case, although I say that the economic benefits of greater output should be compared with the costs of not allowing the web designer to exercise her religious preferences, that, in theory, is what the web designer is doing. Accordingly, we don’t need a government agency, whether a court or a regulatory agency, to make that assessment. If a government agency were to require her to trade, we know that there would be net losses: the loss to her from being forced to trade would be greater than the gain to the consumers who miss out on the trade. If that weren’t so, they could raise their offer and she would accept.
My response: The argument is that there is no price that could result in a mutually beneficial trade because of the infinite loss to the web designer, so any ruling by SCOTUS that dictates otherwise would produce a net welfare loss and there is no need for the court to get any advice. That is certainly true if the web designer requires an infinite price. But my understanding is that the case was brought without an actual gay couple wanting the designers’ services. I therefore have no idea what tradeoffs the web designer made with an imagined consumer and consumer base. In any case, the role of the expert panel would be to guide the Justices about what we know about dispute resolution when the participants are extremely far apart. I would be more comfortable with the Justices’ ruling if they concluded, based on the insights of the expert panel, that the dispute could never be resolved more constructively after considering a plausible set of options instead of relying solely on their subjective interpretation of the constitution. It is important to be right for the right reasons. At this point in the debate about SCOTUS decisions, both sides are content to be right for the wrong or at least highly questionable reasons.
Cliff says that he has “no idea what tradeoffs the web designer made with an imagined consumer and consumer base.” But he doesn’t need to know. The web designer knows her preferences better than he or any court does. He says that he doesn’t want the judges to be central planners. But here he’s pretty clearly saying that he would have the designer ask “Mother, may I?” rather than letting her exercise her preferences. That’s the ultimate in central planning.
Cliff says, “I would be more comfortable with the Justices’ ruling if they concluded, based on the insights of the expert panel, that the dispute could never be resolved more constructively after considering a plausible set of options instead of relying solely on their subjective interpretation of the constitution.” But why should we or, more important, the web designer care about his comfort. Cliff is being the man of system here, whom Adam Smith discusses in The Theory of Moral Sentiments.
Cliff says “It is important to be right for the right reasons.” It is. In my view, the reasons stack up nicely. First, the web designer should be able to exercise her freedom of speech, the point at issue here. Second, even if we go with Cliff’s extreme view that consequences are all that matter, SCOTUS still made the right decision. It refused to require an exchange that one party didn’t want. She said she would do this knowingly, meaning that whatever the excluded customers would pay her would not be enough to compensate her. In other words, SCOTUS refused to require an exchange whose costs to one party exceeded the gains to the other parties. As a believer in market efficiency, Cliff should be happy with the decision. But he’s not. Why? The only reason I can think of is that he does not respect people’s rights to make their own decisions about whom to deal with. Again, Cliff is being a central planner here.
I’m reminded of the 1991 movie Bugsy. In one scene, Bugsy Siegel goes to a nice house, rings the doorbell, and gets invited in. He tells the owner that he wants to buy it. The owner says he has no interest in selling. In a normal situation, that would be the end of the story. But Bugsy threatens the owner and so the owner gives in and sells. I think that’s horrible. What does Cliff think? Would he say that a court should intervene and weigh the competing interests? And if he wouldn’t say that, why wouldn’t he say it?
Generally, policies with the primary intent of redistributing income instead of improving efficiency are taken by economists as given, meaning democracies support them or reject them at the ballot box. Economists assess those policies from an efficiency perspective on whether they are least cost solutions to achieving the social goals they are trying to achieve by redistributing income. So, on the education loans and college admissions cases, I agree that Biden has not subjected his education loan policy to the ballot box, but that policy would influence voters’ preferences for or against him if it were maintained. In any case, I speculated on what the motivation is for Biden’s and the universities’ polices because I didn’t see a market failure. So, the economic issues are what are the least cost ways of achieving the policies’ goals? To that end, I think an expert panel would provide useful information on what we know about the effects of suspending the education loans and of admissions policies that favor certain applicants based on their race and ethnicity. Again, the objective is to be right for the right reasons.
Notice in the first sentence that Cliff is sure that voters are the ones who should get to decide whether to redistribute. In his view, there is no principle here that is being violated. In my view there is. So no, I as an economist don’t want to be an agent of the state, taking as given what the government tells me it wants or what polling data tell me the public wants. And since we’ve literally never had a vote on redistribution at the federal level, how does Cliff know this?
Cliff writes, “So, on the education loans and college admissions cases, I agree that Biden has not subjected his education loan policy to the ballot box, but that policy would influence voters’ preferences for or against him if it were maintained.” But a president, especially one with the power that modern U.S. presidents have, has thousands of policies. How do we know that if voters voted for Biden that it’s because of that policy? And even if we did know that, so what? Why is what relatively uninformed voters vote for so sacred? And especially why is it sacred when what they’re voting is what governments are going to do or not do others and it’s not sacred to let someone choose how to use her resources in her own life? This is seriously messed up and if I weren’t constrained by Liberty Fund rules, I would use another adjective.
And notice once again how comfortable Cliff is with letting one man decide how $400 billion is allocated because we get to vote against him.
READER COMMENTS
Vivian Darkbloom
Jul 7 2023 at 9:14am
While I agree with most of Henderson’s piece (here and previously), I suggest one should start this discussion on grounds that are much more succinct and clear than this:
“What they should do is read the rules and see if the particular legislation conforms to those rules.”
This is a bit sloppy and to a great extent circular. It’s important to realize at the outset of this debate what the Supreme Court (and other appellate courts) do. Let’s focus on the Supreme Court, because the examples given are based on Supreme Court decisions.
Essentially, almost all Supreme Court decisions fall under two broad categories:
First, the Court agrees to hear cases and renders decisions where there is a difference of opinion as to the “correct” interpretation of a (federal) law or regulation;
Second, the Supreme Court agrees to hear cases where a law, regulation or other action is alleged to be contrary to the terms of the US Constitution.
Normally, the US Supreme Court won’t intervene (issue a writ of certiorari) unless there is a split of opinion between or among lower courts. These cases are not raised sua sponte–they are the result of cases raised by litigants through various appellate courts.
As to the first type of case, it is essential to understand the Constitutional division of powers—the passage of legislation (and the policies they represent) are fundamenal and enumerated powers of Congress, which passes laws, and the Executive who approves them–both branches which consist of elected officials. In determining the correct interpretation of laws, the intent of Congress is paramount *as it should be*. The courts will consider the legislative history and will interpret legislation in a manner that makes most sense. In this respect, it may be appropriate to consider the economic effects, but only to the extent that such a reading more likely represents the intent of legislators (here, the Supreme Court gives perhaps too much deference to the idea that legislators would not intend to to anything stupid!). Nevertheless, it is *not* the job of the Supreme Court to override legislation by substituting it’s economic judgement for that of legislators. The most appropriate time for a cost/benefit analysis is *before* legislation if voted on and signed into law. If a law no longer makes economic sense, it is the job of Congress to repeal or replace it, not the Supreme Court.
In Constitutional cases, the Supreme Court often does use economic analysis. The Court applies various tests to the validity of legislation, depending on the nature of the rights and/or Constitutional restrictions involved. For example, the Court might apply a “reasonable” or “rational basis”, “compelling interest” test, etc. In doing so, it often does consider the economic impact of laws under review against say, the government and/or individual/public interest involved. It would be difficult, for example, to think of a Commerce Clause case in which the economic effect is not considered.
I was therefore puzzled as to the exact nature of Winston’s objection. While the Supreme Court does not allows couch these balancing tests as “cost-benefit tests”, in many (appropriate) cases they are. It is not clear to me what sort of “commitment” Professor Winston is looking for.
As to cost-benefit analyses (and other economic analyses) that it is argued the Supreme Court should be “committed to”, I probably have much less faith in the objectivity of those analyses than does, apparently, Winston. I have enough experience with “transfer pricing studies” (ostensibly based on “economic science”) to know that they can represent wildly different views of economic “reality”. Given this, are “cost-benefit analyses” as much ideology as science?
Finally, as indicated above, the Supreme Court certainly *does* consider economic analyses (in appropriate cases) when issuing opinions. If Professor Winston (and other economists) wish to insert their economic judgements into the mix, they are already free to do so. When appropriate to furthering their case, litigants often do submit economic reports to bolster their legal arguments. Add to that the numerous amici curaie briefs that do the same. Professor Winston is certainly free to have his own analyses attached to any brief whose authors believe it would be relevant and useful. But, it’s hard for me to fathom why and how the Supreme Court should be “committed” to these any more than they should to studies authored and submitted by psychologists, sociologists, statisticians, etc. In many cases it would boil down to a choice between two or more competing analyses.
Finally, I was flabbergasted by the suggestion that it should be the job of economists to substitute their judgements (business and otherwise), and by extension the Supreme Court of a web designer who chose to litigate her concerns all the way to the Supreme Court. Enough said because I think Henderson has already adequately pointed out the absurdity of such a notion.
Capt. J Parker
Jul 7 2023 at 9:36am
“Judges should follow the rules” is not a compelling argument. The SCOTUS majority, progressive or conservative always claim that they are doing just that. So, I think Mr. Winston has a strong point that SCOTUS needs expert guidance. However, economists only cover part of the picture; the “promote the general welfare” part. We also need a panel of experts to cover the “secure the blessings of liberty to ourselves and our posterity” part.
steve
Jul 7 2023 at 9:48am
“What I object to is SCOTUS acting as if it is not constrained by what the Constitution says.”
But judges are at least as, probably more, ideologically driven than all other politicians. You are placing your faith in this one branch of government above all others. It seems as if reading public choice theory for years you have decided it doesnt apply to judges. Judges, all of them, read the Constitution, then find ways to twist it to mean what they want it to mean. People are happy when their findings agree with their political biases and unhappy when they dont. To be a bit fair to them, ignoring the Constitution for a minute, many/most of the laws written by Congress are poorly written. Judges, not just SCOTUS judges, end up having to interpret them which inevitably results in policy.
I agree that it doesnt make sense that one man gets to make decisions about so much money, but he is going to go away. I would contend that it is even worse with SCOTUS. You have 9 people that none of us voted for who have lifetime sinecures that get to make what are essentially dictatorial decisions affecting huge sums of money, among other things, and no matter how much they choose to twist or ignore the law they cant be removed or censored. (In theory they can but not in reality.)
Given their ideological biases, to which they wont admit, I do think Winston is overly optimistic. Their ideological goals will drive their outcomes so they dont care about the consequences, other than their supporters and the people giving them money will be happy.
Steve
catherine adkins
Jul 7 2023 at 11:33am
I don’t disagree with David’s argument, but even seemingly unambiguous laws (including constitutional provisions, which are law) can be tricky to apply. Imagine a presidential candidate had been born on an airplane midway through a flight from Paris to New York, and it was impossible to determine whether the plane had crossed into U.S. airspace prior to delivery. If his candidacy were challenged on the basis that he was not a natural born citizen, what factors should a court look to in making its ruling? Original meaning (including the fact that the framers could not have imagined airplanes), the purpose of the rule (with the help of “expert” historians), the candidate’s popularity and likelihood of winning (and thus the likelihood that the Court might undermine its own standing with the public by ruling against the candidate)? When the answer to a tough question can’t be found in the law itself, as is often the case, judges will rely on extrinsic factors. Telling them to “follow the law” is a whisper in the wind.
David Henderson
Jul 7 2023 at 2:47pm
I never denied that there are ambiguous cases.
I gave Cliff an unambiguous case: I wasn’t born in mid-air. I was born about 16 miles north of the United States. I really would like to see Cliff’s answer to my question.
Kevin Corcoran
Jul 7 2023 at 11:39am
A few couple thoughts come to mind.
David wrote:
This disagreement between David Henderson and Cliff Winston perfectly captures the difference between the constrained and unconstrained vision Thomas Sowell described in A Conflict of Visions: Ideological Origins of Political Struggles. Specifically, when discussing how the two different visions view the role of the judge, Sowell wrote:
By contrast, Oliver Wendell Holmes saw his duty as a judge was “to see the game is played according to the rules whether I like them or not.” I get the sense that Cliff Winston is very much of the unconstrained vision regarding the role of judges, with David Henderson more aligned with the constrained vision.
Arguments that a given law or the Constitution is not perfectly unambiguous in a given instance tends to quickly become what Eliezer Yudkowsky called the the fallacy of gray. In this fallacy, sophists mock the “simplistic” black and white worldview of their opponents, and argue that it’s all shades of grey. Yet in practice, these people end up acting as though all grays are therefore the same shade, and end up replacing a simplistic two-color worldview with an even more simplistic one-color worldview. It may well be the case that no statement is perfectly unambiguous to all readers and requires no interpretation of any kind, but that doesn’t mean the degree of ambiguity and range of reasonable interpretation isn’t often very, very narrow. Yet in practice, we’ve ended up in a situation where judges have “interpreted” the actions of someone carrying out entirely private activity, on his own property, trading with nobody inside or outside his state, as engaging in “interstate commerce.” To try to argue this was a reasonable application of what the Constitution permits on the grounds of ambiguity about the meaning of interstate commerce is, to put it kindly, silliness in the extreme.
There are more thoughts bubbling in my mind right now but I’m going to limit myself until I’m in a more coffeed state of mind. (Yes, I did verb the word coffee and no I will not apologize for that.) I may come back with more thoughts! But overall, I very much enjoyed this post (and the posts leading to it).
David Henderson
Jul 7 2023 at 1:29pm
Excellent comment, Kevin, as is your wont. Oh, and by the way, you didn’t make a verb out of coffee; you made an adjective. 🙂
Kevin Corcoran
Jul 7 2023 at 4:02pm
See? I knew I needed more coffee!
Clifford Winston
Jul 7 2023 at 11:44am
I think things have gotten off track, which is partly my fault, so let me summarize and try to get my main point back on track.
If economists never performed retrospective and prospective empirical assessments of the effects of public policies to correct market failures and to redistribute income, we would have much less knowledge about the extent of government failure. As pointed out by Charlie Schultze from his perspective as a CEA chair, the value of this evidence is that it can prevent policymakers from recommending atrocious policies and can convert 5th best policies to 3rd best policies.
I began my long comment by saying that I have not seen such empirical assessments of the Supreme Court’s rulings with an eye toward identifying the extent of government failure by this branch of government. I noted the chapter in our book that found the Court’s rulings on business cases had become increasingly influenced by ideological preferences over time. This finding raises serious concerns that SCOTUS is NOT just interpreting the Constitution, so it is worth assessing the performance of SCOTUS empirically on whether its rulings are contributing to government failure. This is not straightforward, but is that a valid reason why these assessments shouldn’t be explored? Such evidence could help SCOTUS in the same way that research documenting other areas of government failure may have prevented atrocious policies. I suggested that expert panels could be a conduit for at least sketching the relevant empirical considerations for SCOTUS in actual cases. If the SCOTUS government failure literature developed, the panels could possibly prevent atrocious decisions.
I get the sense from some comments here and elsewhere that people are fearful that this constructive use of empirical analysis and evidence would cross a sacred line and cause more harm than good. (I understand that people can concoct worst case scenarios; see yesterday’s online comments on my NYT essay for fear of Big Brother.) I think the main area of intellectual disagreement is that I see a possible connection between traditional government failures, such as agricultural subsidies and trade restrictions, and the failure caused by SCOTUS rulings that are based on a subjective interpretation of the Constitution. Note this is a long-run perspective and not dependent on whether one thinks that SCOTUS did or did not make appropriate rulings on the recent cases. I understand that people like to debate SCOTUS rulings on those cases but those debates are incidental to my main point. If Econ Log hosts virtual discussions, I would be happy to participate in one on government failure and the Supreme Court.
David Henderson
Jul 7 2023 at 1:32pm
You write:
Maybe they have, but maybe they haven’t.
A good way to have a discussion is to answer each other’s questions. I asked two questions, one about me, born in Canada, as president and one about Bugsy Siegel. I would like to know your answers.
Capt. J Parker
Jul 7 2023 at 12:44pm
Mr Winston said:
The main area of intellectual disagreement is the same as the main area of disagreement between progressives and libertarians. Namely: How highly should government value personal liberty and how highly should it value the general welfare. SCOTUS is probably the only place where the ancient documents defending personal liberty get dusted off from time to time to see what transgressions government has made against them in its pursuit of general welfare. Subjecting this process to an economic oversight panel tips the scale in favor of general welfare.
Clifford Winston
Jul 7 2023 at 1:12pm
I like this characterization and I hope to use it. Let me explain.
I finished a paper titled: Toward A Research Program In Government Failure just before SCOTUS issued their end of term rulings. I pointed out that economists have developed a research program in market failure, but they haven’t even reached a consensus definition of government failure. I argued that it was important to develop such a research program and discussed its components, including empirical estimates and classifications of government failures in policies to correct market failures and to accomplish social goals; identification of systematic features of those failures that indicate the type of policies that are more or less likely to fail; theoretical and empirical explanations of the causes of government failures; and a short-run and long-run research agenda.
I did not include government failure associated with SCOTUS decisions because there is not a body of empirical literature I could discuss. However, after the recent SCOTUS decisions, I started thinking a bit about this issue. So, I touched the waters by sketching a few points about the economic evidence that seemed to be overlooked and sent them to David and other people. David disagreed with my specifics and that brought me to this website.
I am starting to think it would be worth writing a new paper on the Supreme Court and government failure to carefully assess what it means for SCOTUS rulings to fail; how such failure could be quantified; and what if anything could or should be done to reduce the failure.
Any suggestions of literature on the topic or possible coauthors would be appreciated. Many thanks!
Casual Observer
Jul 7 2023 at 1:02pm
Might be a silly question, but this needs more clarity for me: How do you (Dr. Winston) (or anyone for that matter) determine whether or not SCOTUS decisions are due to “ideological preferences”?
More specifically if your analysis ( or Dr. Henderson’s) determines that a decision was ideological and therefore not “desirable”, isn’t it is also possible that one can argue this analysis was due to ideological preferences?
Was the original Roe decision any more ideological than the more recent decision to overturn?
Clifford Winston
Jul 7 2023 at 1:28pm
There is a small empirical literature on the topic of ideology in SCOTUS rulings. Lee Epstein, Will Landes, and Dick Posner wrote a paper where they estimated the determinants of rulings in favor of business. Among their explanatory variables were dummy variables for each Justice that measured the “proximity” of each Justices’ rulings to the Chief Justice’s rulings. The theory was that conservative justices’ ruling would be more closely aligned with the conservative Chief Justice’s rulings, Rehnquist and Roberts are the Chief Justices in the sample, and liberal justices rulings would be less aligned with or opposite to the Chief Justice’s rulings. Statistical tests could be used to determine statistically significant differences between justices’ alignment with the Chief Justices and changes in the alignment over time.
Richard Epstein criticized the authors’ findings of ideologically based rulings, measured by the statistically significant difference between the conservatives’ alignment with the Chief Justices and the liberals lack of alignment with the Chief Justices, on the grounds that they did not control for case selection. So, my coauthors and I collected a new sample that controlled for case selection and found even stronger evidence of ideologically based rulings than Epstein, Landes, and Posner reported.
nobody.really
Jul 7 2023 at 5:25pm
To clarify: I read Clifford Winston’s reply to say that his definition of “ideological” does not have the stigmatizing meaning of “not desirable.” Rather, “ideological” just means predictably correlated with the opinions of some justices more than other justices. If justices acted without “ideology,” we would still expect disagreements, but we would expect those disagreements to be random, not correlated.
Clifford Winston
Jul 7 2023 at 5:53pm
Yes, that interpretation is correct.
The empirical studies I mentioned suggest the Justices’ ideologically-influenced rulings may result in a socially undesirable (however interpreted) outcome, but that outcome is not certain nor do the studies suggest specifically what that undesirable outcome may be. In our book, I offered a suggestive link for the finding on ideology with our previous evidence that antitrust policy and enforcement have produced few benefits to consumers, including SCOTUS decisions on major monopolization cases. But that link is tenuous at best.
Much more work is needed to systematically address the question of whether the Supreme Court has contributed to government failure. My interaction on Econ Log has convinced me to pump the brakes and take a step back from my priors. No commitments, but I may conclude that SCOTUS as a policy making body may be better than I have tended to think! I will report back at some point.
Casual Observer
Jul 7 2023 at 7:54pm
Thank you for that clarification, and thank you Dr. Winston for further explanation. Isn’t this correlation (whether weak or strong) to be expected to some extent since each justice has a “predictable” reading of the laws/regulations and constitution based on their training as originalist vs non originalist? I guess an argument could be made that since a majority of justices tend to be graduates from Harvard, Yale, and Stanford law, the predictable reading really stems from their experience practicing law not necessarily from their training in school (thinking out loud here).
Clifford Winston
Jul 7 2023 at 8:53pm
You are revealing that the “art” of econometrics is to tell a good story. A finding of an ideological correlation could reflect multiple factors, including the ideology of the president who appointed the Justice, the Justice’s endorsement of originalism, the Justice’s worldview about the role of the Supreme Court in society, the comfort the Justice has with judicial activism, and the like. I doubt an econometric study will reveal THE underlying variable for an ideological correlation. However, even if that variable could be determined, we have to go the additional step and ask, “So what?” That is, we want to understand whether ideological preferences are having a harmful effect on rulings.
To make things more complicated, we, or at least I, have to think more carefully about the appropriate benchmark for assessing SCOTUS rulings. I have been rightly criticized for considering only the welfare standard used in economics. However, if SCOTUS, and for that matter society, places a higher weight on personal liberty, then I am using the wrong standard and I would reach the wrong conclusion about SCOTUS performance. So, there are several interesting and challenging issues raised by our discussion.
BS
Jul 9 2023 at 11:10am
“To make things more complicated, we, or at least I, have to think more carefully about the appropriate benchmark for assessing SCOTUS rulings. I have been rightly criticized for considering only the welfare standard used in economics. However, if SCOTUS, and for that matter society, places a higher weight on personal liberty, then I am using the wrong standard and I would reach the wrong conclusion about SCOTUS performance.”
Surely the standard for assessing SCOTUS rulings is the law, particularly the constitution. What does the constitution have to say about the weight of personal liberty or of welfare?
Assess court rulings by any arbitrary standards, sure. Some standards would not be relevant for the outputs to be used as inputs to the judicial process, but the outputs might be useful to the legislative process.
Mactoul
Jul 7 2023 at 10:11pm
Hayek termed social as a weasel word par excellence. A way to reach pre-defined conclusions.
As in social justice etc. I suspect the socially desirable is a part of the same family. For the matter is before Supreme Court precisely because there is no agreement on what is desirable.
Monte
Jul 8 2023 at 10:12am
Fascinating discussion with insightful comments from everyone.
Speaking of expert panels, I’m surprised no one has mentioned applying the Delphi method to SCOTUS deliberations. This technique possesses characteristics similar to prediction markets and has realized some level of success in policy making, particularly with regard to the ELAC action plans web-based policy Delphi in Latin America and the Caribbean.
Like economics, law continues to strive towards acceptance as a legitimate science. There was an excellent paper on the subject circa 2019 examining Delphi as a tool for “making strides toward a more scientific brand of law” (see Constructing More Reliable Law and Policy: The Potential Benefits of the Underused Delphi Method).
Monte
Jul 8 2023 at 10:14am
Link here.
Clifford Winston
Jul 8 2023 at 11:51am
Many thanks for the paper on the Delphi method. I will read it with interest.
Circling back to social desirability, here is a paper assessing the social desirability of rail transit:
http://americandreamcoalition.org/pdfs/Socialdesirability.pdf
We find that urban rail transit is socially undesirable in most metro areas because its social benefits are exceeded by its large social costs. Economists are generally comfortable using social costs and benefits as a benchmark for social desirability. However, some urban planners would claim that any policy that reduces auto use is socially desirable. I don’t think this view has much support except for in Berkeley and Portland.
Cases before SCOTUS can involve credible alternative views of what is socially desirable. I don’t think the Constitution makes it possible to always determine what is THE correct view; thus, I envision a role for economists to identify and possibly quantify the tradeoffs involved.
Mactoul
Jul 8 2023 at 8:22pm
What work is done by the qualifier social as applied to benefit, costs?
Clifford Winston
Jul 8 2023 at 8:40pm
Social indicates explicitly that the empirical work accounts for externalities. In the transit case, its social benefits include reducing auto congestion externalities.
Casual Observer
Jul 9 2023 at 12:40am
@ Dr. Winston, you stated “We find that urban rail transit is socially undesirable in most metro areas because its social benefits are exceeded by its large social costs.” I find this fascinating because it seems there’s a revolution going on to make cities more pedestrian/bike/transit oriented. The main example that people use as guiding star: Amsterdam. As I recall it was quite car centric in the 60/70s, but a big push to shift away from this made it into the the bike/pedestrian utopia that it is today.
I’ll take a look at your paper!
Jim Glass
Jul 9 2023 at 11:19pm
A plausible definition of a government failure …is a policy intervention that significantly wastes resources.
That’s an example of government failure. Hardly “the definition”. One can think of other examples, and worse. Let not the economist become “the man with a hammer”.
If the constitution gave unambiguous guidance that was aligned with socially desirable outcomes, then it would be dispositive …
Who decides “socially desirable”? Which side of Roe-Dobbs is the socially desirable side? Maybe this is why I don’t remember being taught in law school that the purpose of the Constitution is to function by contemporary opinions of “socially desirability.” Which get very diverse. (See 1859…)
Now, let’s imagine the Constitution giving unambiguous guidance that contradicts the socially desirable outcomes in majority opinion. What then? Why does the Bill of Rights exist?
the Constitution, just like transit operations, has not kept pace with changing demographics and other societal changes.
This is dangerously close to the Progressive Era reformers’ view that the Constitution was written for a small, backward, agrarian country, had become an obstacle to the mighty advances of 1920s science and social science, and so should be pushed aside. (Woodrow Wilson wanted a constitution “accountable to Darwin, not Newton”).
This Progressive thinking led them to endorse eugenics and state-forced sterilizations, upheld by the Supreme Court in Buck v Bell, 1927, with Justice Holmes’s famous quote, “three generations of imbeciles are enough“. A decision based on the “socially desirable result” to remember.
Jim Glass
Jul 10 2023 at 12:04am
In any case, my view is that empirical economic analysis could and should be used to help reduce the chance that SCOTUS decisions will result in government failure….
Why do you think empirical economic analysis isn’t fully considered now? In a case big enough to go all the way up, every party brings every argument it can, paying a small fortune to do so. And there are at least two levels of litigation below the Supreme Court to develop the arguments.
What lawyer charging enough to take a case to the Supremes would be so incompetent as to omit an economic argument that could help the paying client? What court wouldn’t consider it? If a case reached the Supremes via Posner’s 7th Circuit, they wouldn’t pay attention to his opinion?
Stop. There’s a rule known to physicists that is even more true in economics: When one invokes “infinities” one’s argument has jumped the tracks.
I’m with Professor Henderson on this. The economics of this case are clear:
A web designer refuses to make a happy birthday web site for me because of her crazed bigotry against persons with Scottish ancestry. Her welfare is optimized by not doing it or else she’d do it, obviously. So I go and get the web site I want from one of 10,000 other web site designers available to me either in person in my home city or online around the world.
Economic result: She gets hers, I get mine, total economic activity is the same either way, as the lawyers say ‘no loss, no damages’, and as the economists playing basketball say, ‘no harm, no foul’.
But there may be other legal issues involved, and that’s why our case might go to the Supreme Court.
Jim Glass
Jul 10 2023 at 12:08am
Is that all?
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