thelegalbeagleblog

A fine WordPress.com site

It isn’t necess…

It isn’t necessary to imagine the world ending in fire or ice. There are two other possibilities: one is paperwork, and the other is nostalgia.

Frank Zappa

Advertisements

If you’re older…

If you’re older, you’re smarter. I just believe that. If you’re in an argument with someone older than you, you should listen to ‘em. Even if they’re wrong, their wrongness is rooted in more information than you have. — Louis C.K. (#29 of http://thoughtcatalog.com/nico-lang/2013/10/55-brilliant-louis-c-k-quotes-that-will-make-you-laugh-and-think/)

House Votes to Supersede Kelo

On February 26, 2014, the United States House of Representatives approved legislation to supersede Kelo v. New London, 454 U.S. 469 (2005), and prohibit the use of eminent domain to take private property for economic development.  The Private Property Rights Protection Act, H.R. 1944, defines economic development as “conveying or leasing such property to another private person or entity for commercial enterprise carried on for profit” to increase tax revenue or general economic health.  An uncured violation would render a condemnor ineligible for federal economic development funds for two years following a final judgment.  The bill would put an end to condemning authorities’ habit of using eminent domain to revitalize blighted neighborhoods.

Text of the bill: http://www.gpo.gov/fdsys/pkg/BILLS-113hr1944ih/pdf/BILLS-113hr1944ih.pdf

Harvard prof promotes Georgist taxation

Harvard prof promotes Georgist taxation

De Blasio’s vacant land tax, and tax increment financing.

Liberties

As I follow Jesus, I also perhaps surprisingly find myself becoming more libertarian. I’m not saying that there is or should be a causal link there, but that’s been my experience. I feel that our morals can govern us with teeth without being federal or state law.

I told my mom that if she wanted to start getting fired up about Hillary 2016, she should take a look at this response of hers on abortion: http://www.upworthy.com/dont-ask-hillary-clinton-about-abortion-if-you-cant-handle-her-answer?c=reccon1

As a (moderate, Georgist) libertarian, while I think that on a moral level, we all should be shepherding each other to elect to faithfully support the lives we create, which begin at conception, I do find the arguments for making abortion legal and available (and regulated) compelling because it keeps its use in the hands of accountable professionals.

On (I think) a similar note, I am starting to find a lot of arguments for the legalization of currently illegal drugs fairly compelling. Although, as with abortion, there is a moral imperative to shepherd each other away from their use as much as possible, the benefits of putting their use in the hands of accountable professionals seems to have been underestimated. There will be road safety, public use and other issues to regulate, but it doesn’t seem to be wildly different than the current efforts around alcohol and tobacco.

Interesting comments from a football player and an obnoxious comedian:

http://msn.foxsports.com/buzzer/story/steelers-safety-ryan-clark-says-some-teammates-smoke-marijuana-020614

http://www.theguardian.com/commentisfree/2014/feb/06/russell-brand-philip-seymour-hoffman-drug-laws

 

Glimpses of Heaven

This week our pastor Scott spoke about Christ’s miracles, and how they were intended to be sign-posts of the greater, eternal miracle that He was offering us in a relationship with Him.

Scott used the example of his grandfather, who performed a trick with his dentures in order to invite his grandchildren into a relationship with him. But, of course, the children just want to see more tricks.

I experienced a miracle on December 28, when God allowed me to be spared from death or serious injury when I was struck while on my father-in-law’s bike, from behind, by a car going 35 mph (Mr. E’s bike wasn’t so lucky).

To describe this as a matter of God’s will, of course, may itself be “religious,” in my mother’s description. Was God’s intentional plan to spare me? I guess I don’t know that for sure in some provable way, but I do feel that the event that God allowed was miraculous to me — and therefore that it was a sign-post of love, inviting me in to eternal relationship with Him. Well aware that I am giving in to the confirmation bias of my faith, I choose to believe that God sent his angels to cradle me in my moment of vulnerability to show me a sign of His love.

To believe in an omnipotent God is to believe that my death or serious injury would also have been an event allowed by God. Believing and trusting in Him does not necessarily lead to miracles, but it does mean that we see them for what they are when they do occur — glimpses of heaven.

The fact of our lives is that miracles of the flesh are the exception, not the rule. Our faith does not change the fact that bodily life is a fleeting mist.

But they remind us of the eternal miracle of God’s love for us, which will be there when bodily miracles cease.

Ashok Rao’s Democratic party rant

Ashok Rao’s Democratic party rant

My favorite section (though I’m not on board with single-payer healthcare):

[T]he Seriousness that plagues the Democrats has handcuffed them from embracing a single idea that the wonkish left deems to be smart. Land taxes. Single-payer healthcare (do you even hear them talk about it?). Immigration permit markets. Oil nationalization. ENDING THE DRUG WAR. (Oh, no, let’s just wait seven years and when our approval ratings fall we should make some funny noises about those mandated minimums. Is there any reason the joker of a half-man that is Eric Holder still has a job?).

Rather, the biggest debate of the day is whether a handful of people pay 35% or 39%. As if that matters. The Democrats are engaged in a hopeless match of maintaining the ’90s status-quo (which, granted, was quite good) not of policy, but of intellectual climate. At least the Republicans are redefining the debate.

My argument is hardly a call for more leftism in the party. I was hopeful about Elizabeth Warren but she’s been a real disappointment on monetary policy, which she clearly misunderstands. I want more rightism and leftism. The Democrats have poisoned themselves into believing compromise is the arithmetic mean of two dipshit ideas.

SCOTUS on NYPD stop and frisk?

Linda Greenhouse’s article in the New York Times (http://opinionator.blogs.nytimes.com/2013/08/21/imagining-the-court/?emc=eta1&_r=0) discusses whether the Supreme Court would have agreed with Judge Scheindlin’s ruling last week in Floyd v. City of New York.

I’d estimate that they would not agree on the 14th amendment (equal protection) claim, but that they might agree on the 4th amendment (unreasonable searches and seizures) claim.

We’d tend to think that the conservative Supreme Court would not be as generous as Scheindlin with the 14th Amendment (unless white people are getting hurt through affirmative action, hehe).  As Greenhouse states in her third to last paragraph, discriminatory intent (which plaintiff must show for a 14th amendment equal protection violation) is becoming harder to prove, not easier.  I think that the Supreme Court would have found compelling the City’s argument that each racial group’s percentage of all stops/frisks was about equal to its percentage of all criminal suspects.  [Scheindlin dismissed that comparison and focused on the fact that minority neighborhoods experienced a disproportionately high number of stops/frisks, even holding crime rates constant.]

But the Supreme Court is a little less stingy with the 4th amendment.  Certainly they would have agreed that some of the plaintiffs had experienced (1) stops in the absence of reasonable suspicion of criminal activity, or (2) frisks in the absence of reasonable suspicion of their being armed and dangerous — both of which are unconstitutional under the Terry case.

The City’s liability (in this case, to have their policy and practice enjoined) would turn on whether NYPD practice and policy encouraged the unconstitutional stops or frisks.  I think that the Court might have found the absence of reviews of stops and frisks (for constitutionality) by the NYPD worthy of judicial correction.

Adam Smith and the classical economists for dummies

Part of the reason I went to law school is that I struggled with economics in high school and college.  But I enjoyed Tyler Cowan’s MRU online course on the great classical economists, most prominently Adam Smith (http://mruniversity.com/courses/great-economists-classical-economics-and-its-forerunners).  One of the early take-aways, for those of us for whom “supply and demand” hasn’t been intuitive, is that we aren’t alone.

In fact, although Galileo and others had some idea of scarcity value (water is more essential than diamonds but costs less because there’s more of it available), influential people were getting some basic things wrong for a long time before the classical economists came along.

Among those with misunderstanding in those days were mercantilists who thought that prosperity required a nation to force its colonies to accept its exports in order to bring in more specie (precious metals) and keep interest rates low—that is, it should keep a positive trade balance.

Adam Smith wasn’t the first to correct them, but in the Wealth of Nations he wrote of this “fallacy of composition.”  The wealth of a nation is not a function of its relative supply of gold and silver.  Instead, free trade self-regulates and produces the most capital for society.  Tariffs, on the other hand, may benefit the domestic manufacturer but do not increase the stock of capital (Smith admitted that tariffs may be ok to ensure domestic defense manufacturing, offset domestic taxes, or retaliate against foreign tariffs.)

Central to the classical economists’ legislative agenda was repeal of the corn laws, which had been in place to protect domestic suppliers of grains, in favor of a free market price system.  Producers had sacrificed the interest of the consumer for their own, and the classical economists created a movement to correct that.

Free trade begets specialization, the division of labor, which leads to increased dexterity, productivity, and innovation.

Critically, Adam Smith stated that the division of labor is based on relative talents, which come from custom, habit, and experience and education.  This seems obvious but was new and repugnant to those who believed that Europeans had more natural talent for everything and should enslave and control unequal races.  Smith noted that slavery, tenant-farmer arrangements, and irregular and oppressive taxes were not actually profitable because they gave the oppressed no incentive to be more productive.

Smith recognized that capital increases productivity and wages.  He saw that banks could create more liquid capital for investment by keeping just a fraction in reserve, allowing firms to convert more into fixed capital.

He called out “unproductive labor” that does not create capital to reinvest, such as kings and ministers and singers, and said that capital should be invested in productive labor.  Smith liked agriculture best, but put manufacturing and transportation on his good list, too.

Of course, Smith believed that the price system on its own leads capital to its most advantageous employments.  Merchants are thus “led by an invisible hand” to promote the interests of society by pursuing their own.

This does not mean that Adam Smith believed that there was no role for government.  General national revenue from certain, convenient, and minimally burdensome taxes is needed for defense (a standing army offering more security and liberty than militia), a justice system, and for areas of infrastructure, including school construction, where local revenues do not suffice.  He seems to have favored taxes on land and luxurious commodities to those borne by consumers.

The MRU course shows that the great economists left a lot to future to debate.

How accurate was the labor theory of value that Smith adopted from John Locke, that the real price of something was relative only to the amount of labor required to cultivate it?  Smith was assuming, without knowing it, that the supply or “marginal cost” curve is flat.  Ricardo would show how the supply/demand price is relative to labor value because the marginal cost curve is wages; rent to landlords does not affect price because it is equal to the value of labor not paid to laborers on account of competition between laborers.

Is saving good or bad?  Malthus worried that saving would diminish demand.  Ricardo argued that savings are recycled into the economy, leading to higher demand.

How should a nation finance its spending?  Malthus, the forerunner of Keynes and Krugman who was concerned about demand, said debt.  Ricardo, the forerunner of the Chicago school who was not as worried about effective demand, said taxes only.

Is free trade and expanding capital always the goal?  The classical economists that followed Smith, including the utilitarian Jeremy Bentham, seem to have thought so.  But Robert Torrens warned against sudden removals of trade protections.  John Stuart Mill argued that blindly expanding capital means many commodities end up in excess.  He also wrote that the business-only Bentham was neglecting religion, sympathy, self-respect, honor, love, spirit, national culture, and poetic imagination.

What about the economic role of the state?  Some of the classical economists saw a greater role for government with regard to natural monopolies like rail, water, and gas, and others saw the need for labor regulation.  Some welfare reform is important to curb abuses – i.e., a preference toward subsidized job training – but how helpful or damaging is welfare to the economy?

These all seem to be questions for “moderns” like Cowan.

Mortgage Condemnation

Professor Hockett testified to Congress that “it is incumbent on local government to purchase underwater mortgage loans from private label securitization trusts; reduce principal; thereby mitigate loss for borrowers, communities, and investors; and in so doing stabilize homeownership rates, families, neighborhoods, and communities across the country.”

http://www.lawschool.cornell.edu/spotlights/Hockett-Reveals-Plan-to-Address-Underwater-Mortgage-Loans.cfm

I am following the use of eminent domain to purchase underwater mortgages.

On July 29, 2013, The New York Times reported that Richmond, California – and possibly other cities with a large percentage of mortgagor homeowners underwater – may soon begin to use eminent domain to acquire mortgages from current lien-holders in order to reduce homeowners’ principal debt and prevent foreclosures. Private investors will fund Richmond’s mortgage acquisition program and become the new lien-holders.  Mortgage Resolution Partners LLC will manage the program and earn a loan modification fee (some groups are working to develop a nonprofit alternative).

Current lien-holders, who would be forced to accept the current fair market value of their loans, are challenging the constitutionality of mortgage condemnation (http://www.nytimes.com/2013/08/08/business/mortgage-plan-irks-freddie-mac.html?adxnnl=1&adxnnlx=1376489002-G7ATK1oEx1E4fy/1jZ52Sg) and sent a letter to the New York Times (http://www.nytimes.com/2013/08/09/opinion/no-to-seizing-mortgages.html?_r=0).

The plan is probably constitutional, following Midkiff and Kelo but also various cases enabling the government to acquire intangible interests, including stocks, by eminent domain.

Certainly current lien-holders will take a hit and be pissed.  Will lenders make mortgages harder to get and more expensive in towns/cities that try this, like Mr. Stephens says in his letter, driving down home values?  Or will lenders find towns/cities with fewer underwater mortgages more attractive?  I tend to thing that the city will come out ahead IF successful, but maybe the program is prone to corruption.  Who are the new investors that get to take advantage?

And will it work? Will the city really get the mortgages for 80% of home value, with enough to cover closing/condemnation costs and leave the homeowners with equity?  Is 80% of home value really “just compensation”, i.e. the current market value of the mortgage (which should be the current home value – foreclosure costs)?  Success relies on courts arriving at a truly fair home value (no advantage to condemnee, which would be novel in condemnation law) and arriving at foreclosure costs that are significantly greater than the city’s closing/condemnation costs (also unlikely).

This may be a solid legal theory that is difficult to implement in practice.  That being said, kudos to Richmond, CA for trying it.  It will be fun to watch.