Sunday, November 13, 2022

Don't Let Geopolitics Kill the World Economy
https://www.project-syndicate.org/commentary/us-china-high-tech-trade-restrictions-by-dani-rodrik-2022-11

When advocating their interests in a globalized world, great powers should calibrate their trade and technology polices carefully, eschewing measures that are designed for the express purpose of weakening their competitors' development prospects. With its latest moves against China, America has failed this test.

CAMBRIDGE – At the Communist Party of China's 20th National Congress last month, the country's one-man rule under Xi Jinping became fully entrenched. Though communist China has never been a democracy, its post-Mao leaders kept their ears to the ground, paid attention to voices from below, and thus were able to reverse failing policies before they became disastrous. Xi's centralization of power represents a different approach, and it does not bode well for how the country will deal with its mounting problems – the tanking economy, the costly zero-COVID policies, growing human-rights abuses, and political repression.


US President Joe Biden has significantly added to these challenges by launching what Edward Luce of the Financial Times has appropriately called "a full-blown economic war on China." Just before the Party Congress, the US announced a vast array of new restrictions on the sale of advanced technologies to Chinese firms. As Luce notes, Biden has gone much further than his predecessor, Donald Trump, who had targeted individual companies such as Huawei. The new measures are astounding in their ambition, aiming at nothing less than preventing China's rise as a high-tech power.

The United States already controls some of the most critical nodes of the global semiconductor supply chain, including "chokepoints" such as advanced chip research and design. As Gregory C. Allen of the Center for Strategic and International Studies puts it, the new measures entail "an unprecedented degree of US government intervention to not only preserve chokepoint control but also begin a new US policy of actively strangling large segments of the Chinese technology industry – strangling with an intent to kill."

As Allen explains, the Biden strategy has four inter-related parts, targeting all levels of the supply chain. The goals are to deny the Chinese artificial-intelligence industry's access to high-end chips; prevent China from designing and producing AI chips at home by restricting access to US chip design software and US-built semiconductor manufacturing equipment; and block Chinese production of its own semiconductor manufacturing equipment by barring supplies of US components.

The approach is motivated by the Biden administration's view, on which there is broad bipartisan agreement, that China poses a significant threat to the US. But a threat to what? Here is how Biden expresses it in the preface to his recently released National Security Strategy: "The People's Republic of China harbors the intention and, increasingly, the capacity to reshape the international order in favor of one that tilts the global playing field to its benefit."

So, to be clear, China is a threat not because it undermines any fundamental US security interests, but because it will want to exercise influence over the rules of the global political and economic order as it gets richer and more powerful. Meanwhile, "the United States remains committed to managing the competition between our countries responsibly," which really means that the US wants to remain the unchallenged force in shaping global rules in technology, cybersecurity, trade, and economics.



By responding this way, the Biden administration is doubling down on US primacy instead of accommodating the realities of a post-unipolar world. As the new export controls make clear, the US has given up on distinguishing between technologies that directly help the Chinese military (and hence might pose a threat to US allies) and commercial technologies (which might produce economic benefits not just for China but for others as well, including American firms). Those arguing that it is impossible to separate military from commercial applications have won.

The US has now crossed a line. Such a broad-brush approach raises significant dangers of its own – even if it can be partly justified by the intertwined nature of China's commercial and military sectors. Correctly viewing the new US restrictions as an aggressive escalation, China will find ways to retaliate, raising tensions and further heightening mutual fears.

Great powers (and indeed all countries) look out for their interests and protect their national security, taking countermeasures against other powers as necessary. But as Stephen M. Walt and I have argued, a secure, prosperous, and stable world order requires that these responses be well calibrated. That means they must be clearly linked to the damage inflicted by the other side's policies and intended solely to mitigate those policies' negative effects. Responses should not be pursued for the express purpose of punishing the other side or weakening it in the long run. Biden's export controls on high-tech do not pass this test.

The new US approach toward China also creates other blind spots. The National Security Strategy emphasizes "shared challenges," such as climate change and global public health, where cooperation with China will be critical. But it does not acknowledge that pursuing an economic war against China undermines trust and the prospects of cooperation in those other areas. It also distorts the domestic economic agenda by elevating the objective of outcompeting China over worthier goals. Investing in highly capital- and skill-intensive semiconductor supply chains – on which US industrial policy currently focuses – is just about the costliest way of creating good jobs in the US economy for those who most need them.

To be sure, the Chinese government is not an innocent victim. It has become increasingly aggressive in projecting its economic and military power, though its actions have mostly been confined to its own neighborhood. Despite previous assurances, China has militarized some of the artificial islands it built in the South China Sea. It imposed economic sanctions on Australia when that country called for an investigation into COVID-19's origins. And its human-rights violations at home certainly do warrant condemnation by democratic countries.

The trouble with hyper-globalization was that we let big banks and international corporations write the rules of the world economy. It is good that we are now moving away from that approach, given how damaging it was to our social fabric. We have the opportunity to shape a better globalization. Unfortunately, the great powers seem to have chosen a different, even worse path. They are now handing the keys to the global economy to their national-security establishments, jeopardizing both global peace and prosperity.



Dani Rodrik, Professor of International Political Economy at Harvard Kennedy School, is President of the International Economic Association and the author of Straight Talk on Trade: Ideas for a Sane World Economy (Princeton University Press, 2017).


 -- via my feedly newsfeed

Dean Baker: Thomas Edsall Talks About the Elites Screwing the Masses, but It’s Much Worse than He Says

 

via Patreon

Thomas Edsall’s latest columntells readers how people in power, including many Democratic type people, have made decisions that have seriously worsened the situation of the 60 percent of the workforce without college degrees. While the basic point in the column is completely true, the column gets one important fact badly wrong, and hugely understates the extent to which the screwing of non-college educated workers was the result of deliberate government policies.

The fact the column gets badly wrong is the claim that “automation” has somehow sped up in recent years and is rapidly displacing less-educated workers. Automation is not a well-defined concept, economists would more generally talk about productivity growth. This is well-defined and we have good measurements of productivity growth going back to the end of World War II.

From the standpoint of an individual worker, or the economy, it doesn’t matter if their labor is no longer needed due to an assembly line speed-up, greater efficiency in organizing the workplace, or robots. In all three cases, fewer workers are needed. The obsession with automation as something new and different is completely misplaced.

If we look at productivity growth, we get the opposite of the story that Edsall and his sources are telling. In the last decade productivity growth has averaged just 0.9 percent annually. Productivity growth has been slow in the pandemic, but even if we take the decade from the fourth quarter of 2009 to the fourth quarter of 2019, productivity growth averaged just 1.2 percent.

By contrast in the years from 1947 to 1973 productivity growth averaged 2.8 percent. This was a period of rapidly rising wage growth, with pay for workers at the middle and bottom keeping pace with the overall rate of productivity growth.

The picture does not change if we just look at manufacturing. Productivity in manufacturing has actually been flat over the last decade. In the decade from the fourth quarter of 2009 to the fourth quarter of 2019 it rose at a 0.2 percent annual rate.

In short, the story of workers being rapidly displaced by automation, robots, or anything else does not fit the data. Furthermore, rapid displacement is not necessarily bad news for workers, as shown by the strong wage growth that accompanied the strong productivity growth in the decades following the end of World War II.

If we had a story where we were seeing rapid productivity growth, accompanied by rising inequality, then we could say that we face an unfortunate trade-off, with the cost of more rapid growth being higher inequality. But in fact, the opposite is the case. We see very slow productivity growth accompanied by rising inequality. It is not clear what gain we are supposed to be getting for this increase in inequality.

Not Free Trade

The other part of Edsall’s story is 100 percent accurate. We designed trade policies to put our manufacturing workers in direct competition with low-paid workers in developing countries. This cost us millions of manufacturing jobs and put huge downward pressure on the wages of workers who still held their jobs. As a result of the massive job loss due to trade, the wage premium for working in manufacturing has largely disappeared.

But this policy was not “free trade,” as Edsall says. We made a conscious decision to put manufacturing workers in direct competition with much lower paid workers in developing countries, while continuing to protect more highly paid workers. We could have designed trade policies that would have made it much easier for doctors, dentists, and other highly educated professionals in developing countries (and rich countries) to come to the United States and compete with our professionals.

This would have offered large gains to the economy, as we could have saved hundreds of billions of dollars annually paying less money for these professionals. Our trade negotiators never pursued this type of free trade because doctors and lawyers have far more political power than steel workers and textile workers. As a result, we structured trade in a way that redistributed a huge amount of income upward and pretended that it was just the natural course of globalization. But wait, it gets worse.

Government-Granted Patent and Copyright Monopolies

The fact that some people (those with college and advanced degrees) are better positioned than others to benefit from advances in technology is not an accident. It is by design. The reason that these people are able to be winners from technology is because the government grants patent and copyright monopolies for innovations and creative work. Over the last four decades it has made these monopolies longer and stronger, which increases the amount of income going to those in a position to benefit from them. (See my discussion in chapter 5 of Rigged [it’s free] or here.)

As a result, a massive amount of income has been redistributed upward. This has made a small number of people tremendously rich, such as Bill Gates, whose fortune depends on the government’s protection of Microsoft’s patent and copyright monopolies. It has also allowed millions of others to earn far higher paychecks than if these monopolies were weaker, or if we relied on different mechanisms for supporting innovation and creative work.

The recent experience with Moderna and its Covid vaccine illustrates this point perfectly. The government paid Moderna $450 million to develop a vaccine. It then paid another $450 million for its final phase 3 clinical trials that provided the basis for the FDA's approval. It then allowed Moderna to have control over the vaccine. The result was that we got at least five Moderna billionaires as its stock price rose by tens of billions of dollars. Undoubtedly, many other Moderna employees became millionaires, although probably not the people who serve lunch in its cafeteria or clean its toilets.

Of course, this money comes from somewhere. We pay about $400 billion a year (around $3,000 per family, each year) more for prescription drugs because the government provides patent monopolies and related protections. We pay around $100 billion a year more for medical equipment and several hundred billion more for computer software.

This is all money out of the pockets of non-college educated workers. And when the big winners in this story decide to spend their money on houses and other items, we get the inflation we are seeing today, which apparently has everyone so upset.

The key point is that this is all by design. We could have told Moderna that we are going to pay them to develop its vaccine, but then everything is in the public domain. Anyone, anywhere in the world can manufacture it. Furthermore, its non-disclosure agreements with its engineers are unenforceable. This means that they could all sell their services to anyone who wants to pay them to set up manufacturing facilities.

In this alternate universe, the key people behind developing the vaccine would almost certainly be well-compensated, but we would be talking millions, not billions. The decision to structure our rules on technology, so that a relatively small segment of the population could benefit hugely at the expense of everyone else, was a political choice. It was not something that technology did.

This is what I refer to as “the Really Big Lie.” The idea that somehow globalization and technology developed in a way to screw workers without college degrees and it just so happened that more educated workers were big winners. And, many of the more educated workers are good liberals, so they would even be willing to pay higher taxes to help out the losers with various social programs.

Given this reality, is it surprising that the people who were screwed would be angry at the “winners?” To be clear, I am sure that almost no one among the angry non-college educated has given any thought to government-granted patent and copyright monopolies or the protection from competition that their doctors enjoy.

Why would they? These points are almost never made in major news outlets and politicians like Trump push racist stories about lazy Blacks and immigrants ruining their world.

But these people are absolutely right that they have been screwed by policies pushed by an educated elite. It is tragic that they see an outlet for their anger in going after the most disadvantaged segments of society, but they do have a real basis for their anger and perhaps some day this fact can be discussed in outlets like the New York Times.

Thursday, November 10, 2022

 A good question, Maicol David Lynch. And, an important one for socialists, especially Marxists.  However, the Gramscian "specific conditions" obtaining for a particular socialist government suggest there may be more than one answer to your question.


It seems to me there are a number of variables to think about in finding a "model" for socialist leadership. This is my understanding:

Variable 1: What is socialism?

There is an economic, and political answer. 

For both Marxist and non-Marxist theories of socialism, the state -- or some non-profit oriented proxy, supplants private enterprise in degrees and proportion based on (at least) these assumptions:

a) that abundant resources, and abundant production and financing capacities of industry make it possible to reduce the "prices" of the "means of life" toward zero, where little or no profit, no retained earnings, no money is required. If there are costs they are born by general taxation.
 b) The "means of life" become public goods, meaning they neither exclude shared use nor have any rival for universal, "free" provision of the good. The ratio of public to private goods is a good measure of the degree of economic socialization.
c) The "means of life" becomes increasingly expensive as both physical and social reproduction of human societies requires a rise in human capital -- the knowledge and capabilities to be fully productive in advanced society. One can thus expect "abundance" to spread gradually, perhaps never fully satisfied. Investments in education and training must be accompanied by cultural revolutions in work and leisure life that also are expensive, controversial and disruptive under the best of circumstances,  and inevitably contrary to many 'traditions' as past gender, family, age, nationality, racial and ethnic roles are challenged. 

 

The point is: progress toward "abundance" will be gradual, and measured, no matter how revolutionary the changes in political or state leadership may be. Progress in economic relations requires careful planning and development. Shifts can take decades to become pervasive in an economy even when they are fast moving. (Consider the use and regulation of cell phones combined with the Internet) Many outcomes are impossible to predict in advance. All investments in the future have RISKS of failure. 

     





Of all early expressions of socialism, only Marx's has stood the test of history. The countries that call themselves socialists are all strongly influenced by, and contributed extensions and expansions of Marx's key concepts. Among the key conc



**For modern non-Marxists, "socialism", or its real life expressions -- "social democracy" and "democratic socialism" -- is pretty much summed up as an effort to perfect the democratic values promised in most, not all, bourgeois revolutions, from the American revolution forward.

The democratic socialist aspiration for "a more perfect union" struggles constantly against the inequities of developing capitalist relations, and strives to offset or compensate or restrain destructive social and political  tendencies arising from market anarchy.

But it does not reject "market" relations, as in Utopian or Anarchist conceptions, like Robert Owen 19th American experiment. Given the vast wealth being socially created by capitalism,  such "rejection" was entirely Ideal -- as contrasted with Marx.

In earlier times most "social democratic" formations in Europe were Marxist in one form or another. Some saw Marx's effort to be "scientific" about socialism as meaning a natural, more or less smooth, evolution toward perfection requiring no extraordinary personal subjective effort.

*
The history of socialism as a political trend since Marx and Engels wrote the Communist Manifesto has often been consumed with debates over which approach to socialism was Utopian, and which was "scientific".

Tuesday, October 18, 2022



Bernanke v. Kindleberger: Which Credit Channel?

By Perry G. Mehrling

OCT 13, 2022 | MACROECONOMICS





In the papers of economist Charles Kindleberger, Perry Mehrling found notes on the paper that won Ben Bernanke his Nobel Prize.


In the 1983 paper cited as the basis for Bernanke’s Nobel award, the first footnote states: “I have received useful comments from too many people to list here by name, but I am grateful to each of them.” One of those unnamed commenters was Charles P. Kindleberger, who taught at MIT full-time until mandatory retirement in 1976 and then half-time for another five years. Bernanke himself earned his MIT Ph.D. in 1979, whereupon he shifted to Stanford as Assistant Professor. Thus it was natural for him to send his paper to Kindleberger for comment, and perhaps also natural for Kindleberger to respond.



As it happens, the carbon copy of that letter has been preserved in the Kindleberger Papers at MIT, and that copy is reproduced below as possibly of contemporary interest. All footnotes are mine, referencing the specific passages of the published paper, a draft copy of which Kindleberger is apparently addressing, and filling in context that would have been familiar to both Bernanke and Kindleberger but may not be to a modern reader. With these explanatory notes, the text speaks for itself and requires no further commentary from me.






“May 1, 1982



Dr. Ben Bernanke

Graduate School of Business

Stanford University

Stanford, CA 94305






Dear Dr. Bernanke,



Thank you for sending me your paper on the great depression. You ask for comments, and I assume this is not merely ceremonial. I am afraid you will not in fact welcome them.



I think you have provided a most ingenious solution to a non-problem.[1] The necessity to demonstrate that financial crisis can be deleterious to production arises only in the scholastic precincts of the Chicago school with what Reder called in the last JEL its tight priors, or TP.[2] If one believes in rational expectations, a natural rate of unemployment, efficient markets, exchange rates continuously at purchasing power parities, there is not much that can be explained about business cycles or financial crises. For a Chicagoan, you are courageous to depart from the assumption of complete markets.[3]



You wave away Minsky and me for departing from rational assumptions.[4] Would you not accept that it is possible for each participant in a market to be rational but for the market as a whole to be irrational because of the fallacy of composition? If not, how can you explain chain letters, betting on lotteries, panics in burning theatres, stock market and commodity bubbles as the Hunts in silver, the world in gold, etc… Assume that the bootblack, waiters, office boys etc of 1929 were rational and Paul Warburg who said the market was too high in February 1929 was not entitled to such an opinion. Each person hoping to get in an[d] out in time may be rational, but not all can accomplish it.



Your data are most interesting and useful. It was not Temin who pointed to the spread (your DIF) between governts [sic] and Baa bond yields, but Friedman and Schwartz.[5] Column 4 also interests me for its behavior in 1929. It would be interesting to disaggregate between loans on securities on the one hand and loans and discounts on the other.



Your rejection of money illusion (on the ground of rationality) throws out any role for price changes. I think this is a mistake on account at least of lags and dynamics. No one of the Chicago stripe pays attention to the sharp drop in commodity prices in the last quarter of 1929, caused by the banks, in their concern over loans on securities, to finance commodities sold in New York on consignment (and auto loans).[6] This put the pressure on banks in areas with loans on commodities. The gainers from the price declines were slow in realizing their increases. The banks of the losers failed. Those of the ultimate winners did not expand.



Note, too, the increase in failures, the decrease in credit and the rise in DIF in the last four of five months of 1931.[7] Much of this, after September 21, was the consequence of the appreciation of the dollar from $4.86 to $3.25.[8] Your international section takes no account of this because prices don’t count in your analysis. In The World in Depression, 1929-1939, which you do not list,[9] I make much of this structural deflation, the mirror analogue of structural inflation today from core inflation and the oil shock. But your priors do not permit you to think them of any importance.



Sincerely yours,



[Charles P. Kindleberger]”










References



Bernanke, Ben S. 1983. “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression.” American Economic Review 73 No 3 (June): 257-276.



Kindleberger, Charles P. 1973. The World in Depression, 1929-1939. Berkeley CA: University of California Press.



Kindleberger, Charles P. 1978. Manias, Panics and Crashes: A History of Financial Crises. New York: Basic Books.



Kindleberger, Charles P. 1985. Keynesianism vs. Monetarism and Other Essays in Financial History. London: George Allen and Unwin.



Kindleberger. Charles P. and Jean-Pierre Laffargue, eds. 1982. Financial crises: Theory, History, and Policy. Cambridge: Cambridge University Press.



Mehrling, Perry. 2022. Money and Empire: Charles P. Kindleberger and the Dollar System. Cambridge: Cambridge University Press.




Notes


[1] Bernanke (1983, 258): “reconciliation of the obvious inefficiency of the depression with the postulate of rational private behavior”.

[2] Reder, Melvin W. “Chicago Economics: Permanence and Change.” Journal of Economic Literature 20 No. 1 (March 1982): 1-38. Bernanke (1983, 257) states explicitly, “the present paper builds on the Friedman-Schwartz work…”

[3] Bernanke (1983, 257): “The basic premise is that, because markets for financial claims are incomplete, intermediation between some classes of borrowers and lenders requires nontrivial market-making and information-gathering services.” And again at p. 263: “We shall clearly not be interested in economies of the sort described by Eugene Fama (1980), in which financial markets are complete and information/transactions costs can be neglected.”

[4] Bernanke (1983, 258): “Hyman Minsky (1977) and Charles Kindleberger (1978) have in several places argued for the inherent instability of the financial system, but in doing so have had to depart from the assumption of rational economic behavior.” It is perhaps relevant to observe that elsewhere Kindleberger takes pains to point out the limitations of the Minsky model for explaining the great depression: “it is limited to the United States; there are no capital movements, no exchange rates, no international commodity prices, nor even any impact of price changes on bank liquidity for domestic commodities; all assets are financial.” (Kindleberger 1985, 302) This passage appears in Kindleberger’s contribution to a 1981 conference sponsored by the Banca di Roma and MIT’s Sloan School of Management, which followed on a 1979 Bad Homburg conference that also included both men, which proceedings were published as Financial Crises: Theory, History and Policy (Cambridge 1982).

[5] Bernanke (1983, 262): “DIF = difference (in percentage points) between yields on Baa corporate bonds and long-term U.S. government bonds”.

[6] It is exactly the sharp drop in commodity prices that Kindleberger puts at the center of his explanation of why the depression was worldwide since commodity prices are world prices. Kindleberger (1973, 104): “The view taken here is that symmetry may obtain in the scholar’s study, but that it is hard to find in the real world. The reason is partly money illusion, which hides the fact of the gain in purchasing power from the consumer countries facing lower prices; and partly the dynamics of deflation, which produce an immediate response in the country of falling prices, and a slow one, often overtaken by spreading deflation, in the country with improved terms of trade, i.e. lower import prices.”

[7] Bernanke’s Table 1 cites August-December DIF figures as follows: 4.29, 4.82, 5.41, 5.30, 6.49.

[8] September 21 is of course the date when the Bank of England took sterling off gold, see Kindleberger (1973, 167-170).

[9] The published version, Bernanke (1983), still does not list Kindleberger (1973), citing only Kindleberger (1978), Manias, Panics, and Crashes. Notably, the full title of that book includes also the words “A History of Financial Crises.” Kindleberger himself quite explicitly frames Manias as an extension of the Depression book, now including all of the international financial crises he can find. Later commentary however follows Bernanke in viewing Kindleberger (1978) as instead an extension of Minsky’s essentially domestic Financial Instability Hypothesis, which is not correct. On this point see footnote 4, and more generally, Chapter 8 of my book Money and Empire (Cambridge 2022).

Perry G. MehrlingAcademic Council
Professor of Economics, Boston University

Share your perspective


More from Perry G. Mehrling
Payment vs. Funding: The Law of Reflux for Today

PAPER WORKING PAPER SERIES By Perry G. Mehrling

FEB 2020


A Money View of Keynes, Keynesians, and Post-Keynesians

ARTICLE By Perry G. Mehrling

FEB 4, 2020


Can Bitcoin Replace the Dollar?

ARTICLE By Perry G. Mehrling

OCT 14, 2017

More articles

Big Tech: Not Only Market But Also Knowledge and Information Gatekeepers

ARTICLE By Cecilia Rikap

OCT 4, 2022


Economist Offers Stark Climate Reality Check. Plus a Bit of Science-Based Hope.

ARTICLE By Lynn Parramore

SEP 27, 2022


The IRA as a Climate Bill

ARTICLE By Steven Fazzari

SEP 15, 2022



KEEP UP WITH OUR LATEST NEWS

Our e-mail newsletter shares new events, courses, articles, and will keep you updated on our initiatives.
Comments SIGN UP
The Institute for New Economic Thinking


FacebookTwitterYouTube


Institute for New Economic Thinking

300 Park Avenue South, Floor 5

New York, NY 10010

(646) 751-4900
Terms of Use | Privacy Policy

©2022 Institute for New Economic Thinking. All Rights Reserved
Explore
Featured work on Environment

Economist Offers Stark Climate Reality Check. Plus a Bit of Science-Based Hope.

ARTICLE By Lynn Parramore

SEP 27, 2022

Navigating the Crises in European Energy

PAPER WORKING PAPER SERIES By Michael Grubb

SEP 2022


Electricity Markets, Climate Change, and the European Energy Crisis

ARTICLE By Michael Grubb

SEP 5, 2022

View more from this topic
All topicsAGRICULTURE
BUSINESS & INDUSTRY
COMPLEXITY ECONOMICS
CULTURE
DEVELOPMENT
ECONOMIC GEOGRAPHY
ECONOMICS PROFESSION
EDUCATION
ENERGY
ENVIRONMENT
GENDER
GOVERNMENT & POLITICS
HEALTH
HISTORY
HUMAN BEHAVIOR
INEQUALITY & DISTRIBUTION
IMPERFECT KNOWLEDGE
LABOR
LAWS
FINANCE
MACROECONOMICS
MATH & STATISTICS
MICROECONOMICS
TECHNOLOGY & INNOVATION
PHILOSOPHY & ETHICS
PRIVATE DEBT
RACE
TRADE
Featured expertsView all



Rob JohnsonPresident
President, Institute for New Economic Thinking

The World After Capital

VIDEO Featuring Albert Wenger and Rob Johnson

JUL 6, 2022


Fear and Loathing in Expertise

VIDEO Featuring Rob Johnson

JUN 29, 2022

View more from this expert

View all experts
Featured work in South Asia

The Right to Energy & Carbon Tax: A Game Changer in India

ARTICLE By Rohit Azad and Shouvik Chakraborty

JUN 10, 2019

The Bogus Paper that Gutted Workers’ Rights

ARTICLE By Servaas Storm

FEB 6, 2019


Unstable Capital Flows Threaten Emerging Economies

ARTICLE By Terry McKinley and Francis Cripps

AUG 24, 2018

View more from this region
All regionsAFRICA
ASIAChina
Hong Kong
Japan
AUSTRALIA
EUROPEAustria
Denmark
England
France
Germany
Greece
Hungary
Ireland
Italy
Portugal
UK
Ukraine
MIDDLE EAST
NORTH AMERICACanada
United States
SOUTH AMERICABrazil
Chile
SOUTH ASIA
INDIA

Friday, September 30, 2022

Scotus Mailbag talk: If you were creating a new constitutional order from scratch...?

 



captured from Matt Yglesias substack:  Interesting conversation (avatars for names) on comparative approaches -- mainly Canadian --  to constitutional reform of the supreme judiciary.


Lost Future: How do you feel philosophically about judicial review being part of a country's political system? I remember when I learned in school that a majority of developed countries actually don't have true judicial review, they practice 'parliamentary sovereignty' and the legislature can just pass whatever they want.... Was pretty shocking. But, most of those countries are in the EU, so aren't they now all subject to the EU Court of Human Rights? So maybe that's no longer true, I dunno.

If you were creating a new constitutional order from scratch, would you empower a supreme judiciary to strike down 'unconstitutional' laws? Or is that too subjective & inherently partisan? I think we've all heard criticisms that the justices are just unelected politicians, etc. etc. One reasonable compromise (for the US) that I was thinking is that it should require a supermajority to declare a law unconstitutional- using a raw majority to determine what should be a fundamental question is pretty dumb. Also, individual judges should have a lot less power in our system. Open to hearing your thoughts though!

It’s important to distinguish between two separate ideas. One is judicial review of laws to assess their conformity with the constitution. The other is the idea that the courts should be the people who “go last” in an interbranch conflict.

I think the Canadian system — in which laws are absolutely reviewed by the judiciary for conformity with the Charter of Rights and Freedoms, but Parliament has the right to overrule the Supreme Court — is good. Overrides do happen under this system, but relatively rarely — the Court’s rulings are not a dead letter. One reason they are not a dead letter is that the Court has a decent amount of legitimacy. But one reason they preserve that legitimacy is the Supreme Court is not a locus of massive partisan conflict. And that’s because strong policy-demanders at odds with an important constitutional ruling have a more promising course of action than politicizing the judiciary — they can just push for parliamentary override. To me, it’s a good system.

But note that in the United States, a lot of the de facto power of the judiciary comes from non-constitutional cases. Because of bicameralism, presidentialism, and the filibuster, the stakes in judicial interpretation of statutes are very high here. If the Supreme Court of Canada rules that some Canadian air pollution regulation violates the law and Parliament feels they don’t like the outcome, they can just pass a new law that clarifies the point. In America, if the Supreme Court rules that the EPA can’t regulate greenhouse gas emissions, then that is a de facto guarantee that there will be no emissions regulation because the barrier to passing a new law is so high in our country.

This is why on some level, I think “judicial review” is the wrong thing to ask questions about. Obviously courts need to be able to do statutory interpretation. But what we have in the United States is an extremely low-productivity legislature that in practice devolves massive amounts of powe