Is Justice Roberts a Big Player?

by Roger Koppl

The Supreme Court upheld “Obamacare” because Chief Justice Roberts changed his mind. (It seems that “Obamacare” is no longer a pejorative.)  In this curious situation, a stalwart of the Federalist Society  has become a Big Player in healthcare markets.

A Big Player is a powerful actor who uses discretion to influence a market. In the long run, Big Players are government entities or the creations thereof. They are discretionary actors whose personal discretionary choices supplant known and simple rules. In other words, Big Players substitute the rule of men for the rule of law. The great theorist of the rule of law, A.V. Dicey, said in an important remark that the rule of law “means, in the first place, the absolute supremacy or predominance of regular law as opposed to the influence of arbitrary power, and excludes the existence of arbitrariness, of prerogative, or even of wide discretionary authority on the part of the government.”

Roberts has become a Big Player, and yet the Federalist Society is against that sort of thing. It is committed to the rule of law. Its attitude to the role of the courts is expressed in a passage from Federalist 78: “It can be of no weight to say that the courts, on the pretense of a repugnancy, may substitute their own pleasure to the constitutional intentions of the legislature…. The courts must declare the sense of the law; and if they should be disposed to exercise WILL instead of JUDGMENT, the consequence would equally be the substitution of their pleasure to that of the legislative body.” But the “judgment” of Justice Roberts in this case seems to be very much an “exercise” of his “will.”

Should we therefore castigate Roberts as a hypocrite or ideologue? I don’t think so.

The problem is not that Roberts secretly wishes to impose his personal will on the law. Indeed, the decision seems to be the most restrained possible. It was hardly an instance of “judicial activism” or “legislating from the bench” given Robert’s presumptive political opposition to Obamacare. The problem arises when sweeping measures such as the Affordable Care Act come before the Court. Such laws are ambiguous. Continue reading

George Soros, F.A. Hayek, and The Constitution of Liberty

by Mario Rizzo

I think George Soros is a good man. To me he seems like a person who wants to make the world a better place. He, like Keynes, is against comprehensive economic planning (ambiguities about “planning” noted) but thinks that financial markets are inherently unstable and thus must be regulated by a nimble or flexible regulator.

I was at a forum last Thursday at the Cato Institute in Washington, DC in which Ronald Hamowy, Bruce Caldwell, Richard Epstein, and George Soros ostensibly discussed F.A. Hayek’s The Constitution of Liberty (the new, definitive edition). This post is not meant as a report of the event. I am not a reporter. However, I want to focus on a number of points that Soros made about Hayek’s views. I hope this will clarify some sources of misunderstanding about Hayek that may be quite common in some quarters. Continue reading

Libya and the Rule of Law

by Mario Rizzo  

Frank H. Knight had an important insight about economics. Howsoever we may seek to narrow it, the basic human interests that make the subject important lie at the intersection of ethics, the theory of knowledge, and psychology (at least in a broad sense).  Friedrich Hayek was also right to think that the insights of law and the insights of economics can be mutually beneficial.  

Classical liberalism, however, is not simply economics even in a broadened sense. It is a philosophy about the limits to state power and action even when the goals are alleged to be good or holy. Classical liberalism, as Hayek taught us, is about appropriate means and not simply about the desirability of ends.  

ThinkMarkets is vitally concerned with economics, it is true, but also more generally with classical liberalism and it application to real-world problems. Accordingly, one of the main concerns of this blog has been the rule of law (albeit applied mostly to issues of economic policy).  Another important concern has been the slippery slope processes that get policy-makers and, more importantly, the public into situations that are unforeseen and undesirable.  

This brings me to the Libya question. Continue reading

BP Shakedown?

by Mario Rizzo  

I do not know, at this point, whether BP was negligent or grossly negligent in its drilling and related activities leading to the Gulf oil-spill. They may well have been but I leave that to further investigation.  

It seems, however, the federal government’s regulatory policy was and continues to be a mess, as Chidem points out. The moral outrage of the Congress and the Administration in view of their “gross negligence” or worse is absurd, but not unusual.  

Nevertheless, these are not the only issues.  

Congressman Joe Barton (R. Texas) accused the Obama Administration of a “shakedown,” that is, some form of extralegal extortion, in getting BP to set up a $20 billion compensation fund. He was forced to apologize by his political masters.  Continue reading

Economic Development in Honduras

by Jerry O’Driscoll  

The imbroglio in Honduras is political and constitutional, but also economic.  The underlying economic issue is what development model will be followed: that of the caudillo with its populist redistribution, or a free-market model. 

The most solid reporting on the crisis as been done by Wall Street Journal columnist Mary Anastasia O’Grady.  She has clarified that the ouster of former President Zelaya was ordered by the Honduran Supreme Court in response to his attempted coup.  Last week she traveled to Tegucigalpa and interviewed the Cardinal, who was drawn into the controversy.  The Cardinal is a well-known advocate for the poor.  So on what side did he come down? Continue reading

Planning And Democracy: Redux

by Mario Rizzo 

The Senate Finance Committee has filed its current version of healthcare reform. It is here.  

(HT: Volokh Conspiracy)  

It is 1,502 pages long and it is in legislative language. If passed, it will affect our lives in important ways. Let me suggest that you all read it carefully and then let your senators know what you think. 

Of course you won’t do that and neither will I. We are rationally ignorant and we shall remain that way. 

Will the senators, not on the committee, read it? I doubt it. They will be too busy giving their opinions on selected portions. However, special interests will know about the particular provisions that affect them. As to the senators on the committee, staffers will give summaries. How much they understand or care about provisions that affect the general interests in contrast to the interests that elect them is unknown.  

The welfare state makes a mockery of the rule of law and of representative democracy.

Economic Planning versus Democracy: Illustrations from the Commentators





1. Carl Bernstein, the noted journalist, on the Morning Joe TV show on MSNBC:  

“Everything we have been hearing this morning on this broadcast indicates that the reason Barack Obama is showing such masterful- and I think we can use that word- leadership so far is that he’s in the process of solving the problem of the U.S. Congress, the fact that it is a largely dysfunctional institution. That he’s got to work around it to get this economic program moving and through.” Continue reading

U.S. Treasury’s Bailout Framework: Mockery of the Rule of Law

by Mario Rizzo


In an attempt to provide greater transparency and predictability the US Treasury has issued the basic “framework” that will determine whether a troubled “financial institution,” defined extremely broadly as the law allows (see my previous post), will receive governmental aid. Many commentators, including this one, have thought that the Treasury policy was in great need of clarification. Instead, what we have gotten is an extremely vague set of standards followed by a statement that targeted investments will be on a “case-by-case basis.” Continue reading