Rule of Law or Rule of Lawyers?

As we all know, Calvin Coolidge once said: "After all, the chief business of the American people is business."

The phrase became part of the American political narrative; it has been counted among the causes of the Great Depression.

As that story tells it, the unfettered pursuit of profit caused the stock market bubble that turned into the Great Depression. Then Franklin Roosevelt came along to save capitalism by vastly expanding the role of government as regulator, overseer, and employer.

If you believe the story, as Barack Obama evidently does, you will approve of the way he is conducting his presidency. If you have read Amity Shlaes' book: The Forgotten Man: A New History of the Great Depression, you might see the story as a self-serving distortion.

If that is true, then you know that the Obama agenda is not going to get us out of our current economic crisis.

Given the failure of the Obama agenda, a new narrative is making its way through the culture. In it, the American people have lost faith in government, have come to see that labor leaders and trial lawyers are not their friends, and are want business leaders to take the reins of government.

So explains the Schumpeter column in The Economist. Link here.

If this is true, then we should applaud their perspicacity. One thing we can say about the last four decades, during that time the business of America was not business. It was advocacy.

We have lived through a cultural moment in which business was relentlessly demonized. It was accused and attacked and indicted for being corrupt and venal, for exploiting workers at home and abroad, for polluting the environment, and producing misery the world over.

From consumer advocates to environmental activists to crusading journalists to academic leftists to attorneys-general to John Edwards, a band of advocates formed a class of that has presented itself as our guardians... in Plato's sense of the term.

Their benign intervention would protect us all from capitalists, imperialists, and oppressors. They would rid the culture of sins of racism, sexism, and all other forms of prejudice.

Armed with subpoenas and lawsuits they would fight it out in the courts. When they found themselves in the corridors of power, whether legislative or executive, they would pass law after law, heap regulation on regulation, and prosecute the corrupt... all the better to help the people.

Their benevolent interventions would make the system run better. Because, as we are all supposed to believe, if you eliminate sin and corruption by empowering bureaucrats and trial lawyers, the system will run better.

The problem, as a majority of the nation is beginning to see, is that these efforts make the system work better for bureaucrats, journalists, intellectuals, government employee unions, and trial lawyers.

When business has to spend its time defending itself against lawsuits and fulfilling regulatory requirements it has that much time and energy left to produce better products and to distribute them more efficiently.

Worse yet, the rise of the advocates produced something like a class struggle between the thinking class and the productive class. The former presented itself as a moral beacon lighting the way to a more efficient tomorrow. The latter was diminished and demeaned, for wanting to keep us chained to the corruption of yesterday.

Of course, greater regulation incites business to seek ways to avoid regulation. It becomes a cat and mouse game. When you raise tax rates to prohibitive levels you invite the wealthy to hire armies of lawyers and accountants whose goal is to help their clients avoid paying taxes.

When people feel that they are being unjustly punished, when they believe that they have being harassed by lawyers and reporters, they will no longer identify their interest with the community interest, but will seek out their own venal self-interest. 

The worse the situation got the more the advocates felt vindicated. They never imagined that they were the problem; they were convinced that they were the solution.

When the financial system nearly collapsed, the advocates knew that capitalism and the free market system was at fault. And they knew how to fix it. The system needed more rules and regulations... meaning that it needed more work for lawyers.

In the end it was less about the rule of law than about the rule of lawyers.

Enter Barack Obama.

When you pass a 2000+ page bill redefining the health care system, you take the practice of medicine out of the hands of doctors and into the hands of lawyers and bureaucrats. If you ask, however, why the nation's medical system is having so much difficulties, you might notice that the trial lawyers have been supremely effective in blocking most efforts at malpractice reform and insurance reform.

Ask yourself this: Who profits from Obamacare. In the end, it must be the lawyers. Since no one understands what is in the bill, only a massive effort by a large number of lawyers will be able to figure it all out. And given how incomprehensible it all is, the law will require an expanded bureaucracy. More money for lawyers and bureaucrats means less money for medical care.


The same applies to the 2000+ financial regulation bill. Again, no one really knows what is in the bill. No everyday citizen knows enough to figure it all out.The meaning of the new law: more work for lawyers. More work for bureaucrats.

Has America figured it out?

We will soon see. Consider the struggle for governor of California. Who better to represent the advocacy culture of the past decades than Jerry Brown? Who better to defend the bureaucracy, that is, the public employee pension system than  the Jerry Brown who helped construct it?

Will the people of California vote for a professional advocate like Jerry Brown or will they choose a titan of high tech job creation, Meg Whitman?

There could not be a clearer choice. And yet, the race has become bogged down in the question of whether or not Meg Whitman hired an illegal immigrant and whether or not she treated said illegal immigrant as a member of her family.

(Since when is it a crying shame not to treat your housekeeper like a member of the family?)

Of course, Brown and his surrogates are appealing to Hispanic voters. But he is using the old narrative where corporate fat cats are venal and corrupt, and that they earned their ill-gotten fortunes by exploiting the poor working classes.

It is a powerful narrative. It has worked before. If it works this time, one is tempted to say that California will deserve to go bankrupt.

The Economist warns us against placing too much hope in business people. It should realize, however, that America has been watching with increasing chagrin its current lawyer president make a hash of his job. And it has noticed that economic policies put together by a bunch of lawyers and academics and bureaucrats have not been doing very much to stimulate the economy. Who could blame them for looking to people who have really created jobs?

But what if the Economist has a point? Considering how complicated the advocates have made the system, perhaps only a lawyer can get us out of the mess. Perhaps a business executive will not know enough about the intricacies of government bureaucracy to untangle the system.

Perhaps the real lesson of the election will be that our next president should be: Gov. Chris Christie.