The Education of Judge Richard Posner

Back in 2009 we alerted you to the fact that one of the "intellectual giants" of the conservative movement, federal circuit court judge Richard Posner, had become a Keynsian.

It's taken three years, but Posner kept thinking:

Posner expressed admiration for President Ronald Reagan and the economist Milton Friedman, two pillars of conservatism. [Give him time; give him time.] But over the past 10 years, Posner said, "there's been a real deterioration in conservative thinking. And that has to lead people to re-examine and modify their thinking."

"I've become less conservative since the Republican Party started becoming goofy," he said. [Editorial note: That was 32 years ago.]

Posner, who was appointed to the appeals court by Reagan, speculated that the leaks about the deliberations over the national health care law — which are apparently designed to discredit Chief Justice John Roberts' opinion upholding the law — would backfire. "I think these right-wingers who are blasting Roberts are making a very serious mistake," he said.

"Because if you put [yourself] in his position ... what's he supposed to think? That he finds his allies to be a bunch of crackpots? Does that help the conservative movement? I mean, what would you do if you were Roberts? All the sudden you find out that the people you thought were your friends have turned against you, they despise you, they mistreat you, they leak to the press. What do you do? Do you become more conservative? Or do you say, 'What am I doing with this crowd of lunatics?' Right? Maybe you have to re-examine your position."

Keynes

I'm going to try hard to write this post without saying anything snarky about any individual or any publication. It will be a struggle, and I'm not sure I can do it, but here goes:

The New Republic [argh! (struggle) argh!] has a fascinating essay by Richard Posner [argh! (struggle) argh!], whose name will be familiar to some readers, about John Maynard Keynes. Posner [argh! (struggle) argh!] is a judge on the U.S. Court of Appeals (7th Circuit). Perhaps you will be as surprised as I am by it. The essay is longish, but will reward you with deeper understanding.

A sample:

Until last September, when the banking industry came crashing down and depression loomed for the first time in my lifetime, I had never thought to read The General Theory of Employment, Interest, and Money, despite my interest in economics. I knew that John Maynard Keynes was widely considered the greatest economist of the twentieth century, and I knew of his book's extraordinary reputation. But it was a work of macroeconomics--the study of economy-wide phenomena such as inflation, the business cycle, and economic growth. Law, and hence the economics of law--my academic field--did not figure largely in the regulation of those phenomena. And I had heard that it was a very difficult book, which I assumed meant it was heavily mathematical; and that Keynes was an old-fashioned liberal, who believed in controlling business ups and downs through heavy-handed fiscal policy (taxing, borrowing, spending); and that the book had been refuted by Milton Friedman [HA! Oops, sorry], though he admired Keynes's earlier work on monetarism. I would not have been surprised by, or inclined to challenge, the claim made in 1992 by Gregory Mankiw, a prominent macroeconomist at Harvard, that "after fifty years of additional progress in economic science, The General Theory is an outdated book. . . . We are in a much better position than Keynes was to figure out how the economy works."

We have learned since September that the present generation of economists has not figured out how the economy works. The vast majority of them were blindsided by the housing bubble and the ensuing banking crisis; and misjudged the gravity of the economic downturn that resulted; and were perplexed by the inability of orthodox monetary policy administered by the Federal Reserve to prevent such a steep downturn; and could not agree on what, if anything, the government should do to halt it and put the economy on the road to recovery. By now a majority of economists are in general agreement with the Obama administration's exceedingly Keynesian strategy for digging the economy out of its deep hole. Some say the government is not doing enough and is too cozy with the bankers, and others say that it is doing too much, heedless of long-term consequences. There is no professional consensus on the details of what should be done to arrest the downturn, speed recovery, and prevent (so far as possible) a recurrence. Not having believed that what has happened could happen, the profession had not thought carefully about what should be done if it did happen.

Baffled by the profession's disarray, I decided I had better read The General Theory. Having done so, I have concluded that, despite its antiquity, it is the best guide we have to the crisis.

On the Personhood of Corporations

As you know, the Supreme Court held that corporations have the right to spend as much money on political contributions as they'd like, because they have a right to free speech just like people. This was a twisted interpretation of a long-established principle in law that allows corporations access to the law as though they really are people. They can make contracts, sue, and be sued, basically. Oh, yes – and be taxed!

Of course, this is a convenient legal fiction that moves things along for all of us. But corporations do not vote (yet), get drafted, get executed for murder, make love, or go to the bathroom (except into our drinking water).

The question of where to draw the line between the legal fiction of corporate personhood and "Hey, let's get real!" is under dispute. The Roberts Court, which has been busy lately limiting the voting rights of real American persons will likely be heard from again as it champions the rights of corporations to freedom of religion.

Steve Benen has a good take on current developments:

At issue is a cabinet-making company called Conestoga, whose Mennonite owners oppose birth control on religious grounds. They filed suit challenging the contraception provisions in the Affordable Care Act, arguing that their faith applies to their for-profit business -- the Hahn family, which owns Conestoga, doesn't like birth control, so the family wants to leave contraception access out of the company's health plan.
As of yesterday, that argument didn't go over well in court.

A federal appeals court said Friday that the owners of a private company could not challenge the contraception mandate in President Obama's healthcare law.

The 3rd Circuit Court of Appeals said the owners of Conestoga, a cabinet-making company, could not challenge the mandate because of their personal religious beliefs.

It's a pretty straightforward decision -- corporations may be people (my friend), but according to the 3rd Circuit, the Hahn family can have its religious beliefs, but the cabinet-making company does not have religious beliefs of its own.

"We simply conclude that the law has long recognized the distinction between the owners of a corporation and the corporation itself," wrote Judge Robert Cowen. "A holding to the contrary -- that a for-profit corporation can engage in religious exercise -- would eviscerate the fundamental principle that a corporation is a legally distinct entity from its owners.

The ruling added, "The [contraception provision] does not impose any requirements on the Hahns. Rather, compliance is placed squarely on Conestoga. If Conestoga fails to comply with the Mandate, the penalties ... would be brought against Conestoga, not the Hahns."

This may seem like common sense, but the arts-and-crafts chain Hobby Lobby has filed a nearly identical lawsuit -- its owners don't like birth control for religious reasons, either -- and as Sarah Posner recently explained, this company has had far more success at the 10th Circuit.

And when two federal appeals courts disagree on the same question, the U.S. Supreme Court generally intervenes to settle the dispute. We may, in other words, soon see a major legal showdown over whether corporations have their own distinct freedom of religion that affords businesses the right to block their employees' access to contraception.

With six Roman Catholics on the Court (and no Protestants), how do you feel about the corporations' chances of getting religious freedom?