Eugene Volokh's Blog, page 2726
August 20, 2011
The Rating Agencies and Complexity, Conflicts, and Complacency — Additional Note
This is a further comment to my two posts below on the rating agencies, here and here. I probably should have titled the post on regulators investigating the rating agencies differently. Although the post starts out talking about US government civil investigations into the rating agencies, it is mostly about theories of liability that might be raised, not just by US authorities, but by other jurisdictions, particularly as Europe reacts to sovereign debt downgrades.
I agree with Glenn (and thanks for the Insta link) that the US government investigations are not likely to go anywhere, partly because the relations between regulator and regulated are likely too close for political comfort, and partly because of the optics of actually pursuing S&P so soon after the US sovereign debt downgrade. In principle these are all separate and the investigations commenced before the downgrade, etc., etc.. But in our current environment of intertwined regulators and regulated, Wall Street and Washington (whether you call it a salutary blending of the "public" and "private" interests to the benefit of everyone, or just plain crony capitalism and rent-seeking), I find it hard to see an investigation as being anything other than a nod to the Senate committee and its hearings.
That said, the fundamental point I seek to make below, despite the post title, is that although fraud — including fraud in some highly technical, securities-law version with its own peculiar standards of intent and other elements — is the main and likely the only realistic basis for going after the rating agencies in the United States, and is not likely to win for the government, other jurisdictions might see things quite differently. US law sees this as having to fall into the fraud paradigm, however specifically worked out in statute, regulation, and case law, and not as a question of standards of due care by the rating agencies with regard to the markets as a whole.
Other jurisdictions might well believe that there is a standard of care both in the construction of risk models and in their specific applications, and that this is a duty of care to the markets as a whole, if one chooses to be a participant in a general way — not merely as some uncompensated commentator or blogger, but accepting fees, expressing views as a commercial player, etc. The US has many federal and state standards as to when commercial actors owe each other duties and of what kind and degree, but no one should assume that those rules obtain in other jurisdictions. And what might not be achievable as a legal result in the US, might well obtain — with some of the same practical consequences — in the EU. For that matter, I do not regard the chances of successful litigation against the rating agencies on some theory of standards of care owed to the market as a whole by a market player as zero even in the US, though those theories are much more likely to succeed somewhere in Europe.
My post title takes off from the current investigations by US authorities, but is really about the range of possible theories of liability, in the US or elsewhere. I should note that this is on the assumption that no one finds evidence within the rating agencies or the relationships with Wall Street that comes much closer to a smoking gun of conflicts of interest resulting in actual deception resulting in actual fraud. The theories in the post are premised on the rating agencies not having committed fraud in its traditional sense.
The easiest way to support that assumption is to assume what many financial journalists have said (though disputed by some of the comments to the post below), viz., that the complexity of the financial instruments was such that the rating agencies did not understand them sufficiently to model the risks, and instead accepted the banks' own (highly flawed but deeply self-serving, we all now understand) models as a basis for making their ratings decisions. Many of the commenters emphasize not complexity as befuddling the rating agencies, but instead conflicts of interest arising from who pays the rating agency for the rating — the issuer. This surely plays a part, and so does "complacency" — the assumption that someone remote in time and space, pensioners in Germany (to use an example from a Wall Street banker that Roger Lowenstein cites) or somewhere, will be left holding the bag. It is true that market players who are skeptical of the ratings won't much care so long as the risks are offloaded on someone else, but someone at the end of the road either has to be mistaken as to the uncertainties but willing to rely on the ratings; or else believes mistakenly that there is a further party in the Ponzi scheme on whom to offload the instrument; or else believes that the size of the market stamped with AAA ratings is so large and has already been partly blessed through the US government NSRO brand that the US government will ultimately insure against failure, i.e., the final party in the Ponzi scheme onto whom the risk is offloaded.
That's looking with hindsight. But seen from the front end, I would stress that those coming up with these instruments were in a complex cognitive and psychological world in which it was not overwhelmingly evident that this was the house of cards all can now see. They were in a sea of hopes, uncertainties about the future, insufficient worry about other people's money, the ready cash available upfront, the fact that many smart people with much mathematical skill were telling them this was okay, the comforting presence of the herd, the gently subversive and lulling deep water current of an anticipated Bernanke put to save things, and many other things that cloud the waters. There is a narrative flaw in Michael Lewis's The Big Short, in other words, despite its many virtues — the flaw is that the heroes of that book are the people who indeed had the foresight to short the mortgage market, but they are not people who could have been picked in advance to be the Wise Voices. These guys were brilliant, contrarian, and in this case right — and in any other circumstance might have been just as brilliant and contrarian, and utterly wrong.
In those circumstances, the conflict of interest that the rating agencies have as to who pays them is easy to focus on as the root source of corruption. It is a problem, and needs a fix. But issuers have been paying rating agencies for ratings on corporate bonds for a long time and that does not appear to have been a problem despite the genuine conflict. Issuers retain trustees in a securities issuance and the securities laws impose various duties on the trustee despite being selected by the issuer; the potential problems from this conflict are significant, but don't appear to have led to market meltdown fraud. What makes those different, however, is a level of transparency as to what might constitute bad, fraudulent, and deceptive behavior, such that both investors and regulators have a pretty good model for it. It's not so complicated. Combine uncertain about the future, complexity in the model, and many promises from very smart people that we have turned a corner on risk management and we can have a much freer lunch than before, and we have "this time is different."
Well, plus ca change ... my underlying point is that future financial regulation needs both to separate out the elements of complexity, conflicts, and complacency, as well as how they intertwine to reinforce each other. And to do so in a way that is something that can be captured by the common sense of a prudential regulator. Prudential regulation by following the herd is not a great heuristic; but neither is, the contrarians must always be right. Nevertheless, financial engineering (I'm not sure the term is all that useful anymore) seems to have taken as its metaphor systems "optimization" and the assumption that there's a way to capture of all possible benefits. Mechanical engineering for a robotic craft trying to navigate around the Martian landscape, with much built-in slippage and assumption of many unanticipated failures — limits — might be a better engineering metaphor.
August 19, 2011
"Respondent Is Prohibited from Posting Any Information/Comments ... on Any Internet Site Regarding the Petitioner [the Mayor's Sister] and ... Her Immediate or Extended Family"
Johanna Hamrick runs the Berea Post blog, and had been candidate for mayor and city council president in Berea, Ohio. She had posted various things critical of Norma Kleem, the sister of the Berea mayor, and (among other things) Berea Commission on Aging member and, apparently, the organizer of the Berea July Fourth parade, such as:
DON'T FORGET YOUR TOMATOES!
As the Fourth of July Parade is approaching we are getting so excited here at The Berea Post. It is sure to be a special year as we have heard of only one parade participant having a discriminatory letter.
All persons receive a letter to be a part of the parade. As you guessed it, you have to return your form to Norma Kleem. In prior years she has limited who is allowed in the gate, what vehicles, and many other obstacles have been put up. This year the letter was the same as prior years, all except one. One persons letter stated that only Berea City Fire Trucks were allowed in. Why? Well if the City Club gets their donated fire truck in, someone could look better on the fire truck. Yes, one letter stated this information. How low can you go? Well the little dictator wants control. Little dictator wants to make sure any opponent is denied like in past years.
Please Sunday July 3rd, DO NOT FORGET YOUR TOMATOES!!! I truly would love to chuck one right at someone in THAT camp. It would be quite enjoyable. Happy Independence Day Berea.
Norma Kleem sought a protection order against Hamrick based on this post and other conduct (including, allegedly, following Kleem in her car, and trying to hit Kleem with her car). On Monday, Judge Nancy Margaret Russo granted the order, stating, among other things,
Respondent is prohibited from posting any information/comments/threats/or any other data on any internet site, regarding the petitioner and any member of her immediate or extended family.... Respondent is known to post as Lilly on the cleveland.com blog and Berea-Post; she is prohibited from blogging/posting on any site @ petitioner including but not limited to these blogs.
Presumably the "@" means "about," though in any event the first sentence already bars Hamrick from saying anything about Norma Kleem. And given the "any member of her ... extended family" clause, it looks like she can't post about Mayor Kleem, either.
This order is a blatant First Amendment violation, it seems to me. Even if the injunction restricted only speech that allegedly fell into a First Amendment exception (such as libel or threats or obscenity), such an injunction would almost never be constitutional unless it was issued following a final decision on the merits that the speech indeed falls into a First Amendment exception — and there was no final decision on the merits here: This is a preliminary injunction issued at an ex parte hearing at which defendant wasn't even present.
But beyond this, the injunction doesn't purport to bar only speech within one of the First Amendment exceptions: It bars defendant from making any statements about Kleem, including true statements and pure opinions. Such a broad speech restriction would be unconstitutional even if it applied only to a purely private citizen, but it is even more clearly so when it bars all statements about someone who is apparently pretty substantially involved in local civic affairs. And of course the unconstitutionality is still clearer given that it bars defendant from speaking about Norma Kleem's brother, the mayor, as well, though I think the order would remain unconstitutional even if the "extended family" clause were removed.
For other examples of such unconstitutional orders, see here and here.
Could President Perry carry a gun?
Chris Moody attempts to analyze the issue for The Ticket. The analysis could have been improved by reading the laws of the District of Columbia.
Moody describes D.C. as "a city that bans carrying firearms." That's not exactly correct. The D.C. Code generally prohibits carrying a firearm "without a license issued pursuant to District of Columbia law." D.C. Code § 22–4504. It is true that in practice, the D.C. government virtually never issues carry licenses to citizens. However, the Code makes various exceptions to the license requirement, including that "The provisions of § 22–4504 shall not apply . . .to officers or employees of the United States duly authorized to carry a concealed pistol . . ." § 22–4505(a).
Thus President Perry could simply authorize himself to carry a concealed pistol. For good measure, he could likewise authorize the entire White House staff, or indeed every single employee of the United States government, to also carry a concealed pistol in D.C.
As the Moody article points out, President Perry could ask the D.C. police to deputize him, in order to take advantage of the D.C. law allowing the police to carry guns, but President Perry would have no practical need to ask the D.C. police to use their discretion to grant him the ability to do something he can do without their permission anyway.
UCLA's Adam Winkler suggests that President Perry could issue an Executive Order authorizing him to carry. Executive Orders can apply solely to the Executive Branch of the federal government. An Executive Order could be one mechanism (although certainly not the only one) by which President Perry could "duly authorize[]" gun carrying by himself or Executive Branch employees. However, if the D.C. Code did not have the exception for federal employees, then it's doubtful that an Executive Order could overcome a carrying ban enacted by the D.C. City Council. One might argue that since the entire D.C. city government, with its limited home rule powers granted by Congress, is part of the federal government, the President can by Executive Order negate the operation of a D.C. City Council law. However, as far as I know no President has ever tried to go so far with an Executive Order. And an Executive Order certainly cannot violate a specific congressional statute, including the statute granting partial home rule powers to the D.C. City Council. (The congressional grant of home rule actually excluded criminal law, so D.C. styles its anti-gun laws as "health" laws, and the courts have thus far let D.C. get away with it. However, even if the D.C. gun laws are arguably ultra vires, an Executive Order would not seem to be the appropriate mechanism to deal with them.)
Moody also raises the issue of the Secret Service:
The Secret Service, however, could make a very serious argument that the president shouldn't be carrying a weapon for his own protection. Remember, a spirited debate broke out in the days leading up to President Obama's inauguration over whether he would be forced to surrender his Blackberry for security concerns. (In the end, Obama got to keep his Blackberry, but under certain conditions.) If a Blackberry's almost off limits, you can imagine how the Secret Service might react if the president wanted to pack a Glock.
Well, President Obama's decision to accept some restrictions on his Blackberry was his choice, presumably made after considering the advice of the Secret Service. The President is in charge of the Secret Service, and not vice versa. The Secret Service cannot "force" him to do anything. They're not a Praetorian Guard. So when First Lady Eleanor Roosevelt refused to allow the Secret Service to drive for her, or even accompany her, as she traveled around the United States, there was nothing the Secret Service could do about it. The Secret Service did urge her to carry a concealed handgun, and learn how to use it, and she took their advice. After the assassination of President William McKinley, new President Theodore Roosevelt started carrying his own handgun for protection.
As far as we know, there is not a shred of evidence that concealed carry by either Roosevelt had any negative impact on their security. So there's no reason to imagine that the Secret Service would have a good reason to urge President Perry not to carry a handgun. Unlike a Blackberry, a handgun does not send wireless communications which could be intercepted by foreign spies, nor does it contain a GPS device which can reveal the user's location.
Regulatory Scrutiny of the Rating Agencies
US regulators, including the Department of Justice and the SEC, are reported to be undertaking civil (apparently not criminal) investigations into the rating agencies' practices in rating mortgage-backed securities in the run-up to the financial crisis. The WSJ reports here, but behind the subscriber wall; the Washington Post reports:
The probe is the latest of dozens of government investigations and investor lawsuits targeting Moody's and S&P, a unit of McGraw-Hill Cos., all based in New York, over the top grades they assigned to bonds backed by subprime mortgages. Even as the Financial Crisis Inquiry Commission called them "key enablers of the financial meltdown," the raters avoided legal liability, according to Benchmark Co.'s Edward Atorino.
"People have been poking around Moody's and McGraw-Hill forever," Atorino, a New York-based analyst, said in a telephone interview. "They haven't found the smoking gun yet."
The Justice Department has been contacting analysts to discuss mortgage-bond ratings since 2009, the former employees said. In May, Senator Carl Levin, the Michigan Democrat who chairs the Permanent Subcommittee on Investigations, referred the results of a probe into mortgage bonds, credit ratings and the financial crisis to the agency.
Most observers would agree that the rating agencies were key enablers of the financial crisis, as the FCIC said; from a legal liability standpoint, the question is why. The most detailed accounts by financial journalists such as Michael Lewis or Roger Lowenstein point mostly to complexity — the inability of the rating agencies to understand the complex financial instruments they were being paid to rate, with the result being that they relied upon what the issuers themselves said about the risk and risk modeling. The financial journalists mostly emphasize not understanding complexity and, in the absence of any independent modeling themselves, acceptance of the banks' risk models, even over the conflict of interest created by who pays whom for ratings. If that's the case, then it is hard to see how fraud and related claims get going.
The WP article observes that the agencies have won in court, on the grounds that they are expressing opinions, nothing more — which is to say, however implausible the opinions might have been in retrospect (all those triple-A ratings?), that's not fraud and in any case, the sophisticated market players are in the best position to judge and protect themselves:
Terry McGraw, the chief executive officer of S&P's parent company, said on a July 28 conference call with analysts that 30 lawsuits against the rater have been dismissed or dropped and that he's seeing "those dark clouds go away." Judges have ruled that the ratings are opinions, protected by the right to free speech, according to Sean Egan, president of Egan-Jones Ratings Co.
To date, the freedom of speech defense has worked," Egan said in a telephone interview. "If there's evidence that a ratings firm intentionally issued an inflated rating and the effect was to defraud somebody then I think it would be a completely different matter."
This is roughly to say that the rating agencies have no duty of care toward anyone in how they reach their ratings; incompetence in reaching their conclusions is not culpable unless there is something more at issue. I'm not sure that is 100% watertight as a legal matter, even in the US.
However, the US is not the only jurisdiction that matters here, of course, particularly as European sovereign debt comes under rating agency scrutiny. The EU has different standards on commercial speech, duties on free expression in the market place, and at either the EU or national level (or even local level, to judge by the recent moves by a local Italian prosecutor against the agencies), calls for scrutiny have begun that are outside of US legal standards. European jurisdictions might conclude that there are legal obligations to use "generally accepted" and reviewable (by courts or regulators) methods of determining ratings in order to prevent disorders in the markets leading to unjustified losses.
I don't think this is completely off the table even in a US setting, actually. Supposing, to take the silly hypo, that S&P decided, quite consistent with its announced and contractually accepted mechanisms for revising its ratings, that it would now draw ratings out of a hat? Is this really beyond regulatory or judicial review? In the real world, moves by the rating agencies — as provided in their policies and contract terms — to alter their standards going forward, presumably to improve them, have raised important questions as to the ratings done under earlier standards. Is it really true, even under the US's much stronger opinion protections, that none of this is reviewable to determine whether there was a rational method behind it? In the US, perhaps not — and quite so, in my view, given the problems of the regulator of such standards being the US government, which is also subject to the rating agencies — but I doubt European courts and regulators feel the same way.
Finally, however, there is an area in which it seems to me there is genuine room for litigation that would have a far greater chance of being entertained in court — whether US courts or abroad. That is the question of terms that have legal meaning — often separate legal meanings in different regulatory circumstances — such as "default." The rating agencies have their own definitions, but as the arguments over the US downgrade brought to the surface, what are the events of default and what a default legally means, have genuine issues attached to them. There has been litigation, and likely much more litigation, over how to interpret contract provisions in financial contracts — credit default swaps, for example — such as events of default. There is lots of contract doctrine, case law, a lot of legal authority, for how to interpret such clauses. But the idea that such terms are beyond litigation as a matter of their "meaning" just because they are part of the "opinion" of a rating agency, whether in US courts or courts abroad, seems to me a bridge too far, at least if one is trying to predict tomorrow's court behavior today.
Unchain Agricultural Biotechnology
Population growth and climate change demand increases in agricultural productivity — increases that can only be achieved through the use of modern biotechnology. Yet excessive and scientifically unjustified regulatory restrictions hamper the development of more productive crop strains, particularly where they are needed most. So argues Penn State biology professor Nina Federoff in today's NYT, and she's right.
In 2010, crops modified by molecular methods were grown in 29 countries on more than 360 million acres. Of the 15.4 million farmers growing these crops, 90 percent are poor, with small operations. The reason farmers turn to genetically modified crops is simple: yields increase and costs decrease.
Myths about the dire effects of genetically modified foods on health and the environment abound, but they have not held up to scientific scrutiny. And, although many concerns have been expressed about the potential for unexpected consequences, the unexpected effects that have been observed so far have been benign. Contamination by carcinogenic fungal toxins, for example, is as much as 90 percent lower in insect-resistant genetically modified corn than in nonmodified corn. This is because the fungi that make the toxins follow insects boring into the plants. No insect holes, no fungi, no toxins.
Yet today we have only a handful of genetically modified crops, primarily soybeans, corn, canola and cotton. All are commodity crops mainly used for feed or fiber and all were developed by big biotech companies. Only big companies can muster the money necessary to navigate the regulatory thicket woven by the government's three oversight agencies: the E.P.A., the Department of Agriculture and the Food and Drug Administration.
Conservatives are often criticized for adopting ideologically or politically motivated positions on scientific questions — and they should be. But the Right has no monopoly on the politicization of science. As the debate over agricultural biotechnology shows, progressives can be just as guilty, and the effects can be just as grave.
It has been clear for decades that the means through which a crop strain is developed has no bearing on the health or environmental risks such a crop could pose. The scientific consensus here is broader and more stable than on climate change and other contentious environmental questions. The National Academy of Sciences, British Royal Society and EU have all concluded that modern biotech techniques are no more dangerous than traditional crop modification methods. Nevertheless, due to progressive environmental activism and fear campaigns, crops developed with modern biotechnology are subject to greater regulatory scrutiny. As Federoff notes, a reactive precautionary stance may have been justified years ago when biotechnology was new, but there is no scientific justification for such a position today. Yet progressive environmentalists continue to oppose modern agricultural biotechnology — and the supposed defenders of scientific integrity have little to say about it.
Rearguing Texas v. White
Some Texans, including the current governor, maintain that Texas retained the right to secede when it joined the United States. The Supreme Court's 1869 decision in Texas v. White would suggest otherwise. But was the Court correct? Via the WSJ Law Blog comes news that the Supreme Court Historical Society is hosting a mock retrial of the case. Justice Scalia will preside.
High School Student's Parents Sue Because School Briefly Suspended Student for Drinking Alcohol on School-Sponsored International Trip
The case is Sabol v. Walter Payton College Preparatory High School (N.D. Ill. Apr. 12, 2011, just posted on Westlaw in the last few days); the plaintiffs argued the suspension violated substantive due process, procedural due process, the Fourth Amendment, and the Equal Protection Clause, and constituted abuse of discretion and intentional infliction of emotional distress under state law; not so, says the district court (correctly, I think). Here's the court's conclusion:
From any objective standard, Sabol–Jones got off light for her deliberate infraction of the no-alcohol rule despite her having signed a written commitment not to do so. In candor, this lawsuit should never have been brought, and Sabol–Jones, her parents and their lawyer should have known as much.
There is no genuine issue of material fact here, and defendants' motion for summary judgment is granted as to all claims, and Sabol–Jones' motion is denied. This action is thus dismissed in its entirety.
This ordeal, which began before Sabol–Jones' senior year of high school, is, as they say, ancient history. [Footnote: "Ordeal" is used advisedly here — under the circumstances, defendants' involvement in having to defend this action at substantial expense is deserving of that label, perhaps even more than Sabol–Jones' total experience.] Sabol–Jones is now attending Georgetown University on a full scholarship, and her counsel's overly dramatic doomsday prediction about the effect of the suspension on her "entire life" has proved to be baseless (as any objective observer could have predicted).
Note also the magnitude of the punishment: "Sabol–Jones' [ten-day] suspension was delayed and split into two five-day periods to accommodate her college interview schedule and the start of classes. [UPDATE: Footnote: Although Sabol-Jones was told that the School would not seek her expulsion, she twice received notices indicating that expulsion hearings were to proceed. Defendants acknowledge that those notices were sent in error and that no hearing date had ever been set for expulsion proceedings.] She served between two and three days of her ten-day suspension before filing for a temporary restraining order and a preliminary injunction in the Circuit Court of Cook County. That court stayed the suspension. Sabol–Jones' similarly charged classmates served their full ten-day suspensions, participated in expulsion proceedings and attended drug and alcohol seminars. Due to the stay of her suspension pending the resolution of this lawsuit, Sabol–Jones did none of those things."
Global Warming Could Trigger Alien Attack
The Guardian reports on a scenario analysis conducted by several scientists considering possible scenarios resulting from contact with alien life forms. The analysis covers many basic scenarios, such as basic communication or the possibility of disease transmission from physical contact, but also suggests global warming could give aliens an excuse to attack.
The authors warn that extraterrestrials may be wary of civilisations that expand very rapidly, as these may be prone to destroy other life as they grow, just as humans have pushed species to extinction on Earth. In the most extreme scenario, aliens might choose to destroy humanity to protect other civilisations.
"A preemptive strike would be particularly likely in the early phases of our expansion because a civilisation may become increasingly difficult to destroy as it continues to expand. Humanity may just now be entering the period in which its rapid civilisational expansion could be detected by an ETI because our expansion is changing the composition of the Earth's atmosphere, via greenhouse gas emissions," the report states.
"Green" aliens might object to the environmental damage humans have caused on Earth and wipe us out to save the planet. "These scenarios give us reason to limit our growth and reduce our impact on global ecosystems. It would be particularly important for us to limit our emissions of greenhouse gases, since atmospheric composition can be observed from other planets," the authors write.
Somehow, I don't think an alien race capable of interstellar space travel would consider humanity much of a threat — we have yet to put people on Mars — but the authors do characterize these scenarios as "highly speculative." If we're willing to accept the premise that aliens come to earth and care about what we're doing, why should we assume the alien race embraces contemporary environmental ideology? It seems to me the scientists are engaged in a bit of projection.
We could just as easily speculate about an advanced alien race seeing things quite differently. Perhaps the aliens would come from a planet with a much warmer temperature and see global warming as our invitation for them to colonize the planet. Or maybe they'd see gradual warming as a sign that we are a productive civilization that has been able to conquer and subdue our natural environment and is therefore worth trading and cooperating with. Or maybe this race would follow something like the "Prime Directive" and see our expansion as a reason to just leave us alone. Or maybe they would watch cable television and conclude we are a primitive, debased species not worth their time.
[Note: Extra links added.]
August 18, 2011
Public School Teacher Reassigned Following Anti-Same-Sex-Marriage Facebook Post
A former "teacher of the year" in Lake County, Florida, has been reassigned while school administrators investigate comments posted on his Facebook page about same-sex marriage.... [S]chool officials received a complaint Tuesday about the content on Mount Dora High School teacher Jerry Buell's personal Facebook page .... CNN affiliate Central Florida News 13 reported that a status post on it said, "I'm watching the news, eating dinner, when the story about the New York okaying same sex unions came on and I almost threw up."
"We began to review the code of ethics violations immediately and yesterday afternoon temporarily reassigned the teacher pending the outcome of the investigation," [Lake County Schools Communications Officer Chris Patton] told CNN Thursday....
The newspaper said that in the same July 25 post, Buell said same-sex marriages were part of a "cesspool" and were a "sin." ...
Buell, a teacher for more than 26 years [and a former "teacher of the year"], served as the Social Studies Department chair at Mount Dora and taught American history and government, according to the high school's website....
Taking a Look At Texas
Texas Governor Rick Perry's greatest asset as a candidate is the Lone Star state's recent economic performance. Paul Krugman may not be impressed, but the Texas economy has boomed while the rest of the country has stalled, as this analysis shows. But can Perry take credit for it? Not necessarily. Megan McArdle is skeptical. Jason Sorens suggests Perry can only claim "a bit" of credit insofar as he has maintained the general policies that have made Texas a desirable location for businesses and taxpayers from other states. Gov. Perry himself, Tim Carney explains, is more "cowboy corporatist" than free marketeer. (See also here.) Given this approach to economic development, one could conclude Texas has boomed in spite of Perry's policies as much (if not more) than because of them.
Eugene Volokh's Blog
- Eugene Volokh's profile
- 7 followers
