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Sunday, June 1, 2008

Book Reviews – June 2008

David’s Hammer: The Case for an Activist Judiciary

by Clint Bolick

Cato Institute • 2007 • 177 pages • $11.95 paperback

Reviewed by George C. Leef

In recent years “judicial activism” has been assailed from both ends of the political spectrum. Conservatives complain about “liberal” activism when courts strike down laws they favor, and “liberals” complain about conservative activism when judges interfere with any of their schemes for controlling society. Can anything be said in its defense?

Emphatically, yes, answers Clint Bolick in David’s Hammer. Bolick, a veteran constitutional lawyer, contends that there is good judicial activism and bad judicial activism. The book is his attempt to sort the two out and explain why the good variety is important to a free society. He’s right on target in saying, “With the explosive growth of government at every level and the concomitant erosion of liberty, what we really have to fear from the courts is not too much judicial activism, but too little.”

Bolick argues that the Constitution meant for courts to assume an “activist” stance to protect the people’s liberties against incursions by the other branches of government. Both the liberal and conservative critiques of judicial activism, unfortunately, amount to nothing more than unprincipled sniping at the courts for interfering with statutes and regulations they like. As an antidote to unprincipled activism (and its equally bad twin, inactivism), Bolick advocates five general rules for judges:

  • Carefully review all contested actions by federal, state, and local governments that implicate individual liberty.
  • Evaluate laws with a presumption that liberty should be preserved.
  • Remember that the Constitution enumerates the proper sphere of government power, so if there is no legal basis for an exercise of power, it is void.
  • Read the Constitution so as to give meaning to every word.
  • Don’t exercise legislative or executive powers.

Most of the book is devoted to cases Bolick has litigated that illustrate his philosophy about judicial activism. He begins with an excellent example, the case of Juanita Swedenburg. She grew grapes and made wine in Virginia and wished to be able to sell her products to customers around the country. The trouble was that many states had laws prohibiting interstate shipments of wine. Vintners like Swedenburg couldn’t sell in New York unless they established a “physical presence” in the state, but doing that would be far too costly for small sellers. But why should they have to? Why should state borders and anticompetitive laws get in the way of commerce?

Bolick fought the case tooth and nail, battling an array of interest groups that wanted to see the law upheld. He won in district court, but lost on appeal in the Second Circuit. Fortunately, the Supreme Court took an activist approach. In a 5–4 decision, it struck down state laws against out-of-state wine shipments, observing that they “deprive citizens of their right to have access to the markets of other states on equal terms.” This was laudable activism.

Another chapter covers the heated issue of eminent domain and gives us an inside look at a case that went against liberty, the infamous Kelo v. New London, Connecticut. Kelo resulted from the city’s effort to seize the home of Suzette Kelo as part of a redevelopment project centered on a Pfizer Corporation office complex. Here is where Bolick’s point about the need for judges to carefully read the Constitution is especially important. The Fifth Amendment states that government may use eminent domain to take property for public use. Unfortunately, the Court has decided to read that as meaning public benefit, so all politicians need to do is to say that the proposed use of land will in some way benefit “the public.” Mostly that means the new owner will “pay higher taxes.”

Kelo turned out badly, with the Court choosing to defer to the whims of local authorities. It was judicial inactivism.

Bolick has also been busy fighting laws that stifle people’s freedom to enter into businesses and trades. He tells us, for instance, about Leroy Jones, who wanted to start a taxi company in Denver. He planned mainly to serve a minority section where residents often found it hard to get a cab from any of the three existing companies. Why couldn’t Jones just go ahead? Answer: it’s illegal to provide taxi service without having a “certificate of public convenience and necessity” from the Public Utilities Commission. The commission wouldn’t issue the certificate unless Jones could somehow prove that the existing companies were unable to serve the area.

Bolick fought for Jones in court, but lost. More judicial inactivism. Freedom remains squashed.

This book should make you angry. The American colonists rebelled against much less, but today’s petty tyrannies elicit only yawns from many judges.

George Leef is book review editor of The Freeman.

The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future

by Randal O’Toole

Cato Institute • 2007 • 355 pages • $22.95

Reviewed by Gary M. Galles

In The Best-Laid Plans, policy analyst Randal O’Toole offers a well-documented case for why many government plans should be laid to rest. Its opening captures the central issue: “Somewhere in the United States today, government officials are writing a plan that will profoundly affect other people’s lives, incomes, and property. . . . [T]he plan will go horribly wrong. The costs will be far higher than anticipated, the benefits will prove far smaller, and various unintended consequences will turn out to be worse than even the plan’s critics predicted.”

O’Toole locates planning’s failures in the challenging gauntlet that stands between planning and success, and which “almost always leads to disaster because . . . the task is too big for anyone to understand and the planning process is too slow to keep up with the realities of modern life. . . . [M]ost of the professionals who call themselves planners are poorly trained to do the work they set out to do. Even if scientific planning were possible and the right people were doing it . . . politics inevitably distort the results into something totally irrational.”

Further, he traces planning’s problems to the “disparity . . . between how planners think people should live and how people really live.” Consequently, “[b]y failing to ask the right questions, planners end up with a totally wrong-headed view of urban problems. . . . In too many cases, the plans become a source of oppression instead of a way for people to improve their lives and their regions.”

O’Toole relies heavily on two of F. A. Hayek’s major themes. First, because central planning, unlike markets, cannot effectively use the valuable details of time and place that only some people know, its results will be inherently inefficient. Second, the problems caused by one government intervention lead to other interventions, resulting in an ever-growing encroachment on voluntary arrangements. These difficulties, plus those caused by the perverse incentives facing the political players involved, form the core of O’Toole’s argument.

The author fills an important gap. Few people have thoroughly studied such a broad field as planning, largely because the number of different situations and the variety of interacting federal, state, and local programs are so overwhelming. Only someone who has devoted much of his life studying these areas could accumulate the knowledge for this book. We profit from O’Toole’s investment.

The book must walk a fine line, however. He must get down to the details to see where the devil lurks—for example, because cities must repay federal funds on any abandoned rail project, even grotesquely inefficient projects are never admitted to be failures—without overwhelming the reader. The author does a good job in that regard, although the forest-planning section, which involves his greatest expertise, may be too complicated for many readers.

I found O’Toole’s treatment of “smart growth” planning blunders particularly valuable. He offers useful discussions of how “smart growth” sharply increases housing prices, with regressive effects, and increases housing-price volatility; of planners’ ill-considered assaults on cul-de-sacs; of how traffic-calming measures cost rather than save lives; of the bogus “we can’t build our way out of congestion” attacks on freeway construction; of the misunderstanding behind pedestrian malls; of how urban renewal and mass transit were just special-interest politics, and much more.

O’Toole recognizes that so-called market failures are usually government failures, especially when the law makes it impossible for people to defend or sell their property. He also fleshes out why free markets can do nearly everything government planning does, but better and without resorting to coercion.

The Best-Laid Plans does an admirable job of dissecting the reasons for the failures of government planning. Its emphasis on replacing planning with markets is dead-on. The guidelines it offers for reforming government agencies, “minimizing the pitfalls of comprehensive, politically driven planning,” are also useful, were they to be followed. Unfortunately, while O’Toole’s proposals would advance Americans’ well-being, by themselves they are not sufficient to overcome the special interests and “more for me” political pressures that created the increasingly dystopian planning results we now endure. That will take not only widespread knowledge of government failures and of the potential for market successes, but also a far more widespread commitment to liberty on the part of Americans.

Gary Galles is a professor of economics at Pepperdine University.

Bulldozed: “Kelo,” Eminent Domain, and the American Lust for Land

by Carla T. Main

Encounter Books • 2007 • 304 pages • $27.95

Reviewed by Steven Greenhut

Whenever local governments use eminent domain to acquire someone’s property, they downplay the nature of what they are taking. Officials send in their hired appraisers, who undervalue the property, but that’s not what I’m referring to here. Governments always treat the property as a mere piece of real estate. They never acknowledge that they are bulldozing the hopes, dreams, and life’s work of a person or family. They never recognize they cause irreparable harm by demolishing an intricate network of social relationships. Victims of eminent domain tell me that when city governments look at businesses, they have no idea how much work and foresight go into meeting payrolls or planning for the future. Officials see only the buildings, never the enterprise or emotions behind them.

That’s not surprising. Government is about power, and those who exert power don’t usually care about the victims. City planners prattle about the importance of architecture, streetscapes, and other design elements in uplifting the human spirit. They talk that way mostly when they are promoting some new scheme, such as the common redevelopment plans to remake the downtowns of older cities or suburbs into pedestrian-friendly locales. Yet these same officials ignore how their planning schemes destroy the human spirit.

Carla Main captures that truth in her book, the subtitle of which refers to the U.S. Supreme Court’s 2005 decision, Kelo v. New London, upholding the power of cities to use eminent domain for economic development. Main provides a detailed story of one Texas family’s fight against city hall to save its waterfront property and the seafood business that took generations to build. It’s a painful story—one I struggled to read, given that I’ve written about many families who have gone through similar experiences. City officials use their powers to declare a thriving business blighted, then take it away through a bitter legal process, and finally hand it over to someone else—a politically favored developer promising tax benefits and growth to the city. The victims always have a sense of disbelief. In this case, officials wanted to build a yacht marina.

Main’s book artfully portrays what a piece of property means to a particular family, the Gores. She intertwines broader themes, but it’s the family’s story that’s so compelling, an example of what Mindy Fullilove calls “Root Shock.”

Main also readably tells the legal history of how eminent domain has changed from an exception for “public use” to a doctrine under which government can take whatever it pleases and give it to whomever it chooses. Main writes that the 1954 U.S. Supreme Court decision in Berman v. Parker, which allowed the government to use eminent domain to clean up a Washington, D.C., slum, “was a turning point in the history of American property rights . . . because it christened the great mother ship of urban renewal, allowing eminent domain to set sail over the American landscape and pick up passengers who were like devotees of a new municipal religion.”

That’s exactly right. As that passage suggests, Main occasionally indulges in overwriting and sometimes veers into an over-folksy manner, but those are minor flaws. Main puts the focus of eminent domain where it needs to go—on the effects of takings on the lives of those victimized by this abusive government power. Most Americans are not fully aware of what’s at stake. Anyone who takes the time to read this book will understand that the post-Kelo debate is not really about property but about the right of ordinary Americans to pursue their lives and dreams, regardless of the designs of government planners.

Steven Greenhut is a columnist at the Orange County Register and author of Abuse of Power: How the Government Misuses Eminent Domain (2004).

Health Care at Risk: A Critique of the Consumer-Driven Movement

by Timothy Stoltzfus Jost

Duke University Press • 2007 • 265 pages • $22.95

Reviewed by Diana M. Ernst

Timothy Stoltzfus Jost doesn’t know what consumer-driven health care (CDHC) might bring, but he is afraid of it. That dialectic drives his book, Health Care at Risk: A Critique of the Consumer-Driven Movement, a defense of government-monopoly medicine, or what Jost hails as “solidarity based” health care.

Jost is a professor of law at Washington and Lee University, and his health-care proposal includes an expansion of federal health insurance, supplemented by private insurers that are prohibited from evaluating health risk and offering plans that don’t cover routine expenses.

As for CDHC—a combination of direct consumer payment for routine medical expenses plus high-deductible insurance—Jost claims it failed the first time around. The fallacy is that he evaluates the current consumer-driven health-care effort against a consumer model of the 1920s, before insurance and other innovations. Back then, even when costs were much lower, people with major illnesses were unlikely to have saved enough money to pay for treatment. Today’s CDHC endeavor is vastly different, however, based on modern insurance theory and social and medical norms that demand innovative, high quality, and often expensive health services.

The famous 1970s RAND health-insurance experiment shouldn’t be taken as gospel, but the study did show that putting more dollars under patients’ direct control worked for middle-class participants at no harm to their health. As for the poor, today’s CDHC advocates propose reducing prices and increasing quality through competition, supplemented by tax credits to ensure that they have the broadest choice of health care possible.

“If ‘consumer-driven health care’ were advertised as a proposal to shift the weight of health care spending from healthy Americans to the shoulders of the chronically ill, it would probably not sell,” says Jost. True, but that isn’t what CDHC proposes. He notes, but fears, the positive impact of consumer-driven health care to date. Patients who control more of their health-care dollars are using doctors and emergency rooms less often, and more Americans are switching to generic drugs. Enrollees are searching for information on doctors. Patients are following treatments for chronic illness and not forgoing preventive care. Jost admits that these truths indicate cost savings in the long term, but declares, “But we must not just look at positive effects of CDHC, however, but also at its potential problems.” This is the bulk of his harangue.

Why are CDHC advocates more critical of “solidarity based” health systems than of the American status quo? Jost answers his own question when he owns up to the troubles with “solidarity based” delivery: poor access, long waiting lists, and obsolete technology, with rapid care for ruling politicians and high incomes for powerful health-care interests. He laments that the poor in the United States face barriers to health care, but in none of his favored “solidarity based” systems are the poor likely to be as healthy as the affluent.

Americans’ support for “solidarity based” systems deteriorates under the weight of the very facts Jost cites. He concedes that humankind’s common experience is to respond to financial incentives and that we are more productive and creative when we enjoy the fruits of our labor. However, he still rejects markets as the best method to distribute goods, and he fears society’s recognition of individual interests.

We don’t have sufficient information to make choices that reflect our preferences, Jost writes, but even if we had perfect information, “it wouldn’t be possible for the human mind to absorb and process it all.” He expresses distaste for economic freedom and wealth—the money we could spend on health care, he says, we waste on toys, SUVs, and exotic coffee. But even he knows that the alternative is worse: “[G]overnments seldom increase the efficiency of markets and are often unproductive, if not corrupt.”

It’s not a panacea, but the facts look good for CDHC. According to recent reports, health-savings accounts and the corresponding high-deductible health plans are gaining popularity among Americans of all ages, education, and income levels. Consumers are becoming more knowledgeable about medical services and products. Patients are enjoying more control of their health care and relying less on third parties for payment. That will change providers’ behavior and reduce the bureaucratic costs that waste so much money today. Freedom produces good results.

CDHC advocates do not believe in taking health-care dollars away from Americans and delivering them to unaccountable bureaucracies. They do believe that this money should be returned to patients, on the basis that patients can indeed make choices. Jost fundamentally distrusts not only competition, but each individual’s capacity to be free. Those who cherish their freedom—and their health—should be wary of Health Care at Risk.

Diana Ernst is Health Care Policy Fellow at Pacific Research Institute.

  • George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.