Vive La Difference

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Here is an interesting story from the world of sport, where apparently one is free to suppose men and women differ in certain respects without being sued.

They say the complex gender test will take a few weeks to come back. This means they are doing something more sophisticated than looking to eyeball a full set of tackle, and also that they have to.

The story makes relatively clear that this woman, and the wider world that knows her, could believe in good faith that she is a woman. That is why the complex test is required. Here is a question (and I am seriously asking): If she appears, in terms of sexual organs (and I'm guessing this is the case), to be a woman, but is in some other respect a man, can she be a man completely? And if not, what would be her scientific designation? And if forced to compete as a man, would she be disadvantaged, at the very highest levels of competition, to the extent some quantum of her is female?

On S'engage; Et Puis, On Voit

That was a favorite saying of Napoleon’s. Later, Lenin adopted it as his own. Rendered in English it reads, “You commit yourself; and then, you see. It is a romantic notion, fitting for men of action. And it is revealing of each man’s monomania that it never gave them pause that they were committing everyone else.

Now the United States is on the verge of committing itself to nationalized health care, the results of which, should we go through with it . . . we will see. The debate on the business is just getting started, though tragicomically, the enabling legislation is well-advanced. The bumper sticker opposition to the idea writ large is that health care will be rationed. No one even casually acquainted with economics, and so with the notion that economics is the study of alternative uses of scarce resources, would find that news. Steven Singer could not abide the rationing chorus, and so wrote this pointing out that rationing is currently and of course afoot. Whatever his Logan’s Run enthusiasms (I have long thought that Singer’s best eventual exit will be to feed himself to hungry but otherwise healthy and sound young people), Singer is a serious intellectual force. He does a service to the extent he buries the ‘no because health care will be rationed’ opposition to government controlled heath care. The issue, of course, is who, or what, will do the rationing going forward.

Singer almost apologizes for the imperfections of his solution (grey souls in grey suits counting life years and handing out money to the potentially longer lived, all else being equal), but justifies it as the best we can do. He cites Churchill’s defense of democracy as ‘the worst possible form of government except for all the others’ as an analogous rallying cry for his proposal. Singer thinks Americans will accept such centralized rationing provided they can opt for supplementary private insurance and that the cost of care rationed the current way (e.g. by what you can afford) is brought home to us all. This ability to buy supplementary insurance is a big deal. An even bigger deal is the ability to simply pay through the nose for something if it comes to that. As Thomas Sowell has pointed out, the integrity of a government controlled system may depend on making some services and goods unavailable, regardless of an individual’s ability to pay. And don’t think such restrictions can’t be imposed. Again, as Sowell has pointed out, the FDA, although for other reasons, currently prevents us, even those of us with a very different risk profile owing to advanced disease, from buying drugs deemed safe enough for Europeans. As for Americans understanding the true cost of their health care, it seems the higher unemployment rate, coupled with our nation’s informal system of employer provided health care, has brought that cost home to many Americans who until recently were blissfully unaware.

There are two principal concerns I have with government run health care, exclusive of cost (the CBO covered that). First, Singer mentions the high costs of prescription drugs in this country as a source of rationing. He points to the reasonable costs of these drugs in other countries with nationalized systems, which will only pay a certain price for the drugs. The idea is that a nationalized system will bargain for lower-priced drugs, producing savings. But it seems clear that the cost of the development of the drugs will not go down by the act of a nationalized system demanding sale at a certain price. Rather, it seems currently that the American market is paying the loin’s share of the tab, which renders tolerable the risk that the R&D investment into new drugs will be profitable. If the United States institutes universal price controls on drugs (in addition to what goes on in the current government-run health care programs) we may well see R&D by major pharmaceutical companies go down. And we are likely to see more incremental progress via copy-cat drugs that simply tweak side effects, and less true innovation. Note that we see this even now because any industry will seek to minimize its risk and maximize its profit (see, e.g., the practice in both the publishing and motion picture industries to stay with winners, be it Doctor Phil’s fortieth book or Spiderman 20). Government-imposed (read lower) profit margins would surely make the pharmaceutical industry more risk adverse and less innovative.

Second, I am not confident that official rationing, once started, can be acceptably cabined. Singer goes into some detail in his essay about counting life years as the key to his rationing regime. That’s the practice of judging that this teenager should get the instant procedure or drug and that this senior citizen should not. The rationale is that the teenager will continue to live for many decades, whereas the senior…well, the end is nigh. But in practice, it seems unlikely that the teenager would be much featured in the analysis conducted by the grey suits. In practice it seems that what would be before the grey suit would be the senior and his need. And the grey suit would say no; not no as between the senior and a similarly situated teenager, but just plain no. That is to say, because young people are not often in need of expensive medical care, and in any case because identical needs by opposing class members will seldom be coincident in time, the rationing conducted would be in the form of a denial of a single need, not as between a need and a greater need. Or, put another way, the greater need referenced would be that hoary need that has been the benevolent altar baptized by so much human misery down the years. And it is insatiable.

Regarding the way forward, I find myself in agreement with Charles Krauthammer. He advocates radical tort reform and a stark move away from the employer-provided health insurance paradigm. But however you come down on the health care issue, it seems folks of good faith (i.e. not those ideologues who view government run health care as a tool for realigning the American people into dependency on the government, and so are for it regardless of content; nor again those who seem to be using the extant debate as an excuse to riot) can agree at least to this: that the legislators actually read and understand whatever final thing they end up voting on. They will be, after all, one way or the other, committing all of us. They should be charged with a better explanation than “we’ll see” when asked what they have done.

Marco? Polo?

The whites-only swim is over at the Valley Club in Huntington Valley, PA. After breaking its contract with a summer camp of predominantly black-skinned campers, the Club has changed its mind and invites all swimmers back into the water.

The social history of swimming pools tells a stark and true story of race in America. For those readers born too late to have experienced segregated and desegregated swimming in the 1960's, you can sit on the edge of the pool by reading Jeff Wiltse, Contested Waters: A Social History of Swimming Pools in America, or just the review on Legal History Blog.

Something about swimming together nearly naked in the crystal water of a pool reveals and perhaps proves our common humanity. Everyone into the deep end.

Stay No More

It's not news now but just to close the loop, the Supreme Court lifted the stay on the Chrysler-Fiat sale Tuesday. In a two page opinion, the Court per curiam held that the parties requesting the stay did not carry the burden of showing: 1) reasonable probability that four Justices will consider the issue sufficiently meritorious to grant certiorari or to note probable jurisdiction; 2) a fair prospect that the majority of the Court will conclude that the decision below was erroneous; and 3) a likelihood that irreparable harm will result from denial of the stay." My inner contracts professor notes that the petitioners can be compensated for their losses, if any, with damages-- hardly a strong case for irreparable harm.

The sentence that lingers in this perfunctory opinion is the last: "Our assessment of the stay factors here is based on the record and proceedings in this case alone."

And not in response to political pressure, or based on concern about how the outcome of this case might influence the bankruptcy proceeding now pending in In re GM.

The spin on SCOTUS blog is that the Court wrote this opinion with particular care. "By the time the full Court’s order emerged shortly after 7 p.m. Tuesday, it immediately was apparent that the Court had taken its time primarily to craft a legally precise order of four paragraphs. It very likely was composed largely in Justice Ginsburg’s chambers. She is noted for the highly refined, technical care with which she composed legal papers." (what a lovely thing to say about a person).

The Chrysler-Fiat deal closed today. Fiat Chief Executive Sergio Marchionne become CEO of Chrysler. Former Chrysler CEO, Bob Nardelli, packed up his desk and returned to Cerberus Capital Management, the former majority equity holder of Chrysler. Marchionne wrote to Chrysler employees: "There is no doubt in my mind that we will get the job done."

That may depend on how Americans (who are not obese or taller than 5'2") like the Fiat 500. You be the judge.

In re Chrysler Stayed

In a one sentence opinion, Justice Ginsberg stayed the order approving the sale of Chrysler assets brokered by the U.S. Treasury Department. The 2d Circuit affirmed the bankruptcy court order approving the sale Friday. It gave objecting creditors until 4:00 PM Monday to obtain a stay of the order from the Supreme Court. Justice Ginsburg, who is responsible for emergency matters from the 2d Circuit, entered the stay just before the last tick of the clock.

The objecting parties, Indiana State Pension Trusts holding Chrysler secured debt, have advanced two arguments for reversal of the bankruptcy court order approving the sale: 1) the sale to the Fiat SpA group is an improper and unfair sub rosa reorganization plan and the bankruptcy court exceeded its authority under 11 U.S.C. section 363 to order the sale; 2) the U.S. Treasury had no constitutional authority to use TARP funds allocated for the bailout of financial institutions to finance Chrysler-Fiat. On Sunday, a consumer group filed a brief in support of the pension trust investors. The consumers' group wants to stop the sale because its terms relieve Chrysler-Fiat of successor liability for old Chrysler consumers' product liability claims.

The U.S. government filed its brief with Justice Ginsburg today, arguing that the pension trust parties have no standing to complain about the sale. Chrysler is worth next to nothing without the Fiat deal and that the proposed sale yields a better return than the only other option, liquidation. As for the TARP money, the Solicitor General argues that the pension trust investors don't have standing to object to the government’s $8 billion injection of TARP money into the new Chrysler-Fiat. Whether Chrysler-Fiat is a "financial institution" eligible to receive TARP funds is not a question worthy of Supreme Court review. ("The relevant EESA [Emergency Economic Stabilization Act of 2008] provision was enacted only eight months ago and has not yet been construed by any federal court . . . .")

This could be one of those OK Corral moments in constitutional law. The pension trusts represented by Thomas Lauria of White & Case, are the last creditors standing alone against a barrage of pressure on senior lenders to get with the Chrysler-Fiat deal, or else. The Supreme Court may be the only law in town tough enough to stand up to President Obama, Treasury and auto industry czar Steven Rattner.

The gunfight at the OK Corral is said to have lasted about 30 seconds. The trial afterward took weeks. Whether the Earp brothers and Doc Holliday's actions were in self defense or murderous is still a good game for law students more than a century later. In the end, Judge Spicer ruled that "the tragic results accomplished in manner and form as they were, with all surrounding influences bearing upon resgestae of the affair, I cannot resist the conclusion that the defendants were fully justified in committing these homicides-that it is a necessary act, done in the discharge of an official duty."

Cosmic Contract Language

(Originally posted on October 29, 2009)
In Thursday's Wall Street Journal is an article about the trend of drafting contracts with cosmic language like that which was presented to a Bulgarian folk-singing group at a tryout for the TV show America's Got Talent. A clause in the contract warned that their actions that day could be "edited, in all media, throughout the universe, in perpetuity."

This sort of language, relevant mainly in the context of the arts (but see the full article for an example, complete with an allusion to the Big Bang, of its use re: pickles), is apparently motivated by a desire to account for the unknown, and perhaps is reflective too of a very high confidence in the national space program. The Journal article notes that the members of the folk-singing group "briefly contemplated whether they should give away the rights of hurtling their images and voices across the galaxies forever." Then they signed the contract.

Of course professional opinions vary as to the desirability of using such cosmic (the use of 'global' doesn't seem to do justice) language in contracts. Attorney and law school lecturer Ken Adams thinks the use of such language is "silly", and suggests its use could be a way of drumming up business for lawyers. How so? "It [cosmic language] adds an aura of magic- you're dabbling in the occult and you of course need a lawyer to guide you through the mysteries."

But associate professor of law Eric Goldman has a different view. He thinks the cosmic language "could be 'a stroke of brilliant foresight.'" Goldman says in the future, folks looking at contracts drafted without cosmic language might say, "What were they thinking? Why didn't they get the Mars rights?" That would be embarrassing.

Whatever the case, this article comes a few years too late for me. I could have turned it into an entirely novel law review note: Cosmic Language in Contracts and its Ramifications, Toward a Theory of Inter-Galactic Unconscionability.

Post GM America

At a hearing before the Senate Commerce Committee today, Fritz Henderson, GM's CEO, said that GM has no choice but to dump nearly 1600 dealers (and about 100,000 jobs) over the next eighteen months.

Committee Chair John Rockefeller responded : "Let me be very clear: I don't believe that companies should be allowed to take taxpayer funds for a bailout and then leave local dealers and their customers to fend for themselves with no real notice and no real help. That is just plain wrong."

Senator Rockefeller missed the memo. Dumping losing contracts without real notice and without real help is exactly what bankruptcy will permit GM to do.

Rockefeller's frustration touches a nerve. If the government can't expect to see a return on its investment, what exactly is the public purpose of the bailout?

In an op ed for Financial Times, Richard Reich wrote: "The only practical purpose I can imagine for the bail-out is to slow the decline of GM to create enough time for its workers, suppliers, dealers and communities to adjust to its eventual demise. Yet if this is the goal, surely there are better ways to allocate $60bn than to buy GM? The funds would be better spent helping the Midwest diversify away from cars. Cash could be used to retrain car workers, giving them extended unemployment insurance as they retrain."

Reich says that industrial adjustment is just too hard to discuss, much less accomplish politically. One group wants to save jobs and communities that depend on US automakers' survival, without regard to the public cost. An opposing group wants to keep government out of industrial collapse, let the chips fall where they may, and let market vultures clean up the mess. The bailout of GM and Chrysler temporarily placates both groups. The first group gets hope that their jobs and communities have a chance of surviving. The second group gets to imagine that the bailout is a restructuring made necessary because of a mysterious short term liquidity problem, and that with $50 billion in governmental lubrication, that new car smell will be back.

The divide between the groups seems to be more political than real. People whose jobs and mortgages depend on the US auto industry don't like wasting tax revenue. And ardent free marketeers who oppose the bailout of a "company" like GM accept the role of government in easing the pain for actual people who fall on hard times.

GM and Chrysler are short timers. The bailout and the restructurings are life support that at best will give the grieving middle class time to prepare for the end. We are left to wonder: what will post-GM America be like?