The Economic Crisis and the Law

Why is anyone surprised that the economy is not recovering on schedule (in spite of the massive stimulus bill which we were told could not wait a day or two so people could read it)?

Why would ANY business person without solid government connections want to create something new or re-vitalize something old, given the new legion of bureaucratic 'fixers' coming out of Washington, all ready to fix their projects? How can people in business know what to expect next? Especially with the Obama administration's recent history of disregarding contract law, along with the Congress?

Back in April, libertarian law professor Richard Epstein, who is familiar with President Obama from their days together on the faculty of the University of Chicago, gave a fascinating summary of his observations concerning the talents and shortcomings of the president, here.

He talks about the personable president's extraordinary level of self-knowledge, his self-control, his ability to get others to reveal their ideological positions without revealing his own, and his desire to be in complete control of his environment. He then states that,

The fundamental mistake of his entire world view is that he treats contracts as devices for exploitation. He doesn't treat them as devices for mutual gain. And he assumes that redistribution can take place without any negative impact upon production. And if you live in that kind of fairyland, which I think he does, every one of your major social and economic initiatives is going to (A) misfire and if they succeed, God forbid, in getting through, they're going to lead to an intensification of the downturn that we've already experienced. So, wrong guy for the job in terms of his intellectual format. The question is whether you could force him back . . .

You might say that Professor Epstein's summary reflects his libertarian ideology. But his statements seem to be quite consistent with subsequent events.

It's interesting to me that President Obama, with his apparent desire to control so many things from the White House, does not seem to recognize that other people might have similar desires. Why doesn't he recognize that independent-minded people in the private sector - even those who aren't "rich" - might be more productive with less meddling in their own life's work? And that they might "go John Galt" (like the mule in VDH's analogy) if faced with too much bureaucracy or uncertainty about whether agreements with the government will be honored. Or uneasiness about how the rules will change. Obama's actions in foreign relations are turning out to be less predictably "liberal" than his domestic policies.

Links for the entire series of videos on "Crisis and the Law" are below. The link above is Chapter 4. They're not in chronological order. Chapter 2 has some historical perspective. He gives persuasive arguments that allowing bankruptcies under established law would have been far preferable to bailouts of AIG, automotive companies, etc. For both economic and political reasons. Chapter 5 discusses the legislative act that wins the prize for the most Orwellian name ever, the "Employee Free Choice Act". It promotes employee free choice by eliminating the secret ballot in elections on union formation and also the right to vote on contracts.

For best video quality, click on the full screen icon at the lower right after clicking the start button in the center of the screen:

Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5