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Legal Solutions to Non-Legal Problems

posted by Bob Lawless

Again, this is me posting on Adam Levitin's behalf because he is away from Internet access as he owns an Apple computer (often a redundant statement). Adam writes:

R. Glenn Hubbard and Tim Kane have an op-Ed in the NYTimes proposing a federal balanced budget amendment as the solution to federal deficits. 

I've got two gripes about this "solution", both of which may reflect the limitations on economists as policy makers. First, do we really need yet another neat little legal solution for a non-legal problem? Unless process is the goal, law isn't likely to solve political problems. Perhaps I've been reading too much on Chapter 9 and ideas for adapting that chapter (which should probably be repealed from the Bankruptcy Code) to situations where it is even less appropriate. Law isn't going to fix government debt problems. Those are political problems that need political fixes. The political system won't abide by a legal regime it doesn't want.  

Second, if Hubbard and Kane had looked at the literature on state balanced budget amendments, they'd have learned that they are often warped by judicial interpretation, disregarded, or result in all sorts of budgetary contortionism. They're not a solution. Simply put, there's no way to force a self-commitment device on the Leviathan.  Government will be bound only if it wants to be bound. 

At the risk of hijacking Adam's point, I'd make a similar observation about constitutional or legal commitments to protect governmental obligations such as promises not to violate public pensions. These are ultimately political issues.

Comments

Bob has hoisted me on my own petard by turning my argument on my dislike of chapter 9 (or That which must be repealed for it breeds false hopes).

In fairness to Apple, it is an iPad meets Tupepad issue, not a general issue.

I guess word that Reinhart and Rogoff have been blown out of the water hasn't reached the AEI yet, because Hubbard and Kane sure are peddling that snake oil. Mike Mullen is an economic expert (and the Pentagon claiming that deficit spending is a problem is irony of epic proportions)? A sovereign with its own currency (U.S.) has the same budget constraints as a municipality? Wow. Only two types of people ship this rubbish: those who don't know how the federal government works, and those who don't want it to work.

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

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