10 thoughts on “Book Review: The Dirty Dozen”

  2. Conservatives often say federal government was smaller a century ago, which is probably true (I did not study US history in detail since I am not originally from the US) — implying that federal govt should shrink to what it was. But were things better a century ago when federal govt was a lot smaller? The panic of 1907, which required a rich banker (J. P. Morgan) to come to the rescue to avert collapse, doesn’t sound like something anyone would want to go back to.

  3. Murali: The question of the federal government’s size in 1907 is not something that you need to wonder about. http://www.usgovernmentspending.com/us_20th_century_chart.html shows that all government spending, federal, state, and local, in 1907 was 6.6 percent of GDP (compared to 46 percent in 2009).

    The best way to avoid future financial downturns would be to have 100 percent of people working for the government. The economy would be fully planned and there would be no possibility of the instability to which markets are prone. There were no banking panics in the Soviet Union.

  4. The review reads like a biased defense of a contrarian position. Now, I agree with the authors and with your review. But for a general audience the review may be more engaging if you described why the majority of the supreme court supported actions taken by a majority of congress from their point of view. Playing devil’s advocate can be difficult, but if you don’t try then a casual reader may not find your review credible and not get around to recognizing how mistaken those decisions were.

    Murali, you’re implying a link between the size of the federal government and the goodness of the world which you haven’t established for the rest of us. That is, there are many different factors that have changed in the past hundred years. For example, AIDS is an epidemic now, and it was not an epidemic in 1907. The world is better now than it was in 1907. It does not follow that the world is better off with an AIDS epidemic, because the AIDS epidemic is not what caused the world to be better off.

  5. Vladimir,

    You are oversimplifying my thesis. I just pointed out that if the federal government is too small with respect to the assets held by banks, it cannot do anything if its financial system goes kaputz — just look at Iceland, Latvia and Greece today, or the US in 1907. A bigger federal government + the federal reserve in 2008-9 at least were able to employ techniques like fiscal stimulus (inspired by Keynes) and quantitative easing (Friedman’s school) which eased the pain in the short-term.

    Like Phil pointed out, we can kill banking panics — and innovation and most progress — by centrally planning the economy. I believe that both extremes: 1) non-existent government, everything purely market-driven, 2) a 100%-planned economy — are pretty bad. The question is, what is the optimum size of government? I don’t have an answer, but I would’t simply say “100 years ago government was a lot smaller, we should go back to that level”.

  6. Murali: Even if you prove your argument that the U.S. economy was destroyed in 1907, never to rise again because the federal government was too small (which is why we all live in such a poor country today), that isn’t relevant to the questions considered in The Dirty Dozen. Nor would it matter for constitutional law nerds if all of the world’s smartest people agreed that the federal government should grow to 80 percent of GDP by taking over additional aspects of American life. We have a constitution that has not been repealed. In theory, the federal government should not be doing things that are unconstitutional, no matter how many people would benefit from those actions. There is a process in place for amending the constitution if We the People can agree that the federal government needs additional powers.

    [Off topic: As for your argument that the federal government’s actions in 2008-9 saved us from some larger collapse, I don’t think that there is any evidence for that. Had we let AIG and some of the Wall Street banks fail, I think it is quite likely that other banks, possibly some strong foreign ones, would have come over to take their place. Had we not transferred $100 billion in taxpayer funds to GM and Chrysler, we would still have cars being made here in the U.S., both by privately restructured GM and Chrysler units and also by Toyota, Honda, et al. You are not looking at what the American people would have done if they’d been able to spend the $2-13 trillion (nobody seems to agree even on how much we’ve spent so far) that the government spent instead. Donations to private charity, for example, were on a steady rise in the U.S. from World War II until Lyndon Johnson started his federal War on Poverty in the 1960s. Then donations fell. The government displaced a lot of private charitable activity. It is unreasonable to say that the S&P 500 fell only to 680 or so and would have fallen to 100 if not for federal intervention. S&P 500 companies own a lot of assets in strong foreign economies. Looked at in a basket of world currencies, the value of the S&P 500 fell pretty close to what those foreign business units were worth, i.e., their American operations were almost without value. It is possible that the collapse would have been sharper without the feds showering money on their Wall Street and Detroit cronies, but we will never know for sure.]

  7. If you’re looking for comments on your review, I’ll say first of all that it was excellent and I may well read the book. However, I was left wondering if the book addressed the reasons for the court’s steady drift toward greater Federal powers. Aside from conspiracy theories (not that there’s anything wrong with’em), are there identifiable reasons the Supremes have gone in this direction? Have there been periods when the trend has gone the other way?

  8. Angus: Thanks for the kind words. The biggest shifts toward more federal power came during “this time it is different” perceived emergencies, such as the Great Depression or World War II. Perhaps it is simply human nature to panic in a crisis and the nine human justices who make up the Supreme Court are no different. Not everyone panics, which is why there were always dissenters from the decisions that allowed the federal government to go well beyond the enumerated powers. [As an example of panic, look at how the government decided that Chapter 11 bankruptcy would not suffice for a reorganization of GM in 2009. We had to give them $50+ billion in taxpayer money. The Haitians are asking for $3B to rebuild a city of 2 million; GM burned through $3B every week or two and the only question we asked was how quickly we could shovel in more cash.]

    Another factor is that Supreme Court justices are appointed by Presidents. Aside from Ronald Reagan, it is tough to think of a President who didn’t think that he could do a tremendous amount of good if only Congress would give him some more money to spend and some extra power. (As I noted above, it would not be consistent with human nature for a President to ask “I wonder what good the people might do with this money if we left it in their hands to spend.”) So if I were President I probably wouldn’t nominate anyone for the Supreme Court unless I thought he or she to be sympathetic to expanded Executive and Federal power.

    I guess we are seeing a bit of a trend back toward reading the Constitution as plain English (e.g., with the recent campaign spending/political speech decision), just because the interpretation of the Constitution has become so arcane and even our country’s best legal minds can no longer tolerate the complexity.

  9. If the presidential bias is really a strong factor—and I tend to agree—then basically we’re screwed. Because it’s systemic, and unavoidable.

    I wonder, too, if there’s some sort of ratcheting effect. That is, might it be easier to give an entity power than it is to remove it?

    And re: kind words… I thought your take on health care reform is the sanest thing I’ve read on the issue. Also, your Israel essay was really great because you addressed the questions I’m always asking in my head, but which don’t ever seem to be addressed. And my girlfriend is Jewish, and I appreciated the historical take on ‘Jew-hating’—helped me sort of get it. Kudos on going with the balder, truer term.

    Anyway, thanks.

  10. Great overall review. I had written a paper for a college course on the Constitution recently and used the book as a reference. I concentrated my paper on the right to earn a living, and cited the book on the two Supreme Court cases (Nebia v. New York and United States v. Caroline Products) along with the taxi service and African hair braiding examples.

    I think that we are essentially so far removed from the basic framework of the Constitution that a return to small (not just smaller) government may nigh well be impossible. The authors selected great cases that illustrate the loss of the basic concept of limited government.

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