Saturday, February 8, 2020

The Road to Damascus for Elizabeth Warren

Elizabeth Warren was once a staunch Republican and free-market maven.  What happened?

I was perusing The Onion, the online satirical newspaper that used to be cool with the kids, but today has sort of fallen by the wayside.  They still have the "Kelly" political cartoons, which is arguably the high point of the site.  Anyway, they were doing a satirical review of the Democratic candidates and mentioned in passing that Elizabeth Warren used to be a Republican.   I thought they were joking, but it was true.

It is sad, of course, that so many of us get our "news" from comedy sites.  A lot of people keep up-to-date with what is going on by watching The Daily Show or one of its successors, spin-offs, or imitators.  There are also the plethora of "Late Shows" which can trace their lineage to Johnny Carson and before him, Steven Allen and Jack Parr.   So I am not so embarrassed to be getting information from The Onion, a lot of people do similar things.

But why was Warren a Republican?   It is an interesting question.  When she was in law school, the "Chicago" school of law and economics was all the vogue - it was the Reagan era.  Believe it or not, law schools have political slants, which I found amusing, coming from Engineering, studying thermodynamics, calculus, and electromagnetics - where you can't put "spin" on anything, other than, perhaps, an electron.

But law schools had political philosophies, and one reason I chose George Washington over George Mason (of the three Georges in DC) was that George Mason, at the time, was located in an old Sears building (going out of business since 1976!) that still had its escalators.   George Mason was famous as a right-wing "Law and Economics" school and even hired Judge Bork (remember him?) for the faculty.

George Washington was more liberal, of course.  I recounted before how our Ethics professor argued that one of the "SDS" members who helped blow up the math building at the University of Wisconsin should be allowed to practice law.  "It was the 60's!" she said, "We all were protesting!"   I replied, "That may be true, but not all were blowing up buildings!"   A man died in that explosion, which today would rightfully be viewed as an act of terrorism.

Another professor (visiting) argued that men should not speak up in class, as their mean old testosterone would intimidate the women students.   He was not asked back, fortunately, but it illustrated how ridiculous the left can be at times.  What would happen to those women when they become lawyers? Would the judge admonish opposing counsel not to raise objections because it might offend the sensibilities of a woman lawyer?  Of course not.  It was just ridiculous PC thinking.

I graduated from GW and moved on with life.  Despite the attempts to indoctrinate me, it didn't stick much.  I suspect if I went to George Mason, I wouldn't have become a fanatical "Law and Economics" fiend, either.  While economics are important, there are some aspects of civilization where they don't apply.   Criminal law, for example.  You could argue (and many on the Left do) that incarcerating people is a poor economic proposition - it costs a lot of money before, during, and after sentence is handed down.   They make the same argument about the death penalty.   It would be cheaper to just hand out long sentences instead.    But criminal justice isn't about cost-effectiveness, but about maintaining a civilization - there are greater costs and benefits to consider if we decide (as some argue today) to just let everyone out of jail.

Regulated utilities are another example.  It makes no sense to have competing phone companies stringing wires all over the place, or competing electric companies running incompatible systems (i.e., Westinghouse's AC and Edison's DC).   We grant a government-sanctioned regulated monopoly to the utility company as a public good - to serve the people.   In exchange, the utility is allowed to make a reasonable profit, which is why traditionally, utility stocks were never very sexy, but always cranked out dividend checks, in good times and bad.

Warren, infected with the "Law and Economics" virus, famously wrote a very pro-utility and anti-consumer paper that argued, among other things, that regular rate increases should be granted automatically.  She argued that free market principles should be applied to utility companies.   But of course, utility companies don't operate in a free market but as a regulated monopoly.

Granted, there are problems with this model.  Like a "cost plus" contract - used by the military and my former carpenter - they take their costs of operation, tack on a "reasonable profit" (5% or so) and then calculate the rates needed.   A swell situation, but there is no incentive in such a model to cut costs, eliminate waste, and look for cost-savings for consumers.  What the answer is, I am not sure  - I am not an expert on the economics of utility companies - or indeed anything, anymore.

But it was interesting that Warren came out with such an anti-consumer paper, and had very conservative opinions back then.   It disturbs me on a couple of levels.  First, that her views on issues could change so dramatically over time, which speaks to me that her convictions might not be very deep, nor her thinking.   Second, that she was so easily influenced by her teachers in law school, who imbued her with this "Law and Economics" nonsense, which isn't entirely nonsense, but has as much nonsense in it as the PC thinking I was forced to endure at GW.

Warren claims her "Road to Damascus" experience occurred when she started studying personal bankruptcy from an on-the-ground perspective.  In her law school, the theory they taught was that people were profligate spenders who were abusing bankruptcy laws to "get away" with murder.  This was a problem, although it didn't necessarily represent the majority of people seeking bankruptcy protection.  I recall reading in Reader's Digest (again, stacked on the toilet tank in Grandma's house) alarmist articles back in the 1970's which claimed that people were abusing the bankruptcy system to get a lot of free stuff.   And back then, maybe that was true, or even true today.

In Florida, they have a "homestead" law which makes it near impossible for someone to take away your house.   Even if you are foreclosed upon, you can declare bankruptcy and delay the process for years and years.  And in the old days, you were allowed to keep "tools of your trade" and your automobile and personal possessions and whatnot, on the premise that you could not "start over" without these things.   And maybe some people abused this in the past, but a lot less so today.

As I noted before, bankruptcy "reform" has meant that debts are not necessarily wiped out but worked out over a number of years, which means credit card companies can get their money back from you, after you've paid years and years of 25% interest before you throw in the towel.  It is more profitable to ruin customers, economically.  The old days of the friendly local banker helping you achieve your dreams is long gone - if it indeed, ever existed.

And yes, I know people who have declared bankruptcy multiple times - not as part of some nefarious scheme to "screw the man" but because they were profligate spenders and wanted to maintain a post-divorce lifestyle and pay child support at the same time.   Others got caught up in the real estate mania of the 2000's - convinced their ship had come in, not realizing it was the Titanic.   They bought homes as speculative investments - investments that dropped to half their purchase price in short order.

But what Warren saw "on the ground" was that the bulk of bankruptcies were not intentionally induced, but were the result of out-of-control medical debts, as well as the staggering cost of divorce.   She also argued (and I am not convinced) that they were caused by ordinary middle-class people striving to move to a neighborhood with "good schools" - which sounds to me more like an excuse for people who bought more house than they could afford.

Whatever the case may be, Warren had a change of heart - a 180 degree change of heart - and abandoned her "free market" philosophy and became a consumer advocate.   Is this a good or bad thing?   Well, that's a matter of personal opinion.   Myself, I am a fan of the idea of a consumer protection agency.  If it can educate people about the perils of student loan debt, check cashing stores, payday loans, car leasing, toxic mortgages and so on and so forth, it will actually help our economy.   A society cannot survive when it resorts to cannibalism.   And if a majority of people are broke and living "paycheck to paycheck" then there will be no one left to buy all the consumer goods that companies need to sell to make a profit.   Doing social good can be a good for business as well.

Does this mean I am a Warren fan?   Not really.  Frankly, I think she has moved too far to the left, with ideas like wiping out student loan debt using a Presidential order rather than some sort of legislation.   Wiping out debts is a bad idea in and of itself - once you tell people they don't have to pay back loans, they will take out more and more loans and then wonder why they have to pay them back.  Doing this by Executive Order is even worse - it speaks to the ever-increasing power of the Presidency and weakness of our legislative branch - a weakness brought on by this "My Way or the Highway" mentality on both sides of the aisle.

But as I have said before, I think the Democrats want to lose this time around.  Let Bernie get the nod, they are thinking, and when he loses badly to an idiot like Trump, they can say, in 2024, to the progressive wing, "Are we done playing now?   Let's be serious!"    And by then, the Trump recession will be in full swing and the Democrats would have had another mid-term election to try to swing the Senate in their favor.   In the meantime, there will be a lot of suffering among the people.

The worst thing that could happen for the Democrats is for the Democrats to win.  If they won in 2020 and the recession kicks in in 2021 (or even this year) whoever is in the White House will be blamed for it.   Many folks I run into today believe that Obama "caused" the meltdown in 2008, and that his eight years of Presidency were not a time of gradual rebuilding, low inflation, low interest rates, and job creation (at a rate higher than Trump's) but of abject poverty and desolation.   People believe what they hear from Rush Limbaugh, which is why Trump gave him what is now a Cracker-Jack prize.

Worse yet, if a Democrat wins in 2020, the GOP will snap up more seats in the mid-terms in both the House and Senate - perhaps a majority in both houses - and recapture more Statehouses as well.   If the economy tanks - which it will do, eventually - they will be poised to make Warren or Sanders or whoever, a "one termer" much as Bush was.  "It's the economy, stupid!" - remember?

So maybe all of this is irrelevant.   But maybe it also explains why Warren is slipping in the polls.  When you go from raging right-wing to raging left-wing, it is a bit concerning.   After all, it leaves people wondering, what will your opinions be tomorrow, after I've voted for you?