Absurd crony-capitalism tort caps lead to Putin-style rule from the White House — and to the creation of another mega-billion dollar slush fund under the arbitrary control of a “strong” in-charge El Presidente, and largely beyond the control of democratic checks and balances .. and the rule of law.
Once again we see the “ratchet effect” whereby the granting of privileges in violation of the rule of law leads to pathological outcomes, and then in order to “solve” a government created crisis, the rule of law is replaced by the rule of fiat.
We’ve been down this road before, with TARP — a massive slush fund which became the arbitrary kitty of the President, to use as he wished, and contrary to the precise words of the democratically elected legislature.
forcing a company, even in these circumstances, into an extralegal payment scheme under the threat of criminal prosecution violates the rule of law as so usefully explicated by F.A. Hayek. According to Hayek, the essence of the rule of law is: (a) economic actors know what the rules are in advance; and (b) the rules apply equally to all.
In his book “The End of the Free Market,” Ian Bremmer offers a couple of vignettes about business life in Russia under the state capitalism of Vladimir Putin. In one, Putin marches into a grocery story, television cameras in tow, and tells the manager that his prices are too high. They are instantly cut. In another, television cameras also in tow, Putin bursts into the office of the owner of a recently closed cement factory, puts a document in front of him reopening the plant and tells him to sign it. He does.
The Obama administration also ran roughshod over the rights of secured creditors in the Chrysler bailout. In the financial regulation-reform legislation, rather than setting up new rules that apply to everyone, extraordinary discretionary authority is being given to selected regulators.
American companies are sitting on a lot of cash right now rather than deploying it. There are lots of reasons for that. But one of them is that no one really knows what the rules of the game are going to be in the Obama economy.
Richard Epstein explains a better way to run this railroad.
Also, a man inspired by Rules for Radicals not rules of the Constitution.