17 May 2018

Patterns of Urbanization and Municipal Bankruptcy

A significant number of American cities including its 18th largest, Detroit, filed Chapter 9 municipal bankruptcy during the long, slow recovery from the aftermath of the 2008 financial crisis. I blogged about Detroit (here and here) and Stockton (here and here) many times. As I mentioned this past week, I also published a couple of articles on the topic of Chapter 9 bankruptcy: Municipal Bankruptcy: When Doing Less Is Doing Best (download here or here) and Who Bears the Burden? The Place for Participation of Municipal Residents in Chapter 9 (here or here).

I have previously posted about some of the causes of municipal insolvency in America. Featured among them is "debt-overhang," frequently caused when a city's political leadership promises generous retirement benefits to current employees who retire many years later. In other words, city leaders of yesteryear wrote checks that their successors--and current taxpayers--must honor. Demographic matters also play a role.

You can read about another structural explanation here. In a review titled "Suburban Ponzi Scheme" Peter Leithart draws from a book about by Charles Marohn, Jr. Marohn explains that something like the debt-overhang is even more pervasive than that caused by feckless municipal politicians. Specifically, the phenomenon of post-World War 2 suburbanization could not have taken place without federal and local subsidies in the form of highway transportation (think, the interstate highway system), other infrastructure expenditures, and subsidies for home mortgages (an earlier related observation here). We don't often think of roads, infrastructure, and mortgages as examples of governmental subsidies but as Leithart summarizes,
Since World War II, suburbanization has occurred in several phases. First, “transfer payments” from state and federal government funded “local growth initiatives such as new roads, sewers, industrial parks and community facilities.” Then there was spending on transportation, especially the interstate highway system. The third phase was funded by debt, mostly “non-governmental debt including mortgages, commercial real estate loans, credit cards and more.”
What the quote misses is how the 30-year fixed-rate mortgage also represents an federal intrusion into the market. As I wrote here five years ago,
Apparently it's not enough that the federal government already subsidizes home building, buying, and selling with the home mortgage interest deduction. Anything that might bring market discipline to bear on consumer real estate transactions is anathema to big business. (And make no mistake: The construction and real estate lobbies are very big and very powerful. You might read my earlier post on American state capitalism here.)
One might wonder what problem Marohn identifies. Sure, government intervention in the market is far more pervasive then many folks realize but, given what government could subsidize (say, ethanol), what's so bad about roads, infrastructure, and home mortgages? I'll let Marohn explain:
With each increment of new growth, the city assumes the long-term liability of maintaining all improvements deemed "public." This can only work if one of two things turns out to be true: the city’s growth – specifically, the increase of tax revenues from the growth catalyzed by the schemes – will “exceed the long-term maintenance and replacement cost of infrastructure the public is now obligated to maintain”; or, the city will continue to grow at an increasing speed “so as to generate the cash flow necessary to cover long-term obligations.”
In other words, financing the long-term costs of roads and infrastructure requires that those improvements correspondingly increase tax revenue. Except, they don't: "A suburban road is resurfaced at the cost of $354,000. Marohn asked how long it would take the city to recoup that money from the taxes paid by property owners. The answer is 79 years. But the road’s life-cycle is only a third of that." 

Thus, only by increasing the size of the tax base can cities currently pay for the improvements previously made. In other words, a suburban Ponzi-scheme that one of these days will prove unsustainable and ... suburban Chapter 9s!


09 May 2018

Supra-Municipal Bankruptcies Lurking Around the Corner

One might think there's not much left to be written after my three articles addressing aspects of municipal (Chapter 9) bankruptcy: Municipal Bankruptcy: When Doing Less Is Doing Best (download here or here), Who Bears the Burden? The Place for Participation of Municipal Residents in Chapter 9 (here or here), and Nine Into Eleven: Accounting for Common Interest Communities in Bankruptcy (here or here). But what if we had not one, not two, but three simultaneous municipal bankruptcy cases? How could that be, you ask? To get the complete answer you'll need to read Junk Cities: Resolving Insolvency Crises in Overlapping Municipalities (download here). Cribbing from the abstract:
What would happen if the City of Chicago, the Chicago Public Schools, and Cook County all became insolvent at the same time? How should policymakers and courts respond? This Article argues that the pension and budget crises that have left so many local governments deeply in debt have generated another looming problem: the prospect of simultaneous debt crises in overlapping local governments—municipalities, school districts, counties, and other special purpose entities that govern and tax the same territory. These crises will be worse than prior local insolvency crises, as conflicts among overlapping governments will increase the pain suffered by taxpayers, service recipients, and creditors alike.
The U.S. Bankruptcy Code defines "municipality" broadly enough to encompass virtually any non-federal governmental entity other than a State. Thus, a city, a county, and a school district with overlapping areas of jurisdiction may all seek relief under Chapter 9 at the same time. While such a trifecta would give me the opportunity to write even more articles about this field it would be massively disruptive for the folks having to live through the mess.

Might this actually happen? For the reasons discussed in the first of my articles the long-term fiscal viability of many American municipalities is in doubt because of debt-overhang (due primarily to unsustainable retiree pension and health-care benefits) combined with a looming but silent demographic disaster (here and here). Coupled with rising interest rates, it is not unreasonable to expect an uptick in Chapter 9 filings in the not-too-distant future.

08 May 2018

"Isle of Dogs"

Wes Anderson's latest film played a supporting role in the final exam for my Sales & Leasing class where I characterized it as a "blockbuster." Well, that isn't exactly the case since Isle of Dogs has grossed just north of $26 million in the US. Regardless of the extent of its box office success, Isle of Dogs is a well-done film. (See my comments about Anderson's The Grand Budapest Hotel here.)

A few who want to signal their post-colonial virtue have criticized Isle of Dogs for one reason or another. I'll take the comments of Japanese-born Moeko Fujii here as sufficient evidence that the film is example of neither cultural appropriation (even assuming that's a bad thing) nor the White Savior Complex.

If neither of those shibboleths, then what is Isle of Dogs? To delve deeply one would need to be more familiar with Japanese culture and mythology than me so I'll merely observe two things that stood out to me. First, use of stop-motion figures. We don't see many examples of this form in the era of digital SFX so I enjoyed seeing Anderson put stop-motion to use. Although some of Anderson's films have been criticized for being a bit too precious, I didn't see an over-commitment to style in using this form in this film.

Second, the story of Isle of Dogs uses the broad quest theme to frame its narrative. But at the end of young orphan Atari Kobayashi's quest to recover his banished dog Spots an unusual turn of events takes place: Atari pays honor to his uncle, the nefarious mayor of Megasaki, for taking him in after his parents died, and this notwithstanding it was his uncle's venal plot to banish Spots and all the other dogs of Megasaki.

The honor young Atari pays to his uncle contrasts with most quest stories where the victorious underdog obtains his sought-for goal and his nemesis is destroyed. Even the anti-quest of the Lord of the Rings trilogy ends with the destruction of the One Ring. While I won't presume to attribute this display of familial honor to Japanese culture, I found it a refreshing contrast to the banal super-human fare that dominates current Hollywood blockbusters.

So, in a word, I very much appreciated Isle of Dogs and commend it to my readers' attention.

02 May 2018

"World War I and America"


Image result for berg world war I america

It was a slow go but I finished reading one of my Christmas gifts, "World War I and America: Told by the Americans Who Lived It" edited by A. Scott Berg (Library of America 2017). As its title suggests, Berg has compiled a wide range of over 100 original speeches, newspaper articles, essays, diplomatic dispatches, poems, judicial opinions, short stories, and letters by Americans who lived through the beginning of the Great War in Europe through post-war reminiscences by the men who returned.

Fairly balanced with pieces from politicos on top to the doughboys in the trenches and many in between (with a good representation of female voices), Berg's selections portray the gradual descent from a jingoism that couldn't wait for Americans to get "over there" and their idealistic opponents to the anger of some and regretful sadness of others after the war came to an end.

Pieces by W.E.B. Du Bois, Edith Wharton(!), Woodrow Wilson, Eugene Debs, and John Dos Passos stayed with me, albeit for rather different reasons. The hypocrisy of Justice O.W. Holmes, Jr., the silliness of Henry Ford, and the academic pretentiousness of Randolph Bourne should also be noted.

"World War I and America" is not the sort of book one can review. At least, I know I can't do it justice. And it's certainly not the sort of book that folks couldn't put down after picking it up. It takes something out of a thoughtful reader but I thoroughly recommend it to those who want to understand from the inside the world-historical event that did more than anything else to make the 20th and now 21st centuries what they are.

(You can see a short video presentation by Scott Berg about the book here.)

01 May 2018

Postal Profitability?

Early in April in a variety of his tweets we learned that not only is POTUS upset with the coverage of his administration by the Washington Post, he believes that the contract between Amazon (of which Jeff Bezos is CEO and who not-coincidentally purchased the WaPo in 2013) and the US Postal Service is "losing a fortune." You can read a nice summary of the fact-challenged remarks of POTUS in CNET here. But lack of facts in support of the tweeter-in-chief is not news and would have generated little note outside the Beltway.

A few days later, however, POTUS issued an executive order creating "task force" to review the financial stability of the USPS. You can read the full text of the order here. This is a bit strange given that all large vendor contracts must be approved by the Postal Regulatory Commission, an independent federal agency that has exercised it independence by on occasion rejecting requests for rate increases from USPS.

Even assuming good faith on the part of POTUS, there's no likelihood that this task force will uncover anything worthwhile. The principal reason the USPS loses money is--drumroll, please--Congress. Ownership of the USPS was turned over to an independent agency back in the Nixon days, after Congress passed the Postal Reorganization Act. Congress does not--I repeat, does not--fund the USPS with tax dollars (apart from some subsidies for the disabled and overseas voters). The USPS does have a statutory monopoly over first-class mail but in return it must deliver it to everyone in the United States including small, isolated bergs like Wells Tannery, Pennsylvania. Eliminating the cost of maintaining post offices in remote locations would save substantial amounts but Congress kept its fingers in the pie so the USPS continues to fund little-used senior citizen centers across the United States.

But back to how Congress causes the USPS to lose money. Back in 2005 Congress mandated that the USPS--alone among federal agencies--prefund 100% of its retiree health benefits. Prefunding long-term liabilities is not necessarily a bad idea but if Congress really believed it should be done you'd have thought they would have started closer to home with, say, Medicare. Thus, while the USPS operates profitably, its net revenues are inadequate to prefund retiree health benefits. This does not mean that its retirees aren't getting their promised health care but does mean that in future retirees--like future Medicare beneficiaries--are at risk. This risk is significant but it is also significant that the competitors of the USPS, like FedEx and UPS don't have this liability.

How might POTUS or his task force help solve this problem? And how could Congress be part of the solution? First and most simply, appoint and confirm members of the Postal Board of Governors. When turning the postal system into an independent agency Congress provided for a Board of Governors comparable to the board of directors of a private corporation. Of the eleven slots on the BOG precisely zero are in office. That's ZERO. In other words, the body charged with the overall oversight of the USPS has no bodies. And the the BOG is where the large-scale policy questions of services and benefits can be weighed and perhaps resolved.

Why, you might ask, are there no members of the Postal Service BOG? Equal (dis)credit goes to the Executive and the Senate. President Trump has nominated three qualified members (Why not eleven? I don't know.) but they are being slow-walked through the Senate because of Democrat gamesmanship. And why might Senate Democrats oppose filling the BOG? Well, start by asking the darling of Millennials, Bernie Sanders, who blocked President Obama's efforts (here and here) to get folks on the BOG.

There's more to be said about all this but this post should be enough to confirm that the recently-appointed task force will be largely irrelevant and that the long-term solution to fully profitable postal operations requires actual political leadership. In other words, don't hold your breath.

25 April 2018

A Moving Trueman

Carl Trueman, about whom I previously posted at least seven times,* is departing his long-time academic home at Westminster Theological Seminary for Grove City College, a highly-regarded undergraduate institution.

(Lawyers among my readers may recall that a dispute between Grove City College and the US Department of Education reached the United States Supreme Court in 1982. After the college won, Congress changed the law to ensure that the reach of the DOE would extend to all programs of colleges even thought the school did not accept any federal money. Standing on principle, Grove City then declined to matriculate students who accepted federal financial aid and now stands as one of the few bastions of true academic freedom in the United States.)

But back to Carl. While over the years I have had fine conversations with Carl, I certainly cannot count him as an intimate friend. And, while at times he can be a bit of a contrarian (well, okay, maybe that's another reason I like the guy), Carl's abiding love for Christ's Church as both an academic and as a pastor is exemplary. Carl's Church-centered theological perspective finds an appropriate ecclesial home in the Orthodox Presbyterian Church. As recounted by D.G. Hart here, over the past several decades the OPC has gained by attrition as its more Evangelical pastors and members have left for the looser pastures of the Presbyterian Church in America. But even here Carl has proved something of a contrarian by not falling into the vice of sectarianism, which, it seems to me, characterizes the ethos of many who speak with a distinctively OPC voice.

The short of it: Grove City will be much the better for Carl's move.


* Posts about Carl as keynote speaker in 2012 at the annual Renew Conference of Westminster Reformed Presbyterian Church here and here.

* Posts about his writings, print and online here, here, here, and here.

* A post about Carl as keynote speaker at the 2016 Convivium Irenicum of The Davenant Institute here.

18 April 2018

A Constructive Trust in Bankruptcy: Federal Policy Trumps Lack of InJustice

Go here to read an opinion of the United States Bankruptcy Court for the District of Delaware concluding that a constructive trust existed in favor of a subcontractor with respect to payments made by the federal Department of Energy to the general contractor. Sounds boring? Well, sure, unless you're the subcontractor who stands to get a sweet $365,292---payment in full--in a bankruptcy case.

Unlike an express trust or resulting trust, a constructive trust is not a trust in the historic sense of the term. Instead a constructive trust is a remedy by which courts can "freeze" some of the assets of one who has them by virtue of an unjust transaction. For the details of what sorts of transaction are sufficiently unjust to warrant a claim against property you can read my article Third Time's the Charm: The Coming Impact of the Restatement (Third) Restitution and Unjust Enrichment (download here or here). But to cut to the chase, there was no injustice raised in the facts of this case. So, one might ask, why did Judge Gross decide to recognize a constructive trust?

Because of a 1993 case (Columbia Gas Systems) decided by the Third Circuit Court of Appeals which, as a matter of federal law, concluded that a constructive trust can arise without wrongdoing or injustice if it is "consistent with federal policy." Many folks think that the Third Circuit got it wrong in Columbia Gas and I don't know that Judge Gross should have applied it here, when the case involved a different federal statute. But this is the bottom line for practitioners: learn the law of unjust enrichment (by, oh, I don't know, reading my article) and paying attention to statutes, particularly federal ones, that might give your client an additional leg to stand on.

10 April 2018

A Hillbilly Visits Raleigh: JD Vance


J.D. Vance, author of the best-selling "Hillbilly Elegy: A Memoir of a Family and Culture in Distress" came to Raleigh in early April to be part of the first installment in a speakers series sponsored by the Carolina Partnership for Reform. If you haven't read Vance's book, you should. Short and eminently readable, in Hillbilly Elegy Vance takes his life as a son of a dysfunctional family of northern Kentucky Scots-Irish transplants to southern Ohio as a microcosm of what ails a substantial swathe of white, underclass America. More personal although less sweeping in historical scope than Nancy Isenberg's "White Trash" (my thoughts here and here), Elegy scratches the itch of those who want to understand the source of Donald Trumps populist appeal.

Since achieving a certain level of popular acclaim, Vance has gone on to start Our Ohio Renewal, "a nonprofit organization dedicated to promoting the ideas and addressing the problems identified in" Hillbilly Elegy. Vance took his opportunity in Raleigh to list three problems he's identified: opiod abuse, the need for streamlined legal recognition of kinship guardians, and realistic job training. Even more fundamental, however, Vance acknowledges that implementation of good interstitial fixes won't solve the underlying problem of the decay of the family and related social structures. Yet, notwithstanding the extent of the breakdown of intermediate social institutions in contemporary America, Vance has not given up hope or retreated from public advocacy. His fundamental hope seems to be tied to his Christian religious commitment although he made few overt connections in his public remarks.

Vance is a small-"c", non-ideological conservative who reminds me of Carl Trueman (here and here), Philip Blond, and Roger Scruton (here). As Vance remarked, the American people do not really want a socially and fiscally conservative government. By and large Americans are socially conservative and free-spenders when it comes to government. (Of course, on what our government should freely spend varies across the political spectrum.) 

Nonetheless, dealing with the reality of America's social crises is more important than fixating on the American political scene according to Vance. "It's the culture, stupid," isn't what Vance said but I believe it captures his approach. Even moreso, the culture starts close to home and isn't fixed by staying in self-contained echo chambers that reinforce the depravity of the Other.

Salena Zito joined J.D. Vance as a speaker at the program. Zito is a political columnist and former reporter whose claim to fame is her early recognition of the groundswell of populist support for Donald Trump. In my opinion, she was a bit too sanguine in her take on the long-term viability of populism in America. I could be wrong but I think the eventual failure of the populist hopes from a Trump presidency will restore political power to the mainstreams of the political parties.

03 April 2018

Mark Tushnet Hops in the Hot Tub Time Machine

I can assure folks that I have never seen the 2010 comedy "Hot Tub Time Machine" where three middle-age buddies get into a hot tub and come out in their youthful heydays in 1986.  I am reasonably confident Harvard law prof Mark Tushnet hasn't seen it either. Yet Tushnet's essay, Critical Legal Studies and the Rule of Law (download here) brought the movie to mind.

Critical Legal Studies (CLS) were, so I thought, a relatively short-lived phenomenon in the legal academy that began in the late 60's and had pretty much petered out by the mid-80's. CLS purported to be a radical critique of law in America. Subjecting all modes of then-contemporary schools of legal thought, dominated by various strands of liberalism, to criticism in terms of vaguely defined "ideology" permitted the Crits to assume to successively more radical postures of "no one before me knew what was really going on" in America. Their discovery? Law had been merely a means of oppression by Those With Power.

While notoriously short on actually prescriptions of what the law should be (or at least cogent arguments for their preferred solutions), CLS enabled a generation of graduates from some of America's elite law schools to disregard notions of fidelity to texts or history or even (dismissively termed Western, imperialist) notions of logic in argumentation or honesty in legal discourse. Taking some forms of Legal Realism to their logical end, manipulation of the law in the service of the powerless was not a problem because Those With Power had been doing it since time immemorial. Tu quoque writ large.

CLS fell from its perch of prominence for several reasons. First, it had little on-the-ground utility when compared to the more fine-grained tools of analysis provided by law and economics. Second, CLS could be understood as an elite form of virtue-signalling designed to let folks who actually suffered from deep-rooted oppression know that the Crits were on their side--and permitting CLS-influenced graduates to gain and hold the levers of power with a clean conscience. Third, many of the Crits seemed not to have spent time coming to grips with the European philosophers of the Frankfurt School whose names they would cite in support of their program of radical skepticism about the law. And finally, CLS didn't interact meaningfully with the resurgence in Conservative (virtue-centered) legal criticism. In other words, addressing oppression and victimization is all well and good but what about doing so in terms of capital-J Justice?

Thus, Tushnet's piece provides a means to discover afresh what adjective I think best characterizes CLS thirty years on: banal. In his essay Tushnet takes issue with the valorization of the concept of the rule of law by organizations like the World Justice Project. Tushnet does a good job of explaining the historical origins of CLS and notes that its proponents never wrote much about the concept of the rule of law. Why? Because the rule of law was a plank in the platform of mid-20th century liberalism and mid-20th century liberals hadn't done enough to further the Civil Rights movement and--more importantly--had taken America into the war in Vietnam. "And, because they [the Crits] found that landscape unattractive, they were interested not in examining the rule of law on its own terms, but only in examining it as an ideological project." In my words: CLS represented the New Left movement described by Italian philosopher Carlo Lancellotti here.

Then, and now in Tushnet's piece, the bogeyman of CLS is "ideology." Rarely clearly defined, ideology functioned for Crits much like "worldview" does for conservative Evangelicals (here, here, and here): a simplified grid that works as a preemptive take-down of everyone else and frees its users from the need to consider deeply the arguments of those whose positions they reject on pre-theoretical grounds. In this respect CLS can be distinguished from the remnants of Old Left like Margaret Radin who still make principled arguments for her conclusions. (Go here, here, and here for my three-parter on Radin's work on "contract degradation.")

To be fair, Tushnet's essay is only thirteen pages and shouldn't be expected to do the work of a lengthy article. And within those pages Tushnet does a fine job of poking holes in the thin mid-20th century proceduralist arguments. The Crits were correct to observe that there's more to the rule of law than "generality, publicity, and prospectivity." Under such a standard one could plausibly argue that the Soviet Union and even Nazi Germany enjoyed something approaching the rule of law.

The added sauce is not, however, an undifferentiated ideology of redressing imbalances of power. The rule of law requires that the relevant law be measured against a standard of justice and without prolonging this post I submit that it was the failure of CLS to ground justice in more than hand-waving in the direction of New Left ideology that ultimately accounts for its banality.

21 March 2018

The Police Power vs. the Contract Clause: Insights from Oral Argument in Sveen v. Melin

This past week I noted here that SCOTUS had taken up a case dealing with the Contract Clause of the US Constitution. Oral arguments in the case took place on Monday (you can read the transcript for yourself here). Briefly, the lawyer for the kids, who wanted to get the proceeds of the life insurance policy due on the death of their father, squared off against counsel for dad's ex-wife, who had remained the beneficiary on the life insurance policy even after their divorce. The kids had lost before the Eighth Circuit Court of Appeals when that court held that a Minnesota law, enacted after dad bought the insurance but before the divorce, couldn't override the policy itself. Why? Because Article I, section 10, clause 1 of the Constitution says that  "No State shall pass any Law impairing the Obligation of Contracts." 

For what it's worth, I think the kids will prevail for two reasons. First, the Minnesota law had come into effect before the divorce (and, obviously, before dad died). The timeline struck several members of the Court as significant. The law would clearly be unconstitutional had it come into effect after dad died but before the insurance company paid out. Several justices seemed squeamish about a law that would have changed the beneficiary after the divorce but seemed more sanguine about a pre-divorce change that the attorneys for the parties should have talked about with their divorcing clients.* And, there's no reason to believe anyone on the Court would have had a problem with the constitutionality of the law had it pre-dated buying the policy. After all, it's black-letter law that contracts are always subject to existing statutes.

Second, a state's "police powers" are in principle very extensive. Historically, they included the power of a state to regulate the health, safety, and morals of its citizens. Hence, the continuation of established churches in several of the newly independent (but united) states for some decades even after ratification of the Constitution. These powers today are cabined by the constitutions of the states themselves and by the Constitution as through the 14th Amendment it has become ever-more a means of limiting state powers. Nonetheless, the Contract Clause has always been a limit on a state's police powers but, equally so, SCOTUS has recognized that family law largely remains one of the fields over which the police powers remain effective. And Minnesota's "revocation-on-divorce" statute falls squarely within the realm of the retained police powers.

Combining the timing of the change in the law--before the divorce--and the general deference to a state's control over its laws of marriage and divorce, I predict that SCOTUS will reverse the Eighth Circuit and give the kids the money.

* Counsel for the ex-wife made a big deal of the fact that no one knows if the lawyer for either divorcing party mentioned the change in the law at the time of the divorce. And the similar law of Virginia got a shout-out because it requires divorcing parties to be informed that Virginia law revokes spousal life insurance beneficiary designations at the time of divorce. Minnesota law does not. (As an aside, my favorite estate planning attorney informed me this kerfuffle could have been avoided had dad made a trust the beneficiary of his insurance policy. Minnesota law did not purport to change the beneficiaries of a trust upon divorce.)

15 March 2018

It's Back! SCOTUS to Consider the Contract Clause

Nice summary here of issues for today's oral argument.

You can find one of my favorite Constitutional provisions in Article I, section 10, clause 1: "No State shall pass any Law impairing the Obligation of Contracts." While I have posted on the Contract Clause a number of times (try here, here, and here for a sampling), it's been awhile. This gap explains why I was gratified to read this bit of news in Forbes. It turns out that SCOTUS has taken up a case on a writ of certiorari to the Eighth Circuit that presents what may be a case of a state law that runs afoul of the Contract Clause.

As explained in the article,
Mark Sveen and Kaye Melin were married in 1997 and lived in Minnesota. After their marriage, Sveen purchased a life insurance policy, naming Kaye as primary beneficiary and his children by a previous marriage as contingent beneficiaries. The couple divorced in 2007 and Sveen died in 2011. 
The trouble arose out of the fact that the state changed its probate code in 2002. The law now provided that life insurance beneficiary designations would be revoked upon divorce. After the divorce, Mark did not change the beneficiary designation, leaving Kaye listed as the primary beneficiary when he died. Naturally, both Kaye Melin and the Sveen children want the proceeds, the latter arguing that under the new Minnesota law, they are entitled to the money. Hence the suit.
That’s where the Contract Clause enters the picture. Did Minnesota violate it when it in effect rewrote existing life insurance contracts with its revocation-upon-divorce statute?
The Eighth Circuit ruled in favor of Kaye Melin, the beneficiary named in the policy, holding that the post-divorce Minnesota statute could not "impair" the obligation of the existing life insurance contract. The Sveen children have asked SCOTUS to reverse the appellate court citing a series of cases beginning in the 1930s in which the Court has permitted state law to tweak or defer collection of a variety of contracts.

So far I suspect many of many readers might be rooting for the ex-wife--next to only property, contracts are God's gifts to human society and no state should mess with 'em. But consider:

One group that will be watching this case closely is state and local government employees in California (and elsewhere) who through the 2000s convinced hapless state legislators and city governments to grant ever-greater retirement benefits. (Read some of the details in my article Municipal Bankruptcy: When Doing Less Is Doing Best (download here or here).) They are now fighting hard to keep the state from rolling back those unsustainable (here and here) benefits in the more austere decade since.

For what it's worth, I don't believe the Contract Clause prevents a state from modifying an existing contract unilaterally. Such a change may well be a breach of contract but it wouldn't impair the "Obligation" of contract as such. But I could be wrong so we'll have to wait and see.


13 March 2018

A Great Showman and the Shape of the Other

Over the past couple of weeks we saw two films, The Greatest Showman and The Shape of Water. Some have criticized The Greatest Showman for its lack of fidelity to the life of its titular character, P.T. Barnum. Others have seen in The Shape of Water an elision of the difference in kind of human and non-human creatures. Common critiques of both films have suggested obeisance to contemporary notions of political correctness or seen in them evidence of an invidious plot by the Prog-Left political-entertainment complex. Of all these criticisms, the last may have some traction in The Shape of Water but all of them miss the obvious common mark: both films valorized love for the Other, a notion that has long antecedents in Christianity.

Those who criticized The Greatest Showman for lack of historical verisimilitude must have failed to notice that it was a musical. Since when have successful Hollywood musicals been anything more than an opportunity to take a snippet of reality and mix it with large doses of singing and dancing? The score of The Greatest Showman was terrific, the dance scenes were great, and a plot centered around the dangers to character and family of hard-won success was as traditional as apple pie. Was the real Barnum as concerned with the personal well-being of his circus "freaks" as the character played by Hugh Jackman? Did he really reject the advances of the real Jenny Lind? Don't know; don't care. On the other hand, is a representation of a character advancing the interests of social misfits and outcasts always timely? Are great talents often hidden behind physical and social barriers? You bet. Following last year's success with the musical La La Land, I can heartily recommend The Greatest Showman.

Winning an Oscar for best original music score struck me as a no-brainer for The Shape of Water. Guillermo del Toro taking the Oscar for best director seems eminently reasonable. I'm a bit surprised that it didn't also win for its juxtaposition of jarring and languid cinematography. But Best Picture?

The Shape of Water is not about erasing the barrier of intimacy between humans and other creatures. As was evident from the first few minutes, it was about how outsiders relate to the larger world (and vice versa), and how most outsiders, on finding a comfortable niche, are content to let other Others struggle. Only the mute Elisa Esposito is willing to risk herself to save the humanoid creature and she eventually manages to bring along first her neighbor, a stereotypical gay--but unemployed--commercial artist who spends his days watching old Hollywood musicals on his black and white TV but blanches at watching news of violence deployed against Civil Rights workers. And next is Elisa's African-American co-worker who is satisfied with a steady job and at first wants nothing to do with saving the strange amphibian creature.

The venality of satisfaction with comfort and avoidance of risk is the fundamental source of conflict in The Shape of Water. Of course, there must be some external (and existential) source of danger against which the protagonists struggle and it is here--in the film's population of that danger--that The Shape of Water takes the easy way out.

Those aiming to end the life of the creature whom Elisa and her friends seek to save barely qualify as cardboard cutouts. The "bad guys"--American and Soviet--are conscienceless automatons whose stated motivations hardly warrant the sorts of malicious actions they undertake. del Toro is reported to have said that he set The Shape of Water in 1962 Cold War-era America because to have set it in the present would have made viewers too uncomfortable. Perhaps del Toro had in mind the outsized fears of undocumented aliens or of refugees from the Middle East. Regardless of the contemporary Others whom the creature represents, not all those who express some concern about illegals or resettling Muslims should be counted as the epitomes of evil represented by security director Richard Strickland, US Army General Hoyt, and the Soviet handlers of scientist-spy Robert Hoffstetler. There are many prudent reasons to be concerned about unrestrained migration of peoples but del Toro was not one to paint in shades and hues when it comes to projecting his vision of oppressors of the Other.

In short, del Toro pushed all the rights buttons to get an Oscar. A suspenseful and well-told, intricately filmed, and superbly accompanied story coupled with the political proclivities of the voters of the Academy of Motion Picture Arts & Sciences was just the ticket. There is little question that a vision of the Other as unemployed, rural, and White would not have been as well-received.

Although I am glad to have seen The Shape of Water, I can't recommend it to a general audience. The film's nudity and depictions of sexual activities make it inappropriate for many. And, while it can be enjoyed on its own substantial artistic and story-telling merits, regrettably I was left with the sense that The Shape of Water was tainted by virtue-signalling to the political sensibilities of our elites.