Obamacare: Obscuring the Federalist Argument

Prof. Ronald Dworkin's article in the New York Review of Books  on the "mandate", Obamacare's most controversial provision, makes for a very interesting read. The author purports to present the actual policy argument, on which the Supreme Court should uphold the Affordable Care Act's constitutionality. He seems to think that the contentious issue, whether the federal Congress has, among its enumerated powers (as written down in Art. I section 8 of the U.S. Constitution); whether, in particular, the mandate, i.e. the requirement that most individuals buy their own health insurance on a penalty of a fine, falls within the scope of the power of the Congress to "... regulate commerce ... among the several states ...", is rather trifle.

However, the issue is not whether the mandate is a good idea policy-wise. Prof. Dworkin seems to ignore the fact that 26 states are among the plaintiffs in the constitutional challenge against the mandate. 26 states wish for the Supreme Court to rule that it is up to them, not the federal government, to enact such sweeping legislation.

I find Prof. Dworkin's policy arguments very convincing, although equally valid counter-arguments could be put forward. However, this is a policy discussion that should be taking place on the state level. Although the Supreme Court should respect the federal legislature's role and afford all legislation passed at least a presumption of constitutionality, based on the argument that Congress is elected, while the Supreme Court is not, in actuality the prominence of the federal government is in fact a step away from democratic self-government, if one understands that self-government entails that decisions are made as close to those affected as possible. People do vote, of course, for the federal Congress. Yet, it is the state legislative bodies that are much more reflective of local opinion than federal government. This federal over-extension led to the imposition of the will of a majority in some states over majorities in other states. People are disinclined to engage in debate over the merits of a policy proposal among themselves, since their opinion might become irrelevant within the context of the federal legislative bodies, in effect letting others make their decisions for them.

The only thing that's worse than federal over-extension at the legislative level is federal judicial activism. How much people value their privacy nowadays is very understandable, yet no such right exists within the federal Constitution or its Amendments. However, the Supreme Court, with a reasoning that was similar to Prof. Dworkin's in that it appealed to the policy aspect of the cases before it, found that such a right existed within the "penumbra" of a number of Bill of Rights provisions, precluding the state from prohibiting the use of condoms between married couples. That finding by the Court meant that the citizens of Connecticut would no longer have to debate the silliness of their legislation; they could rely on someone else, in this case the Supreme Court, to take care of them. The women's movement lost a lot of its dynamic when the right of privacy was extended to include a right to abortion on demand by the Court, not by the voters. And although most people would not have, nowadays, problems with what consenting adults do in their bed, a sense of civic responsibility was lost, when the Supreme Court declared that laws penalizing "sodomy" are unconstitutional. If I were a Texas citizen, I'd be hoping to be able to overturn such law by ballot.

The federalist argument, then, should be taken seriously. Political discourse is fundamental for the functioning of a democracy and is displayed at its best on a local level; it should not be made moot by extension of the federal legislative or judicial powers.

Rioting in Athens

Anyone watching last night's riots in Athens would justifiably conclude that the very foundations of the Hellenic Republic were at stake; which is, in fact, very close to the truth, only in exactly the opposite way to what the demonstrators and rioters claimed. The Parliament was voting for an emergency bill, that would allow the government to sign a new bailout with the European Union, the European Central Bank, and the International Monetary Fund, whilst committing itself to enact measures which purport to reverse the budgetary deficits and increase the competitiveness of the greek economy. Were the Parliament to fail to pass the emergency bill, the aforementioned international institutions would no longer extend a line of credit to Greece and Greece would default on its obligations, beginning with a large chunk of bonds which are to mature in March, which would not be paid. This would lead to the uncontrollable bankruptcy of the Greek State and, almost inevitably, to Greece exiting the Eurozone and returning to a national currency. A national currency would, of course, be devalued almost instantly and Greece would experience galloping inflation, not to mention a shortage of most goods, including food.

Yet, all those demonstrators alleged that the passing of the emergency measures would lead to a virtual occupation of Greece by its lenders, poverty, recession, and a loss of labor rights. These allegations were based on the text of the "Memorandum of Understanding on Specific Economic Policy Conditionality"; the Memorandum's most controversial provisions provide for a drastic reduction in the minimum wage and of the power of collective labor agreements reached at the branch level (i.e. the sector of the economy involved) versus those reached at a company level - or the terms of individual labor contracts. Another provision that has proven controversial, contained in other documents of the emergency bill, relates to a waiver of sovereign immunity on the part of the Hellenic Republic when it comes to its lenders' rights to collect the loan by seizing the property owned by the Greek State. It should not come as a surprise, nowadays, that provisions concerning the reduction of the overblown state, even by means of redundancies of public servants, did not prove as controversial.

The former provisions are seen by their opponents as a big blow to the labor movement, as leading to poverty and deepening the recession (since they will lead to smaller wages). What is strikingly absent in their considerations is the current unemployment rate, which has topped 20%. As long as no provisions for mandatory hiring (as a means of reducing unemployment) exist - which, fortunately, not even the strongest proponents of a controlled economy have put up as proposals yet, keeping an antiquated regulatory regime in the labor market strips the unemployed from even the slimmest chances of acquiring a job. Moreover, a black job market, in which actual wages are way below the official minimum wages of today, is left to flourish, much to the actual detriment of workers' rights there. The Prime Minister, Mr. Papademos, has explained how a reduction in labor costs (including both wages and social security contributions) will lead to an increase of hirings in the medium term. As far as the waiver of sovereign immunity is concerned, its wording (which has, in fact, been used in many bonds and guarantees by the Hellenic Republic in the past) has given rise to an urban legend, that, in the event of default, the lenders of Greece would have the right to seize and sell the Acropolis, the general allegation being, that Greece is no longer a sovereign nation (and, as such, is under foreign occupation).

If anyone had taken the time to read the memorandum, they would have realized that most of its provisions are nothing less than essential modernizing measures and are, in fact, beneficial to ordinary citizens. For example, they will not be forced to hire a lawyer in the event of a real-estate transaction, as was the case so far; the regulated profit for pharmacists should be drastically reduced; companies should no longer be forced to publish their economic data in newspapers; a number of taxes that are earmarked for certain groups should be abolished. Such provisions strike a blow to several vested interests that have fragmented the greek society but reduce the burden on society as a whole and should have been welcomed by the demonstrators.

Unfortunately, the dangers inherent in bankruptcy were not enough to convince the demonstrators that the passage of the emergency bill was of the utmost importance. What strikes anyone who will read the Memorandum, however, is that almost nobody has come to defend its provisions, other than the controversial ones, which are undoubtedly in the common interest. Sadly, vested interests still play a large role in Greek politics and it seems costly for someone to publicly support even the most reasonable of provisions, that would even barely touch their privileges. The result is that the political class trying to pass the emergency bill does so in a defensive and apologetic way; the threat of bankruptcy is the exclusive argument presented in favor of the Memorandum which is presented as a series of austerity measures, its developmental significance being overlooked (although a coherent policy of attracting foreign capital in the form of foreign direct investments is strikingly absent). But, then, this gives rise to populist cries about national dignity, not to mention the notion that Europe would never allow Greece to default on its debts but would somehow (despite the constant failures to honor the commitments already undertaken and the risk to other European taxpayers' money) intervene at the last moment. This also leads to actual faults in the Memorandum not being criticized; if, for example, the significance of being able to pay off a company's debts to the State in 60 installments were made clear to the Memorandum's authors (who reduced the maximum umber of installments to 12), such provision would possibly not have entered the Memorandum - or the aforementioned lack of any coherent policy to attract foreign direct investments might have somehow been remedied.


It is unfortunate that any such discussion has eluded the rioters, who would chant and swear against the foreign occupation and international capitalism and forget that, in cutting off all channels of credit, Greece would be incapable of meeting its population's basic needs, even feeding itself. As it was pointed out by both the Finance Minister and the leader of the New Democracy party, the same lot who chanted "Hossana", when Jesus entered Jerusalem, would cry "crucify Him!" only five days later. Were the emergency measures to fail passage in the Parliament, the temporary jubilation and rejoicing would be supplanted by complete anarchy only a few days later.