Economics of War Come to Congressional Budgeting

The Republican Party is the home in America of more astute and insightful economic analysis and the grass roots level. This is growing more and more true as radio talk show hosts become better able to articulate the information. They manage to reduce complex ideas of reducing marginal tax rates creates increased family welfare down to the bumper sticker phrase, “It’s not your money, Senator!”

This same ability to reduce complex ideas down needs to go beyond Economics 101 concepts of guns versus butter or supply and demand. If we do not, we still end up fighting bad Democratic ideas like socialized medicine, spend-now-pay-later social security, etc., on terms that only the Democrats and “all politics is local” pork barrel politicians of both parties can win. Most of this can be accomplished by applying the principles of the dismal science of economics to conflict.


Pork and Islamic Terror
Will any pork barrel politician like being called out as the equivalent of an al-Qaeda terrorist? The politician is more motivated by his single issue pork barrel project than the common good. An al-Qaeda terrorist is more interested in pushing his single issue of Islamicistic domination than the common good of the world’s citizens.

In essays on the economics of war, one professor makes economics and war as much a part of his studies as the pricing of a loaf of bread. There is a demand curve and a supply. The supply is of wealth (i.e., booty or production for war and peace, respectively) versus the demand for conflict.

He claims that his analysis applies equally well for armed conflict or terrorist attacks as for Congressional budget fights. It seems true.

Not being the economist myself, I can only refer to his graphs and analysis for why some of the following points are true. However, common sense and a little observation of human nature bears these “maxims” out.

Because the return on investment is much greater, it is more economically efficient for a small group to push for its single issue than it is for the majority to oppose it. Think about it. A town needs a bridge. They convince their Congressman to get money for the bridge. The Congressman increases his campaign contributions from the townspeople and the benefiting businesses for himself and for his PAC to finance other candidates. He increases his re-election chances by pushing for the bridge. If the bridge is not paid for out of the federal budget, the Congressman gets a lot of good press at home. But if he succeeds in getting the bridge, he might even get his name on it. Then the town will never forget who its benefactor is. (Not much different than Alexandria, Egypt can never forget that it was founded by Alexander the Great nearly 2300 years ago.) If the Congressman has a child who wants to go into politics, the young politician will be able to milk that bridge for votes for generations.

The Congressman on the other side of the country might even vote for this bridge in a town he has never heard of, if he too gets to build something – say, library named after him in his hometown. (The Congressional equivalent of the Carnegie Library – who built those libraries, by the way?)

Now let’s turn to the terrorist. He is motivated to bring down a government. Very few in the community support him. Mao Tse Tung suggested that the terrorist could easily win with a small force. All he needed to do was be highly motivated and smart. So in Mao’s world, you attacked the population that you wished to persuade. As the police and army respond, they respond by repressing the population: restrictions on movement, increased security, reduction of rights to free speech, imposition of higher taxes to pay for more security for the ruler, etc. The population begins to resent the ruler for these impositions. The population begins to fear participating in society for fear of being hurt or killed by terrorist attacks. It is easier for the citizens to stay, not to participate in the economy, and to resent the government. The support for the terrorist grows and feeds into a new cycle of violence.

Both the terrorist and the Congressman feed off of systems that reward the instigator with greater returns than would come from more traditional efforts. Each of these is a highly predictable, economically efficient action for the desired goals.


How to Resolve the Dilemma?
Just because we understand the motivations, does not mean we as average citizens need to approve of that behavior. To overcome either self-centered manipulation of the economics of war, the economist will tell you is dependent on the ethos that permeates the particular society. Why do Republicans and Democrats who dislike each other not fight personal wars through duels, fight factional (see the Federalist Papers for application) wars through armed conflict, or tear apart the Constitution through outright treason and sedition when the minority party in Congress? Simple. The ethos of America does not find such actions acceptable. In Kentucky, the governor must swear at his inauguration that he has never fought a duel. These principled positions survive because the morality of the country requires it not because the law requires it. Law only functions when morality permits it.

Why is Afghanistan war-torn? Because the ethos created by conflict, escalated by the later intervention of the Soviet Union and the U.S.’s support of the opposition, did more to support single issue warlords than it did for civil government. Why is recovery going to be difficult? Warlords still have single issues to promote – themselves. Altruistic behavior and capitalistic commerce will occur in small doses, but only after the courage of the majority to resist warlords through armed conflict becomes strong enough will the warlords disappear.


The Solution of Political Morality
The only way to stop terrorist activity and pork barrel politics is by changing the moral culture that allows it. How? The bumper sticker could say, “Only criminals have pork barrels.” We need to define a moral principle that local funding should be done by states unless many states benefit. The Interstate System benefits all states. If I want to go to Denver from Indianapolis, I am happy to have an interstate through Kansas (even wiser a turnpike, but that is for a different day). If trucks on interstates are not the epitome of interstate commerce, I don’t know interstate commerce.

We need to raise the cost of single issue politics. Only when it is almost more expensive for single issues to win than it is for the majority to oppose will single issues truly die. The politics of theft by Congressional committee needs to be called what it is – criminal. Having worked with groups of people, I know that work only gets done when fewer than two people apply themselves. Groups slow down work. Yet groups are the only way that work can be broadcast. Oh, the paradox!

Controlling lobbying won’t work. Destroying Congressional staffing won’t work. Breaking down doors to executive sessions to committees won’t work.

I am frustrated because I can clearly describe the problem, but I don’t know how to solve for the law of economics in conflict.

In War in the Shadows, the author suggests that guerilla warfare (which terrorist rely on) can only be won by the larger (probably governmental body) group if the larger group abandons the idea that it must seize and hold all territory. The war must be won by establishing fortified areas where the warriors can retreat for recuperation and re-supply among the guerillas. Then the security perimeter can be expanded through cooperative, non-repressive efforts. The population must feel that the government is responsive and protective of the population.

I suggest that this is the way that pork barrel politics at the federal level must be fought. Attorney Greg Garrison has started his own fortified position in Indiana. He is calling out the Congressmen from Indiana on pork barrel politics. Now, I admit that to date most of his examples of pork barrel spending have focused on out-of-state expenditures. For his stronghold to be successful, he must focus on the local population. He needs to identify wasteful spending in Indiana that each Congressman directly benefited from. To attack Pence, the attack must be on spending in Muncie. To attack Carson, the spending must be in Indianapolis. Only when these attacks change the moral culture for voters toward their own Congressmen will the morality truly change.

National attacks on local expenditures is even less effective than local attacks on out-of-state expenditures. Single issue politics is the equivalent of terrorism and its techniques of guerilla warfare. They must be handle the same: so says the law of economics.

Republican for Raising Taxes

As the Indiana legislature and other states' legislatures are closing in on writing their budgets for this budget cycle, we are hearing the typical question of raising or lowering taxes. As with any debate written within the past sixty years, the language of the debate has traditionally been written and dictated by liberal democrats. This has allowed the Democrats to control the emotional response to the message.

As the conservative movement has been able to find its voice after the Reagan and Gingrich revolutions in the White House and House, respectively, it is slowly learning how to choose words that better reflect the true debate.

For example, the debate over estate taxes has been using the language favored by the Democrats. Admittedly Teddy Roosevelt, as I understand it, first pushed the estate tax for the purpose of preventing the super-wealthy of the era from creating a caste system of wealth. He wanted to prevent the Rockefellers and Vanderbilts from controlling America in perpetuity by the power of wealth. He made the faulty assumption that once wealth is created in America, it would stay in the same family forever. Who could argue that huge estates should remain in place forever? How anti-American!

He looked at the history of Europe and its historical wealth and assumed that the "Robber Barons" were accomplishing the same thing by different means. The Democrats of the New Deal thinking picked up the populist notion and ran with it for nearly a century. They kept pointing out how anti-American passing estates from one generation to the next were.

Then the Republicans of the conservative movement learned to change the vocabulary. This tax was imposed when a person died. Without that triggering event, no tax was "recognized" (lawyer word for the reason for a tax being owed). So they changed the debate from the tax on the wealthy (which no one in America feels that they are) to a tax on the dead. This gave the tax a bad taste, even for Democrats.

This change of vocabulary may have the feel of George Orwell's Winston Smith in the Ministry of Truth in1984. Changing the words changes the truth, right?

Never fear changing words if they move toward the truth.

The truth is, as I have pointed out in a previous posting, the estate tax is an optional tax that even Bill Gates can avoid. The tax is imposed on the dead uninformed.

Why not call it what it is the uninformed middle class death tax? Well, the Republicans came up with the shorter version: death tax. This changed the entire debate. Now Democrats had to explain why the name "death tax" was an inaccurate description. This opened an old debate subject to previously undiscovered information. The Democrats had a hard time selling a 55% tax rate on the dead. Add to this the last 25 year push for old people to retire on the wealth of their retirement plans rather than guaranteed income streams of pensions, and everyone could be taxed at death. The American dream of wealth for all, the death tax for all.
Even Hillary had to at least support changing the death tax system.

Let's get back to my point: the current budget debates.

The current debate about tax cuts makes the Republicans look stupid. Why "lower taxes" when huge expenditures for war are foreseeable into the future?

The Democrats have made complete mud of this debate, too. Let's pull the definition of words apart and examine this further. I looked up the word "tax." It means, "A contribution for the support of a government required of persons, groups, or businesses within the domain of that government." American Heritage® Dictionary of the English Language, 4th ed. (Houghton Mifflin Co. 2000). It can also be defined as "A charge, especially a pecuniary burden which is imposed by authority." Webster's Rev'd Unabridged Dictionary (MICRA, Inc. 1998). So a tax is the payment to the government and not the calculation method.

So if we look at history a tax cut occurs when the amount of money that a taxpayer pays to the government is reduced. Where do these tax cuts occur? Since the income tax is based on the amount of income a taxpayer has received that year, a tax cut would occur when the size of the check for the taxpayer is reduced. Lower income means bad times. Bad times occured in 1970's and early 1980's. This despite high tax rates. So the Democratic ideal of high tax rates lead to low taxes. The Democrats cut taxes and increased spending (which I knowingly assert without support and will address at a later date). For more information on high tax rates and lower taxes received by the government see the works of Dr. Thomas Sowell, Professor Walter Williams, or Professor Arthur Laffler.

The Democrats have pushed the Karl Marx notion that the best means of taxing a population is by taking for the wealthy and giving to the poor. (No, this is not Robin Hood. The Robin Hood story is based on taking money from the crooked despot King John. So crooked that even his lords found his taxes outrageous and demanded the King sign Magna Carta.)

Despite my respect for Karl Marx's descriptive talents, we ahve yet to find many of his proscriptive and theoretical solutions to work well at all. So maybe we should proactively call this fallacy of cutting tax rates is the equivalent of reducing the taxes flowing to the government.

Presidents Kenney and Reagan have proven that reducing taxes increase taxes.

Let's see the Republicans call a spade a spade: President Bush should call for increased taxes -- by reducing tax rates. By pushing the notion that he is trying to reduce taxes, he is perpetuating the fallacy that tax rates are an accurate proxy for taxes generated. They are not.

Let us destroy one more "fact" of the Orwellian Ministry of Truth. Republicans must raise taxes!!!

Did Arnett Commit Treason?

Like many Americans today, I am angry. My gut reaction is that Peter Arnett, if he be a U.S. citizen, committed treason yesterday. As a lawyer, I feel uncomfortable uttering those words, not knowing how treason actions really work. So I did some research. Surprisingly, I feel even more adamant that he committed treason.

How did I come to that conclusion? Well, let' look at the law.

Constitutional Mandate
First, the U.S. Constitution, Article 4, Section 3: "Section 3 - Treason: Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.

"The Congress shall have power to declare the Punishment of Treason, but no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attainted."

Did not everyone in the world witness these statements? Need we have more? Did not Arnett confess to making the statements in his apologies on the "Today" show? Under Federal Rules of Evidence, such a statement against interest is admissible and not subject to exclusion under the rules for hearsay at Fed. R. Evid. 801 to 803.

Congressional Input
Second, U.S. Code article 18, section 2381: "Treason: Whoever, owing allegiance to the United States, levies war against them or adheres to their enemies, giving them aid and comfort within the United States or elsewhere, is guilty of treason and shall suffer death, or shall be imprisoned not less than five years and fined under this title but not less than $10,000; and shall be incapable of holding any office under the United States."

But we may be guilty of treason for not pointing it out 18 USC sec 2382: "Misprision of Treason: Whoever, owing allegiance to the United States and having knowledge of the commission of any treason against them, conceals and does not, as soon as may be, disclose and make known the same to the President or to some judge of the United States, or to the governor or to some judge or justice of a particular State, is guilty of misprision of treason and shall be fined under this title or imprisoned not more than seven years, or both."

Another twist is 18 USC sec. 2387: "Activities affecting armed forces generally
"(a) Whoever, with intent to interfere with, impair, or influence the loyalty, morale, or discipline of the military or naval forces of the United States:
"(1) advises, counsels, urges, or in any manner causes or attempts to cause insubordination, disloyalty, mutiny, or refusal of duty by any member of the military or naval forces of the United States; or
"(2) distributes or attempts to distribute any written or printed matter which advises, counsels, or urges insubordination, disloyalty, mutiny, or refusal of duty by any member of the military or naval forces of the United States -
"Shall be fined under this title or imprisoned not more than ten years, or both, and shall be ineligible for employment by the United States or any department or agency thereof, for the five years next following his conviction.
"(b) For the purposes of this section, the term ''military or naval forces of the United States'' includes the Army of the United States, the Navy, Air Force, Marine Corps, Coast Guard, Naval Reserve, Marine Corps Reserve, and Coast Guard Reserve of the United States; and, when any merchant vessel is commissioned in the Navy or is in the service of the Army or the Navy, includes the master, officers, and crew of such vessel."

US Supreme Court
Third, the US Supreme Court in its major case on the subject, Cramer v. U.S. Particularly, its implicit proposition that speech can be treason, even though its point was there must be more: "On the other hand, a citizen may take actions, which do aid and comfort the enemy- making a speech critical of the government or opposing its measures, profiteering, striking in defense plants or essential work, and the hundred other things which impair our cohesion and diminish our strength- but if there is no adherence to the enemy in this, if there is no intent to betray, there is no treason. " Cramer, 325 U.S. at 29. The Court's point is that there must be intent to betray over and above the speech. Speaking to the enemies' people? Calling the enemy successful?

Conclusion
We have a legal duty to prevent our government in form and action from being undermined. Now, suffice it to say I do not fear that our government will fall because a small-minded person like Arnett has spoken, but these is tragic.

Should we restrict protest? No! No! No! The professor at Columbia University has spoken his mind that we should suffer a thousand Mogadishus. This statement is far less damaging because of its location and circumstances. It was not done in manner that will knowingly help the enemy. It is a loud mouth. Have him make the same statement in front of an Iraqi audience when Iraq is the enemy then a crime is committed.

Arnett should be prosecuted. Otherwise, we all become felons, guilty of aprising treason.

An Angry Father or Not All as It Seems

Over the weekend I saw the sad story of the first Marine casualties in our war. My heart aches for them. One of the disturbing videos on CNN was of a distraught father mad at the President for, paraphrasing, "taking my son away from me." The clip had no setup other than "heeeeeere's the distraught father" type summary.

The father was Mr. Waters-Bey. I do not recall his first name -- my apologies to the gentleman.

The name ending in Bey reminded me of a pro-bono case that I worked on as a law clerk where a federal prisoner was complaining of cruel and unusual punishment violations. I couldn't remember much about the name other than the supervising lawyer told me that it is a religion common in prison. I could remember nothing else.

I decided to do some cursory research. I found a website that described the religion. According to this website the religion is related to the Moorish Science Temple of 1913 and its progeny the Nation of Islam.

I do not know much about this religion, and one website's research does not make doctoral research. Nevertheless, based on impressions alone, I wonder about the motivations and the emotional source of this rightfully distraught father's anger. Why this analysis? Simple, once again the press (especially CNN, here) puts a person on camera with no analysis of the basis for a person's statements. This failure to fully disclose readily ascertainable information concerns me.

This father is entitled to his mourning, his outrage, and his religion. The press is not entitled to a free pass when it provides no context for the press conference. The American people deserve reporters who question seemingly out of place from the expected.

Estate Taxes Good?

In the midst of war, the Washington Times ran an editorial about Bill Gates' position on estate taxes.

Since this is well within my professional expertise as an estate planning attorney (trained in multi-millionaires' planning techniques by the Esperti Peterson Institute at Michigan State University), let me make a simple point: multi-millionaires can easily pass the entire assets of their estate to their children intact. One oft-used technique is the Charitable Lead Trust linked with a charitable foundation. The millionaire or billionaire can pass his entire estate tax-free. Admittedly, he must put restrictions on the money for 18-22 years, but it works. (If you are curious about how this works, send me an email at jheck@hecklaw.com.) Most estate planners consider the estate tax an "optional tax." Good planning eliminates the tax in its entirety.

Simply put, while I do not question Bill Gates' personal altruism (since most published reports indicate his children will only be decamillionaires and not billionaires, by Bill's and Melissa's estate plan). I do question the soundness of their logic. If the estate tax can be so simply circumvented, why puts so much emphasis on giving money to the government as sound policy.

Where I do see the value of the estate tax is as a motivator. My professional experience is that most persons do not plan for a future that is more than 15-20 years away. The estate tax in its pre-reform model was an excellent motivator for the middle class and upper class to spend time thinking about the next 10 to 50 years, no matter the person's age. The value of this is that it allowed these persons to creatively provide for family members according to the family member's individual skills and problems and to seriously consider healthy doses of long-term charitable planning.

With the loss of a real threat of estate taxes for the middle class and a serious bear market, the numbers of persons considering these altruistic aspects of planning have plummeted.

I will skip further comment on this matter until the war closes. Suffice it to say, beware of the wealthy seeking more taxes; there is usually more to the story.

You gotta read this article from Canada.

Despot or Street Thug: Saddam's Criminal Trial

Last night President Bush left no doubt that we can, should, and will go to war against Saddam if Saddam does not go into immediate exile. Even this morning I hear debate that focuses on our burden to prove that Saddam has weapons of mass destruction. This is non-sensical.

Burdens of proof are legal principles for courts of law. In our hierarchical, modern thinking, we think of the results of certain actions as being on a range from frivolous, fun, benign, negligent, reckless, intentionally dangerous, destructive, to war. As we go through this range, the legal bent of common society is that any person who wishes to move from benign into more catastrophic and deadly force of war needs to have made a strong case for his action. This is patently ridiculous.

Long ago in Greece, a trilogy of dramas made the point. King Agamemnon returns from the Trojan war and is killed. His son Orestes seeks revenge on his father's killer, as is right by custom. His father's killer, though, is Orestes's mother. The Furies, gods of vengence, chase down Orestes for killing his mother. The godess Athena intervenes and appoints the world's first jury to sit in judgment of Orestes.

This story is instructive. Only within society subject to the rules of participatory justice is there a right and obligation of burdens of proof. Where there is no willing submission to these rules, why should a tyrrant have the right to claim that parties with little or no access to information should bear the burden of proof?

Despite claims of the existence of international law, there is little in the way of law that applies internationally. There are no established rules other than those dictated by the Security Council. That bears little or no resemblance to the legislative or judicial function of a parliament or court, respectively. It is an international brawl.

If Saddam were to submit to the jurisdiction of a body with a judge having the power to impose enforceable injunctions (i.e., orders to act) against Saddam, Saddam would be able to claim that the United States or other party has the burden to show that Saddam is wrong. Then the United States could seek recourse to the judge to seek permission to access specific areas or order certain documents produced. Similar to the Federal Rules of Civil Procedure 26 through 37.

Since Saddam has not submitted himself to the jurisdiction of any court, the rules of brawl apply. Let's not be deceived by socialist calls for an international body to impose order on the world. This is just a way to bring the Soviet's Comintern back to life.

Saddam is not responsive to any other person, organization, or law. He is a despot. Let's not act like he is a misbehaving street thug that can be thrown in jail.

Coming Issues of Medical Malpractice Reform

In the process of building America, the English came to rely on a brilliant new legal concept: the company. This concept did something that had never happened before, it allowed an investor to limit his risk in the enterprise. How? It is such a part of our thinking today, that we do not even consider it. The company said that an investor could lose his entire investment, but no more.

Think about it in today’s context: a couple years ago, you had Enron, for example, in your retirement account. When Enron went bust, you looked at your portfolio and Enron was worth zero. Have Enron’s creditors coming knocking on your door to take possession of your house to pay Enron’s bills? Of course not.

This limitation on the creditors ability to take your house is “limited liability.” In a more theoretical sense, limited liability is a partial shifting of risk from the investor to society-at-large. In the strictest sense, once the business and the investor’s investment in the business run out, creditors have nothing to collect against. These creditors as part of society-at-large take a hit and have to write off the account as bad debt, never to be recovered.

In the professional world, we have a theory that no professional should be able to completely shield himself from liability. Theory is the doctor, lawyer, accountant, etc. will have an incentive to watch his patient’s or client’s matters more closely, in order to protect the professional’s home, investments, etc. (As a lawyer myself, I am not terribly enamored of this theory.)

At its core, the medical malpractice crisis that is building today is founded upon this unlimited liability. The doctors cover their risks of losing a lawsuit in two major ways (and many others that are beyond this analysis’s scope): purchase medical malpractice insurance and order many studies to raise the probability of finding all findable problems. These two techniques ultimately cause medical costs to skyrocket.

From my own observations, I know how true this is. My father is a recently retired radiologist specializing in nuclear medicine – the speciality of x-raying soft tissues like brains, lungs, hearts, kidneys, etc. Up until HMO’s and health insurance pushed cost controls, my father’s practice in nuclear medicine boomed. It was the most or second-most profitable part of his company’s radiology practice. His practice as what he called “a doctor’s doctor” was to do these esoteric studies to see tissues in the body with exploratory surgery. He would report to the surgeons and internists as to what he saw on very grainy (primarily before modern medical imagery) pictures. This would save vast amounts of risk for the surgeons in particular – unnecessary surgeries avoided or surgeries with longer invasion periods.

Unfortunately for the patients, these studies were not always necessary. But the surgeons ordered them anyway. HMO cost management and the start of standardized pricing for Medicare, for which my father was on the Harvard University-based study committee, put a severe crimp on the profitability of this proliferation of esoteric studies. Quickly nuclear medicine was not the profit performer that it had been for my father’s company.

Now days, the doctor has fewer options and his risks of being sued continue to climb as my professional brethren make money in many states at the expense of physicians, their patients, and the taxpayer.

In my home state of Indiana, we have heavy caps placed on medical malpractice awards. We have a formal physician review tribunal that determines whether a case has medical merit before it is allowed to go to court. The result of these procedures is that Indiana has indirectly created limited liability for the physician and a review process that has physicians act as a court of first impression. These restrictions have drastically lowered Indiana’s malpractice premiums. Some would suggest that it has not been lowered enough for the cost savings. I would suspect the national exposure may have an impact on that. The best benefit is that Indiana has some of the best health care in the country, since doctors such as one of my clients are seeking to move to Indiana from states like Pennsylvania solely because of the malpractice exposure differences.

So what should we do to improve the system. I do not suggest that Indiana’s system be adopted. There are still ways to make the system better than Indiana’s.

I would suggest a less bureaucratic system with some of the same intents.

First, the doctors must have a way to limit their liability statutorily. This could be done per-incident or it could be done over a period of time. Using the SEC Rule 10b-5 analysis for when a company is liable for failing to disclose a fact, the limit should take into account the probability and magnitude of the problem. As the U.S. Supreme Court said in Basic, Inc. v. Levinson, 485 U.S. 224, 238 (1988), "Under such circumstances, materiality will depend at any given time upon a balancing of both the indicated probability that the event will occur and the anticipated magnitude of the event in light of the totality of the company activity. SEC v. Texas Gulf Sulphur Co., 401 F.2d at 849." In the securities world, this means that a company has an obligation to disclose a fact if it is "material." The fact is material if the balancing of probability of the fact being true and the magnitude of the impact of the fact being true suggests that the fact is important. So a chance that the company will go bankrupt for being sued because an employee was fired for incompetence is probably not material for SEC compliance because while the former employee will likely sue, the chance of bankruptcy is nil. If the company would go bankrupt due to product liability suit even though the suit has little chance of winning, this would probably be material.

This balancing method is the key to my proposal. To understand its importance, one must understand the "eggshell skull doctrine." Rardin v. T & D Mach. Handling, Inc., 890 F.2d 24, 28 (7th Cir. 1989). In all lawsuits, the person being sued is liable for all damages that he causes regardless if the person harmed was especially likely to be harmed or is more likely to suffer huge damage. The classic example is if you are in a bar fight and hit another person, you are liable for the medical expenses regardless if the punch would typically cause a black eye but your victim had a skull the thickness of an eggshell. You pay for the damages you did cause, not what you could have caused. In the doctor's world, they start at a huge disadvantage. The doctor did not just walk into a bar to get a drink and ended up in a fight. Their job is to help patients who are in trouble. These patients need help. Yet the doctor could be found liable for damages as he finds the person. They have a higher probability of being sued because trouble seeks them out as the nature of their business.

The balancing would not only provide less chance of liability, but even if liability is found, the doctor is not liable for every dollar of loss just because of an eggshell skull circumstance. For example, if the probability of the problem is small and the magnitude of impact on the family of the patient (including the patient) is small, the liability limitation should be strict. If the probability of the problem is small and the magnitude of impact on the family is large in dollar terms, the liability limitation should be more generous to the family but not a goldmine. If the probability of the problem is higher and magnitude is high, the liability limitation should be almost unlimited.

In practical application, this would be done through negligence law, which is at the foundation of medical malpractice adjudication. In negligence, the patient has to show that the doctor had a duty, the doctor violated that duty (“breach”), the breach actually caused the patient harm measured in dollar terms (“damages”), and the breach was the legal cause of damages. (For those aspiring law students out there, actual cause and the damages are prototypically described separately, but in actual practice they are attached at the hip.)

My solution for medical malpractice would be a redefinition of the relationship of duty and damages. If the probability of an event is low, the statute should formally set that medically improbable circumstances do not give rise to a duty. Put another way, the probability of the event and its damages should be multiplied together. Cases not meeting a certain threshold should be thrown out of court as a matter of law without consideration of the rest of the elements of the case.

Since I do not possess my father’s University of Chicago Medical Center knowledge, bear with my example. Let’s say that the patient has a tumor that hard to identify in early phases but is easily treated cost effectively when it is. The cost of care increases the longer the tumor is unidentified. Even in good medical practice, failing to diagnose the tumor in the first stage is 1 in 10 or 10%. The cost to fix the problem is $10,000. The calculation is $10,000 x 30%= $1,000. 85% of the time the tumor can be identified in the second phase before it is terminal but the cost of care is $50,000. The calculation is $50,000 x 85%= $42,500. The remaining percentage are nearly impossible to find and are always terminal at $100,000 for cost of care or $100,000 x 5% = $5,000. Even in a completely thorough exercise of duty, the doctor’s failure to identify the problem could result in a weighted average cost of $48,500 in medical fees. I would suggest that any damages attributable to a doctor, including pain & suffering, mental anguish, loss of consortium, lost wages, etc., have the doctor be exempt from liability as a matter of statute. This means that in practice the $48,500 would not go to the patient or his family, the additional claim for pain & suffering that could amount to between $100,000 and $150,000 (conservatively), the additional claim for loss of consortium (which I believe would be $100,000 but I am not sure), the lost wages for the normal treatment (using the above weighted percentages) of a $50,000 a year worker could be removed for $20,000. This could mean that the value of the limited liability would conservatively be about $268,500.

This system would be difficult to implement initially. There is little data in the medical journals, I imagine, that would address these types of factors. And yet, this data would now have a practical imperative to be developed and scientifically debated before any litigation. Over time medical science through expert testimony would have these numbers established. As evidence, these percentages would change over time and not be locked in place, which statute would require. The damages would be relatively easy to establish given the standardized medical billing codes that currently exist, thanks to the Harvard University commissions mentioned earlier.

So what does this mean? If a particular patient would show at trial that he has $750,000 in from an incompetent physician’s failure to diagnose, the court would reduce the $750,000 by the standard risk that all patients have of not being diagnosed initially. The final judgment would be entered for $481,500.

The patient would be compensated for the egregious damage but would not be compensated for the risk that the average patient in his situation would bear without hope of recovery. The system would benefit because the physicians would have a larger window for damages which they are expected to pay nothing and settling nuisance cases would be less likely. This would make plaintiff’s lawyers less likely to file questionable cases or ones that have smaller value.

The problem with this is that it raises the stakes and combativeness of the cases that do more forward. Any system that limits nuisance cases is likely to be so. The lawyer must show how bad the doctor was just to keep the case alive.

Currently the system is based on a one-arm bandit system though. This system allows doctors to testify against doctors with laymen juries making decisions without really understanding that defendant doctors were not abusive but just using professional judgment as to diagnose. This proposal gives an objective measure to professional judgment and a legally proven means of shifting the risk of error.

The economic benefits of this are that the medical malpractice insurance companies would have fewer small cases to defend, an inexpensive and systematic defense to apply, a smaller amount to pay to settle the case early, and less worry about juries since the data is more universal so the juries would likely be better informed when they enter the courtroom. The insurance companies would also be able to give some practice management consulting and auditing in line with ISO 9000 thinking to make sure the standards set are in place and evidence of the standards compliance are done in advance of the litigation defense having arisen. This would have a potential increase in quality of care aspect.

The patient expense and government expense would benefit dramatically. The doctors would feel less need to do defensive medicine thereby driving down the per-patient/per-visit cost of medicine. The medical profession would do more studies that give explicit guidance on prudent practice to create better, admissible evidence (which would probably be funded by the malpractice insurance carriers). Bad apples would be more readily identifiable with better prosecution of license revocation, thereby reducing the risk of bad doctors over the entire insurance risk group. The government would have an incentive to set the Medicare compensation close to market value so that doctors would have increased liability protection (remember the defensive medicine costs) while having the counter-push to lower costs for coverage.



The real risk in these types of litigation are the unknown. Runaway jury awards get most of the attention. But the problem in this, as in most litigation reform issues, is that the system is poorly equipped to apply rules that dump nuisance cases early. This standard-setting proposal allows more malpractice cases to be determined as a matter of law long before a jury is involved. This increased predictability is one of the best means to provide a good and stable economic environment (as the US has long preached to countries like the USSR and China and other kangaroo court systems).

Doctors would have an easier time shifting their expenses away from risk protection and toward economically helpful activities such as investing in medical infrastructure, hiring staff to comply with clear standards, spending more time with patients because the per-capita cost of insurance and practice management have decreased, and taking more time off because the fixed costs of practice are lower.

This medical system is a mess being awash in unpredictability and lottery judgments for patients. Bad doctors deserve to be run out of practice. Doctors who make one error in a well run practice do not. Society needs to bear more of the risk of good doctors making mistakes but not by increasing costs. Lowering costs and simplifying high quality practices is the way.

How to Know when to go to war

With war in Iraq pending, we need to stop and consider how do you decide to go to war.

Since I am an amateur historian of the post-Vietnam ilk, I put a heavy emphasis on analyzing war with a view Col. Henry Sumner’s critique, which itself has been heavily critiqued, and with a view to the well-studied work of War in the Shadows (whose author escapes me at the moment) about when to decide to go to war and how to deal with partisan warfare (a.k.a. guerilla warfare). These works are heavily practical works. They only lightly deal with the philosophical reasons to go to war.

My study of “why war? When war?” is not simple, but it is not debilitatingly complex either.

Why War?
War should be fought for a number of reasons. In the practice of law, we lawyers distinguish between “elements” and “factors.” Elements are the parts of a law that the plaintiff or prosecutor must show the court to win. When is a driver in accident liable for the other driver’s injury. The injured driver must show that a particular rule, e.g., drivers must stop for red traffic lights, was violated by the defendant driver. This showing of a rule and its violation are two elements of holding another driver liable for injuries. If one of the two is missing, no shifting of liability for injuries can occur. These are the legal versions of true-false questions.

Factors are the different questions that a judge can ask to make a decision. These tend to apply in situations where the facts are complicated and true-false questions are difficult to use to obtain meaningful answers. The example that applies in everyday business without anyone but a lawyer paying attention is a business entering into a contract – who can legally bind the company to a contract. No one set of facts is the required way to show binding authority. If you as a business owner give your business credit card to your assistant to buy office supplies and that assistant has a business card that you gave her, a court would allow the assistant to charge your credit card. You have put information out to the world through the business card that the assistant works for you and it is reasonable for an identified assistant to buy office supplies. Is the business card the only way this works? No, letterhead, phone calls, failure to correct the properly mailed invoice, signing checks for previous, similar transactions. These are all different factors that a court can use to show that you gave your assistant authority to bind your company to buy office supplies.

In the matter of deciding to go to war, this is hard to put in a true-false or elemental analysis. This seems to be a factor analysis. So what are factors that should be considered?

Here some that come to mind: a non-democratic republican government or armed militia unassociated with a nation-state (which I will collectively refer to as a regime); a regime threatening its neighbors or specifically identified persons or groups of persons by word, deed, past action, or other manifestation; a regime capable of carrying out its threat or part of its threat in a manner that would constitute a breach of the peace in criminal law; a regime that has a history of either refusing to enter into treaties, protocols, or organizations or has a history of flagrantly violating such agreements.

These factors are based on some core philosophies and past historical trends. Let’s be explicit about some of them. Democratic republics avoid war, whether scrupulously or unscrupulously (see present debate on Iraq). Militias that are outside of a democratic republic tend to be breading grounds for despotic and dictatorial thinking (see fatwahs or declarations of various Islamicist leaders). Threats need to be taken and analyzed in light of what actions a regime will take; threats need to be taken and analyzed in light of what a reasonable analysis would cause affected persons to do in taking security precautions, economic choices, and governmental organization (see previous reference to Finlandization in prior posting). A threat need not rise to a full fledge assault, but breaching the peace gives the fears of assault and Finlandization credibility that the regime will develop toward brinksmanship (consider the classic example of the Cuban missile crisis). A history of avoiding international interdependence and cooperation increases the likelihood that the regime’s anti-democratic-republican tendencies are more dangerous than a neighboring cooperative regime.


When war?

Even if all these idealistic factors and philosophies are all leading to war or armed conflict, we need to be slow done and be practical in a light taking into account the literature noted at the outset.

Even if war makes sense, we need to consider the practical factors. Here are some of the factors that need to be looked at:
What is the vision for the regional and global politics that are sought? This is a description of explicit vision. Not a description of platitudes: the development of democratic republics in the middle east by removal of the regime Finlandizing the region rather than the US seeks liberty for all persons.

How will the military know it has won? Defining war’s victory must scrupulously avoid the fallacious theory of limited war. War is not truly won unless the operational and political systems that gave rise to the reasons for war are terminated in full. This means the opposing regime, supporting governmental regime, and targeted militia-type regime are all destroyed. A true war victory must be defined as removing the problematic regime and replacing it with a democratic republic.

Is there a realistic strategy for military movement, action, and holding that allows the military to win and replace the opposing regime permanently? If the strategy will leave a substantial risk of guerilla warfare, this strategy is questionable by definition. This guerilla risk may be possible to avoid through heavy use and reliance on what is traditionally called propaganda, but in today’s world would be handled differently with a mix of psychological operations against the opposing force and honest, free press infiltration of the population’s media. Old-line propaganda must be avoided. The Powell Doctrine of overwhelming force should be used wherever practical, but it should not be used to avoid an immediately threatening regime: this would be a breach of the democracies’ leadership to protect and defend their populations from threats, foreign and domestic.

Is there a realistic means of military tactics that can be accomplished leading to the results sought. This is area that would focus on the military hardware and personnel available with the American and its allies’ collective arsenal.

Is there a logistical means of positioning for accomplishment of the tactics and strategies sought. This leads to many political questions of foreign and domestic governments. This is one of the key points that I can emphasize. The choice to go to war in an academic sense should already be made, the definition of victory determined, and the strategies envisioned before the concern about where airplanes would be allowed to fly, where tanks travel, and where airbases are located. If the war is just, the vision sound, the definition of victory usable, and strategy effective, only then is setting the pieces in place meaningful. In a more practical sense, this is a reiterative process. The process must be done from top down until a snag is hit. If the strategy is set for attacking Iraq from two fronts, the second coming out of Turkey, failing to have Turkey accept troops and tanks prevents the logistics from being accomplished. The tactical adjustment requires a strategic adjustment. But that does not change the definition of victory.


Past application

Here is where the first Gulf War became catastrophic in short term success. We agreed to too many limitations on the vision for the region and the definition of victory because of the logistical requirements of removing Saddam not from Baghdad but from Kuwait.

We turned too heavily to the UN’s approval to allow a complete visionary success. And yet, it was probably inevitable. I do not see that we would have been successful by pushing the vision too soon. While the Clinton appeasement led to the current scenario, we could have been more successful in allowing Saddam to fall with only a minor increase of military and political directness.

Even so, this Pandora’s Box was probably more dangerous that it is today. A dozen years of weakened and restricted Saddam gave Iraqi exiles and internal dissenters a chance to develop toward more consensus. This has not been easy and is likely only developed to the current extent because of the mini-war in Afghanistan. There was a vision of what American involvement could do. This vision was lacking before. It was not concrete.


Current application

Saddam’s regime is a threat by all measures. Its past actions do Finlandize their neighbors. He does have a history of breaching the peace. He is not willing to be constrained by international agreements that he has signed, including the 1991 cease fire agreement. He does limit the growth of democratic republics in the region. A definition of victory of removing his government is easy to accomplish. In the desert, many strategies are available. The tactics are plentiful. The logistics are not readily in place. The logistics have not hampered the vision and definition of victory.

While these factors do not cover all scenarios, they do cover many without any reference to the underlying cultures, religions, or other xenophobic aspects.

This analysis is based on the premise that peace is not absence of war. Peace is a lack of threats, lack of Finlandization, lack of international assault. Any argument premised on peace as absence of war will not accept any aspect of this analysis, and I have no ability to understand why any person would allow his fellow man to be brutalized to serve the premise that war is never acceptable. War is not the last option. Defensive wars are always the last option (France, the Rhineland, and Bliztkrieg). Wars of liberation are never the last option.


I would invite anyone to layout their own analysis to support how a threat as any member of the Axis of Evil should under no circumstance feel the pain of war. If that is too strong, I invite that person to describe when war is acceptable even if peace is absence of war and war is always the last option. I will happy to publish such a peace with the only requirement being that no basic fallacies of logic are involved (e.g., personal attacks a.k.a ad hominem attacks, everyone else is doing it a.k.a. bandwagon fallacy, 20-20 hindsight more strictly post hoc ergo propter hoc (“after the fact, therefore because of the fact”), etc.).

Recently the Rev. Dr. Kent Millard of St. Luke’s United Methodist Church, Indianapolis, Indiana, delivered a sermon about how a Christian should decide on whether to go to war with Iraq. He emphasized that conscious Christian could reach diametrically opposite results through the same readings of the Bible. His key point was that whatever opinion a Christian has, it should be based on a full understanding of the facts, readings of the Bible and Christian traditions, and prayer.

His call thoughtful and prayerful opinion is a universally desirable result that humans struggle to regularly attain. His sermon has caused me to reflect on how these types of opinions on issues.

Since these types of opinion are at their core decisions about a person’s morality, what do we know about how people make moral choices? Several decades ago, the late Lawrence Kohlberg developed a study of how boys learn morality which has been critiqued by the likes of Harvard Professor Carol Gilligan. First was the stage where mom and dad herded the child away from wrong doing. Second was the stage where parental rules dictated what was wrong-doing, such as don’t play in the street. Third was the golden rule where the boy determined what was wrong-doing based on what he would like to have happen to him. Fourth was the legislative rule where wrong-doing is described by society at large. Fifth was the Henry David Thoreau-type moral vision where wrong-doing is described by thought about principles.

In light of Professor Kohlberg’s theory of moral development, I began analyzing Dr. Millard’s sermon and thesis. The sermon focused on two biblical stories. First, he described the story of Jesus’ violent attack on the money-changers’ operations, who were “stealing” from the visiting faithful to the Temple of Jerusalem. Second, Dr. Millard described the story of Jesus’ arrest shortly before his crucifixion where Jesus uttered the famous phrase “those who live by the sword, die by the sword.” Dr. Millard pointed out these passages as two passages that support different ways to interpret the Bible’s recommendations on whether to decide to go to war with Iraq.

Dr. Millard suggests that the first passage could be a representation of Jesus showing an example of violence in furtherance of protecting other persons as justified. Dr. Millard further suggests that the sword comment could represent that violence should not be used to further one’s own standing. These two rules as parental dictates seem to be self-contradictory. If we step further out from these two rules and seek a common vision, we should look at the essence of Christian thought: the sermon on the mound. There Jesus described the idea that one should love your neighbor as yourself.

As the servant of others, Jesus seems to proclaim with the violence of money-chargers’ incident and pacificistic statement at Gesamine that violent self-promotion is condemnable and violent protection of others from fraud is worthy.

This conclusion has some severe weaknesses. Unlike the Hebrew tradition that was undergoing extensive development after Jesus’ death through the collective writings of the Talmud and related documents, Chrisitianity tries to extrapolate its entire doctrine from the limited, recorded statements of one man – Jesus. Jesus focused his message on the individual. Little of what is recorded about his statements were about society as a whole. Can war be used to serve the needs of others? Has it ever been done? Let’s look at history.

Much of history demonstrates wars that were begun either for expansion of power or wealth. The Roman Republic mastered the art of war for the defense and protection of its well-placed socii – allies. Many jokes of the era allude to the danger of being one of the socii – that later became subjects of the growing Roman Empire. The cost to socii of not cooperating with a Roman, parental demand was catastrophic. Nearly 1800 years later, the French began sweeping across Europe with a book of law in the backpack of each soldier with the stated purpose of removing old monarchies. The soldiers bearing the freedom reflected in the famous Napoleonic Code shortly found that wars in the name of liberty, equality, and fraternity can also lead to imposition of a French emperor. Allies and ideals have been used to further empire throughout history.
American history takes a turn in the idealism of Woodrow Wilson. Wilson began a century-long trend of war being fought without conquest or coercive mercantilist treaties. American war is now brought to bear on foreign shores in the name of self-defense and the defense of democracy around the world. Germany is beaten twice and after two generations becomes a united democracy. France, and the Benelux (the birthplace of a united Europe), and Scandinavia unleashed from despotic German rule and returned to their own unique types of democracy. Japan is beaten and made a democracy for the first time. South Korea and Taiwan are kept free of communism and two generations later become democracies. Spain is persuaded to democracy but its shielded neighbors’ success. NATO is kept intact to create new democracies throughout Eastern Europe after two generations of concerted effort against despotic, communist rule. The invitation of America’s socii is overwhelming.

At other times, America has exerted power to start the slow road to democracy that has yet to fully be unleashed. We have done it Kuwait. In the former Yugoslavia. In Afghanistan. (Vietnam was an unmitigated failure because its stated purpose and its implementation bear no resemblance to each other.)

Few places in history has a universal power invited its socii to pursue democracy and offered military protection. The most similar predecessor is ancient Rome. Unlike the Roman example of threatened annilation for failing to cooperate, the American example is replete with visions of liberty and democracy.

With so few precedents to look to the actual use of war as a power for liberty and justice, cynicism is predictable. Just as the old saw suggests: those who forget the past are bound to repeat it.

America has a vision of universal availability of the right to life, liberty, and pursuit of happiness. If Jefferson’s French influence Monteseque is to be believed, the proper source of democracy truly derives from the protection of life, liberty, and property.

To avoid repeating the past, America must always keep in front of its eyes and its Thoreau moral vision that Montesque and Jefferson are correct: every person has a right to life, liberty, property, and the pursuit of happiness. Are we in the Garden of Gesamine in asserting those rights at the barrel of a gun? Or are we confronting the money changers?

To me this seems an easy answer in Iraq. Saddam kills his enemies. Saddam threatens his supporters. Saddam attacks his neighbors – twice in a decade. Saddam has a life long history of racketeering and despotism. Should a country that was born from circumstances where its founders could freely assemble and declare its freedom from despotism not feel obligated to help shed off the shackles of despotism for a people that cannot freely assemble to issue a similar declaration?
Money changers are frauds, cheats, and thieves. If those cheats can be physically thrown out of their territory, what can we do with genocidal killers, despots, and war criminals?

Does an ability to accomplish the goal require such sudden and overwhelming force as only America can bring? If there are less confrontational means of moving toward democracy, should we choose the slower course?

In 1981 we saw the first signs of the fall of communism as a Polish electrician climbed a fence. We had no ability to protect American citizens life, liberty, property, and pursuit of happiness and promote that electrician’s cause by force of arms when the electrician lived the umbrella of Soviet nuclear warheads.

Today, we have no ability to free the Chinese from the oppression of communist China because of the nuclear and conventional power of China. We have seen the mass equivalent of the Polish electrician in Tiannamen Square, yet the Chinese are not yet free. Even so, Tiannamen is the sign that two generations hence, the communists have little hope of being in charge with America exerting its vision.

Today, we see Iran on the brink of a dramatic, secular, democratic revolution. What is the likelihood of that change if the Iranian people have a greater sense of security from a neighboring despot’s attack that would allow a greater sense of a right to property and life.

All cases are not the same. Our vision is clear. We have a process for implementing rules.

I do not hear America threatening war against another democracy. We do not threaten our socii with war for failing to agree with us. Our only true precedent is easily distinguished from our present circumstances. We threaten not democratic Germany or France for their foolish positions, but the despot threatening mass extermination of America and its socii. Are these cries of imperialism or war for oil important? Do we not have a humane obligation to free the Iraqi people?