- Rory Stewart — Populism
- Vivek Ramaswamy — Why Environmental, Social, and Corporate Governance that Measure the Sustainability and Societal Impact of Business Is A Bad Idea
- US Senator Tom Cotton — the Race for the Senate: Legislative Agenda Based on the Georgia Runoffs
- Alan Abramowitz — a Post-Mortem Analysis of Georgia Senate Runoff
- Eric Kaufmann — Shy Trump Voters
- Scott Bullock — Litigation Against Burdensome Regulations and Zoning Requirements as well as Defending Property Rights
Rory Stewart — Populism
Vivek Ramaswamy — Why Environmental, Social, and Corporate Governance that Measure the Sustainability and Societal Impact of Business Is A Bad Idea
Vivek Ramaswamy Transcript
We’re going to go onto our next speaker, Vivek Ramaswamy, who was the founder of a biotech company called Roivant Sciences. He’s got a new book coming out in the fall entitled Woke Inc.: Inside Corporate America’s Social Justice Scam. Vivek will be speaking on a bunch of different topics today, including ESG. Go ahead, Vivek.
My upcoming book, as you mentioned, Woke Inc., is in part a critique of stakeholder capitalism. It’s in part a critique of the so-called woke movement that’s being advanced by corporations and other elite institutions today. And in the book, I’m not a journalist that’s done a lot of research to report on my findings, although I did do some research for the book, but I’m writing mostly from my firsthand experiences of having gone to elite universities, working in hedge funds for seven years, and then subsequently founding a number of companies, including a large biotech company, which I led as CEO for seven years before I stepped down this January.
So I’ll start with a bit of a critique on stakeholder capitalism. And then I’ll close with a discussion about the merger between stakeholder capitalism and the woke movement. So stakeholder capitalism first refers to the basic idea that companies shouldn’t just serve their shareholders, but should also serve other societal interests along the way. And today, technology companies, Wall Street, big business broadly has roundly endorsed the idea. Milton Friedman 50 years ago didn’t like it because he thought it might lead companies to be less efficient. And while I have to admit, I share his concern to some extent, there’s even a bigger problem that I’m personally worried about which is that I think that stakeholder capitalism actually represents a threat to the integrity of American democracy itself. And the idea is really pretty simple the way I look at it, at least in the first instance. In order for companies to be able to pursue these societal interests in addition to their shareholder interests companies and their investors have to first define what those other societal interests ought to be.
And that isn’t a business judgment. It’s a moral judgment and speaking, not personally as a CEO, but just as an ordinary American, I don’t want our capitalist elites to actually play a larger role than they already do in determining our society’s core values, where I think those questions ought to be answered by our citizenry at large through our democratic process, publicly through open debate, privately at the ballot box, without the intervention of market power to settle questions in the marketplace of ideas. And I don’t necessarily consider that a Republican or Democratic idea. I do consider it a deeply American idea. I do find it pretty puzzling that progressives seem to be the ones today who love the idea of stakeholder capitalism, because many progressives who love stakeholder capitalism absolutely abhor Citizens United, a famous case from about a decade ago because it permitted corporations to influence elections and democracy.
I personally view stakeholder capitalism as Citizens United on steroids because it actually demands these CEOs use their corporate resources to implement the social goals that they in particular want to push. And even we talked about Amazon earlier, I chuckled as I watched Jeff Bezos going woke and joining the stakeholder capitalism movement, which should tell you a little bit about something when someone like Jeff Bezos takes over and adopts a new value, it should cause you to question what the real goals are in adopting those values at all. I come from the pharma industry. I think that rejecting stakeholder capitalism doesn’t have to mean putting profits ahead of patients, but it does mean putting patients first, including ahead of other social causes. That means we don’t care about the race or gender of the scientist who discovers a cure for COVID-19 or whether the manufacturing and distribution process that delivers the vaccine most quickly to patients is carbon neutral.
Those are the kinds of choices that we need to make. It’s not just strictly a question of putting profits ahead of patients, but the question of whether you put your essential corporate purpose ahead of ancillary social causes. And I personally think that actually a part of this debate from my own personal experiences are the issues of conflicts of interest and in the real world, most conflicts aren’t actually financial. If you take an example, if I’m a public company CEO, and I decide to use the corporate piggy bank to make a big donation to my high school or the temple where I worship in Ohio, that should raise a pretty big red flag since my high school or my temple have nothing to do with my business. But personally, I don’t think it’s any different if a CEO uses the corporate piggy bank to make a donation to say Black Lives Matter.
And many CEOs did exactly that last year and they were applauded for it. But in both cases, even in the case of the high school or in the case of BLM, the CEO drives some kind of personal benefit from using the company’s piggy bank to make the donation. I personally consider that to be a conflict of interest. And I find it curious that the conflict of interest hawks seem blithely unconcerned, or at least silent, about this class of reputational conflicts of interest. Now, it’s also curious that a lot of big businesses are now lobbying the government itself to mandate so-called ESG related disclosures for public companies. And again, I’m a skeptic. I asked lawmakers when I’ve testified in front of Congress and in front of the Senate earlier this year on these topics to ask themselves what those business leaders actually hope to achieve for themselves.
We talked about food earlier. Take a software manufacturer advocating for voting rights. That’s pretty easy in a given state, but reckoning with the nationwide impact of soda consumption on human health? That’s actually a lot harder. And that’s just a general rule of thumb for me is when choosing between accepting constraints on matters that relate to the core of your business versus matters that don’t, self-interested CEOs generally choose the latter. And that’s exactly the smokescreen that stakeholder capitalism and its related cousin in the woke movement have created over the last few years. So I’ve other issues too. I talk about them in the book. I think stakeholder capitalism tends to favor incumbents over startups. That’s why the business round table and the Davos crowd tends to favor it rather than small business owners. I personally think that it’s possible that we’re in the early stages of an ESG linked asset bubble, akin to the pre 2008 housing bubble.
Like both of them are driven by a social agenda that was at least in part disconnected from economic fundamentals. But to me, those are really secondary issues. And the bigger issue is the threat to American democracy itself because when we demand that corporations make moral judgments and exercise political power, I personally think that democracy loses twice, once through integrity in the lawmaking process and also in our political and public debate as citizens through corporate overreach influencing that by using market power to substitute open debate as the way we settle political questions. But we also lose social solidarity as a people when even the private sector becomes politicized.
And I think that personally in a divided polity like ours, we depend on certain spaces that remain apolitical, maybe the baseball stadiums in which we all gather irrespective of whether we’re black or white or Democrat or Republican, or the common projects that we pursue, maybe it’s building Alexa, or maybe it’s building something else that brings us together towards a common purpose that isn’t political in nature. I actually think contemporary American democracy and American democracy for most of our history has depended on the existence of those apolitical sanctuaries to bring together an otherwise divided group of people.
And instead what we see today is that this new infection of stakeholder capitalism is poisoning democracy. On the one hand partisan politics is now poisoning capitalism in the reverse direction and in the end we’re left with neither democracy nor capitalism. And so speaking more as an American, not as a CEO, I don’t want to live in a corporatocracy. I don’t want to live in a $1, one vote, system. I don’t want to live in a modern version of old world Europe where a small group of wealthy elites decide behind closed doors what’s good for the rest of society. I want to live in a democracy where everyone’s voice and everyone’s vote is weighted equally. And I think that’s actually the heart of what’s wrong with stakeholder capitalism in a way that Milton Friedman’s critique from 50 years ago might’ve actually missed.
In my book I also take aim at the social component of the ESG movement in particular, which has merged with the modern so-called woke or critical race theory-based conception of individual identity that has taken an already divisive philosophy of concentrating power to make judgments in the hands of small group of business elites, but merging that with a debate about the essence of what it means to be an individual and agent in the world. I know that’s something that our next speaker may be talking about as well, has created a particularly dangerous brand of woke capitalism that proved convenient for Wall Street, where it got to merge a bunch of woke millennials getting together with a bunch of big banks and together we’re birthing woke capitalism, allowing them to put Occupy Wall Street up for adoption starting 10 years ago. That might have been where this began, but over the course of the last 10 years, it’s actually become unstoppable in a way that’s supplanted our solidarity as a people even further.
Vivek Ramaswamy QA Transcript
Amazon had this HQ2 project where they were going to put their next corporate headquarters. Amazon went out and shopped it, and they picked New York City where they were attacked by AOC for getting tax benefits. Amazon seemed a little bit in shock and taken aback by that. How do we think about the relationship for corporate America as it competes where it should locate its offices?
I think that this is just a new form of crony capitalism. Where crony capitalism 1.0 back in the pre-2008 era was, “Hey, if you’re Goldman Sachs, place your alumnus in the US Treasury Secretary and let’s hope that you favor your alumnus when it comes time to deciding who to hand out bailouts to and who not to.” And that was a trick that worked pretty well. It’s pretty simple in terms of how that game is played or corporate contributions to electoral campaigns to expect favors in return. But now I think that there’s especially with the new progressive left, that kind of currency doesn’t necessarily work to achieve the same types of results that it once would have, which is why they’re tithing in a new currency.
They’re tithing in the woke currency through performative social gesturing, which is a different way of exerting influence where direct green pieces of paper wouldn’t do it. We’re now able to do it through the signaling of virtue and ideological alignment. And I think we’re seeing it. I think Amazon’s a great example where I think the checks that they’re writing to Black Lives Matter if you turn on your Amazon streaming services, the selection of movies that you see following George Floyd’s death. I don’t think this is a change of heart for Jeff Bezos relative to where he was 30 years ago. I kind of laughed when Amazon announced their $15 minimum wage when they might’ve announced it at a time where their competitors were actually coming under fire under profitability threats.
This is actually just another way of competing, but effectively when they ultimately face a political threat from a new left that may not be prone to lobbying in the same terms, the ability to signal potential solidarity around the certain social agendas and causes that the far left cares about is a new way of actually winning favor in a way that at least agrees to let the far left look the other way when it comes to leaving corporate power intact.
And I think that’s happening every day in Silicon Valley today where the implicit grand bargain with the left today. The left was historically very skeptical of corporate power, especially the concentration of corporate power in potentially monopoly or oligopolistic hands. And instead, what we’re seeing right now is a version of, especially with a particular party in power in the United States, an implicit grand bargain to say that, “Hey, we’re going to censor content that you don’t like on the internet. In return, we’re going to agree to have you look the other way when it comes to leaving the status quo intact.” And I think it’s actually working out through an unspoken grand bargain, but sort of a repeat game. It’s actually settled at a new equilibrium that’s working at least as well as the old equilibrium from direct lobbying through the use of dollars through the front door. And I think Amazon is among those that understands this game better than most.
Jeff Bezos acquired the Washington Post. This is the largest newspaper in the political capital, and it took direct aim at President Trump. Jeff Bezos went to great lengths to articulate that this was his personal investment and really had nothing to do with Amazon. In previous generations the public was very concerned about major media power and its role with other corporate activity. Do you think that Amazon has abused it in some way? And how do you compare that with Facebook or Twitter denying Trump access to their sites as well?
I think that there’s two different things going on there. I’m obviously editorializing and offering my perspective here. This isn’t a factual account, but it’s my opinion. I think that the Amazon example is an interesting one where I think a lot of what Amazon does is new crony capitalism, modern, progressive veneer crony capitalism. I think Jeff Bezos buying the Washington Post is something else altogether, which is actually the use of one’s moral standing where your marginal value of an added dollar goes down pretty hard when you’re in the hundreds of billions of dollars of dollars that you’ve amassed over the course of the last number of decades, that you ultimately need to buy yourself relevant to the ability to exert influence in ways that you actually care about, but through vehicles that go beyond the pursuit of profit alone.
That’s what I differentiate in my book between the scammy kind of stakeholder capitalism. That’s where I put Goldman Sachs and a lot of the Wall Street firms in that category where it’s really just another way to make a buck or protect your market power over the long run, from the authentic kind of stakeholder capitalism or the authentic kind of stakeholderism more broadly, where you actually care about the value that you seek to advance, but you’re using your market power to be able to do it. And I think there’s a reasonable debate to be had about which one’s actually worse. The first one is kind of scamming and inauthentic. The second one is actually potentially more frightening by actually concentrating real power in the hands of those who are using their market power to influence power in the marketplace of ideas.
I think this is actually happening in Silicon Valley with respect to the big tech regulation of content on their websites today. The government now in power with Democrats in control of the House, the Senate and the White House, are effectively working with private companies to do through the back door what they directly can’t do through the front door under the first amendment, which is actually censoring political opposition.
And I know that sounds conspiratorial, but if you look at just the data points over the last year, the most dramatic steps that these big tech firms have taken towards regulating so-called hate speech and misinformation on their sites actually came in close proximity to when they were called to testify in front of the House or the Senate on exactly those same topics. And a lot of powerful liberal lawmakers that are threatening those companies and saying, “We’re going to come after you. We’re going to regulate you. We’re going to break you up. We’re going to make it swift.”
Many of those exact quotes over the course of the last year, these guys get in their private jets to go back to the other coast and they say, “Okay, we’re going to do exactly what we were told to do because we know what they think counts as hate speech. We know what they think counts as misinformation. We’re going to purge that from the internet. And by the way, there’s a federal piece of legislation that immunizes us from any liability at the state level when we do that.”
That’s Section 230 of the Communications Decency Act. And one of the arguments advanced in my book and I wrote in the Wall Street Journal about this earlier this year as well, is that the combination of that carrot and stick, the stick being the congressional threats and the carrot being Section 230 that immunizes Big Tech from state liability when they go out and purge that content, actually creates from a legal standpoint state action in the mantle of private enterprise because there’s actually longstanding jurisprudence which says that the government cannot delegate to private parties to effectuate what the government cannot directly do under the Federal Constitution.
I think that’s effectively what’s happening with respect to the regulation of political content on the internet today, where under the garb of acting as private enterprises, they’re really acting as instruments of the state, which is a different form of crony capitalism in reverse. And so we live in complicated times and not every narrative neatly fits into just the scammy stakeholder capitalism bucket. There’s different things going on in different places. But one of my goals in the book is to parse each of these for the essence of what they are.
How do you think about applying Michael Moss’s comments on big food and stakeholder capitalism?
The point I would make is, take Coca-Cola issuing statements about a voting law in Georgia last month that, like it or not, like the law or not, Coca-Cola certainly sounded more like the statements of a super PAC than a soft drink manufacturer. I think that part of what is going on is ultimately a different way of evading accountability for a real public reckoning and conversation around issues that go to the core of a businesses like Coca-Cola.
Making statements about a voting law, that’s easy work. The ability to engage and reckon with the consequences of your product on the nationwide epidemic of diabetes and obesity, particularly in the Black community is a lot more difficult even as Coca-Cola continues to engage in anti-racism training that teaches the employees on how to be less white. So I think for a lot of companies, stakeholder capitalism has proven convenient. The ESG movement has proven convenient. The adoption of new theories of racial identity relating to white privilege matters relating to race, and anti-racism have proven a convenient way to deflect a conversation around the essence of what their core business model is actually about. So that’s back to what I think of as the scammy kind of stakeholder capitalism. I was listening to that argument about big food, the same thing that you could apply to big tech, there was a good discussion earlier about the nature of addiction and whether the accountable parties ought to be either the consumers or the users or ought to be the companies that feed those addictions.
I have a separate view, which is more deeply that the recession of notions like religion and patriotism and virtue cultivating institutions in our nation’s history probably are responsible for both because that leaves people more vulnerable to the kinds of things that they’re sold that have addictive properties that make it difficult to parse accountability between whether it belongs to the company or to the user. But putting that view to one side, I think that today for companies it has proven to be a lot more convenient to be able to engage with these orthogonal social debates that have nothing to do with their business as a way of evading real dialogue and debate around the essence of what their core business practices are ultimately about.
I think that we need to return to a world in which we can have wherever you land an open debate about those without being distracted by what I view as more or less irrelevant smokescreen debates about individual identity that these corporations are fueling, but also debates that in turn actually create new divisions in our actual society in their own right by taking us and dividing us into particular tribes based on where corporations signal they land in one place versus another.
US Senator Tom Cotton — the Race for the Senate: Legislative Agenda Based on the Georgia Runoffs
US Senator Tom Cotton Transcript
Larry Bernstein (01:09:41):
All right. Our next speaker is a US Senator from the state of Arkansas, Tom Cotton. Tom will be discussing the race for the Senate in Georgia and a potential legislative agenda. Please go ahead, Tom.
Thank you, Larry. Yeah, I thought I’d discuss because it’s on everyone’s mind, on the first two points in my opinion there really are only two outcomes. I think the Republicans will either win both races or lose both races. It’s hard to imagine the kind of voter that’ll show up and split their ticket on January 5th. So that means it’ll either be 50/50 with Chuck Schumer in charge of the Senate agenda, or 52/48 with Mitch McConnell and the Republicans in charge. First let’s look at the 50/50 Senate with Chuck Schumer in charge, which I consider the dystopian poor.
If the Democrats take both of those seats, they are going to advance their radical agenda, which they’ve been perfectly clear about. They will eliminate the filibuster, and once that filibuster is eliminated, they can pass any law on a mere 50 vote threshold with the vice-president breaking the tie. So what are some of the things they’ve said they want to do?
They want to pack the Supreme Court and the lower courts because they’re dissatisfied that those now have center right majorities, they want to make Washington DC a state because they would rather pack the Senate with more Democratic senators in perpetuity than slightly modify their agenda to appeal to a broader based coalition. They want to pass Nancy Pelosi’s crazy voting law that would override the voting laws of all 50 states and require universal mail-out balloting with ballot harvesting with not so much as signature verification.
They want to grant amnesty to illegal immigrants and immediate voting rights in 2024, if not 2022. They want to raise taxes. They want to pass the Green New Deal with its radical economic restrictions. They want to give massive bailouts to long mismanaged states and municipalities. They want to confiscate guns. This is the agenda that they want to foist upon the American people if they have a 50 50 Senate.
That’s one reason why I’ve been to Georgia multiple times in the past. I just went back this past week to campaign and I’ll be going back again because the stakes for this race are so high. Many people don’t appreciate that even in a 50/50 Senate, Chuck Schumer being the majority leader and then ending the filibuster will mean truly radical change for America.
However, you have the alternative scenario, which I call the bright, sunny uplands of a 52/48 Senate when we reelect David Purdue and we reelect Kelly Loeffler and Mitch McConnell, and the Republicans are in charge of the Senate. In that case, we will have the clear mandate, along with a much expanded House of Representatives, to act as a break on the radical Democratic agenda. In fact, that agenda will be better than dead when it comes to the United States Senate. Just as it has been for the last two years when Nancy Pelosi passed her crazy voting law, when they tried to pass amnesty for illegal immigrants. When they took other radical actions, not only were we able to stop it, we didn’t even address it simply.
Now, if Joe Biden wins the presidential race, he also is going to have to stock his administration. In a 52/48 Senate, he will not be able to get confirmed radicals to critical positions like treasury, like justice, like state, like a lot of the regulatory agencies that oftentimes operate outside the front pages, but do so much to affect the strength of our economy. Whether it’s the FEC or the CFPB or OSHA, or the EPA. Ultimately he will be able to confirm his cabinet and to stop those agencies as well, but he will not be able to do so with the kinds of radical left-wing nominees that the Democrats hoped to install just a few weeks ago. Now, obviously we will work with the House of Representatives to try to advance legislation that is in the common good. Still haven’t passed an infrastructure bill. For many years we have to pass annual spending bills. We have to pass the annual defense bill. Those are places where in divided government, we will find common ground because we must find common ground.
Some of those bills may be better or worse, but they ultimately will pass. Now, I hope that we can do more than that. I hope that we can come together for instance with a new coronavirus relief bill. I wish that we would have done so months ago, because I’ve long believed we needed that. Not the kind of broad-based survival package that the Cares Act was in April, but rather something that is more specifically targeted and tailored and calibrated for those who are most in need.
US Senator Tom Cotton QA Transcript
I have a couple of quick questions about the, I’ll call it inside baseball of the politics related to the Georgia runoff. Historically Republicans have had advantages related to runoffs specifically, and in Georgia in particular. Do you think it’s different this time because of the importance of this election? Do you think that more Republicans will naturally show up who are older and more engaged in the political process, even voters who are opposed to Trump are inclined to get Biden in office. Once they’ve achieved that objective, will they return to the Republican Party and the Senate race because of their desire for divided government?
Georgia Republicans have a remarkable winning streak when it comes to these runoffs, something like two dozen runoffs in a row they’ve won. Although I think I’d liken that to the stats you see on Saturday when you’re watching college football, that says one strong program has beaten another program 25 straight times. Well, very few of those involve any of the players on the field at this time. So I wouldn’t put much stock in that history. Although it’s comforting to see, shows some perhaps structural advantages. Some of which with Nancy Pelosi in charge in the House, and with Joe Biden still ahead in Georgia and in the electoral college at the moment, you would expect Republicans across Georgia to be very motivated to make sure that they not just get the continued outstanding representation they have from David Perdue and Kelly Loeffler, but they have a chance to put the brakes on the Democratic agenda.
Two questions are whether the Democrats can rival their historic turnout in Georgia, and then as you say, Larry, whether the swing voters, especially swing voters in the Georgia suburbs who might’ve voted for Joe Biden because they oppose the president, but might want to vote Republican down ticket for divided government. Now, if given that apparent choice, will take that action. Americans for the most part in the last generation has favored divided government. Especially when they see one party lurching to an extreme, as the Democrats have done over these last four or five months, they really tend to favor divided government. Our voting starts in mid-December and absentee voting I think may already be underway. So this is going to be a very hard fought election.
You mentioned the harvesting of votes. This seems like something that was ripe for abuse. How do you think about that? How was it done, particularly in Pennsylvania, that leads itself for potential voter fraud?
Yeah. Larry, unfortunately when you combine universal mail out balloting with vote harvesting, you threaten the sanctity of the secret ballot. So all of your listeners understand, there’s a big difference between absentee voting by mail and universal mailout voting. When you absentee vote, there is a clear and audit-able trail of action that is expected on both sides. The voter submits an application, which the clerk receives, and sends the ballot to the voter who is expecting the ballot. The voter completes the ballot and the administrative paperwork and returns it back to the clerk who was expecting it.
What places like California do is send out ballots to every registered voter over the last two years. Despite the fact that many of those voters will have passed away, they will have moved to other addresses, and therefore live in different precincts in the state. Or they may have moved out of the state itself. That is a recipe for fraud by itself. But then when you combine it with ballot harvesting, which is the act of canvassers, usually paid by the parties, going door to door and asking for those ballots, you really do raise the specter of intimidation and threaten the secret ballot.
Because you know, if you have a list of registered voters, that that household has a ballot, it’s not asking them to vote by absentee. It’s not asking them to go vote at the polls. It’s saying, “We’re here to collect your ballot.” That can be a very intimidating and aggressive action. There are of course people out there who would threaten retribution if you don’t participate. So I worry very much about the threat that universal mail-out balloting and ballot harvesting poses to the sanctity of the secret ballot.
That’s one reason why we would never take up Nancy Pelosi’s voting rights law, which mandates universal mail-out balloting and still permits ballot harvesting of the kind they have in California. Of the kind that caused an entire congressional election in North Carolina to be invalidated two years ago. That’s how big a threat it is to the integrity of our elections.
I have a technical question about the rules of the Senate. So unlike the House, which every two years is considered a new House, my understanding is that the Senate is continuously in session.
Yeah, Larry, you’re right about the composition of the two chambers. When one Congress ends, there is not a House of Representatives seated, and then a brand new House is seated. The Senate, of course, because we have staggered six year terms, always has two thirds of our members available, which is ongoing to conduct activity year over year. That’s why Senate rules have always been considered to be continuing rules. While they typically have been changed only under the provisions of the rules themselves. That’s happened sometime, near the filibuster rule in the 19th century, used to require literally unanimous consent to end debate. Then at one point it was at two thirds. And then it was reduced to the seventies, to its current standard of three fifths. But to change the rules typically takes a two thirds vote. To change them in accordance with the rules itself.
That’s why what’s known as the nuclear option is when a majority of the Senate overrules the ruling of the presiding officer and says, “That’s not the standard we’re going to apply.” It’s kind of like a brute force action, but the bottom line raw politics of it is a majority of the Senate can do that. That happened 20 or 25 years ago with some technical questions about spending bills, it happened most famously in 2013 when Harry Reed used a bare majority to say that the filibuster rule no longer apply to nominees, we weren’t going to require the three fifths vote. It’s only now going to be a simple majority.
So the bare knuckled question or answer is that a simple majority of the Senate can vote to operate in accordance with the standards it sets, even in violation of the black letter rules. That’s why a Democratic vice president would be able to break a tie on that. Or a simple Democratic majority had the Democrats won that would have been able to do so. Now, that would be totally unprecedented. I know people say, “Well, you did it on nominees.” That’s very different. The Senate operates in two different states, the legislative calendar, which is where we do most of our business, and then the executive calendar, which is where we vote on nominees and treaties.
For more than 200 years, the filibuster had not been used against nominees. Genuinely. You know, Clarence Thomas was confirmed in 1991 on a vote of 52 to 48. Any Democrat, any single Democrat could have demanded a vote to end a filibuster against Clarence Thomas and it would have failed on those votes, but none of them, not Joe Biden, not Ted Kennedy, not John Kerry, none of the old lines of Democratic Senate thought it was appropriate to use a partisan filibuster against even a Supreme Court nominee, much less the cabinet or sub-cabinet nominate. It was only in 2003 when a new Democratic Senator from New York named Chuck Schumer started using the filibuster against nominees that we went down this path. So it started in 2013, it ended in 2017.
What the Democrats did and then what the Republicans concluded was going back to what the informal rules had been, the customs, the standards, the practices of the standard for 200 years, which is that nominees go up or down with a simple majority vote. It’s never been the custom or practice or unwritten rule of the Senate that legislation can pass on a simple majority, especially landmark, sweeping legislation. I mean the filibuster rule is not part of the constitution, but it is directly downstream of the Senate’s design and the founding fathers’ intent for the Senate to be a place of greater deliberation, of a place to form wider consensus and compromises that reflect the whole of society.
Can that vice-president break a 50/50 tie on a Senate rule change?
Yes, yes they can.
Okay. My next question is in a 50/50 Senate, I’ll say the most liberal Republican and the most conservative Democrat now take on voting importance. In this last session, we’ve all got to know who our most liberal Republicans are, but who are the most conservative Democrats and how will they think about some of these issues in order for the Senate to pass some of these radical pieces of legislation?
So probably the most reliable member of the Democratic caucus in their center is Joe Manchin. After that, you might say Kyrsten Sinema from Arizona, perhaps Mark Kelly, the newly elected Democratic Senator from Arizona, but even for centrists they’re pretty far over on the left. And after you get past them, it moves very rapidly to the left. Some of these issues that are really central for the Democratic Party, they view them as absolute litmus tests. Like Nancy Pelosi’s voting law, which is what Barack Obama called to eliminate the filibuster for, at a funeral. I mean, I don’t know about you, but I’ve never been to a funeral where they eulogize about Senate rule procedure, but that’s what Barack Obama did at John Lewis’ funeral. I find it doubtful that the Democrats would muster the courage to stand up to their radical left, which is where they get all their energy and all of their money.
Just as a follow-up. In the late 1930s, the Democrats controlled a super majority of the House and the Senate, and they talked about packing the courts, but it still didn’t pass. What has changed in terms of the composition of the party that they would change their mind when a court didn’t agree with the objectives of a majority Democratic legislature.
That’s really the only time there’s ever been an effort to pack the Supreme Court for partisan reasons, because the president doesn’t like the outcome of the Supreme Court’s rulings. FDR off a landmark victory, I think he won 61 or 62% in 1936, he controlled 76 Senate seats, controlled over 340 House seats. Really at the peak of any president’s power, except maybe Washington in his first term or Lincoln. Now one difference is that the Democratic Party was so large in the 1930s. It was much more ideologically diverse. You had a lot of Democrats from very conservative states, but still very Democratic states, who’d been a very strong supporter of a lot of President Roosevelt’s New Deal legislation, who were not going to support that kind of radical restructuring of the Supreme Court.
They’re right to do so, because if you take the step of changing the Supreme Court’s composition because you don’t like the rulings, it doesn’t just undermine the Supreme Court’s legitimacy. It really undermines the rule of law. Because if one party is going to do that when they’re in power, then the other party is probably going to do it when they get to power. And ultimately the Supreme Court just becomes kind of a super legislature, which is not what it’s supposed to be. It’s supposed to decide cases on the facts and on the law.
And just to follow that up, if they do pack the courts, follow what you call that super legislature, the constitution really doesn’t empower the courts to do that. Do you think that when it flips and we have a Republican legislature and presidency, in lieu of repacking the courts, will they pass rules that limit judicial review?
Some of those require a constitutional amendment, Larry, but the problem with some of what the Democrats are proposing is they’re permanent changes. We’re not talking about say tax increases in tax cuts. You know, Democrats take office and they raise your taxes. Republicans take office and we cut your taxes, as we did in 2017. But some of what the Democrats propose to do are permanent changes and you can’t un-ring the bell. So for instance, if they make Washington DC a state, which it should never be, you can’t unmake Washington DC a state when Republicans win the next election. If you pack the Supreme Court, you can’t remove justices that have life tenure. If you give amnesty to 15 million illegal immigrants and they have voting rights, you can’t un-amnesty once you’ve created new American citizens.
That’s why these Georgia runoffs are so important. Because again, what they’re proposing to do are not just bad policy, not just higher taxes or bad healthcare policy, but proposing to change the rules of the game in part so they never lose another election. That’s why it’s so important that we win these elections and show the Democrats that those ideas are unpopular and hopefully they’ll drop them in the future.
I think at that same funeral that Obama was at, he also mentioned DC statehood, in our 200 odd years that we’ve not made the district of Columbia its own state. Is there a reason for that? Then do Republicans have an alternative to enfranchise those voters potentially by maybe merging the district with the State of Maryland or another state, or what other alternatives there are so we can keep the balance in the Senate?
The founders were very clear in the constitution and in the Federalist papers that Washington DC was designed to be a federal city. It is not a state. It is a city, and it’s specifically designed to provide the seat of government and to provide security, autonomy, and independence to the seat of government. Now, some people may say, “Well, that’s old fashioned and that’s outdated and outmoded.” There were riots across the street from the White House where the president sits with the nuclear codes in June. Do we really think that Muriel Bowzer, the current Mayor of Washington DC, would have stopped all that if she had been the governor of an autonomous state in control of her own national guard? I have serious reservations about it. To say nothing of the security of telecommunications and electricity and water and so on and so forth. So I don’t think we should ever give up Washington status as a federal city.
Now, if you wanted to compromise, you’re right Larry, you could retrocede most of Washington to Maryland, trying to take appropriate steps and security measures to mitigate some of those threats to the autonomy and security of our federal institutions. That would give all the voters who currently live inside Washington DC a vote in the House of Representatives, because their population is about exactly the size of one congressional district. The fact that Democrats refuse to do that show what they really want. It’s not about the House. It’s two votes in the Senate in perpetuity since Washington DC is the most Democratic jurisdiction in America. I think they just voted 93 to five for Joe Biden. It’s totally unconstitutional, not only under the original constitution, but under the 23rd amendment as well, because remember the seat of government in the 23rd amendment gets three electoral votes. The maps that they drew would mean there’s only one residence left in the seat of government, that would be the White House. So the whole thing is just a partisan power grab.
Final question relates to the stimulus proposals currently being tossed around in the legislature. We’re talking about trillions of dollars, and I would’ve thought this is by far the most important piece of legislation that will be on your agenda in the next couple of years. How do you think you’ll get different results in the case of the Georgia runoffs? Are we talking about trillions of dollars difference in the amounts?
I think you’re talking about a very big difference in the amounts, but you’re also talking about a very big difference about where their money goes. What we don’t need to do is bail out states and cities that have longstanding fiscal problems because of the way they’ve managed themselves. That’s what the Democrats will do.
Tom, thank you very much for your time.
All right. Thank you, Larry.
Alan Abramowitz — a Post-Mortem Analysis of Georgia Senate Runoff
Alan Abramowitz Transcript
All right. With that, we’re going to change tacks and bring in our final speaker, that’s Alan Abramowitz. He is the Alben Barkley Professor of Political Science at Emory. And I’ve asked Alan to do a postmortem analysis of the Georgia Senate runoffs
Thank you, I’m going to start off by saying that I think that there are two perspectives that are important for understanding the results of the Senate runoff elections in Georgia, a short term perspective and a longer term perspective. A short-term perspective focuses on how Democrats flipped the results between the November election and the runoff elections in January. The longer-term perspective focuses on the factors that have shifted Georgia from a solidly Republican state as recently as 2012 to now clearly a swing state in 2020.
Let me talk first about the short-term forces that were responsible for flipping the result of the two Senate elections. In January, David … Sorry, in November, David Perdue fell just short of winning a majority of the vote, and led Jon Ossoff by almost two percentage points, or about 90,000 votes. Likewise, the Republican candidates in the special election, Kelly Loeffler and the others, combined to receive more votes than Raphael Warnock and the other Democratic candidates. Warnock finished first in a large field, but if you just add together all of the Republican and Democratic votes, there were actually more Republican votes. That might have led you to expect Republicans would have the advantage going into the runoff.
In January, however, Ossoff defeated Perdue by a margin of just over one percentage point, about 55,000 votes, and Warnock defeated Loeffler by a margin of about two percentage points or about 93,000 votes. A swing of about three percentage points in margin, which produced a very dramatic change in outcome.
The keys to Ossoff’s and Warnock’s victories in January were a tremendous turnout by Democratic voters in the runoff. So turnout was remarkably strong across the entire state. About 89% of turnout in the general election, which is off the charts for a runoff election. In fact, 60% of eligible voters in Georgia voted in the runoff, which was a higher turnout than we had in the 2016 presidential election. So that tells you just how high the turnout was.
But turnout was greater in Democratic strongholds. Looking across some of the counties in Georgia, in the strongest Democratic counties, turnout was about 93% of the November turnout. In the strongest Republican counties, it was only about 87%. That’s still very, very high. Close to 180,000 new voters turned out for the runoff who did not vote in the November election, which is also remarkable, and we’re quite confident that those new voters went decisively for the Democratic candidates.
What we saw here was that Trump and the Biden victory in the presidential election energized Democrats. So I think it was less a story of Republicans being turned off than it was a story of Democrats being very turned on.
The longer-term picture is that there are forces that have shifted Georgia from a solidly red state only a few years ago, only about 10 or 12 years ago, to clearly a purple state now. And I can’t understand what happened in the runoff elections without understanding these longer-term forces that are driving political change in the state of Georgia.
One of those long-term forces is demographic change. There was a growing non-white share of the Georgia population and electorate, as there is in many parts of the country, but it’s happening a little more rapidly in Georgia than it is in many other places. Most of this growth in the non-white population is concentrated in metro Atlanta, especially suburbs of metro Atlanta like Gwinnett and Cobb, that are the second and third most populous counties in the state.
Under Stacey Abrams’ leadership, Democrats have invested a great deal of effort in registering and turning out these non-white voters, and they’re not just African American voters, they’re increasingly Latino voters and Asian American voters as well, who are becoming a larger share of the Georgia electorate.
But this is a gradual shift. According to exit polls, there was actually little change in the racial makeup of the Georgia electorate between 2016 and 2020. The proportions of white, African American, and other non-white voters were virtually identical in those two elections. So what else changed between these two elections? The point I want to really emphasize here is that the single most important factor contributing to the shift between 2016 and 2020 that really set up the outcome of the runoff elections was the growing Democratic share of the white vote, which went from 21% in 2016 when Hillary Clinton was running to 25% in 2018 when Stacey Abrams was running for governor to 30% in 2020 for Joe Biden and for the Democratic Senate candidates as well.
That increase in the white share of the Democratic share of the white vote alone explains the difference between losing Georgia by just over five points in 2016 and narrowly winning the state in 2020. And this is also largely why the Atlanta suburbs flipped so quickly from red to blue. And with those Atlanta suburbs flipping, the state flipped.
My conclusion is that if you’re trying to understand the longer-term trend here, particularly since 2016, I believe that doubling down on conservative, small town, rural voters has cost Republicans big time in the Atlanta suburbs, and that is the main reason why Donald Trump lost Georgia, and that is the main reason why David Perdue and Kelly Loeffler lost Georgia in the runoff elections.
Alan Abramowitz QA Transcript
Let’s start with some background history on Georgia. I guess there’s really nothing about Georgia that doesn’t change. I looked up recently what happened in the 1960 election in Georgia, and I think Kennedy won Georgia versus Nixon by over 30 points. So here are states that goes from being very much of a Democratic state … I don’t think the Republicans, I’m sure they won in ’72, but … Yeah, Carter won Georgia in ’76, I imagine he won it in ’80. And I don’t know if Bill Clinton won it in ’92 or not.
But Georgia seems to be a state that’s constantly changing. How do you think about … Is it, was just a mistake that we political scientists thought that Georgia would always be red, or was it always changing and we just took a false sense of security in that?
Well I think that the shift that we saw from Georgia being a safe Democratic state in the 1950s and into the 1960s except when Barry Goldwater ran in 1964, this was the traditional one-party South. And the Democratic Party continued to dominate politics in Georgia below the presidential level for many years even after the 1960, it wasn’t really until 1980s and ’90s that we began to see Republicans winning many elected offices in Georgia.
That transformation was taking place pretty much across the region. Bill Clinton did win a narrow victory in Georgia in 1992. That was the time when in order to win a presidential election in any Southern state, the Democrats had to nominate a moderate to conservative white candidate like Bill Clinton.
From the South.
From the South, exactly. From the South, just like Jimmy Carter of course being a native Georgian had an additional advantage. So it wasn’t until 2008 with Barack Obama came within five points in Georgia we began to notice that things were changing in Georgia. And that was a reflection of largely the growing mobilization of African American voters. Of course in 2008 we saw a tremendous surge in turnout across the board, but especially among African American voters to support Barack Obama.
But that wasn’t enough to put the Democrats over the top. You had to have this other ingredient that had to happen. And that was the transformation of the white electorate in Georgia. Now the white electorate in Georgia is still quite conservative and is still strongly Republican. It’s just not as Republican as it used to be.
This is similar to the transformation that we saw in Virginia that occurred earlier, where the state went, over a period of eight years, from being a fairly save Republican state to now of course we’ve gotten to the point where it’s considered a fairly safe Democratic state. Georgia’s not there yet. It may get there in another four to eight years. That remains to be seen.
Is Virginia … Just a sec, to back up on Virginia. I think Virginia is sort of like two states. I’ll call it the DC MSA and the rest.
The difference here is that all those people who work for the government, I mean DC is like 93% Democratic, something ridiculous amount. And everyone who works for the government is very blue. But then as soon as you leave that DC MSA, you’ve got this incredibly deep red rest of state. But I’ll call it the DC MSA section of the state is growing much faster than the other areas. But you don’t have a DC MSA in Georgia. You do have Atlanta.
First of all, the story about Virginia isn’t quite accurate. Yes, northern Virginia is a big part of the story. It’s not the only part of the story there. You’ve also seen growing Democratic strength in the other metro areas of Virginia. The Richmond metro area has become more Democratic. The Norfolk, Virginia Beach area and some of the other smaller metros in Virginia have also been part of the story there. But yes, northern Virginia was crucial, and it remains … And it’s been growing in size relative to the rest of the state.
Do we have something comparable to that in Georgia? Yes we do. It’s metro Atlanta. Metro Atlanta has been growing faster than other parts of the state, and it’s been changing politically, rapidly. In fact, many of the small town and rural parts of Georgia are not growing very much at all. Some of them are losing population. Georgia is the engine that … I mean, Atlanta is the engine that drives the economy of Georgia. We’re getting a lot of people moving in, white, black, Hispanic, Asian, all sorts of people moving into metro Atlanta, and that’s driving this transformation of politics not only in metro Atlanta but in the state.
I like to use two counties as the best examples how Georgia has changed over the last eight years. If you take Cobb and Gwinnett counties, those are two suburban counties. They are the second and third most populous counties in the state. In 2012, they voted for Mitt Romney over Barack Obama by double digit margins, both of those counties. In 2016, Hillary Clinton carried both of them narrowly. In 2020, Joe Biden carried both of those counties by double digit margins. And in the runoff election, actually, Gwinnett voted for the two Democratic Senate candidates by a margin of 20 percentage points.
That is just a remarkable transformation that reflects both growing diversity, but also as I said the fact that the white electorate in these areas has been alienated from the Democratic Party under Donald Trump and has … We’ve seen college, and these are areas of high education, they have moved toward the Democrats very rapidly.
Going back to African American demographics for a second. I’m from Chicago. And Chicago had been referred to as the Black Metropolis. Over the last 15 years or so, African Americans have been leaving Chicago in droves. We’ve averaged 10,000 net, 10,000 decline in population of African Americans each year. We’re pretty much to the point now where we have more Hispanics in Chicago than we do have African Americans. And if you look at the demographic results, the number one place that African Americans are moving to is Atlanta. To what extent, not to suggest that Chicago is even the number one place where people are coming from to Atlanta, but African Americans from all over are I think establishing the new Black Metropolis is the Atlanta MSA.
How do you think about African American demographics, and will this be the driver for the state politically?
Well it’s obviously very important. Yes, we’re seeing African American in migration into metro Atlanta, not so much the city of Atlanta by the way, which has also become … Now has a smaller percentage of African Americans than it used to. The city of Atlanta itself is now majority minority African Americans. Where you’re seeing the growth in the African American population is largely in the suburban counties surrounding Atlanta.
And yet when we look at the composition of the electorate and the African American share of the electorate, so far at least, it really hasn’t increased that much. It’s been hovering around 30%. That’s still obviously very large and crucial for any Democratic candidate. But it was 30% in 2008, and it was about 30% again in 2020. In fact, the exit poll estimates for the presidential race show that the African American share of voters at only 28%. Then it inched up in the runoff, which was very important for Ossoff and Warnock. The African American share inched up to about 31 percent in the runoff. So turning out African American voters clearly was crucial to winning those two runoff elections.
Again, I would still say that the ability of Democratic candidates, including an African American candidate and a very progressive white candidate who happens to be Jewish, to win 30% of the white vote in Georgia is truly remarkable.
And maybe just a final thought on Georgia. You seem to be suggesting that Trump’s angle on Georgia, which was to get the rural voter all excited, do you think that the Republican Party will adapt to reengage with the conservative suburban voter, or like Virginia, is the state of Georgia heading blue?
Yeah, I mean I think that is a great question.
You can learn, you know?
In the short term, I think it’s going to be difficult for the Republicans in Georgia to really adapt to this changing reality, because they’re sort of stuck in this … They’ve painted themselves into this corner with Trump. Now of course you know that Trump has been attacking the Republican leadership in the state, attacking both the governor and the secretary of state as part of his campaign to try to overturn the election results. But we did see the two Senate candidates, both Kelly Loeffler and David Perdue, align themselves very closely with Trump. They would refuse to put any distance between themselves and Trump. They even called for the resignation of the Republican secretary of state, who would not go along with Trump’s efforts to overturn the election results.
I think there’s going to be a battle for the soul of the Republican Party in this state as there will be across the country to see whether the Trump forces are able to remain in command, or whether we’re going to see a return to something resembling the pre-Trump, still very conservative, but a different brand of conservatism than what we’ve seen over the last four years. And I think in 2022, it’s going to be very interesting in Georgia. We have the governor and secretary of state and all of statewide elected officials are up. And right now, the party’s very divided, and Democrats smell blood. Now it’ll be a midterm election with a Democrat in the White House. Usually those don’t go well for the president’s party. But the conditions the Republican Party is in in Georgia right now I think is giving Democrats hope that they can extend this trend beyond 2020.
Eric Kaufmann — Shy Trump Voters
Eric Kaufmann Transcript
With that, I’m going to hand the call off to our first speaker, Eric Kaufmann.
Hello. I want to address the polling miss, first of all, and why it took place. The first thing to note, of course, is the size of the miss this time. According to 538 on the popular vote, Biden was supposed to take it by eight and a half points. It turned out to be only about 4.4 points. That’s a very large polling error.
More importantly, locally errors were as large as eight points in states like Ohio and Wisconsin, five or six points in Michigan, Florida. These are crucial states for those who are predicting the result. But what I really want to focus on is the systematic direction of the error, not the error itself. It’s a very difficult thing to predict an election to within one or two points. But the fact that the error went against Trump in both 2016 and 2020, I live in Britain and something similar happened with regard to the Brexit vote here that people assume that the Remain vote would take it.
Now, this is not the conspiracy that some on the right allege; however, it is also not the case that progressive cultural norms and narratives are also not culpable. And I want to make the point that in fact, they have a role to play in explaining some of this miss.
I want to now move on to the question of who the pollsters got wrong. And what really jumps out this time is the big skew with white college educated voters. White working class voters were predicted wrong by the polls, but it was the white college educated voters that the ABC poll, for example, got off by 28 points, Pew between 18 and 23 points. These are massive misses. And this is partly because this goes against the narrative that white college educated voters are smarter, too smart to vote for a buffoon like Trump, put off by his racism and his crudity. Could it be that this narrative was playing a role?
Second point is that the focus in a lot of the polls is very much on demographics and social factors, education, race, for example. But actually, most of the variation in support for Trump is within group, not between group. So, for example, if you actually run a model of Trump voting, you’ll find that education might predict 1% of variation. Attitudes to illegal immigration will predict 30% of the variation. Anything that gets closer to those psychological attitudes, which some social psychologists term authoritarianism that is going to get you a lot closer to the answer.
So with this variation within social category that pollsters really need to start to try and control for and are missing. David Shore, for example, commented that in the General Social Survey, the number of people who say they don’t trust other citizens is 20 points higher than a lot of the polls. So the polls, even though they are correcting properly for education, are systematically missing these low trust voters and that correlates increasingly with voting for Trump. So you have a psychological and an attitudinal factor that’s not picked up by the weighting.
The next point I want to make, however, is this question of social norms and political correctness which I believe plays an important role. A number of experiments have shown, for example in 2017, Lucian Gideon Conway showed that when you primed respondents with a passage about the importance of political correctness, support for Trump increased substantially. Ashley Jardina in 2019 showed similarly that describing Trump’s policies as racist tends to increase support for them amongst certain voters in the population.
It’s interesting in this regard that a couple of Republican pollsters, Frank Luntz reports that, first of all, Republican voters were twice as likely as the Democrat voters to say they wouldn’t share their views with their friends by 19 to nine points. Secondly, that many express resentment that pollsters would misrepresent their views and that they didn’t trust pollsters who often come with an academic or a corporate label. And indeed, trust in universities has seen a substantial decline as has trusted media amongst Republican voters since 2015. From 31 to 14% in the media, trust in universities has dropped also by over 30 points between 2015 and 2017.
So we’ve got an increasing, what I would argue is a reactance problem, people reacting against what they see as a hostile or unfriendly pollster who doesn’t represent them. Now, we can argue about the merits of the case, but it’s interesting that Josh Kraushaar cited a couple of Republican strategists who in interviewing suburban voters, heard the respondents complained about quote the excesses of so-called cancel culture, pointing to an environment where employees worried they can be fired or punished for heterodox views.
This has been backed up by a [inaudible 00:08:24] study, which recently found that 60% of Republicans with a master’s or doctoral degrees said they worried about their careers if their views became known to their coworkers. In fact, 88% of Republicans say that political climate these days prevents me from saying things I believe because others may find them as offensive. Only 44% of Democrats do. So we have a significant degree than of reticence amongst Republican voters, which I would argue resulting in both a certain degree of shyness and certainly reactance to being contacted by pollsters. And so pollsters are missing this group because of that reactance to political correctness. And we’ve seen declines in trust in important institutions associated with polling, such as the media and universities.
What then might be the solution to all this? And I think the solution beyond trying to roll back some of the excesses of political correctness and speech policing and norm violation policing is actually to think about how you might weight a survey by a question, such as a question on trust or a question perhaps on a key attitude that’s relatively stable, perhaps a death penalty, something that can get away from simple crude social categories and allow pollsters to weight their surveys more accurately would, in my estimation, help to get around this problem of reactants and non-response bias that’s increasingly plaguing polls and that cannot be corrected by simple demographic weighting. Thanks very much.
Doug Massey & Eric Kaufmann QA Transcript
I want to go back to longitudinal studies just for a second. So, the USC survey did a longitudinal study in preparation for the Trump, Hillary Clinton election in 2016. It’s result was a kind of a Trump plus one at the end. The result was that people said, “Oh, that’s incredible. This was the only poll that showed Trump doing so well,” and they were fully transparent. They had an African-American male who was a Trump voter, and that caused a lot of controversy. There was an article in New York Times about whether or not how much weight should be given to that individual. This time in the 2020 race, that longitudinal study showed again, Biden winning by more than 10. So it fell to this, it had the same problems as the other polls. So, I wonder if that means if you guys suspect whether or not longitudinal polling, even though more expensive, may not create much more value because its problems associated with a not representative sample. Doug, maybe you can start with that.
Well, I think longitudinal surveys is not the kind of fast, quick mechanism that you can use for political polling on an ongoing basis. It’s more for fundamental research survey work and no, it’s not a panacea to solve all these problems. It’s much more basic than that.
Yeah. I mean, it’s worth saying too, that another approach, which I think the GSS and other surveys undertake is to more intensively recontact people who don’t respond and put money into that. So, that is another route to improving accuracy perhaps, but again, very expensive.
Scott Bullock — Litigation Against Burdensome Regulations and Zoning Requirements as well as Defending Property Rights
Scott Bullock Transcript
Okay, let’s go ahead to our third speaker. That’s Scott Bullock. Scott is the president and general counsel for the Institute for Justice. He will be discussing litigation against burdensome regulations and zoning requirements, as well as defending property rights. Go ahead, Scott.
Thanks so much, Larry. It’s great to join you for the call. The Institute for Justice is a non-profit law firm that litigates for Liberty. And we are in court every day, defending the rights of ordinary Americans who would otherwise really not have a chance fighting against abuses of their constitutional rights. We’re involved in a number of different areas and I’m going to talk about two of them today. And they’re interesting issues because they’re ones that are a bit underappreciated, but they’re also issues where there’s widespread consensus, that reform of these laws is desperately needed. So the first one I’m going to talk about is the right to earn a living, what we call economic Liberty and how this is probably most profoundly impacted by modern day occupational licensing laws.
And in the 1950s, about one in 20 people needed a license in order to practice their profession. Today, that number is about one in four. And the numbers are huge. The amount of people that this impacts, it’s more workers than union members and minimum wage workers combined. So, this really does have a direct impact upon people’s ability to earn a living. And what we’re not talking about here, or kind of legitimate licensing attempts, licensing laws that go toward protecting public health and safety. But for far too many professions, licensing laws are really about economic protectionism.
And so, we’ve done a whole series of cases trying to break down these barriers to the right to earn a living. So we’ve represented everybody from African hair braiders to taxi cab drivers. Before the revolution in ride sharing services as many of your listeners probably know, it was extremely difficult to get a license, to drive a cab within many cities. The medallions in New York were worth over a million dollars. This was not about protecting public health and safety. This was about restricting competition and driving up prices. We’ve defended street vendors and a number of other especially entry level positions.
One of my favorite cases that I did when I was litigating for IJ was a case where we represented the Monks of Saint Joseph Abbey. And the monks had made handmade wooden caskets for over a century for their brethren. And monks, even though they don’t need a lot of resources have always been great entrepreneurs. They brewed beer, they baked bread, they’ve been farmers. And so they saw an opportunity to sell these caskets to parishioners as a way of supporting the Abbey. And parishioners like the fact that they were made by the monks and the monks prayed while they were making them.
There was one problem. As soon as they started offering these caskets for sale, they were sent a cease and desist letter by the Louisiana board of funeral directors and embalmers, a nine member board, eight of which is members are licensed funeral directors themselves. And so, it really demonstrated the fact that so many of these licensing boards are made up of people that are in the protected industries. So we filed a lawsuit on behalf of the monks and won an important decision by the fifth circuit court of appeals that said economic protectionism, simply protecting certain industries from competition and having an impact upon people’s ability to work is not a legitimate government interest. That was a great decision that we’ve now been building upon.
And as I mentioned, this is an issue that really cuts across the ideological spectrum, probably president Obama’s council on economic advisors and Donald Trump’s labor department don’t agree on very much, but both of them agreed on the need to reform occupational licensing laws in the country. So let me turn to the second thing I’m going to talk about today, and that is civil forfeiture. And this is really an issue that probably many of your listeners might be familiar with. If they’re not, it’s a power that many people can’t believe exists in a country that is supposed to respect private property rights and rights to due process. Civil forfeiture is the ability of government to take your property without convicting or even charging you with a crime. And that means the government can take your home, your business, your cash, or your car. And this is very distinct from criminal forfeiture. Criminal forfeiture is tied to the conviction of a property owner for wrongdoing. Civil forfeiture actions are actions against the property themselves.
So there have very bizarre case names, like a case that we litigated in Texas called State of Texas vs one, 2004 Chevrolet Silverado. And because this is a civil action, the burdens are much lighter upon government. And you don’t even have such things as a right to an attorney if you can’t afford one, like you do in a criminal trial. We have a report coming out this month that shows how incredibly lucrative this is for law enforcement. We documented using the numbers that were available that over 20 year period, federal state and local governments have forfeited $68.3 billion with a B, dollars from property owners. So this is something that is an enormous nationwide problem. It’s also one that disproportionately impacts people of modest means. Civil forfeiture is not oftentimes used against the kingpins as our study also shows. That the typical forfeiture is just $1,300 in cash or the value of property.
Well, why is this happening? As so many people listening in on the call know, is every economist will tell you, incentives matter. And the law was changed in the 1980s to give law enforcement agencies a direct financial incentive to forfeit as much property as possible. Before that, forfeiture revenue went to the general revenue accrued to the state. Now at the federal level and in most States law enforcement agencies are entitled to keep everything that they forfeit for themselves. Thereby giving them this direct financial incentive to take as much property as possible. And many property owners throughout the country have paid the price for that. Like the issue of occupational licensing and an economic Liberty, there is broad consensus that this is wrong, that something has to be done about it. We are hopeful that the new Congress and the new administration will look at federal forfeiture laws anew and try to reform this. But like with economic Liberty and with civil forfeiture, there are powerful interest groups on the other side that are determined to keep the status quo as it is.
So that is why it’s important for us to be in court, fighting against these laws of occupational licensing laws and civil forfeiture laws, and many others to give ordinary Americans some hope against these egregious abuses of power. Thanks.
Scott Bullock QA Transcript
Scott, thank you. Actually, I wanted to open up with, maybe ask you to talk about one of your cases that I found very interesting and that related to, I think it was in Georgia, the case of that motel. Where the feds working with local governments were able to figure out which motel did not have a mortgage and then waited for a drug deal to happen at the motel. And they basically confiscated the entire motel, even though the owner had nothing to do with the crime. Could you talk a little bit about that case and why it was particularly obnoxious?
Absolutely. It really epitomizes everything that’s wrong with civil forfeiture laws. And this was a case in Tewksbury Massachusetts actually. And it was a family owned motel that had been around for a long time. And the federal government worked with the local police department to file a forfeiture action. And the name of that case was the United States of America versus 434 Main Street, Tewksbury Massachusetts. And so the action was against the property itself. As we demonstrated during the case, the property owner had no knowledge of and certainly did not consent and definitely did not participate in any of these crimes, what were essentially low-level drug dealing that was occurring at the motel. But our government’s argument was that doesn’t matter, the property was involved in the crime and so therefore that should be enough under civil forfeiture statutes.
And so we represented him, fought back against this attempt. I should also point out too, how draconian these laws are. Mr. Caswell, who owned the motel, this was his business, this was his retirement money. And if he would have had this property forfeited, he would have lost everything. So the stakes in the fight were enormous. We thankfully were able to step in and represent him and beat back this attempt by the U.S. attorney’s office in Boston to take this property. But it really demonstrated how egregious these laws are and how difficult it is to fight back against them. Because lawyers don’t come cheap. As I mentioned, you’re not entitled to a lawyer because it’s a civil proceeding, even if you can’t afford one. And so oftentimes people were forced into settling with the government because the costs of the legal fight will quickly outstrip the value of the property. So it was one that we were happy to set this important precedent, but at one, that again, that demonstrated how problematic these laws are.
I wanted to go in a slightly different direction for a few minutes. And that is, sometimes you win by losing. And one of the cases that you did was this famous Kelo case, which related to eminent domain, where the government took private property just to give it to another person for private use. That case, you ended up taking to the Supreme Court and losing, but you may have won the war and lost the battle. Can you tell us a little bit about Kelo and why it was so important?
Yeah, that was a case that was, you’re absolutely right, with the nine cases up before the Supreme court, that’s the only one that we actually lost. But it’s one of the primary reasons why, when you do this type of work, when you do public interest law, you’re not just arguing in the courts of law, you’re arguing in the court of public opinion. And you’re using all the tools of public interest law of building awareness of this in the media, working at the grassroots level on community activism. Doing strategic research to document the extent of the problem. Because you want to shine a spotlight on this issue to such an extent that even if you have a setback in court, like we certainly did in the Kelo case, people who know about this issue were outraged about what is happening. And you have then, the means to try to change this in other forums as well.
And so that was an example. People were just shocked that the Supreme Court had signed off on something like this and said that just pure economic development to increase the prospect of the increase of tax revenue or more jobs is enough to justify the use of eminent domain. Which is under the constitution as many of your listeners will know, is really confined to public uses. That’s in the language of the constitution itself. And the court said, we’re going to take a broad view of public use, and that really going to mean public benefit. And public benefit is more tax revenue and improved economy. But that’s really a vision of eminent domain without any sort of meaningful limitation. Everybody could come up with a more productive use of your land than what you’re making of it. And that’s one of the real tragedies of this. Is that all governments have to do is project.
And oftentimes the history of eminent domain abuse when it was used in urban renewal schemes back in the 50s and 60s and up until the Kelo case, is that these projects oftentimes fail to live up to expectations, or in many instances, like what happened in New London and so many other inner city neighborhoods, they’re just complete disasters. And neighborhoods are cleared and nothing is built. And that’s, that’s what happened in the Kelo case. But it is a great example of how you can take a setback in court and turn it into a win. We’re ultimately trying to get that issue back up before the Supreme Court. Many justices have said that they do not think that that decision will stay on the books forever. But this is one where we’ve been able to change the legal landscape to such a degree that it’s not as much of an issue as it once was in the 1990s and 2000s. It was happening all over the country. Now there’s more isolated instances of it because of the changes in the law and the fact that developers and city councilors know how unpopular this is.
Hi Scott, this is Rick Banks. This is a fascinating litigation. And I’ve taught as a law professor. I’ve taught the casket makers case to great effect. And that’s a wonderful case. It is outrageous. But my question is, how are you determined in the scheme of licensing laws? Which ones seem outrageous and which ones do you think should stand as justifiable? I mean, presumably you think that doctors should be licensed by a medical board, for example. But the casket makers case at the other extreme, how do you draw the line in there between what’s permissible and what’s not?
Yeah, it’s a great question. And it’s always a balancing act. And what we really look for is the origins of these laws and why they were passed. Were there people that were legitimately concerned about protecting public health and safety. And said, “Hey, let’s have some minimal standards in place then we’re not going to challenge those.” There’s some, for instance, cosmetology laws, hair braiding laws, which is other cases that we did for a number of years. That say, “Listen, you’ve got to take some courses on sanitation. And you have to know what to look for in people’s scalp, if there might be some type of disease and that sort of thing. We’re not going to challenge those.” People can make the argument from a pure market perspective that, “Listen, there is private alternatives to that, and you can have certification and there’s market solutions to that.” And I certainly get that, but it’s not something that’s going to be able to be challenged in court and win. And again, if it’s more directed toward public health and safety, then we’re not going to challenge it.
But there’s so many instances, and there are so many targets where it’s just pure economic protectionism. Give you an example of one of the areas that we’re challenging right now that is in the medical field, the certificate of need laws that exist in many States. Where anybody that wants to provide new medical services must petition the government. And then the competitors, typically large hospital chains get to intervene in those proceedings and say, “Well, we have no more need for MRIs,” for instance, “in this area. We’ve got it covered.” And that is where it is really not about, are they really worried about protecting the public or are they really worried about limiting competition in order to raise their prices? And so, the ones where we can document that that’s really about economic protectionism, those are the ones that we target.
And have you concluded in those cases that because these are situations where the legislature has been captured, that your only route to reform is to pursue litigation rather than to advocate for legislative change?
Yeah. I mean, we do have some legislative work. And it’s one of the reasons why that we are in court is to show that it’s really difficult to change the law because of regulatory capture here. And that’s one of the reasons why we have courts. It’s to level that playing field. That’s what happened when we represented the monks, for instance. They said, “Well, we don’t really like to sue. We’re monks. That’s not really our style to do litigation.” And they tried twice at the Louisiana legislature to try to change the law. They thought they worked with a sympathetic legislator. And they wanted to do that. And then after two rounds and getting slaughtered, basically, by the Louisiana funeral directors association, every single time in the legislature, they said, “All right. Now we’re ready to sue.”
And what’s good about this though, is there is more interest in legislatures now because of the recognition that this is a real problem, the impact that it’s having upon workers and others. And so that’s something that we’re encouraged by that there’s actually more hope, certainly, than what there was when we started litigating this about 25 years ago, to pass some meaningful reforms to try to break down these barriers.
Okay. And where do you think the problem is worse? For listeners who are wondering, there are so many regulations out there, are there particular industries where you think the harms and the loss of the public are greatest?
Well, I mean, it’s really across the board. And we are doing both ones where it has a real impact upon entry-level occupations. And that’s where people are just trying to get the first rung up on the economic ladder. So it’s really important to do a lot of work on that. But we are doing more work in the healthcare field, though, right now. I’d mentioned those certificate of need laws. They’re more sophisticated cases. They’re frankly, harder to win because judges are going to be a little bit more reluctant to enter what they see as interfering with the laws here. But when you’re able to document that this is really about economic protectionism and the fact that these certificate of need laws, the federal government has abandoned them. They were an effort in the 1970s, kind of a command and control approach to curtail costs.
The federal government, the federal trade commission has admitted that they don’t work. They’ve advocated for their repeal. They’ve basically abandoned them but they exist in several states right now. And so, that’s one where they’re tougher cases, but they’re really important because of the need to inject competition and to try to lower the prices and to offer more choices to folks in the healthcare field. One of the things you’re seeing in the COVID world is a re-examination of a lot of these licensing requirements when there’s a desperate need now for healthcare workers. And so, a lot of states now are waiving their licensing requirements.
Being a doctor in Nebraska is not much different than being a doctor in Ohio, but there’s a lot of barriers to doing that. And a lot of states now we’re waiving this. If doctors want to move to this, even in an area where there’s obviously more of a justification for licensing, states are reducing barriers for instance, to nurse practitioners. I believe there’s six states where they previously were not allowed to work in hospitals without being under a doctor’s supervision. Now, those are barriers are lowered. And so, we’re hoping that this re-examination of a lot of these licensing laws that you’re seeing now born out of necessity, that some of these reforms stay in place even after the pandemic has passed.
Yeah. Again, Scott, to follow up on what Rick was asking you about choice of which cases to do, it seems to me that you do stuff, not necessarily to change occupational licensing for hair braiders. But to sort of highlight the catastrophe that’s going on throughout, across the board, across all industries. And when you pick very stylized cases that are absurd on their face, it forces the government to reconsider their entire programs. I’m thinking particularly with your success with civil forfeiture, where Eric Holder, I think what, basically just at one point after you continued to win, he basically said, “You know what, we’re going to just change our policies and give up on benefiting from civil forfeiture,” that they were forced to defend in court and then would consistently lose. Can you comment a little bit about that, the general strategy?
Yeah, definitely. I mean, our ultimate goal in this as public interest lawyers is to set a broad precedent that not only benefits our clients, but can be used by others then too. Either to encourage governments not to even go down that path, or if there’s litigation, to use that precedent to try to break down those barriers. For instance, Tesla has used our monks’ case to say that, “Listen, we want to do direct auto sales to customers.” And several states now, there’s still exclusive franchise agreements and laws that restrict that. And so the goal is to set these broad precedents that can help many, many others that are not our clients but can still benefit from these precedents. And then you’re right, we also turn up the heat on government. And that’s one of the reasons why we’re so active in the media to try to pressure them to do the right thing.
And we did get those reforms that were done in the Obama administration. Jeff Sessions actually repealed several of those, even though several conservative senators like Senator Mike Lee have been outspoken opponents of civil forfeiture. Jeff Sessions was a big fan of civil forfeiture and change those policies. That’s one of the reasons why we advocate not only for the judicial precedents, but say the changes have to be made in the law too. Because policy changes, as you know, can be just change with the stroke of a pen with new administrations. And so, we are actively working to try to change the law at the federal level. And we’re hopeful that because there was some criminal justice reform in the last Congress, that civil forfeiture could be an issue that could unite left and right and lead to some changes in an area where people are outraged about the abuses.