A Draconian Constitution? 

Spare a charitable thought for Draco, the Athenian lawmaker whose reputation resides almost exclusively within his unhappy eponymous adjective: draconian. 

He meant well. 

Draco was in a sense the real father (the possibly fictitious real father, if that makes any sense) of Greek democracy: Before he set down what is known as the Draconian constitution, the Athenians had no written law. The law they had took the form of an oral tradition, which was easily manipulated by the powerful at the expense of the vulnerable. This led inevitably to class conflict and communal conflict along with endless blood feuds, and so the people of Athens commissioned Draco to develop a body of laws that would be written down and published (in the literal sense of “make public”—posted in an accessible common place) so that every literate Athenian could consult the law and understand what his duties and privileges were under that law. 

It is a testament to the power of the written word that so many societies remember (if only in legend) and honor their great lawgiver: Hammurabi, Moses, the decemviri who set down the first Roman law in the Twelve Tables. How in the heck Teddy Roosevelt ended up on Mount Rushmore instead of James Madison is a mystery. 

(I know, I know—it’s not really a mystery.) 

Draco’s laws were notoriously harsh, with his code frequently meting out death as a punishment even for crimes that would seem to us petty. There is a legend, reported in Plutarch, that Draco gave minor crimes the same lethal punishment as major ones because there was no harsher punishment available for the serious crimes—that the petty ones merited death seemed to him self-evident. Judge Roy Bean had nothing on Draco.

Another legend holds that Draco’s laws were written in blood. That (probably) was not true, though it isn’t the worst idea: There are a quarter-million words in the grievously misnamed Affordable Care Act, and it would have been good if somebody had to bleed a little—or a lot—for them. In any case, the next Athenian constitution, authored by Solon, was written in poetry rather than in blood. 

But just as Draco’s code may seem to us inhumanly harsh even though it was an important and maybe even heroic effort at establishing real justice and the rule of law, the Solonian constitution contains many features that would seem to us unjust: For example, a man’s place in the political hierarchy was determined in part by his wealth. But never forget the most important question: Compared to what? Before Solon’s reforms, political standing was hereditary—a man can acquire wealth, but he cannot acquire a new ancestry, and the move from birth to wealth was a step toward meritocracy if not toward equality under the law per se. Solon was attempting to reduce the relative power of the Athenian version of a house of lords, the aristocratic Council of Areopagus. (Areopagus is the name of a hill sacred to the war god Ares; the apostle Paul delivered a famous sermon against idolatry there.) Pluto(speaking of Greek gods)crats may not be exactly your thing, but they are generally an improvement on hereditary aristocrats. 

Solon was a kind of Greek version of Cincinnatus, the Roman savior who famously gave up his dictator’s powers and returned to his farm, thereby embodying the ideal of his country’s civic virtue. In Solon’s case, he went into self-imposed exile for a decade after creating the new Athenian constitution, so that the people would not be tempted to make him into a caudillo and so that he would not be tempted to let them. 

There are all sorts of weeds you can get way deep into if you want to learn about competing theories of statutory and constitutional interpretation (listen to Advisory Opinions, which sometimes features David French of the New York Times, for all your legal-weeds-exploring needs), but the first thing to understand about all that is so fundamental as to be pre-legal: We write down our laws for a reason, or, rather, for two reasons that are mutually reinforcing: We write down our laws to fix their meaning and to make them accessible to those who must live under them. When Americans encounter a law or laws they don’t like (such as the Bill of Rights), they often say, “Yes, well, that was fine way back when, but things have changed since then.” But every law is an antiquity the second after it is committed to paper—that the horizons of the present should be bounded by decisions taken in the past is what the law is all about, and there is no escape from legal anachronism whether modest or radical in degree. 

If we go by the legends (which are a good enough source for our purpose here), then there is much to admire in Draco: He was, we are told, neither corrupt nor self-serving nor personally cruel nor inclined to hand out favors to friends and allies—his heart was full of the love of justice and his mind soberly fixed on the need for civic order. 

But he wasn’t very good at writing laws. 

Neither are many of his heirs. Consider our ongoing national convulsions over the regulation of abortion. 

If you read the current accounts of the federal courts’ approach to mifepristone, the abortifacient, then you might think that the debate is about whether the drug “should remain widely available,” as the New York Times puts it in a headline. The issue is presented as a moral and political one, as though our courts had any competency in moral or political issues rather than expertise in legal ones. The Supreme Court has ruled that the status quo ante will remain in place while the legal questions are sorted out in the courts—and legal questions are what we are talking about here. Whether easy access to abortifacients is socially or morally desirable is not a question for the courts—that is a question for legislators if it is to be a public question at all. 

The conflation of the moral and the political with the legal is a common problem when it comes to the wreckage of judicial activism, which is strewn across our social landscape. The legitimate question in Roe v. Wade was not whether abortion should be permitted, whether abortion is an abominable homicide or a necessary condition of women’s autonomy, or anything like that—the question was whether the Constitution mandates that it be permitted, a claim that was, and is, preposterous and nonsensical, the Constitution being entirely silent on the matter. Likewise, the question in Dobbs was not whether abortion should be outlawed or tightly regulated but whether the Constitution permits the states to do this, which, of course, it does. Such regulation may be wise or unwise, desirable or undesirable, but there is no serious question that it is constitutional. 

Before Dobbs, a very small number of intellectually honest abortion-rights advocates would concede, from time to time, that Roe was nonsense as jurisprudence, arguing instead that abortion rights should be established by statute or by constitutional amendment. These people were, of course, ignored and reviled by other abortion-rights advocates, because our political discourse has trouble handling anything more complex that: “Me want abortion! Me demand abortion! Abortion good!” or the contrary sentiment equivalently expressed. 

What is mainly at issue in the current mifepristone agony is—and you can learn this if you read the New York Times’ account down to the 19^th paragraph and beyond—whether the FDA followed the law when it approved mifepristone. Seriously: The Times doesn’t say what the case actually is about until the 19^th paragraph, but, after 986 words of prologue, the Times reports: “In his preliminary ruling, Judge [Matthew] Kacsmaryk said that the Food and Drug Administration had improperly approved the drug.” In fact, we learn that the judge is a Trump appointee and that he is understood to be unsympathetic to abortion rights even before we are told about the substance of his ruling. (Journalism!) 

The facts of the case point to a different kind of debate from the one we are having. 

One interesting aspect of federal abortion law is that there isn’t very much of it. There exists the Partial-Birth Abortion Ban Act of 2003—and you will notice that the headlines have not for these past 20 years been full of news of cases brought under that law. (The National Right to Life Committee tells me that as far as they know nobody ever has been convicted under the law. I’ve asked the DOJ to confirm that and am awaiting a response, which I will share when I have it.) So there is one statute that does not seem to be enforced, and there are a handful of measures relating to public funding of abortions and the like, bits and pieces.. Meaning, not a whole lot in the statute books. 

Roe was a judicial misadventure, not the result of a law written and passed by democratically elected lawmakers; Dobbs was only the appropriate judicial undoing of Roe’s inappropriate judicial doing.

There isn’t any mifepristone-specific federal statute to guide us here. There is something masquerading as public-safety regulation. And the relevant law there has not been revisited in some time: The FDA owes its existence to the 1906 Pure Food and Drugs Act and has received no real statutory guidance on abortifacients; the statute cited in the 5th Circuit mifepristone decision has its origins in the 1873 Comstock Act, portions of which are still on the books (18 U.S.C. § 1461), prohibiting the mail from being used to distribute any “article, instrument, substance, drug, medicine, or thing which is advertised or described in a manner calculated to lead another to use or apply it for producing abortion.” There are some pretty serious First Amendment problems with that law, the bulk of which deals with verboten communication (prohibiting the mailing of “every written or printed card, letter, circular, book, pamphlet, advertisement, or notice of any kind giving information, directly or indirectly, where, or how, or from whom, or by what means any of such mentioned matters, articles, or things may be obtained or made, or where or by whom any act or operation of any kind for the procuring or producing of abortion will be done or performed, or how or by what means abortion may be produced, whether sealed or unsealed,” etc.), but those issues are not necessarily as easily adjudicated as you might expect. The federal code is kind of a mess here. 

But we don’t live under statute—not really: We live under regulation. Like many such regulatory agencies, the FDA enjoys very broad rulemaking power—unconstitutionally broad in the view of some very thoughtful people—that empowers executive branch regulators to go where legislative branch lawmakers have not prepared the way, and where they may not have intended the regulators to go at all. Put another way: We don’t have the right kind of federal legislation about abortifacients as a class of drugs, and the FDA debate is, properly speaking, about whether this particular abortifacient is safe and effective, not about whether as a matter of federal policy access to abortifacients as a class should be regulated more tightly or more liberally. 

Again, this requires some stepping back from our political passions: You may think that climate change is the most important issue in the world, but it is not at all clear that the Clean Air Act’s air-pollution language actually gives the EPA the power to impose shutdown dates on coal-fired power plants as a way to enact a climate policy that Congress has, for many decades now and under both parties, declined to enact in law. Antonin Scalia joked that he wanted to have a rubber stamp made that would read: “Dumb But Constitutional”; the converse of that, difficult to express quite as pithily, is that not every good thing is legally or constitutionally mandated—or even legally or constitutionally permissible. The honest kind of gun-control advocates argues that we should repeal the Second Amendment and thereby make broader and deeper gun regulations constitutionally permissible; the dishonest kind—the common kind—argues that the Second Amendment doesn’t really say what it plainly says and that, even if it does, somehow (oogedy-boogedy, abracadabra!) that doesn’t really matter. You know how it goes: “Never mind the Bill of Rights, think of the children.” 

One thing that you can be sure of: This isn’t going to end with mifepristone. There is going to need to be a great deal of abortion lawmaking, by lawmakers and they are not going to get a lot of it right on the first try. We should not pretend that mifepristone is ultimately a drug-safety question when it is really an abortion-policy question wearing a very light and implausible disguise. There already has been some pretty clumsy abortion lawmaking, statutes that, for instance, make it unclear what physicians can do when treating a miscarriage or an ectopic pregnancy. These laws may be criticized as draconian in the sense of severe or excessively punitive, but they also are Draconian in the sense of being poorly constructed, however well-intended. 

Fixing this is a job mainly for elected legislators working in legislatures, not for judges imposing private policy preferences on the barest of constitutional pretexts or for unaccountable executive-agency regulators making what amounts to legislation regarding controversial social issues under the pretense that these are ordinary health-and-safety regulations. Dobbs wasn’t the end of anything—it was the beginning of an actual, legitimate lawmaking process, or at least an opportunity to begin. 

Economics for English Majors: Mark to Market

“Fed Rethinks Loophole That Masked Losses on SVB’s Securities,” reports the Wall Street Journal. “Potential change would reverse 2019 decision to loosen rules for midsize banks.”

First of all: It isn’t a loophole. A loophole is an unintended oversight or exemption in a law or regulation; the rule that permitted Silicon Valley Bank to put off accounting for unrealized losses on its bond portfolio was not unintended or accidental in any way: It was a matter of policy intentionally designed. This kind of language is an ongoing problem: We endure an endless stream of second-rate journalism talking about how private-equity investors benefit from a “tax loophole” that is no such thing. If you meant the policy to work that way, it isn’t a loophole—it’s lawmakers trying to avoid responsibility for the laws they have made. 

But, back to Silicon Valley Bank for a second. If you remember the 2007-08 financial crisis, then you may have heard the words “mark to market” repeated in sometimes feverish tones. What does “mark to market” mean? It isn’t complicated: “Mark to market” means that when a bank or another business is telling investors or regulators about the value of its investment portfolio, it has to tell them the value of what they can sell that portfolio for—not what they paid for it. If a bank buys a $1 share of Acme stock (a bargain at any price) but Acme shares decline to $0.90, then the bank cannot pretend, under mark-to-market rules, that it still has a $1 asset. This kind of thing matters a lot for banks, insurance companies, pension funds, and other financial institutions that are required to maintain a reserve of capital that is proportional to its obligations. Regulators want to make sure that banks can actually repay their depositors, and so, in theory, banks are supposed to invest conservatively and account for those investments conservatively. 

Silicon Valley Bank put most of its savings into the original, gold-standard conservative investment: U.S. Treasury bonds. Treasury bonds are considered safe investments not because the price doesn’t fluctuate but because nobody thinks the U.S. government is going to default on its debts. If you paid $100 for some bonds that are now worth only $40, that isn’t necessarily a problem: If you hold the bonds to maturity and the U.S. government makes good on its obligations, then you are going to get repaid in full with the agreed-upon interest. On the other hand, if you want to use those bonds as collateral against some obligation, then you have to mark them at the $40 the market will pay for them rather than at the $100 you paid for them. 

SVB had huge losses on its bond portfolio, but much of that went unaccounted for because the bank said it intended to hold those bonds to maturity—meaning that unrealized losses on those bonds would not be part of the bank’s capital-cushion calculation. The “loophole” under discussion in the WSJ article refers to a different category of bank investments, securities “available for sale.” In theory, these are supposed to be subject to mark-to-market rules—because as securities available for sale, they are on the market!—but the Fed, in its wisdom, decided that some smaller banks—not small ones, but not behemoths—would not have to comply with those rules, because complying would be … inconvenient.

WSJ:

Under post-financial crisis rules, banks with more than $250 billion in assets were directed to include unrealized gains and losses on such securities in their capital ratios. Smaller regional banks, however, were allowed to skip this requirement based on the argument that it would introduce too much volatility into their capital metrics. In 2019, the largest U.S. regional banks earned an exemption, too. 

The changes under consideration would likely reverse that reprieve, meaning unrealized losses would dent capital levels. 

“Available for sale” securities played a role in the downfall of SVB, which had availed itself of the exemption. In March, SVB announced that it had sold a chunk of securities at a nearly $2 billion loss and said it would sell stock to raise capital.

… SVB was sitting on even bigger unrealized losses in a separate bucket of securities that the bank said it would hold to maturity. Those losses aren’t recognized either in the bank’s financial statements or in regulatory capital.

Yes, complying with banking regulations is inconvenient. So are bank failures. In any case, it seems to me that tighter capital requirements for banks would be a good idea, and that political pressure to exempt the smaller firms from regulation should be resisted. If the idea is to protect consumers from bad bank management, then we should want to protect clients of smaller banks, too, no? But if the idea is to pass some regulations so you can say you passed some regulations and then exempt people you don’t want to annoy—well, I think I know what to think about that.

Words About Words

What is a loophole, really? When I tried to imagine the origin of the word, I thought of someone trying to tie a knot around something or someone that slips out of the loop before the knot is tightened. And that is … not it. 

The loop in loophole isn’t the loop that you make a knot out of. It is a loupe, from the Middle English word for a narrow window or a slit in the through which sneaky medieval archers could fire from cover. You had to be a pretty slippery—and, presumably, skinny—sort of sneak to escape through a loupe-hole. The arrow slits at the top of a tower are crenellations or crenels, meaning notches, or embrasures, or balistraria, because we do not have enough words for these things! The solid parts between the crenels are cops or merlons; the whole structure together comprises a battlement or castellation.

Loupe seems to be related to a Germanic word meaning to look or peer—the outdated English exclamation lo! It probably is an abbreviation of this look—and that will make you think of a jeweler’s loupe, a magnifier used by gemologists or watchmakers or the like. But the dictionaries insist that the magnifying loupe comes from a different source, from a Frankish and Proto-Germanic word for something that dangles, also present in modern English in the words lobe and lob. I kinda-sorta suspect that there is more to the story here and will keep digging.

Elsewhere

Here is my five-word economic policy, one word of which is not printable in this space. 

Dominion’s settlement with Fox News is no surprise to me—if you look at the size of the settlement relative to the company’s earnings, and then consider the fact that lots of people lose defamation suits, the result is pretty obvious. More at Dispatch Live, which you could watch … live … if you are a Dispatch member. 

You can buy my most recent book, Big White Ghetto, here. 

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You can see my New York Post columns here. 

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In Closing

Callback to the beginning: What did Paul say at Areopagus? 

Paul stood in the midst of the Areopagus, and said, Ye men of Athens, in all things, I perceive that ye are very religious. 

For as I passed along, and observed the objects of your worship, I found also an altar with this inscription, TO AN UNKNOWN GOD. What therefore ye worship in ignorance, this I set forth unto you. 

The God that made the world and all things therein, he, being Lord of heaven and earth, dwelleth not in temples made with hands; 

neither is he served by men’s hands, as though he needed anything, seeing he himself giveth to all life, and breath, and all things; 

and he made of one every nation of men to dwell on all the face of the earth, having determined their appointed seasons, and the bounds of their habitation; 

that they should seek God, if haply they might feel after him and find him, though he is not far from each one of us.

An unknown god—maybe that is the god T.S. Eliot had in mind in his epitaph for the modern world:

And the wind shall say: “Here were decent Godless people:
Their only monument the asphalt road
And a thousand lost golf balls.”