Canadian Originalism

Via Larry Solum, I see Adam Dodek has written aneo-originalist defence of Bertha Wilson.

He's perfectly within his rights to do so. Originalism has always been a centralizing-liberal slogan in Canada. Frank Scott is our original originalist, as it were.

"The purpose of constitutionalism, which is to subject politics to higher norms of reason, is enhanced in its comparative form."

Professor Murkens defends comparative constitutionalism in an explicitly Platonic vein.

There are two contestable premises here:

1. Politics ought to be subject to norms of reason.

2. The international community of judges is a better source of reason than democratic politics.

My Last Post on the US Presidential Election

There is much to like about John McCain. I have long thought his foreign policy instincts and advisors are dangerous, and that electing him would amount to endorsing a utopian-interventionist view of the world. At the same time, though his domestic policy positions are basically non-existent, I thought he would be useful curbing a Democratic Congress. My first-favourite result would be Obama as President and a Republican Congress, but since that was impossible, I thought that a McCain Presidency might be the lesser of two evils, at least on days when I convinced myself that budgetary considerations would keep McCain from giving way to his most interventionist impulses.

I understand that everyone on the left thinks McCain is running the most egregiously negative campaign in history. Phooey. While I don't really think the Ayers and Wright associations are that big a deal (they were useful to Obama at the time, but I trust his opportunism). On the other hand, they are perfectly reasonable subjects to give him trouble on. Neither McCain nor Obama are decent candidates for bodhisattva or saint, but by the standards of democratic politics, they are moderately honourable.

But this latest mortgage plan just shows that McCain disdains public policy too much. He proposes to buy mortgages -- not at the price their owners are willing to part with them as in the Paulson panacea, but AT BOOK VALUE! That is downright insane. The only possible excuse is that McCain just made up this policy on the fly during the debate, and has no idea what he is talking about. And that is not much of an excuse.

Obama is academically inclined, risk averse and fundamentally conventional. McCain is not quite so bright and a risk addict. I think the world would be better off with Obama.

Is Socialism the Solution?

The following is my attempt to summarize what I understand from reading economists' commentary on the financial crisis and possible remedies for it. See Delong. And Mankiw has links to most of the public comments by major economists.

Across the spectrum of responsible economists, it seems that there is concern about the solvency of banks (revealed in the increase in the TED spread) and the functioing of credit markets.

And it seems that the way to deal with it is to use the US Government's great ease of borrowing money to improve the equity of the financial institutions. The problem with the Paulson plan is that it seems to do that the wrong way: it creates a fake, subsidised market for mortgage-backed securities which thereby inflates the value of those assets above what they are really worth.

The Swedish response to their financial crisis. First, make sure the balance sheets are telling the full story. Get the bad news. Don't cover it up. Second, inject public money to make the better institutions solvent by buying equity. Merge, close down, do what you must to shrink leverage while keeping confidence in the system. Finally, sell the publicly owned equity at a profit.

The risk is that the American political system won't work as well as the Swedish one, and public ownership will just mean that decisions get politicized. But that's an even bigger problem with Paulson-Dodd: the value of the assets the government is buying up ultimately depends on the willingness to foreclose on somebody. What government is going to do that?

What Does the Financial Crisis Mean for Inflation Targeting?

The big recent argument in monetary policy is between those who think
central banks should just target core inflation -- incluidng Greenspan,
Bernanke and very much the Bank of Canada -- and those who think it
should also worry about asset bubbles -- in other words, take away the
punch bowl just when the party is getting started.

One appeal of inflation targeting is that it seems to address the
problem of legitimacy central banks face. They make decisions with
enormous impacts on the economy, but they are purposively insulated from
democratic accountability. If they can say that they have little
discretion, and simply follow a simple rule of keeping inflation steady,
then they can more easily justify themselves than if they admit that
they have massive discretion. And a mandate to deal with asset bubbles
necessarily involves discretion, since no one can precisely say when
they occur and because the central bank would have to do more than one
thing at a time, necessitating tradeoffs.

The difficulty with the simple rule, though, is that core inflation is
not as big a problem as asset bubbles. So solving a minor problem at the
risk of exacerbating a bigger problem looks like a bad idea.

But what we will be left with is a super-empoweered central bank without
a clear rule to guide it. In other words, what we will be left with is
less democracy and more technocracy.

The Leaders' Debate

Recycling what I posted on Andy's site:

I just heard part of the leaders' debate on the radio driving my daughter back and forth from choir practice (and over her loud complaints about choice of radio station). My impression was that Harper and Layton did best. Next time, the Liberal Party should consider that reasonable facility in English is an important asset in a national leader especially since they seem destined to be shut out of Quebec.

On the substance, I thought Harper dealt pretty well with corporate taxes/income trusts and Afghanistan. However, I thought Layton had a good point that it is outrageous that he is going to the voters without any program at all. I worry about rewarding that kind of behaviour.

One commitment he made struck me as just as foolish as never taxing income trusts. He seemed to say that the federal government would run a surplus no matter what happens with the financial crisis. Herbert Hoover lives. Fortunately, Harper's past record means we can rely on the fact he will break this commitment in a minute when it becomes necessary.