Is the U.S. Justice System Broken?

Fascinating discussion about whether the U.S. justice system is broken. Full transcript here.

Santa Clara Law Professor David Friedman actually manages to outwit Judge Kozinski in some places. (Go SCU!) But Kozinski still sounds pretty darn funny:

Judge Alex Kozinski [joking]: You know what I find? I find that half of the people love my opinions and half hate them. The first half is called the winners, and the other half is called the losers. I’ve never had somebody come up to me and say, you wrote a great opinion sticking it to me. Never.

Judge Kozinski on reverse condemnation:

The government makes mistakes in all sorts of ways that it does business, and if it were perfect, we would have a very different government and it would be a lot less costly. That is the nature of life that people make mistakes, and it is the nature of government that the government is making mistakes. The question is, are the costs of these mistakes internalized?...The question of whether or not you get just compensation, the question of whether something is a public use—-let me tell you what the debate is about there. The debate is about not whether it’s a public use or not. The question is: who decides? Do executive and legislative branch officials make that decision, or does it get decided by judges? Now, I like the idea that you think that judges and juries ought to make that decision, but actually I think there’s a lot to be said for saying that the decision of whether or not something is a public use gets made by the legislature.

Bonus: David Friedman:

I cannot resist my favorite quote on just this subject: “In nothing did the founders of this country so demonstrate their essential naiveté than in trying to restrain government from many of its favorite abuses and entrusting the enforcement of this restraint to judges; that is to say to men who had been lawyers; that is to say to men professionally trained in finding plausible excuses for dishonest and dishonorable acts.” Now, if someone can just find for me where Mencken said that, I can make sure I’ve got the quote right. Mine is by memory.

Congrats to David Friedman for going toe-to-toe with Judge Kozinski and walking away unscathed.

Wisdom

Wisdom from an online dater's profile:

For most of my life I thought I wanted to be an attorney until I realized that most people don't go see an attorney when things are going well in their lives. I don't want to spend the rest of my working years cleaning up other people's messes. Now I'm considering interior design or event planning.

She's only 22 years old. Very precocious if you ask me.

Unions and Courts: Harming Taxpayers?

The Atlantic--generally an excellent, unbiased magazine--posted commentary from a visiting writer that defended unions. I responded with the following comment:

The writer glosses over the long-term, unpredictable, and unsustainable financial obligations bargained for by government workers over the past 10 yrs--none of which would have been possible without unions and politicians in bed together, screwing taxpayers.

The UC system is planning on having its employees contribute just 5% of their salaries for a pension in 2013 while California taxpayers contribute 10%. This is their idea of "reform"--a measly 5% savings rate for retirement benefits that might cost hundreds of thousands of dollars more on the open annuity market. (See http://universityofcalifornia.edu/youruniversity/archive/2011/january/uc-retiree-benefit-plan-to-change.html, Carolyn McMillan, "UC retiree benefit plans to change": "The changes approved require both UC and its employees to contribute more to the pension fund, with employees contributing 5 percent of pay to their pensions by July 2012 and UC contributing 10 percent.")

The problem with unions voting themselves higher benefits is the lack of usual checks and balances, which leads to corruption across all government branches. Even the court system has seemingly gotten into the act: "More than 100 new judgeships were added in the past decade, judicial pay increased almost 46 percent—to $178,789—and annual spending on trial court operations climbed to more than $3 billion."

"In 1998 the AOC's budget was about $77 million; last year it was $138.9 million—or if you include the court facilities budget, $320 million."

"The AOC's staffing has increased from 268 full-time employees in 1998 to 878 as of last March, and about a quarter of those workers are paid $100,000 a year or more."

"At the courts of appeal, for example, he says 46 percent of employees earn more than $100,000; the figure is 38 percent at the California Highway Patrol and 27 percent at the California Department of Forestry and Fire Protection." [California Lawyer, January 2011]

(http://www.callawyer.com/story.cfm?eid=913375&evid=1)

The judicial branch collaborating with politicians, who are themselves in bed with unions, especially unionized police officers, firefighters, and prison guards? Who will look out for the average taxpayer and small businessowner, I wonder?

Documentary Recommendation: Marcus Dupree

I highly recommend ESPN's documentary about Marcus Dupree, The Best There Never Was.

http://30for30.espn.com/film/the-best-that-never-was.html

A touching, tragic, and heartwarming story about an amazingly talented football player and his quest to play in the NFL.

Public Sector Pensions: True/False Quiz

Questions for anyone who supports public sector pensions.

1. True or false? It is ideal to make all California taxpayers personally liable for financial obligations of potentially trillions of dollars to 12% of state workers.

2. True or false? If a financial manager fails to produce 8% returns over the course of 15, 20, or 30 years, he is either incompetent or has mismanaged funds.

3. True or false? Despite the fact that CalPERs bought actual land and commodities like timber in addition to stocks, it still failed to diversify its holdings over the past ten years.

4. True or false? As fund assets increase, it is easier to produce 8% gains.

5. True or false? As fund assets reach the hundreds of billions, it becomes harder to produce consistent gains because it becomes harder to effectively invest in all types of investments.

6. True or false? Warren Buffett, Stanford University, and Chuck Reed are lying to us or are uninformed when they warn us that government pensions in their current form are unsustainable and we should switch to a two-tier pension system.

7. In your opinion, what percentage of mutual funds run by professional managers have weathered the 2008-2009 recession? What makes you believe CalPERs will be in the top group of professional money managers in the future, given their performance in 2008-2009? If Bernanke and Greenspan couldn't see the housing crisis coming, why do you think a CalPERs money manager will?

8. True or false? It is ideal to rely on professional managers--most of whom have proven themselves incompetent over the past ten years--to prevent California taxpayers from being personally liable for potentially trillions of dollars of benefits to just 12% of state workers.

9. Almost all of California's public pensions assume an 8% average annual growth rate. Somewhere, there is a mutual fund manager who can manage the state's pension money and promise 8% annual gains. Do you have your money with him or her? If so, can I have the person's contact information?

10. Have you invested at least 25K in non-401k assets over the past seven years? (The reason I ask is because you would have a better idea of how difficult it is to get 8% a year, even over the long run.)

Even the big funds chase performance and have to mix up asset allocations. That involves the potential for human error no matter what. At some point, public pension supporters are just arguing that 12% of state workers should be immune from investment mistakes while the other 88% cover their arse.

Also, note that I did not mention private unions in this thread. It is a separate discussion, b/c private corporations, unlike states, can more easily declare bankruptcy to shed themselves of any long term obligations. The issue in the corporate union realm is how to ensure proper funding of the PGGC while minimizing the cost to taxpayers and consumers.

Furthermore, the best argument against private sector unions is that they harm younger and newer workers by enacting artificial barriers to getting a job; therefore, one can argue that unions limit worker mobility and freedom, especially for younger workers and immigrants.

In addition, being pro-union (or socialist) usually means you favor restricting work for immigrants in favor of native-born citizens. This is because most union jobs go to citizens, not new immigrants. It's not inherently wrong to believe that citizens should get preference over immigrants for jobs, but it depends on what kind of society you want, i.e., a faster-growing, dynamic society--or a society that votes themselves benefits to a specific class of people at the expense of future growth. But again, that's a separate discussion, and this "quiz" was designed to apply only to public sector unions and benefits.

Movie Recommendation: Finishing the Game

If you haven't seen Finishing the Game (2007), you are missing a hilarious film. 4/5 stars. It's about a group of filmmakers who discover an unfinished Bruce Lee movie. They try to do a remake with a new actor. The search for the new actor includes a white guy who thinks he's half-Chinese; a guy named Breeze Lee; and a Korean and Colombian couple from Alabama.

Bonus: if you want to watch an excellent thriller, check out Shutter Island (2010).

Gordon Brown: Book Recommendation

I recently read Gordon Brown's book, Beyond the Crash. I am very surprised it did not generate more publicity and discussion. An excellent book, but one with very idealistic solutions.

Random Bonus: from Thomas Paine: "My own line of reasoning is to myself as straight and clear as a ray of light. Not all the treasures of the world, so far as I believe, could have induced me to support an offensive war, for I think it murder."

As of 2011, we are still in Afghanistan and Iraq. American taxpayer dollars still support some theory of war and peace in the Middle East that is apparent to the Pentagon but not to the average citizen.