Cleansing Our Institutions the Lessig Way

The latest book by Lawrence Lessig posits that several sectors of American society are corrupt, describes their corruption, and offers reforms that might remedy the problems. Few of the reforms in America, Compromised are feasible even if desirable, and so the reader is left with a sinking feeling that the corruption will endure.

The Preface has a passage from Ernest Hemingway’s The Sun Also Rises: “‘How did you go bankrupt?’ asks Bill Gorton. ‘Gradually,’ Mike Campbell replies, ‘and then suddenly.’” For Lessig, America has reached its bankruptcy moment. “There is not a single American awake to the world who is comfortable with the way things are,” he says. “Everyone has a sense—if only a sense—that with our nation, something is not quite right.” Our author thinks he knows the reason: There remains a consensus that wrongdoers—robbers, rapists, wife beaters, thieves—should be punished, but Americans do not know what to do about corrupt institutions.

Take Congress. Lessig says that while personal corruption (trading votes for money, say) seems to be relatively rare, this does not exhaust the issue. He says Congress is institutionally corrupt because elected representatives who follow the rules still end up being “systemically responsive to the wrong influence.”

The “Tweedist Mechanism”

Lessig takes it that they were supposed to be responsive only to the people at large. His evidence for this is a snippet of Federalist 52. “Frequent elections in relatively small districts,” he says,  were “intended to produce an institution, as Madison described it, ‘dependent on the people alone.’”

For Lessig, responsibility to “the people alone” is an alternative to paying particular attention to whichever individual donors might make substantial campaign contributions. Aspirant senators and representatives must win the donor primary before they have any chance of winning the popular election. Thus, to his eye, (relatively) big-money donors resemble William M. “Boss”  Tweed (1823-1878), whom he quotes as saying, “I don’t care who does the electing, so long as I get to do the nominating.”

This “Tweedist mechanism,” Lessig says, “is an influence . . . that affects what our government does.” (Emphasis in original.) He thinks this influence helps to account for declining public trust in Congress. Either way, this supposed institutional corruption must be remedied.

In his chapter on corruption in the financial sector, Lessig makes the cogent observation that, “in principle, at least, . . . some cases of institutional corruption are a good thing.” He explains, “That is, if we condemn an institution, then the corruption of that institution is something we might, normatively at least, want to praise.” He goes on: “There are bad institutions that are not corrupt,” and “There are good institutions that are corrupt.” Whether we would prefer that an institution be corrupt depends on our evaluation of the institution’s purpose and the sense in which it could become corrupt.

So, for example, consider the top office in the Union of Soviet Socialist Republics and the chief post in American journalism. The raison d’être of the former, general secretary of the Communist Party of what used to be the Soviet Union, was to advance the cause of Marxism-Leninism; while the editor-in-chief of the New York Times exists to produce an informative and/or entertaining product in which people want to advertise and which people want to purchase. Thus, we might have preferred that Mikhail Gorbachev corrupt the office of general secretary in a way that eventually would bring the Soviet Union to its end. We might, on the other hand, have lamented if the editor of the New York Times corrupted his op-ed page by providing a prominent American historian space to urge Gorbachev not to dissolve the Soviet Union because it had so much good left to do. Some corruption is not lamentable, but some is. (Lessig’s example concerns the mafia.)

Corruption of the Rating Agencies

One financial sector problem Lessig identifies is that the federal government began in the 1970s to endow private actors with the public purpose of rating the soundness of various stocks, bonds, collateralized securities, and other debt instruments. Those “Big Three” rating agencies have since had both public and private functions. Predictably, their performance of their public function began to be affected by their private interests. Lessig quotes the report of a federal commission to look into the causes of the financial crisis of late 2007 to 2009 as saying, “Because issuers could choose which rating agencies to do business with, and because the agencies depended on the issuers for their revenues, rating agencies felt pressured to give favorable ratings so that they might remain competitive.”

Predictably, rated institutions played the rating agencies off against one another, which resulted in ratings inflation. “The consequence,” as Lessig summarizes, “was billions of dollars of improperly rated assets flooding through the market.” (This is perhaps a good place to mention that strangely absent from America, Compromised is any mention of public choice economics.)

The author wraps up this section by noting that, while one might consider the agencies to have been corrupted, one also might conclude they have not been. The issue is whether adding the public regulatory function to their portfolios changed their purpose. Writes Lessig:

One might argue that these firms were like any business, in the business of rating simply to make money. And thus, the locus of the mistake that led the agencies into becoming “essential cogs in the wheel of financial destruction” is the SEC, not the agencies. If the local police post directions, “Turn left at the blue house to get to the hospital,” it’s not my problem if I paint my [blue] house brown.

He concludes that particular ratings have objective, fixed meanings, and so the ratings inflation was itself corrupt (unless—depending on the agencies’ purpose—it was merely reprehensible).

Why, wonders Lessig, was it banks but not mortgagors who received federal bailouts in 2008 and after? He quotes Peter Orszag, the director of the Office of Management and Budget in the Obama administration, calling this decision “a major policy error.” He relates it to the contemporaneous omission to prosecute any significant actors in the crisis, then asks why a Democratic President with a Democratic Congress responded “in exactly the way we might expect a Republican to respond.” Lessig distinguishes the Justice Department’s response to the savings and loan crisis of the first Bush administration, when it “investigated more than 1,100 individuals for ‘major’ savings and loan fraud cases”—without noting that Bush was a Republican. His data lead him to conclude that the Obama administration’s inaction flowed from concerns related to political fundraising, but he cannot say so without first taking an unfounded swipe at the party he does not favor.

Fragmentation of American Journalism

The book’s chapter on our corrupt media presents what by now has become a standard left-liberal account of the contemporary American political and media scene. Where once Americans shared a common news culture, which was highly admirable other than its various race-, class-, and gender-based biases, they now lack one.

“We are leaving an era of rich democratic journalism,” he laments, “when strong ideals about the purpose of journalism were set and practiced.” These included being independent of government, of commerce, and of partisan politics. “Journalism, like many institutions in modern America, has suffered from a growing, almost universal skepticism.” That skepticism marks “the gap between what we imagine journalism should be—vibrant, focused on truth, and independent—and what we see it actually is—too often cowardly, commercially interested, and deeply partisan.”

Journalists, whether in cozying up to those to whom they need access, or jabbering incessantly about horse races (to the exclusion of such trivia as, say, the federal debt and unfunded obligations), fail America now. Why? “Our results suggest,” he quotes one study as proving, “that an ‘all issues’ news outlet is unlikely to survive past the first issue.”

Lessig pines for the halcyon days, as recent as 1980, when 90 percent of Americans got their news from one of the three major broadcast television networks. Technological change left a situation in which

Americans didn’t see the same facts; America didn’t hear the same stories; and to the extent that Americans could easily shift away from news they didn’t want to see, the range of Americans who are actually sufficiently informed to participate in American politics contracts. That contraction changes who votes. It changes the nature of the democracy within which they vote.

Who will identify “the facts”? Unless the boardroom is quite tiny, my guess is that the Roy L. Furman Professor of Law and Leadership at Harvard Law School is apt to be at the table.

Rather than conclude that common voters should not be expected to inform themselves about the range of issues governments face, and so we ought to expect an elite to decide, Lessig holds that, “We have come to accept the normative force of citizens expressing themselves through the episodic catalogue of public opinion polls. The elite might sneer, but the rule of the people is sacrosanct.” Yet, he continues, “if there isn’t a sufficiently thick understanding of the facts and the history shared by a sufficiently broad swath of citizens, then the decisions that we, the people, make about these issues will systematically be wrong.”

Here we come to a mistaken premise central to the entire chapter: Lessig assumes that there are particular “facts” and a particular “history” that should be drummed into citizens’ heads, that pre-Internet American journalism’s general uniformity was uniformity in considering the right facts and history, and that today’s divergent news media fail us insofar as they fail to focus on the same right facts and history. Lessig concludes that journalism aimed at profit, not at providing “the” facts, “is not democratic journalism.” He says “we have invested journalism with a critical public function,” and its lack of focus on informing the electorate amounts to corruption.

Lawyers Who Make Lots of Money Aren’t “Doing God’s Work”

The last profession Lessig examines is the legal profession. He puts his finger on a longstanding problem: Prosecutors, the lawyers who “do God’s work,” make less money than private-sector lawyers, and the most important prosecutors make far less money than elite defense attorneys. This is particularly in evidence in the high-cost-of-living cities where the most lucrative private legal careers are to be had.

Predictably, many newly minted lawyers, even those who go into government work, end up wanting to trade prosecution for defense. If a young attorney working in the Department of Justice begins to covet a higher-paying post, his concern for the public interest likely will be blunted. Not only will he want to prosecute the right people successfully, but he will want to please … a certain cadre of defense attorneys. In other words, the ones at the most successful firms. The ones who defend the kind of people who end up being prosecuted by U.S. attorneys’ offices. The guys across the table.

There need not be actual corruption here. No quid pro quo need be arranged. Lessig thinks the recent trend in major corporate cases, where corporations are prosecuted instead of their officers, is a symptom of this institutional corruption. There are potential solutions, such as ordering U.S. attorneys to charge individuals, requiring admissions of guilt for plea bargaining, and requiring prosecutions instead of deferred prosecutions. He hurries to add, however, that were such policy changes instituted, we could expect fewer top-flight attorneys to enter public service in the first place. (I am not so sure of this: If defense attorneys knew prosecutors had less discretion, the defense attorneys could not blame the prosecutors for obeying their superiors.)

The problem might be avoided by paying public lawyers more, but of course the public is never going to pay staff lawyers in the New York U.S. Attorney’s Office salaries comparable to what the defense attorneys they face in court are being paid. So, we end up with institutional corruption—with the kinds of half-measures described above. We end up with less deterrence of crime than we would otherwise have, and that can mean disaster for the public.

America, Compromised is quite bracing, even depressing. At the book’s end, Lessig offers a short essay on “Remedies.” Some, such as having scholars certify that they do not take money to testify on behalf of those who bankroll their research, seem commonsensical, though quite difficult to police. Others—such as depositing campaign donations into special accounts for random distribution, leaving the donor the right to rescind the donation within 48 hours—seem highly impractical. (Amusingly, when this reform was implemented in one Florida county’s judicial election campaigns, “no one gave to any judge at all.” People donate to judicial candidates because they want influence, it seems.)

Lessig laments that presidential candidates now routinely reject public funding of their campaigns. He says that in the 1984 election cycle, Ronald Reagan attended eight fundraisers, but in 2012, Barack Obama attended 228. Noting that conservatives object to both the top-down nature of public funding and the fact that it forces people to subsidize ideas with which they disagree, he proposes an alternative: giving each citizen a voucher allowing him to donate it to whichever candidate he wants. Lessig would adopt a similar system for members of Congress—which would seriously weaken the public’s conviction that Congress is corrupt. In the wake of this book’s publication, Senator Kristen Gillibrand (D-N.Y.) has made such a proposal.

Only in his “Remedies” section does Lessig finally make the point that voter ignorance is rational. By rights, it should have appeared in the middle of his paean to the long-term democratization of American government. Intentionally weakening the parties’ role in choosing candidates, transferring state legislators’ power to elect U.S. senators to voters at large, capping the minimum voting age at 18 years, eliminating property requirements for suffrage, banning the poll tax, and other such measures—all have assumed that everyone is as informed as anyone else, even as professional politicians. Much of this book concerns problems flowing from the rational ignorance of voters.

Lessig therefore proposes a new way of running primary elections. They would be held, not among party operatives chosen by rank-and-file party members and/or elected officials who are party members (as in the old “smoke-filled rooms”) but among “one thousand” “randomly-selected … citizens” who would “come and hear the pitch of the candidates, then deliberate, and then vote.” I do not have much hope for these “citizens’ juries.” Though fed particular information about specified subjects, these people would be apt to be led to particular conclusions by the “neutral” operatives involved in the process. Here would be Tweedism of a different variety. We are already heading in that direction. Like that nominator Boss Tweed told us about, so the education establishment controls the mind of the next generation.

In sum, America, Compromised is a thoughtful and thought-provoking piece of work. Much of the social science data it relays cannot be summarized easily, and space limitations preclude consideration of its every chapter. I therefore leave this fine book for you to read. I hope you will read it.