The Economy Game, Lawyers’ Edition

What are lawyers really? To me a lawyer is basically the person that knows the rules of the country. We’re all throwing the dice, playing the game, moving our pieces around the board, but if there’s a problem, the lawyer is the only person that has actually read the inside of the top of the box.” – Jerry Seinfeld

Illustrated by: Brent Michael
Illustrated by: Brent Michael

Jerry Seinfeld’s pithy description of what it means to be a lawyer contains more than a grain of truth. Of the myriad social dimensions that comprise human civilisation – government, religion, culture, family, the market – few manage to avoid the pervasive tendrils and governing effects of the legal system. As practitioners, it is our job to master the law’s technical complexities and navigate its pitfalls.

Yet this depiction of the lawyer-as-troubleshooter ignores our more fundamental role in constructing the very institutions we are subsequently expected to traverse on behalf of our clients. As Harvard Law Professor Christine Desan notes,

Institutional design, legal architecture, the procedures and processes of social justice—all are structures that matter enormously. People who think about how to build and operate those structures have great influence in shaping our common space. . . . Law training teaches people to think about institutions and processes; it can empower them to lead “by design,” as it were, design of a future world.

If one were to evaluate the recent performance of the global economic system from a “design leadership” perspective, it would be hard not to conclude that it is in drastic need of overhaul. Presently, even the most developed nations face high unemployment, stagnant wages, rising inequality, widespread fraud, misguided deficit hysteria, and a general sense of policy defeatism. All of this in an era defined by unprecedented access to knowledge, zero-marginal-cost goods, computing power, collaborative platforms, skilled workers, and historical data from which to learn. Seriously, what the hell happened?

The historical and political origins of our current malaise are, of course, complex and multifaceted. That said, at least some responsibility lies with the legal profession’s broad surrender of responsibility over economic stewardship to economists in the latter half of the twentieth century. During the New Deal era, young, idealistic lawyers were the driving force behind the creation of much of the modern administrative state (thanks, in part, to competitive salaries vis-a-vis biglaw). Today, by contrast, even the most prominent legal advocates for economic reform – think Elizabeth Warren, Larry Lessig, and Bill Black – have relatively little influence compared with the likes of Larry Summers, Janet Yellen, and Jared Bernstein. It appears our learned profession has taken to heart Charles Fried’s admonition that we abandon our architectural aspirations, and embrace our role as humble janitors, “laboring in the basement of the building of society . . . while the great things that happen, happen in the upper stories,” and are achieved by entrepreneurs, businessmen, artists, politicians, philosophers, and, of course, economists.

The great tragedy of the lawyers’ exodus from the macroeconomic policy realm ultimately has less to do with expertise than it does with vision. It was unrealistic, for example, to expect the global financial crisis to precipitate the wholesale replacement of the basic laws of property, contract and accounting that undergird the global economic system. Yet by approaching issues of systemic change with the view that these concepts are fixed and definite, as modern economics tends to do, policymakers ended up losing sight of the forest for the trees. Perhaps even worse, they discounted transformative policy proposals that deviated from the narrow, path-dependent trajectory of the status quo.

Addressing this problem requires a clear understanding of the appropriate division of labor between lawyers and economists. To borrow Seinfeld’s analogy, it should be the province of lawyers, trained to think across conventional disciplinary boundaries, to articulate the basic goals and conditions of the economic game in accordance with broader principles of justice and equity. Once they are established, economists should then be employed to debate the relative merits of different policies in terms of their ability to achieve these outcomes in the most efficient way.

What might this process look like? Let’s take as a starting principle Columbia Law Professor Susan Sturm’s notion of “full participation,” which she defines as “an affirmative value focused on creating institutions that enable people, whatever their identity, background, or institutional position, to thrive, realize their capabilities, engage meaningfully in institutional life, and contribute to the flourishing of others.” This principle is part of a larger conversation on public sector reform at Columbia Law School. Like Michael Dorf and Charles Sabel’s principle of democratic experimentalism, full participation provides direction and scope to policymakers across a broad range of issues, while remaining sufficiently general and flexible to accommodate a diverse range of implementation approaches.

Consider, for example, the classic problem of involuntary unemployment. From a full participation perspective, the solution to this problem would be to elevate the right of every individual to meaningful work – articulated by Franklin Delano Roosevelt and Martin Luther King and presently enshrined in Article 23 of the Universal Declaration of Human Rights and Section 1021(b) of Title 15 of the United States Code – from a mere aspirational goal to a basic design-constraint of acceptable macroeconomic policy. Policy proposals to meet this condition could take a range of forms, including direct public employment, indirect public employment through the non-profit sector, subsidies for private employment, or some combination of all three. What would not be acceptable, on the other hand, is yet another repetition of the glib mantra “but governments cannot create jobs!” Or, for that matter, the current central banking practice of holding millions of the least fortunate hostage to “the inflation monster.”

Consider also the problem of financial exclusion. Nothing about the nature of finance requires the system to be as hierarchical as it presently is. In addition to affirming a right of access to basic banking and payment system services – say, through the reintroduction of a postal banking system that reduces dependence on for-profit, too-big-to-fail banks – a full participation approach to financial reform could demand built-in accommodation for complementary currencies that support local and community-based innovation, as well as the establishment of birthright, per-capita investment credits to ensure every citizen has a say in the construction of their shared cultural and political identity.

When it comes to the economic game, the possibilities for design leadership are endless and exciting. Why let economists call all the shots?

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