RIP

Robert H. Bork, one of my biggest heroes, requiescat in pacem.

Here are some of my favorite quotes:

[L]egal reasoning of the sort that served us for centuries is now utterly outmoded, and a verbal formulation can always be devised to reach the correct political result. … If the Constitution is law, then presumably its meaning, like that of all other law, is the meaning the lawmakers were understood to have intended. If the Constitution is law, then presumably, like all other law, the meaning the lawmakers intended is as binding upon judges as it is upon legislatures and executives. … It is here that the concept of neutral principles, which Wechsler said were essential if the Supreme Court were not to be a naked power organ, comes into play. (The Tempting of America, p. 135, p. 145)

The role of a judge committed to the philosophy of original understanding is not to “choose a level of abstraction.” Rather, it is to find the meaning of a text — a process which includes finding its degree of generality, which is a part of its meaning — and to apply that text to a particular situation. (The Tempting of America pp. 148-9)

This development can be seen in any number of academic, previously intellectual fields. Sometimes called post-modernism or post-structuralism, the denial of truth is, as Gertrude Himmelfarb says, "best know as a school of literary theory. But it is becoming increasingly prominent in such other disciplines as history, philosophy, anthropology, law, and theology..." It is also becoming increasingly difficult to call some of those subjects "disciplines." In every case — the attack on reason, on the concept of truth, and on the idea that there is an objective reality to which we must attempt to make our words and theories correspond — the impetus behind such assaults comes from the political left. … Nonsense these attacks may be, but, as the history of our century teaches, there is no guarantee that nonsense will not prevail, with dire results. In law, philosophy, literary studies, and history, among other subjects, we are raising generations of students who are taught by the "cutting edge" professors that traditional respect for logic, evidence, intellectual honesty, and the other requirements of discipline are not merely passé, but totalitarian and repressive, sustaining existing social, political, and economic arrangements to the benefit of white, heterosexual males. To change society in radical directions, it is said, it is necessary to be rid of the old apparatus. (Slouching towards Gomorrah, pp. 268-9)

The blueprint for the ideal enterprise software company in the age of entitlements

As an entrepreneurially inclined software engineer (over the last two decades I have worked for 3 Silicon Valley enterpise software startups that have gone on to successful IPO’s), I have been asking myself lately the following question: What is the blueprint for the ideal enterprise software company in the age of entitlements? In attempting to answer that question, I have assumed that government spending on entitlement programs will only continue to expand (that is, more and more programs will make more and more transfer payments to an ever-increasing army of Julias). So, the problem becomes one of imagining a company that can best profit from the expansion of these entitlement programs. Here's how such a company might operate.

Identify those who are eligible for entitlement programs. Lawyers in the legal department of our ideal company will work together with government policy makers and regulators to clarify the rules of eligibility for the entitlement programs. The goal of the lawyers should be to make sure that the eligibility rules are interpreted as liberally as possible (short of fraud) to maximize the pool of eligible individuals.

Reach out through various channels (including social media) to those who are eligible for entitlement programs and recruit them into the programs. This will need to be a joint effort of the legal, marketing, and engineering departments. The legal department will supply the rules of eligibility. The marketing department will develop marketing campaigns to reach out to eligible individuals. The engineering department will develop the software systems to identify eligible individuals and to execute the marketing campaigns on a vast scale through a variety of social media channels. As but a single example, the software team could set up a system that would cause an advertisement for food stamps to be displayed on a web page whenever a user googled the terms “food stamps;” if a user clicked on the advertisement, their browser would be redirected to a Facebook page with information about food stamps and a form the user could fill out to be contacted by a worker from the food stamps program. Our company could charge a fee for every new individual who submitted one of these contact forms.

Build systems that allow the entitlement program to manage the entire lifecycle of a recipient in a program. These systems will perform such tasks as: enter the recipient into the system; disburse payments to the recipient; remove the recipient from the system (preferably only after several levels of approval). Call centers attached to back office systems can be set up to allow recipients to call in and talk to a program representative if the recipient is experiencing a problem with benefits. For example, if a recipient does not receive a scheduled payment, s/he can call in and complain. These systems should transfer payments to the eligible with lightning speed and with minimal stigma. Perhaps the optimum transfer mechanism without stigma is the EBT card (see below). With such a mechanism, our company can receive a small transaction fee for every transfer processed through the system.

Build additional systems to support the “cross-selling” of additional entitlement benefits to recipients. Over time, our company will build up an enormous database of individuals who are receiving one or another kind of entitlement payment. If an individual is eligible for one kind of entitlement payment, that individual might also likely be eligible for another kind. The software team will build systems that a.) data mine the company’s data to identify individuals who have a high likelihood of being eligible for other types of entitlement payments and b.) reach out to those individuals to recruit them into new programs.

Produce research supporting the continuation/expansion of the entitlement program; lobby in favor of the program; encourage voters to vote for the program. The marketing department of the company will also need to produce "research" purporting to demonstrate that the government entitlement programs are achieving their noble ends and that "catastrophic" consequences will ensue if funds for these programs are cut off. The marketing department will supply the results of their research to company lobbyists in the legal department to help support the lobbying effort to influence politicians to expand/extend the funding for the entitlement programs. In addition, the marketing and engineering teams will once again mine their data to identify individuals who are likely to vote to elect supportive politicians and reach out to those individuals through social media to influence them to vote.

In an article entitled Will Obamacare Spark the Next Tech Boom? Bertha Coombs of CNBC describes how the incentives created by entitlement programs operate to create companies that seek to grow and live off the entitlement ecosystem:


Big Blue [IBM] has gone after contracts to build out state health insurance exchanges that will play a central role in the rollout of Obamacare in 2014. "In the middle of this, we acquired a company, Curam, that has tremendous strength in this area," Brooks said. ... So far, the Obama administration gave states nearly $2 billion in funding for the development of the exchanges, but analysts say for tech firms the opportunities are still growing when it comes to the build-out of the infrastructure that will be needed to carry out the expansion of coverage under Medicaid for the health care overhaul. ... Xerox won a $72 million contract to the build-out of Nevada's state insurance exchange earlier this yea. Accenture won one of the biggest prizes, a $399 million contract in June to lead the build-out of California's health benefit exchange, with Oracle and Canadian health IT firm CGi Group serving as subcontractors.

IBM’s press release describing its acquisition of Curam states:

[Curam] expands IBM’s ability to help cities and governments serve citizens better by adopting more intelligent and efficient ways to assess needs, execute social programs, and maximize program results. Curam Software is used by health and human services, workforce services, and social security organizations around the world to deliver welfare, social insurance and both individual and employer based social programs.

That is, a company that develops software systems to help governments administer the welfare state has become a hot startup worthy of being snapped up by IBM to become a cornerstone of its government healthcare initiatives. IBM makes sure to point out in the press release that the name Curam "means 'care and protection' in Irish." A tear rolls down the cheek when one thinks of all those big-hearted Irish software engineers helping to develop systems that minister to the poor.

Another wonderful example of a company retooling itself to profit handsomely by administering entitlement programs is JP Morgan. As Peter Schweizer writes in an article entitled JP Morgan's Food Stamp Empire:

Why, you may be wondering, would one of the nation’s biggest banks benefit from a bill meant to feed poor children? A closer look at the legislation reveals the answer. The bill mandates that “all state agencies implement Electronic Benefit Transfer (EBT) systems by October 1, 2020” for those receiving money through the Women, Infants, and Children (WIC) program. And which company administers nearly half of all states’ EBT programs? You guessed it: JP Morgan Chase. ... “This business is a very important business to JP Morgan,” Christopher Paton, the company’s managing director of treasury services, told Bloomberg News in 2011. “It’s an important business in terms of its size and scale. We also regard it as very important in the sense that we are delivering a very useful social function [to be sure]. We are a key part of this benefit delivery mechanism. Right now volumes have gone through the roof in the past couple of years or so … The good news from JP Morgan’s perspective is the infrastructure that we built has been able to cope with that increase in volume.” ... Just how lucrative JP Morgan’s EBT state contracts are is hard to say, because total national data on EBT contracts are not reported. But thanks to a combination of public-records requests and contracts that are available online, here’s what we do know: 18 of the 24 states JP Morgan handles have been contracted to pay the bank up to $560,492,596.02 since 2004.

As for the ability of such companies to reach out to voters to influence them to vote to expand the entitlement programs they are already in, we have seen exactly such an operation in action in the last election. In an article entitled Barack Obama's Big Data won the US election, Mike Lynch writes:

What this tells us is that data mining is changing politics and the Obama campaign micro-targeted potential supporters. ... Everything about a person that can be measured, was measured and, combined with predictive analytics, allowed the campaign not only to find voters but also to determine what sorts of messages would get their attention and what types of people would be persuaded by certain types of messages.

In sum, then, what is the blueprint for the ideal enterprise software company in the age of entitlements? Why, obviously, one that can build the high-tech engines for administering the government's massive entitlement programs and that can marshall its legal, analytical, and social media resources to expand and reach the pool of eligible entitlement recipients and persuade politicians and voters to extend and expand these programs.

Entitlement capitalism is alive and well in Silicon Valley. Invest accordingly. At least, that is, until the government's money runs out.

One final observation. One of the complaints one hears most often about government is that it is "inefficient and wasteful." What the above blogpost makes clear is that it may not be the wastefulness of government that is harmful, but rather the very efficiency with which private companies respond to the incentives created by government entitlement programs. Think about for-profit education companies (FPE's). The government made available vast sums of money in the form of student aid. So, FPE's sprang up whose functions were: identify students eligible for this aid, assist those students in applying for that aid, and process those students through educational curricula that met the minimum standards of the government student-aid programs. In other words, the goal of the FPE's was not really to educate our young people, but to process as many student aid recipients through their pipeline as possible, shearing off the student aid funds from each one. In return for providing these "services," the FPE's pocketed the vast sums of money made available through student aid and made enormous profits for their shareholders. The benefit to the students themselves and to society as a whole is less clear. Many of the students are still unemployed (how many minimally qualified "computer technicians" can the market absorb after all) and saddled with burdensome student loans. Similar observations can be made about the way in which banks responded to the incentives created by the government to make subprime loans: that is, the problem was not that too few loans were made, but that the machines for making and packaging minimally compliant subprime loans ran all too well. The argument is often made that the application of technology will reduce costs (for example, in Obamacare). No one ever considers the possibility that the application of technology may increase costs because new high-tech enterprise software systems will streamline and increase the flow of benefits from the government to recipients.

Give Obama and the Democrats everything they want

I have changed my mind.

I now believe that, when it comes time to vote whether to increase the marginal tax rate on “millionaires and billionaires” (those making over $250K per year in Obamaspeak) to 39.5%, the Republicans in the House and Senate should vote present. Let Obama and the Democrats have their way on this issue.

I now believe that, when it comes time to vote on whether to increase the debt ceiling by $2T, the Republicans in the House and Senate should vote present. Let Obama and the Democrats have their way on this issue.

For years the Democrats and their allies in the media have accused Republicans of being “obstructionists,” opposing all Mr Obama’s enlightened policies out of, say, racial animus. If only the evil Republicans had not always stood in the way, it is claimed, prosperity would have returned, unemployment would be down, the deficit would have been closed, and the national debt would have been retired. Well, it’s now time to find out if all these claims are true.

Mr Obama ran on a platform. The American people voted in favor of that platform. So, it’s time to see whether that platform actually works. Give Mr Obama and the Democrats everything they want and let’s see what happens.

[Just so I get due credit when the time comes, here is what I predict will happen. By the end of 2014, the annual deficit will still be over $1T a year and we will have added another couple of trillion dollars to our overall national debt; entitlement spending will still be out of control and threatening the long-term welfare of the nation; unemployment will still be above the post-WWII average of 5.77%; the growth rate of GDP will still be scraping along below the post-WWII average of 3.2%. Finally, interest rates on Treasuries will have soared because the financial markets will panic when they realize there no longer is any brake whatsoever on Democratic spending and borrowing; not even QE IV, V, VI, ... will be able to hold interest rates down.]

Obama's allies, Morsi and the Muslim Brotherhood, wage real war against women and minorities

Why isn't President Obama denouncing the actions of President Mohammed Morsi and the Muslim Brotherhood in Egypt? Everything that Morsi and the Brotherhood are doing is utterly antithetical to the development of a liberal, secular democracy In Cairo. Morsi and the Brotherhood are trying to ram through a constitution that was drafted by an Islamist dominated assembly. Of this constitution, which establishes sharia as the basis of Egyptian society, the Times of Israel writes:

One of Egypt’s most prominent ultraconservative Muslim clerics had high praise for the country’s draft constitution. Speaking to fellow clerics, he said this was the charter they had long wanted, ensuring that laws and rights would be strictly subordinated to Islamic law.

“This constitution has more complete restraints on rights than ever existed before in any Egyptian constitution,” Sheik Yasser Borhami assured the clerics. “This will not be a democracy that can allow what God forbids or forbid what God allows.”

The draft constitution that is now at the center of worsening political turmoil would empower Islamists to carry out the most widespread and strictest implementation of Islamic law that modern Egypt has seen. That authority rests on the three articles that explicitly mention Shariah, as well as obscure legal language buried in a number of other articles that few noticed during the charter’s drafting but that Islamists insisted on including.

As Egypt descends into Iran-like medieval darkness, the Obama Administration stands by and does nothing, presumably "leading from behind" once again. As David Ignatius writes:

Through this upheaval, the Obama administration has been oddly restrained. After the power grab, State Department spokesman Victoria Nuland said: "We call for calm and encourage all parties to work together and call for all Egyptians to resolve their differences over these important issues peacefully and through democratic dialogue." Not exactly a thundering denunciation.

"You need to explain to me why the U.S. reaction to Morsi's behavior is so muted," one Arab official wrote me. "So a Muslim Brotherhood leader becomes president of Egypt. He then swoops in with the most daring usurping of presidential powers since the Pharaohs, enough to make Mubarak look like a minor league autocrat in training by comparison, and the only response the USG can put out is [Nuland's statement]." This official wondered if the U.S. had lost its moral and political bearings in its enthusiasm to find new friends.

We heard for months that the Republicans were "waging a war against women and minorities." Now President Obama stands by and does nothing as women's rights and the rights of minorities in Egypt are trampled on.

The Brotherhood's unconstitutional power grabs

In Egypt, President Morsi declares that his decrees should not be subject to judicial review.

In America, President Obama declares that the debt ceiling should not be subject to legislative vote.