Wednesday, June 08, 2005

Alexander Hamilton on Eliot Spitzer

AEI's Federalism Project released a paper titled "Government by Indictment" written by Michael Greve who apparently succinctly (and correctly) considers Eliot Spitzer to be "a trial lawyer with a badge". After reading James Tierney’s description I thought I might like it (and I did).

This paper is important because it refutes Eliot Spitzer's contention that Federalism justifies his continuous intrusions into what should be the SEC's territory.

The abstract reads the following way:
"Government by Indictment" provides a critical analysis of national policymaking by state attorneys general. Increasingly, state AG investigations and prosecutions of major corporations go beyond the objective of punishing individual wrongdoing, or even of changing the conduct of corporate entities. Nowadays, many AG campaigns--which increasingly take the form of multistate actions--attempt to form the internal operations and business models of major American industries.

To that end, attorneys general file indictments that are designed to exact settlements from defendants who cannot afford to bet the company. "Government by Indictment" is a fitting description of this style of law enforcement. The adverse consequences of AG activism reach beyond mere economics; they affect the integrity of American political institutions at all levels. Unchecked AG activism will spell: The re-regulation of major sectors of the U.S. economy; The cartelization of major American industries; The increased dominance of the plaintiffs bar over American politics; and Substantial wealth transfers from productive enterprises to plaintiffs lawyers and advocacy organizations with an aggressive agenda to re-regulate the economy.

In the conclusion Greve gives his spin on what American Founder and Federalist Papers author Alexander Hamilton would have thought of Eliot Spitzer:
The great Hamilton did not know Eliot Spitzer, but he knew the type. Listen to the AGs’ hysterical protests against the most modest attempts to preempt extraterritorial exercises of state authority: does not Hamilton’s prediction that state officials will “resist” the Constitution sound quaintly understated? Consider the befuddled response—by Congress, by the courts, by corporate interests, by legal scholars—to the AGs’ states’ rights cant: can one doubt that the AGs have already “aggrandized themselves by the confusions of their country”? And what are the various multistate settlements and investigations, from the MSA to General Spitzer’s ad-hoc global warming coalition, but so many single- purpose “partial confederacies.”

For the foreseeable future, state AGs will continue to serve as the favored access point for regulatory enthusiasms. Their doors are always open for business of this sort, and they confront no serious institutional obstacles. A return to the constitutional order, if it is to occur at all, will require the patient work of a generation, not merely a few well-funded lawsuits or lobbying campaigns. It will require a hard-nosed recognition that the AGs, like the state demagogues of Hamilton’s days, cannot be appeased; they have to be confronted. That confrontation ought to proceed from a candid, clear-eyed appreciation of what AG activism is and what it is not.

AG activism is not “devolution” or decentralization. It is rather a formally decentralized process that systematically yields uniform, centralizing policies, of a kind that the central political institutions themselves have declined to adopt. To state that empirical observation is to recognize the system’s absurdity.

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Blogger Paramendra Bhagat said...

Eliot Spitzer

8:29 PM  

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