M. Todd Henderson, "An Introduction to the Federalist Society"

M. Todd Henderson is the Michael J. Marks Professor of Law and Mark Claster Mamolen Research Scholar at the University of Chicago Law School. Professor Henderson’s research interests include corporations, securities regulation, and law and economics. He has taught classes ranging from Banking Regulation to Torts to American Indian Law.

Professor Henderson received an engineering degree cum laude from Princeton University in 1993. He worked for several years designing and building dams in California before matriculating at the Law School. While at the Law School, Todd was an editor of the Law Review and captained the Law School's all-University champion intramural football team. He graduated magna cum laude in 1998 and was elected to the Order of the Coif. Following law school, Todd served as clerk to the Hon. Dennis Jacobs of the US Court of Appeals for the Second Circuit. He then practiced appellate litigation at Kirkland & Ellis in Washington, DC, and was an engagement manager at McKinsey & Company in Boston, where he specialized in counseling telecommunications and high-tech clients on business and regulatory strategy.

Presented on September 27, 2017, by the Federalist Society.

Transcript

Speaker 1 (00:02):
This audio file is a production of the University of Chicago Law School. Visit us on the web at www.law.uchicago.edu.

M. Todd Henderson (00:24):
Thank you. Thank you for coming. Lots of familiar faces, some new faces, some faces from my torts class. Welcome home to all of you. I hope that your experience here is as great as mine was and continues to be. This is me 20 years ago, June, with one of my intellectual heroes, Richard Epstein, who I had for four different classes, including telecommunications and Roman law and land use planning. And all of them were the same class, just Richard on the world and human welfare. I put this up here because this was a job that he had and I have now. And when I was in your position, I heard him give these remarks. And so I feel quite a burden from Scalia to Epstein to me. Like one of those things is not like the other, I used to say on Sesame street.

M. Todd Henderson (01:22):
So a little bit you heard this that's what he just read, I want to say one thing at the outset, which is you don't have to believe this stuff to be in the Federalist society. I don't believe this stuff. Let's talk about judges. It's emphatically the judge, like I don't know. I think it's complicated. So I think the Federalist society started for a very important reason, establishes these broad principles, but you don't have to agree with all of them or as emphatically as other people do to be a vibrant participant in the Federalist society. For those of you who think that the benefits of membership are there and talking about what those are, great, join up and sign up and be an active participant. Some of you may not be joiners. I'm not a real big joiner. I'm usually the guy on the outside going like "why did people join that?" Even then, be an active participant in the Federalist society.

M. Todd Henderson (02:21):
It will have lots of great events bringing interesting speakers to campus. None of whom will be Milo Yiannopoulos. These will be serious people who have good ideas about the law. They may be ones that are completely antithetical to what you think the law should be. You will get better by coming and listening to them. You get better as a lawyer at being able to distinguish good arguments from bad arguments, by hearing the other side, whatever that is, make their best arguments. You should be able to pass a kind of ideological Turing test. The Turing test is you're talking to a computer and you don't know you're talking to a computer. That's what Alan Turing thought was the way that you could determine artificial intelligence. There's a kind of ideological Turing test-- at the end of law school, every single one of you should be able to pretend to be a conservative, even if you're a liberal and vice versa. And no one should be able to determine what your ideology is if you're trying not to be that particular ideology. If you can't make the best arguments for nationalized healthcare when you leave the law school, we're doing something wrong. Okay? And that's true on both sides. The Federalist society was founded in 1982 because of this problem. This is a work by Adam Chilton on our faculty. And these are ideologies of law faculties. He's got a lot of ways of determining what these things are. Blue is blue and red is red, and this is one through 50, and that's a problem. Here's the other version of it.

M. Todd Henderson (04:02):
Ideology of law professors on another metric. These are ideological scores. This is the most conservative. This is the most liberal. These scores are really bad proxy because I'm not sure what Trump who's basically a Democrat is doing over here, but by and large, my lived experience is this. Everybody on our faculty voted for Hillary Clinton, 28 out of 30 voted for Obama twice and 50% of America didn't and half the judges in the country. Forget politics. Just think about them all. This is a gag show before this was reprinted in the New York times. Here's judges. Well, it's like America. These will shift as different presidents shift, but the people making law, both in Washington and Congress and in courthouses all over the country look kind of like America. Law faculties who were telling you about the law do not look like America. And this was a real problem. This is even worse. I mean, I think if we looked at these numbers in 1982 we have a little bit of competition across schools: Pepperdine, George Mason, BYU, Alabama at Notre Dame. UVA, I would say that here's Chicago. I don't know what this, I don't know who these people are.

M. Todd Henderson (05:28):
You have a little bit of competition across schools, but by good, my goodness, this cannot be right. This cannot be right. There's complicated reasons why this is, but the Federalist society was started in part to change the conversation in law schools. In a way that I suggest at the beginning was better. Before we could disagree with someone in a way that matters at all, we have to be able to understand them. And you cannot understand people unless you've met them, unless you heard them make their best case. And that's really what the Federalist society is. I went to lots of Federalist society events, where I was really turned off by what the speaker had to say, because as you'll see in a second, I'm a particular kind of person on that side, whatever you want to call it. But I was always enriched. I was always enriched.

M. Todd Henderson (06:26):
Cause I would walk away with a better understanding of where some people were coming from, what the arguments were and an assessment of how people make arguments and whether there were any good. The people in the right generally have lots of intellectual heroes. I'm no different here's one. This is, this is James Madison. I love it. Not just cause he went to Princeton, but because we wrote our constitution and created our constitutional structure. In Federalist 51, Madison talked about the marketplace of ideas and ambition being mobilized, the counter ambition. A role of the Federalist society on this campus, in the lawyer's division. When you graduate, you can participate in law school-like events in the lawyer's division. I've done them. You're practicing Admiralty law in Portland, Oregon. This isn't exactly the greatest sexiest work out there. And you might think, gosh, I really wish I could get back to those kinds of law school conversations that really made my brain fire up and the lawyer's division will have those by bringing in speakers and being relevant for public policy. And part of that is Madison's idea that ambition must be mobilized to counter ambition. There is an American constitution society, which was created in law schools long after the Federalist society, as a counterweight to the kinds of arguments that were built and power of perfecting ideas that were going on inside of the Federalist society. And I will say it is way easier to be liberal than to be a conservative. The side that has to say, generally, it's complicated, is generally going to lose an argument. One of my favorite versions of this, or visualizations of this, is what a libertarian guide named Murray Rothbard called the Parable of Shoes. And he said, imagine that you were in a society in which the government had always provided you with shoes.

M. Todd Henderson (08:30):
And then someone came along and said, you know what? I think we should leave it to the markets to give people shoes. The people in that society would make arguments like: "Are you crazy? How would the market magically deliver shoes to everybody? How would they know what shoes people want? Poor people would definitely not be able to afford shoes in a world in which the government was not subsidizing shoes and on and on and on does this in sort of four or five days." And it's really complicated to argue as conservatives have to do well. Look, I realize it's a lot easier if we pay taxes and the government choose it, just make sure everybody has them, but it actually be better because there's going to be all this dynamic process of information, sharing all of this stuff, that's going to happen. That's going to magically get size 15 Brown loafers to anybody in the world.

M. Todd Henderson (09:21):
The kind of diversity and possibilities of the market are observable to us every day and yet still resisted by most of the people in the United States. That means it's way harder to be a conservative. Another intellectual hero of mine, does anyone know who this is? For shame. This is Edmund Burke, Edmund Burke, and again, as you will see, I'm in the libertarian wing of the side of the right, but Burke had very powerful arguments about why we should be conservative, not libertarian. Burke's argument was effectively, the status quo is the status quo for a reason. What seems to be irrational, unfair, inefficient wrongheaded, or just plain stupid may actually be vital and important for reasons beyond our comprehension and changing it even out of open-eyed motive may cause more harm than good. So the first object of all policy makers or policy thinkers is to understand deeply and completely before we should change anything.

M. Todd Henderson (10:47):
The key to being a great lawyer is knowing when the status quo is good, despite seeming less than good. Knowing when to make small incremental changes in the face of universal codes for revolution and knowing when change is unquestionably, a good thing. In one of my favorite books, The Angle of Repose, Wallace Stegner has a character who's confronting a revolutionary who's on a sort of personal revolt against society. Like these antifa losers. And he says, civilizations grow-- this is the person telling them that they are a loser-- civilizations grow by agreements and accommodations and accretions not by repudiations. If revolutionaries will learn, they can't remodel society by the day after tomorrow, they don't have the wisdom and shouldn't be permitted to. I have more respect for them. Civilizations grow and change and decline. They are not remaining. This is Burke's insight that yes, we want to change, but change has got to be based on incremental change.

M. Todd Henderson (11:56):
Revolutions never work out. Ask the people in Venezuela, how their revolution is working out for them. A University of Chicago scholar named Bethke Elshtain wrote in her book, Democracy on Trial, "culture changes through ongoing engagement between tradition and transformation. If we lose tradition, there will be no transformation, only the abyss." So here you have people talking about the importance of tradition and of course in our own experiences, lots of traditions are really terrible and we need to change them, but it can't be a revolution. That's not how societies progress in the right direction. So that's the teachings of Burke.

M. Todd Henderson (12:48):
Another one of my election heroes, nobody will know who this is, I don't think, this is a former professor at this law school named Aaron Director. Aaron Director was a pioneer of law and economics and he contributed a lot of things including my favorite slogan or definition of Laissez Faire. Director said "Laissez Faire is nothing more than a slogan that all extensions of government activities should be viewed under a presumption of error." Not that we can't make good arguments for the government doing things. Maybe it's the case that the government has some crucial role to play in a particular area, but we should just view government power skeptically, because we all know about the potential downsides of government, right? This is the fundamental question that all law is trying to answer. Who decides, who decides important questions? Is it you, the individual, is it some group of individuals who have formed together for a particular function, like a corporation or a university or a family? Is it the government? What kind of government? At what level? All of these questions are central to debates between right and left in the country. And there is a real tension between the people who are arguing for government power and the fact that this is what government power looks like. There's something weird about, I really want universal health care. That is, I want the government to be in charge of the way healthcare-- Oh, and by the way, Donald Trump and Mitch McConnell and Paul Ryan are literally the antichrist. Those are the people in charge of the government.

M. Todd Henderson (14:58):
I do not believe in unicorns. Michael Munger, who teaches economics at Duke, has put forward what he calls the unicorn test, which is "go ahead and make your argument for what the government should be doing." We can write it out: here's what I want the government to be doing. And most of us, when we do that, we'll say the state should, and then realize that there is no state. Just like for those of you who had made for business associations or will you'll realize there's no such thing as a corporation. Like it's like the spoon and the matrix, there is no spoon. These are just imaginations. We have, they're just groups of people who get together to do things collectively in the name of something like the state of Illinois. There's no state of Illinois. There's just human beings who have been granted power through the democracy to exercise a monopoly on violence, over the people who live in this particular geographic area.

M. Todd Henderson (15:56):
And when you say, I want the state to do something like give me healthcare. Munger says everywhere, like mad libs where the state appears, take that out and put in the actual politicians we have, the actual interest groups that operate in a society, put those people in. So just replace, do a control+F, find and replace the state with Trump, or our governor, Bruce Rauner, or the Congress, or the legislature, and then if you still think it's a good idea that these people, the actual politicians who we elect should have this power, then we can have a conversation about whether the government should be doing it. If you're like me thinking back to high school and the people who won elections in my high school, that's still who wins elections.

M. Todd Henderson (16:53):
Dick Durbin, Dick Durbin, if this is being recorded. So I hope he's listening, went to a really crappy law school and got C's. Yup. No valedictorian of this law school-- and the valedictorian of our law school was in the picture there slightly right of frame it's still a bit of a sore subject-- no valedictorian for this law school has ever become a politician. The people in this building who get the worst grades go into politics and not a lot of U of C people go into politics. These are people who go to really crappy law schools and they get elected because they're rich or they know rich people, or they have that kind of charisma that could fool people. After all, unlike market experiences where you actually buy something and you can experience it, you can see the products, they're tangible. Politics is just promises. It's just, here's the stuff that I'm going to do. My-- we had a visitor here last year who's British. He was on Twitter this morning saying, Oh, it was really great. My son he's 12. He was elected student body president. His campaign: improve the food in the cafeteria and get rid of math. And my response was "politics is the same at every level."

M. Todd Henderson (18:21):
People on the right generally care a lot about this: structure. The structure of the government, who should be deciding. That's not the proper role of the Supreme court, the legislature, who should decide a particular question. People in the left generally only care about outcomes. Do I lead or not? Is mine the group of people that I'm honestly trying to help? Poor people, religious minorities, ethnic minorities, whatever the group is, the down and out who are not knocking out. If you look around America and look at the average wealth of white people and black people in this country, it's a national scandal. It's a total national scandal. The average white family has got $176,000 roughly in wealth? They're beneath zero.

M. Todd Henderson (19:16):
That's a scandal. And of course, people on the left motivated to say like "I want to change that." This, I don't really care so much about that. I just want this to be improved." Again, that makes arguments on the right hard. I generally think, although you don't have that to share this view, that people on the right also want to address the problems of society, but they feel like it has to be done with this. Otherwise there's no law, this is just the abyss. This is just politics. Law plays an important role in having this because, to quote General Ford, which no one has ever done before, I feel like I should fall over. Well, to quote Joe Ford, "the government that is powerful enough to get up and give you anything you want is dangerous enough to take away everything that you have, right?"

M. Todd Henderson (20:08):
These things are unfortunately related. If all you care about is outcomes, then you put a former bus driver in charge and people are, you know, forced to eat rabbits like in Venezuela. Conversations about socialism usually start with why can't the government just give everybody healthcare? And then end up with conversations about, do we think that eating rabbits, this is actual headline for the BBC last week: Venezuela unfurls plan to solve the massive hunger problem by encouraging people to eat rabbits. So that's the kind of abyss. And again, it's very hard to be on other side of that. You can imagine this is the world's smallest political quiz and there are these things. And of course, all of these are very crude, social kind of conservatism and economic kind of conservatism. I will say that the Federalist society is a home. The core parts. Not attending. Everybody should attend. The Marxists in the room or whatever you should attend the debates-- the food is free, they'll be lively. You'll learn something. So come, the core members are in these two quadrants. The professors that you saw in the map, the ones that were red the very few that were red, there are almost zero here.

M. Todd Henderson (21:36):
Lots of people in this country are religious. You will not find very many religious conservatives on law faculties. There's a few that I know in Notre Dame. There's a few closeted ones at some other schools. They're basically afraid to even say anything. That's the kind of state of intellectual oppression that is going on in this country. Okay. I happen to be this little red dot-- I'm a hundred on both or zero, depending on your point of view, I guess. But I'm alone. But there's a-- it is so lonely over here. I feel like Montana. There's just like-- so these are some political scientists and exit polls, and these are people who they voted for. Most Clinton voters are economically and socially liberal and most Trump voters are a socially conservative and economically kind of moderate.

M. Todd Henderson (22:45):
I think that all of these people are immigrants. And their their views are just completely contingent on whether or not their side wins or not. So like, do I want the government in control? Well, if it's about abortion, yes. I would like the government to ban it. If it's about kneeling before NFL games, yes, I would like the governor to ban the NFL from getting federal money unless the people stand up and salute and sing, you know, Johnny comes marching home or whatever it is. Should the government be in charge of licensing occupations or natural--? No, definitely not. That's a terrible idea. Am I in charge of my favorite federalism or not? And it's just like securities fraud suits-- all the Republicans' securities lawyers are like no, no, no, definitely not federalism. The States are idiots. Have the SEC be in charge. It's way more efficient. When it comes to other things like schools? No, no, no, the federal government should definitely not be in charge. Local power. There's just massive amounts of flip flopping and you know me, you know, and this guy, this guy right here, we're the only ones who were consistent or maybe not. I'm just joking.

M. Todd Henderson (24:03):
It's about government. What are these numbers? This is Trump's Make America Great Again budget proposing to spend $4 trillion. 1700 billion, $1.7 trillion is president Clinton's last budget in 2000. In the last 17 years, the federal government has grown by this much. What could possibly explain this? If anybody proposed going back to those unbelievably miserly, horrible, fend for yourself, social darwinist days of the Clinton administration, the New York times editorial board would literally- their heads would explode. Really? You think we were that cheap as a society, social safety net wise during the Clinton administration? The population hasn't grown like this sufficient to explain to claim it. To get a sense of what these numbers are, if you spent $1 per second, the Trump budget, it would take you 131,000 years to spend $4 trillion. The government is spending that much money every second. And do we feel like we're buying that much better of a government?

M. Todd Henderson (25:43):
Or might it be that once government grows, it is like a Leviathan. It cannot be stopped. And the reason it can't be stopped is because it has the people who benefit from this government spending bureaucrats, government workers, all kinds of special interest groups, including people like defense contractors, all of those people can pull a fast one on the American people by saying it would be like nobody would have shoes. If the government didn't exist, it would be chaos. If we went back to 2000 and the amount of money the government was spending, how would people eat? How would people have healthcare? I mean, homeless people everywhere. And that argument is so powerful that allows these people to basically reach into your wallet and take more and more and more, a bigger and greater share of total spending here or here. It doesn't matter. It doesn't matter who's in charge. It just keeps going up. It just keeps going up. The Republicans came to power in 1994 when I was in law school and they said they passed the thing called the contract with America. That was going to reign in government spending. Okay. And it's just more and more and more and more and more.

M. Todd Henderson (27:13):
Okay. Now again, you don't have to believe me that, I don't know, my best guess we could do away with 80% of it. But you don't have to believe me. All I want you to do is come and listen to speakers who are looking critically at what the government is doing and trying to hold it to account. Come listen to them on a particular issue. You're not convinced by just coming to listen, engage in that debate. And don't think because people are saying the government should be smaller than somehow that makes them evil or heartless. I have the same objective function that every single person in this room does or put it in this law school, which was to make human flourishing as big as possible in the United States. That's why I'm here. So once we accept that, that's the case, I could be making a lot more money doing something else.

M. Todd Henderson (28:12):
So I'm here with that goal in mind, I might be wrong. I'm completely open to the possibility that I'm just missing something on a particular issue, but at least we should start from those principles that we don't have bad motives, right? We're both arguing about outcomes. It's totally fine to appeal to a higher power. Everybody, I think wants to be part of something. Some entity that stands, or institution, or organization that stands apart from us that is bigger than us and bigger than any individual. That's totally fine. My only objection is believing that the only thing that that can be is government. Because once the people who- and remember there is no government, there is only people. And once those people believe that you are a captive audience, the potential for them to abuse you is a rife.

M. Todd Henderson (29:17):
For sure, no one will know who these people are. This is James Buchanan and this is Mancur Olson. These are both Nobel prize winning economists. These two guys were really the intellectual foundation behind much of this kind of story-- Buchanan founding, something called public choice economics and Mancur also writing a great book about the rise and fall of civilizations. Both of them were obsessed with government and de-unicorning government. Government is people. People are flawed and selfish. They suffer from information shortages. They're going to favor their friends. They're just like all of us and putting them together and sending them to Washington or Springfield does not turn them into angels. Buchanan called it public choice economics, politics without the romance. And law school should teach you. I'm sure a lot of you studied government or some other kind of horrible major in college. If you did and you think that people who go into government are just pursuing the public interest andM you know, mr. Smith goes to Washington, I'm here to tell you that's not the way it is. Politics can do good things. Government can do good things and we should give it credit when it does those things and resolves certain problems. But the people who go to state capitals are not angels. And there are no unicorns.

M. Todd Henderson (30:48):
Now here's some good examples of data, this is, you've probably heard the Chicago teacher's union or the teacher's union in your particular jurisdiction, talk about school spending and how we're not spending enough on schools. That may be the case. As a factual note, my property taxes, which mostly go to Chicago public schools they have gone up by 210% in the 10 years I've owned my house. I pay about $2,500 a month to send my kids to public schools, except I don't. I send my kids to private schools because public schools stink. Now, if you'd asked me, would you pay more? Remember I talked about race and racial subordination and lost opportunities. And if you said to me, Henderson, would you pay twice? What you're paying in property taxes if the schools were any good, like we could reform them and take away the bureaucracy and the incentives that are completely misaligned, I would say, yes. ButI have zero confidence that that would be the case. Here's spending per pupil. This is $2,000. This is $18,000. And these are some measures of educational performance. And you'll notice the correlation is zero. The R squared as a sensation say is zero. Which means there are things going on in schools that have nothing to do with the amount of money you're spending. Washington DC spends a lot of money on schools and the kids graduate and they cannot read. New Jersey spends a lot. And then there's a bunch of places down here. Utah spends almost nothing and get about the same outcomes. Now, I'm not an education policy person. I have no idea what the right answers are. But here at the law school, if someone just says, oh, the solution is let's give a bigger pot of money to one of the most corrupt entities in America: the Chicago public schools. Three of their last people who were in charge are in prison or indicted.

M. Todd Henderson (33:04):
Barbara Byrd-Bennett is currently on trial for taking taxpayers' money and funneling it to consulting firms that happened to be run by her friends and family. Oh, the problem is more money for schools. This is way too facile an argument. At the end of the day, even if you think the taxes on rich white people like me should be 10 times what they are in this city, if you think that the only move you need to make to improve the schools, you didn't get a Chicago law school education, you weren't going to a lot of Federalist society events.

M. Todd Henderson (33:41):
This is the federal deficit: $1.3 trillion. You'll hear a lot of these antifa losers say the solution is higher taxes on rich people. The 1%, I'm a happy member of the 1%. All of you, three years after you graduate will be in the 1%. It takes about $250-280,000 to get into the 1%. All of the money made by the top people making more than a million dollars a year, all millionaires last year in the United States, income seven hundred million dollars. If you taxed the entire income, a hundred percent marginal rates-- every person in the United States who was a millionaire, you would raise a little bit more than half the federal deficit in one year. And then of course, you'd be faced with a little bit of a problem, which is, uh oh, we have taken all the wealth of all of the richest and most capable people in this society. And given them zero incentive to the next year to do any work because they know all their wealth will be taken. So the idea that we could just raise taxes on rich people, again, disincentivizing the most high performing people in this society is a complete fallacy of some Marxist college economics professor.

M. Todd Henderson (35:10):
This was Stephen King in a piece during the Obama administration, he was urging that the Republican Congress should get out of the way and allow her there to be higher taxes. "Tax me," he said, for bleep's sake, well, this is really curious because since the internal revenue code was passed, the federal government has accepted voluntary tax payments. For those of you out there, and I know there are a few who believe that the government is the most efficient solution to our public policy problems in the United States, 70 a month, the government accepts charity, just like a red cross or your catholic church, Sierra club, put the government in there, give the money. And what is, and my guess is that the criticism will be, well, I will do it only if everybody else does it. What exactly is the moral principle on which that is founded? That is something like I will do good in the world. Only if everybody else does good in the world. You are a monster.

M. Todd Henderson (36:30):
You could go out in the world and help people, but you're only going to do it if you can elect people who will then coerce people at the point of a gun to also give money to those people? That is madness. 0.2%. This is the amount of voluntary- the percent of the deficit that is contributed by people voluntarily every year. Virginia, most States have this too. This is the, the actual numbers. This is the amount of given. This is about 10 years ago in voluntary taxes, 3 billion people actually turned over $3 million voluntarily to the government in that year. That was the amount that was donated in cash to charities, 212 billion. Virginia had a tax plan like this when they had a budget crisis, people could give in money. And at last a reckoning they'd received a $35 from voluntary taxes. Nope.

M. Todd Henderson (37:28):
What explains the difference between these two things is something like a view that two things: one, these charities may be more efficient at solving social problems and two, by giving to a charity, I can direct my contributions to a particular thing that I care about. One of the problems of government is we send people to the city council of Chicago to solve all kinds of problems. And why would we think that people who can best solve the problem of homelessness are also the people who can best solve the problem of police violence, or educating little kids or healthcare or streets. Those are totally different things. Charity allows you to direct your desire to help other people, which we all have through a more tailored approach. It's also more accountable. If your charity sucks, if you give money to help people in Puerto Rico or Houston or Mexico city and they don't do a good job, you're not going to give them your money next year. You don't have a choice when it comes to government. Well you do, but then you end up like Wesley Snipes, serving time in jail because you have to pay, they have a captive customers. What explains the difference between these two things? Well, Arthur Brooks randomly called American Enterprise Institute. Did some good work on this. His book was called, Who Really Cares because if you believe the popular rhetoric, including rhetoric of most law professors, Republicans, quote, unquote, are heartless. They don't care. Just go and Google Maxine Waters and watch any speech. And you will hear about how heartless and callous Republicans are. They want people- the Republican vision of a world, according to people like Representative Waters is the Walking Dead. And the Republicans know that they'll be the ones with the shotguns and the cookout rides and they'll be able to survive in this kind of zombie apocalypse. Again, this does not at all reflect reality. What is this 12 times? There was good survey data. The question that was asked here was the government should reduce inequality. That was the question. Should the government do more to reduce inequality? People who disagreed strongly with that statement, that is what a smaller government, sort of, right? Government should not have that role. Those people gave 12 times as much to charity as people who strongly agreed with the statement and government should do more to reduce inequality. This was true across all income levels. People who made less than $30,000 between 30 and 60, 60 to 100, a hundred to 200, millions, at every single level, about 10 to 12 times higher. That means that these people- it's not that they don't care about their fellow man. How many people have you met outside of like a Hollywood movie who don't care at all about the wellbeing of their fellow man? Honestly, I don't know anybody. And really the choice that Brooks highlights is people view different mechanisms for doing that as being more or less efficacious.

M. Todd Henderson (41:04):
Here's Alan Blinder, who was a professor of economics at Princeton, articulating this kind of view about a Democrat. "Rather than worshiping efficiency, some notion of fairness is typically a paramount in government. Obama may never have met a payroll, but he was a gifted orator and empathy and fairness are in his bones." I don't think he meant it as an insult. He meant this as a compliment that he cares about other people. He has empathy and he thinks about fairness. This is really a four letter word-- fairness-- because it has no context at all when it comes to public policy. Of course, everybody, including monkeys, has a sense of fairness. There's a great study-- they have these chimps who are supposed to do tasks, like push a little lever, and then they get a reward in this particular experiment, they push a lever and they get a cucumber. The first monkey pushes this thing. It's a cucumber and he's like cool. Monkey number two, cucumbers pushes the thing, get the cucumber. Second monkey. First monkey pushed a stick again. He gets a great, and the video of this is amazing. He holds up this grape, but he looks at it and he's like "this is like Christmas this morning. I just got a grape!" Eats the grape, does a little dance. Monkey number two pushes a lever, he gets a cucumber. He holds this cucumber up he looks at the eyeballs of the researcher. Anyway, he's pissed off. He throws the cucumber at the researcher.

M. Todd Henderson (42:44):
Now, amazingly, this monkey was totally happy to do this work for a cucumber. And then when he found out that the guy next door was doing the same work and getting grapes, it didn't sit well with him. And of course, this is what people who talk about efficiency think is also unacceptable, right? If there's no difference from the- the researchers here are horrible people. I don't know what they've got against that second monkey, but they're treating him badly because they're not paying him the same for exactly what he's giving. Everybody's against that. The question is, again, going back to this issue about structure, if all your worry is caring about other people, your decisions about the policies you make are going to be deeply misguided. Because you can't just have empathy about one group of people without thinking about all people.

M. Todd Henderson (43:57):
For instance, I might have empathy for steelworkers. I grew up in Pittsburgh. I knew a bunch of steel workers. I knew their kids. And when the steel mills started leaving Pittsburgh and going to Alabama and Korea, I felt really bad for them. And it's really easy for politicians to come in and say, oh, I feel such empathy. It's not fair that the Chinese or the Koreans can make steel cheaper and their governments are subsidizing it. And so therefore we should put tariffs on steel. Of course, the politicians and people who are making those decisions are not talking about all the other people in the equation. What Bastiat, the French economist called "the unseen people." The people who use steel and buy steel-- every other American, other than the people who live in Pittsburgh, who were my friends, will now pay more for steel. And you might say, who cares? This is some tax from some group of diffuse users of steel to people who make steel, but of course, more expensive steel means that when people buy cars, car companies might put less steel in their cars like reinforcements on the side doors. And then people are dead because the cars are made more cheaply because the steel prices went up and people weren't paying more for the cars.

M. Todd Henderson (45:17):
We can't make that direct link. Would we be able to show scientifically that the tariffs flat? Of course not. What about all the employed people at the Whirlpool manufacturing plant who use steel to make refrigerators. And now they're undercut because they have to buy U.S. steel or steel at higher prices. And they're out of business because people move to other kinds of brick. What about there? What about that employment? Having empathy be your guide without this is a recipe for a complete disaster. And you'll hear people make all kinds of specious arguments, like macroeconomics kind of arguments like, oh, and you hear that from Trump. We have a deficit with the Chinese. That's a bad thing. Somehow. It's not fair to the American worker. What a load of crap, everything we buy from people in China, we pay for in dollars. Where do they think your dollars go? I've been to China. You can't buy stuff with dollars.

M. Todd Henderson (46:22):
They have the Yuan over there. They have to convert and take those dollars and do something with them. What could they do? Well, people from the United States will sell you stuff in dollars. Also, you can buy things like stocks and bonds and real estate and investments in the United States with dollars. If anybody in here believes that there's anything, any content, all to trade deficits, you got a lot of learning to do. That is cool. It's madness. And yet politicians will foist out these arguments as incentives to, well, they'll claim what they're doing is in the public interest. What they're really doing is just passing out friends to their particular favorite group. This this is called the bootleggers and the Baptists story. Any Baptists in here, don't ask yourselves to make fun of you a little bit, both bootleggers and Baptists-- Baptists are a kind of conservative religious group-- bootleggers or people who alcohol illegally. Both bootleggers and Baptists are in favor of restrictive alcohol laws. Baptists because they think drinking is a sin. If you've ever seen the movie Footloose, you know what I'm talking about.

M. Todd Henderson (47:35):
Bootleggers like laws against alcohol because they make money. So bootleggers and Baptists have some kind of unholy coalition. Of course the South don't know that they're in on this, who is the, who's the middle person that stands between them who uses Baptist language to serve the interests knowingly or unknowingly of bootleggers? That person's called a politician. They stand up and they say the evils of the devil's juice and happily benefit the people in their constituency who profit from selling the devil's juice. Okay. I'm running short of time. So I'll give some more examples of what I'm talking about.

M. Todd Henderson (48:27):
80%, the federal government in the wake of the financial crisis decided that this was a good opportunity to have the government spend some more money in ways that would be positive. After all, financial crisis, people are panicked and concerned and worried, and the government comes along and says, okay, something must be done. This is something, therefore, this is a good thing. And one of those things was investing in renewable energy. Of course not clear what renewable energy had to do with the financial crisis. But the Congress passed the 1705 loan program where the Department of Energy would pass out money to companies who were investing in renewable technology, 16.4 billion of the 20 billion in loans. That's 80%, went to individuals who ran companies who were bundlers for Obama members of Obama's national finance committee, or large donors to the democratic party. And before you think for a second, that this is a partisan comment, I will tell you for sure, given enough time, I could go find a hundred examples on the other side.

M. Todd Henderson (49:44):
This is the game that's played in Washington, DC, which happens to be, I don't know if you all knew this or not, the richest place in America, the richest country on earth, in its history, seven, three, six, nine, of the 13 richest counties in the United States surround Washington, DC.

M. Todd Henderson (50:10):
I lived there for three years. I can tell you the only thing that is produced in Washington, D C are rules and loopholes. There's no suits, cars, silicon chips, character drugs, treatments, just rules and loopholes. And they are really, really easy to produce. You need a pencil, paper, and a majority of 50% plus one, and you can pass it any rule. And then happily sell loopholes. And the people who are both making the rules, buying the loopholes, and this is where Trump and Bernie Sanders are right. It's not me and you. Well, maybe you guys. It's not the average person. When they raise taxes in Illinois, John Deere threatened to leave. And the legislature happily went to John Deere, gave them a special tax break. That's how it works. And that not only is unfair to use the term of Alan Blinder. But it leads to massive investments of companies in influencing the policy process. Economists are starting to look at this, there's lots of papers of examples I could cite to.

M. Todd Henderson (51:23):
One example was companies-- there was a particular drug bill that was being considered-- companies spent that's been a million dollars on lobbying. Returned $32 million in returns from influencing the legislation, 32 times on their investment. You cannot make a better investment in the United States than influencing policy makers in Washington. And people who are-- if you, if you think being pro-business, is being pro market-- again, you're deceptively naive. Cause the people who run corporations, they're not unicorns either. They're not angels. They want what's best for their corporation. That is they may go and use the machinery of the state to impose costs on their rival. This is a surefire way to make money in the United States. My favorite example is milk. There was a rule about milk. That it had to be transported in containers that were the same structural strength as we use to transport oil. I mean, if your mom was like my mom, she said, don't cry over spilled milk.

M. Todd Henderson (52:31):
So why are we requiring milk producers to ship their milk in oil tankers? Who could possibly be in favor of such a rule? Well, big milk of course. Because big milk can pass on the extra cost of transportation much more easily than the little mom and pop milk producer. Regulation is something that is heavily supported by industry because it benefits industry. Another example, the SEC, securities and exchange commission. They had a rule proposed in 2005 that would allow mutual funds to send some words on a page to their shareholders by email posted on the web. I just got mine from Vanguard, my retirement. It's a document. That's this thing. And I'm a securities professor. I didn't even open it. It went right in the trash. The number of people who read the stuff that this government requires to send by mail is not approximately- it is zero.

M. Todd Henderson (53:37):
Nobody. Nobody. Then why even do it? The SEC in 2015 said, okay, maybe we could use this thing we've heard about called the internet. Of course the rule was dot roll die, never got passed. Who was spending money, lobbying against it? We know these things because of foil, three minutes, three people-- the post office, the government! A government agency lobbied against a government agency because it would basically put the post office out of business, paper manufacturers, and timber companies. So we didn't get it. A friend of mine, Evan Baehr invented a company called Outbox. Genius. You send your forwarding address to the post office, all your mail goes to them. Big warehouse. They open your mail. They scan it. They send you an email with a PDF-- here's what you got. If you want them to then send it to you, they'll forward it to, snail mail. If not, you can read it instantly in your mail. Genius. They were up and running. They have millions of customers. One day, Evan gets a phone call. It's the postmaster general. Please come see us. And Evan thinks, holy hell, I hit the jackpot. They're going to talk about how they can use our technology to prove the poster. I mean, come on, Evan, are you joking?

M. Todd Henderson (55:04):
I mean, they did not have people with AK 47's there pointed at him, but it was effectively that, which was "you will shut down this business or you will go to jail" and that's your government. Okay. Just so we're clear. I want to make two last points. Then we're done. My libertarianism does not end with the things that some of you believe. The federal government owns 40% of the land of the United States. In states out West, it's 90%. And when Trump tried to take some of this additional land, the federal government bond and set aside to do nothing, and I'm not talking about the grand Canyon. It was like, oh my gosh, we're selling our legacy. This is an absolute travesty. The federal government should own basically zero land, maybe the White House, maybe Capitol Hill and the Supreme court. I'm not willing to concede the Grand Canyon. I think they should sell it to the highest bidder, but I can see why somebody likes the Grand Canyon. Sure, Yosemite. The idea that somebody would buy Yosemite and put like a Carl's jr. on it is freaking preposterous.

M. Todd Henderson (56:23):
Instead we have people who pay tax dollars. All Americans pay the taxes that go to the maintenance of this land. There's no people from the South side of Chicago out there enjoying Yosemite. It's a massive tax on every American so a couple of rich people in Napa can go and do a bear plunge in seven minutes or whatever the heck it is. Those people should be charged price discriminated rates for using these resources or not excluding poor people to claim otherwise is ridiculous. The final point, mass incarceration. My goodness. Look at the number of people we put in jail over things like selling marijuana. And by the way, which is legal in a bunch of places now. By the way, if you're in jail currently for selling marijuana in Colorado, like for five years ago, you're still in jail. The fact that it's now legal does not mean you get like a get out of jail free card.

M. Todd Henderson (57:26):
So we're currently incarcerating people for doing things that are no longer illegal in the places that those people did them. Because I don't know it evidenced that you were a bad person? Maybe? We are locking up people at rates unlike any other country, largely on a completely failed a drug war. There was a great article in the New York Times about Portugal, they took a completely different approach to drugs. Their drug rates have fallen dramatically. The idea that they would just be lawless and- we'd be in here, heroin's now legal and we're all here just shooting up during my torts class. I know it's pretty painful to be shooting. Okay. I'm out of time, you need to go and do other things and eat or whatever. The basic point I wanted to get across is you may think that everything I said or three things I said, or half the things I said was complete craziness. Good. Maybe I believe all these things. Maybe I don't believe all these things. I'm just trying.

M. Todd Henderson (58:29):
I'm just trying to get you to expand your minds and wrestle with things you may not have heard from your college professors. I'm guessing there wasn't a lot of talk like this. And this forum, the University of Chicago Law School is like one of the last places on earth where this kind of stuff can happen. So make the most of these one, two, three, whatever years you have left to engage on these topics. We're not like Berkeley, right? We're not like Georgetown. Thank God. We're not like those places. This is a place where debates like this can happen seriously and on good terms and on friendly and collegial terms. And if you think I'm full of crap and wonder all these things, come to my office. I would love nothing more than to sit for an hour to talk to you about why I am completely full of crap. That is the essence of what the Federalist society is about. And I wish you all the best.

Speaker 1 (59:30):
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