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Apolitical technicians working in an ahistorical profession.  What are the odds of a happy ending?

The graphic above summarizes the U.S. top marginal income tax rate from 1913 (the year the 16th Amendment was ratified by the states) to 2021.  One clear takeaway is that for the vast bulk of the 20th century, the wealthy paid much higher taxes.

As the graphic suggests, however, that changed with the election of Ronald Reagan, whose inaugural address launched an ideological revolution with a simple and memorable message: “government is not the solution to our problem, government is the problem.”  Reagan Inaugural Address (Jan 21, 1981). Thus, with the public’s consent, top marginal tax rates were slashed throughout the 1980s.  At the 1988 Republican Convention, George H.W. Bush (Reagan’s VP) spoke the words, “read my lips: no new taxes,” which helped him defeat Michael Dukakis in the general election. See Lily Rothman, “The Story Behind George H.W. Bush’s Famous ‘Read My Lips, No New Taxes’ Promise,” Time, Dec 1, 2018.  Yet, the political mood of the late 1980s was also strongly anti-deficit. In 1990, when Congress enacted pay-as-you-go rules for federal budgeting, Bush, who was saddled with a massive Saving & Loan bailout, agreed to increase the top marginal rate from 28% to 31% — an act that arguably ended his political career.  See Howard Gleckman, “Reading President Bush’s Lips,” Tax Policy Center, Dec 5, 2018.

Since the early 1990s, much of the electorate has enjoyed the political stability and relative economic prosperity of the “End of History” era, which is a reference to Francis Fukuyama’s famous 1989 essay and 1992 bookSurveying the geopolitical landscape, including the market-based reforms being implemented in China and the former Soviet Union, Fukuyama concluded that there were no longer any “viable systematic alternatives to Western liberalism.”  Fukuyama, “The End of History?,” The National Interest (Summer 1989) at 3. Full global realization and consciousness may not occur for a few more decades, as small-scale governments based on nationalism or religion would likely linger.  But, Fukuyama argued, the outcome of history was no longer in doubt.

I would argue that over the last three decades, a large portion of the legal profession (myself included) slipped into a comfortable “End of History” cocoon.  As we built our careers, sent our kids to highly ranked universities, and monitored the size and status of our retirement accounts, we took political stability as a given. Thus, we became oblivious to growing fissures and cracks that might threaten the rule of law.  Can an ahistorical profession be learned?

I recently purchased a copy of Francis Fukuyama’s most recent book, Liberalism and Its Discontent (2022), which argues that “liberalism is in a state of crisis.”   An internal rot in Western politics, Fukuyama observes, has opened the door to wide-ranging populist fervor grounded in nationalism, religion, or both.  Cf Zoe Strozewski, “Trump Ally Defends Christian Nationalism as ‘Good and Healthy’,Newsweek, July 27, 2022 (quoting Dinesh D’Souza and discussing Marjorie Taylor Greene).

Much to my surprise, nowhere in his book does Fukayama cite, discuss, acknowledge, or even mention the existence of the end of history thesis.  Had Fukayama been willing to revisit, at least briefly, the thesis that made his career, I would have been much more interested in what he had to say.

The bridge

Today’s post is a bridge between Part I, which focused on the original Gilded Age lawyers (Post 312), and next Sunday’s Part II (321), which will carefully consider three empirically based theories of national decline.

In Part I, I acknowledged that for nearly four decades, virtually all my life decisions were premised on the unstated assumption of ongoing (perhaps unending?) political stability and relative economic prosperity (the unstated assumption).  However, after living through the national and global turmoil of the last several years, including past and potential future coup attempts against the U.S. government, my unstated assumption has been revealed to be foolish and decadent wishcasting.

This is embarrassing for a lawyer because we’re supposed to be “member[s] of a learned profession” who “cultivate knowledge of the law beyond its use for clients.”  In turn, this knowledge is used in the “reform of the law” and to “further the public’s understanding of and confidence in the rule of law and the justice system.” This is “because legal institutions in a constitutional democracy depend on popular participation and support to maintain their authority.”  ¶ 6, Preamble, ABA Model Rules of Professional Conduct.

I’m not sure how many other lawyers share my sense of professional neglect and embarrassment.  I suspect there are some.  Likewise, there are many legal professionals without law degrees who deeply care about the future of our world and society.  See, e.g.,  Post 314 (Jae Um). If you’re in this camp, it appears that we need to replace our shallow assumptions with a sturdier, more informed, and more realistic intellectual frame — i.e., something that can be fully squared with the present day.  As noted in Part I, tenured law faculty have more time, freedom, and security than most other legal professionals. So as I dig for firmer ground, I’m sharing my work. That’s the project of this two-part series along with this bridge essay.

Tools for reducing extreme concentrations of wealth

Serious economists, historians, and law professors agree that extreme concentrations of wealth create social and economic conditions that inevitably lead to political instability.  See, e.g., Thomas Piketty, Capital in the 21st Century (2013) (economist); David Huyssen, Progressive Inequality (2014)(historian); Tim Wu, The Curse of Business: Antitrust in the New Gilded Age (2018) (law professor cited in Part I).

Source: David Leonhardt, “A Billionaire’s World,” New York Times, Apr 26, 2022 [click on to enlarge]
Thus, in building my sturdier intellectual frame, Part I focused on the Gilded Age lawyers, as this was a time, like the present, when the nation experienced vast economic inequality combined with growing political populism. See right graphic (originally appeared in Part I).

One of the most important legislative responses to the Gilded Age was the passage of the Sherman Antitrust Act of 1890.  Yet, as noted in Part I, it took nearly 15 years until the United States had a president (Teddy Roosevelt) who was willing to use this law to challenge large corporate combinations, albeit Roosevelt’s preferred solution was intensive government regulation of large national monopolies. For a brief four years (1909-1912), the Taft administration, under Attorney General George Wickersham, was far more aggressive in bringing antitrust suits.  Remarkably, in the election of 1912, the public opted for the more aggressive policies of Woodrow Wilson, who was advocating the anti-corporate bigness agenda of Louis Brandeis.  These efforts, however, were curtailed by America’s entry into World War I.  By the 1920 presidential election, the nation craved a return to normalcy.  Thus, throughout the Roaring Twenties, Harding, Coolidge, and Hoover adopted a hands-off approach toward big business, thus opening the door to a renewed wave of corporate mergers and higher concentrations of wealth  See Part I (citing John Oller, White Shoe: How a New Breed of Wall Street Lawyers Changed Big Business and the American Century at 291 (2019)).

I recap this history to make a simple but important point: the existence of federal antitrust law “on the books” does not curb large concentrations of wealth. For the law to achieve this objective, several additional stars need to align, including:

  • A president who is willing to enforce the law (an accident of President McKinley dying in office, thus elevating VP Teddy Roosevelt president)
  • Public sentiment that strongly opposes the concentration of corporate power (gone after President Wilson)
  • The effective resistance of pro-business forces (Taft told his business supporters that AG Wickersham, known as “the scourge of Wall Street,” would be gone if Taft won a second term, see Part I)
  • Lack of a larger emergency, such as a world war.

During the Progressive Era, the stars only partially aligned. Thus, what ended the high concentrations of wealth was not aggressive antitrust policies, but a massive economic and social leveling in the form of a stock market collapse, a Great Depression, and the eventual entry of the U.S. into World War II.  See Part I.

This is not to argue that antitrust policy is unimportant. I’m grateful the Biden administration is laying the groundwork for a new wave of antitrust enforcement. See, e.g., Jim TankersleyBiden’s Antitrust Team Signals a Big Swing at Corporate Titans,” NY Times, Oct 21, 2021 (noting the Biden administration “has assembled the most aggressive antitrust team in decades” that could result in “blocking mergers and breaking up big companies”). But what are the odds that a Neo-Brandeisian agenda is not partially or wholly sidetracked by a Democratic administration that loses its nerve, an incoming Republican president, or a hostile Supreme Court?

Obviously, tax policy is a second important tool for unwinding extreme concentrations of wealth. In the early 1930s, in an attempt to climb out of the abyss, our elected representatives made the decision to impose enormously high taxes on the gilded class, a state of affairs that lasted for a full half-century.  See today’s lead graphic.  Thus, the grand North Shore estates of Gilded Age lawyers became economically unsustainable and were parcelled out to developers. See Part I. Eventually, however, enough time passes (and generations die off) to permit new narratives that can justify the scaling back of seemingly old policies. Cf Wallace C. Turbeville, “Owning the Consequences: Clinton and the Repeal of Glass-Steagall,Demos, Sept 11, 2015 (written by a lawyer who worked for Goldman Sachs but eventually left to become an advocate of financial re-regulation).

Since the late 1980s, mainstream political discourse has been bounded by a shared belief among Democrats and Republicans that higher taxes on the wealthy will undermine the employment and retirement prospects of the broader population.  And remarkably, this also describes the present. See, e.g., Jake Johnson, “‘Really inexcusable’: Democrats set to let unpopular Trump tax cuts for the wealthy stay in place,” Salon, July 27, 2022 (quoting Amy Hanauer, executive director of the Institute on Taxation and Economic Policy); Richard Rubin,”Democrats’ Failures So Far on Tax Policy Spur,” Wall Street Journal, July 26, 2022 (“[N]early five years after moderate and progressive Democrats united in opposition to the 2017 tax overhaul pushed by then-President Donald Trump, it is likely to remain largely intact for the foreseeable future.”).

It’s hard to resist the conclusion that we’ve become a republic incapable of seeing, understanding, and solving our own problems. Further, disrupting this stupor may take a shock on par with what the nation experienced in the early 1930s.  Our intellectual frame needs to grapple with the future without illusions.  This is why next week’s Part II is focused on three empirically based theories of national decline.

A coda on lawyers

There is one more element of the bridge between Part I (the original Gilded Age lawyers) and Part II (three empirically based theories of national decline). And that’s the narrative that lawyers have special roles and responsibilities in the preservation of constitutional democracy and the rule of law.

A careful reading of the Preamble to every state’s ethics rules suggests that an independent legal profession serves as an early warning system and ballast to political, social, and economic developments that could undermine constitutional democracy and the rule of law.  See Preamble ¶6. Thus, to safeguard this role, “ultimate authority over the legal profession is vested largely in the courts,” as this “helps maintain the legal profession’s independence from government domination.” Preamble ¶¶ 10-11.

Alexis de Tocqueville

The likely source of the special role assigned to lawyers is Democracy in America, which was a detailed account of the American experiment in democracy written in the mid-1830s by the French political theorist Alexis de Tocqueville.  In chapter 16, Tocqueville discusses the unique role that lawyers were playing in all levels of American government, noting that “[t]he profession of the law is the only aristocratic element that can be amalgamated without violence with the natural elements of democracy and be advantageously and permanently combined with them. … [W]ithout this admixture of lawyer-like sobriety with the democratic principle, I question whether democratic institutions could long be maintained[.]” Alexis de Tocqueville, Democracy in America, Book I at ch 16 (1835).

That surface-level reading makes lawyers indispensable to the American experiment. Yet, Tocqueville had more to say about lawyers, acknowledging that “lawyers … like most other men, are governed by their private interests and the advantages of the moment.”  Thus, in Europe, lawyers were regularly enlisted to serve the interests of the monarch and the aristocracy.   Tocqueville observed, “whenever the aristocracy consents to impart some of its privileges to [members of the legal profession], the two classes coalesce very readily and assume, as it were, the consistency of a single order of family interests.”  Indeed, Tocqueville argues that the mistake of the French monarchy in 1789 was the political marginalization of lawyers, which caused them to work in support of the French Revolution. See Id.

According to Tocqueville, lawyers were crucial to the American experiment because the nation, by virtue of its recent founding, lacked an existing government class.  Thus, lawyers were relied upon to build up and operate the nation’s political apparatus, which Tocqueville believed was an enormous advantage, as lawyers’ self-interest and habits of thinking tended to mediate and soften the political impulses of the majority.  Thus, Tocqueville argued, lawyers in early America reduced the encroachment on personal liberties and made it more likely that American democratic government would evolve at a slow, incremental pace. See Id.

Finally, the American experiment was made possible by very favorable public perceptions of lawyers.  Writes Tocqueville:

The people in democratic states do not mistrust the members of the legal profession, because it is well known that they are interested in serving the popular cause … they do not attribute to them any sinister designs. … In America there are no nobles or literary men, and the people are apt to mistrust the wealthy; lawyers consequently form the highest political class and the most cultivated portion of society.

Id.  Obviously, in the year 2022, these public perceptions no longer hold, largely because so many lawyers have become wealthy by working on behalf of even wealthier clients.

Robert Gordon

A final stop on this bridge meditation is the work of legal historian Robert Gordon, who is now a professor emeritus at Stanford Law.  Nearly 40 years ago, Gordon wrote a provocative essay that examined the legal profession’s pretense toward the gradual betterment of the political and economic order. See Robert W. Gordon, “‘The Ideal and the Actual in the Law’: Fantasies and Practices of the New York City Lawyers, 1870-1910,” in The New High Priests: Lawyers in Post-Civil War America 51-74 (Gerard W. Gawalt, ed., 1984).

Gordon’s core thesis is that at the beginning of the Gilded Age, the elite lawyers serving monies interests were acutely aware of the harms and excesses caused by their clients’ commercial interests and thus sought out neutral mechanisms that would, over the long-run, channel their clients’ actions toward “prevailing political conceptions of the good.” Id at 53. The most significant project in this effort was the “improvement of legal science,” which sought to nationalize and regularized the law through “‘national’ law schools like Harvard’s, federal general common law, uniform state laws, and legal treatises and articles.” Id at 55.  To the extent that the law became more certain and procedurally effective, illegitimate tactics would lose their effectiveness, thus making it easier for lawyers to keep their clients within the law.

Yet, as Gordon observed, the idea of neutral legal science could not be squared with the willingness of a large number of judges at both the state and federal levels to invalidate state social reform legislation — i.e., the advent of the Lochner era.  Likewise, by the 1880s, the prospects of moderation and reform were also being hobbled by changes and innovations in corporate law,  which fueled the growth of the giant trusts, a topic covered in Part I. Although this enriched many of the elite, reform-minded lawyers, the problems they initially hoped to solve only became bigger.

In the absence of a unifying ideology, Gordon argues that the bar leadership circa 1910 split into three divergent groups, which likely remain with us to this day:

  1. Reactionaries, such as William Guthrie (discussed extensively in Part I), who viewed corporate concentration and wealth inequality as the outgrowth of a constitutional order that values individualism and rigorously protects property rights.
  2. Institutionalized schizophrenics, who took time off from private practice to engage in public service, essentially working to undo in one sphere what they had accomplished in another.  Gordon cites George Wickersham (also discussed in Part I) as an example of this group.
  3. Apolitical technicians, by far the most numerous, who had “no ideology save that of craftsmanlike client service. This sort of lawyer treats both client desires and the framework of legal regulation as wholly exogenous givens for which he has responsibility; his is merely the technical task of maximizing the one in view of the constraints dictated by the other.”  Id at 66.

The apolitical technicians likely assume that the political stability and relative economic stability of the past will continue into the future.  If you’ve lived through three full decades of the end of history, it’s a hard illusion to shake.

That brings us to the end of the bridge.  Part II (321) of this series focuses on three empirically based theories of national decline.