The justification for public intervention to save Bear Stearns was that failure to do so would have wrecked the derivative market. Bear's counterparties would have had no one to fulfill their contracts. Everyone would have to monitor credit risk. Cats and dogs would start living together. Etc.
No one supported the bailout more than the Economist. But their latest leader points out that the problem does not exist for futures or less exotic securities, because these are traded on exchanges, and the exchange is the counterparty. It monitors the credit worthiness of those who get to trade on it. If derivatives were traded the same way, then the problem wouldn't exist. The Economist claims there are problems with this, since some derivative contracts are too specialized to provide for a liquid market.
But if Bear had gone down, then the participants would just have to balance the pain of monitoring the creditworthiness of their over-the-counter counterparties vs. the loss of specialization of participating on an exchange. Bear's failure would be a signal that credit risk was a bigger deal than everyone had thought. But that was just the right signal.
The Fed's intervention exposes the US taxpayer to big losses, increases moral hazard and will inevitably mean a lot of costly regulation. Sometimes it's just time for a bear to die.
Wednesday, April 30, 2008
The justification for public intervention to save Bear Stearns was that failure to do so would have wrecked the derivative market. Bear's counterparties would have had no one to fulfill their contracts. Everyone would have to monitor credit risk. Cats and dogs would start living together. Etc.
Saturday, April 26, 2008
From a letter in today's Globe
If we are to conquer racism, we must attack it - no matter which side of the racial divide. I have no doubt there are white voters who will not support a black candidate. That is racism. I also have no doubt there are balck voters who are attracted to Barack Obama's candidacy simply because he is black. That, too, is racism.
So racism is voting for people you have a cultural affinity with and against those you don't. In other words, it is another name for democracy.
There are actually few black voters who would always pick the black candidate against the white, and few whites who would always take the white against the black. If we had the immensely-entertaining-if-alarming prospect of an Alan Keyes vs. Dennis Kucinich race, I have no doubt that Mr. Keyes' support would be paler than Mr. Kucinich's.
However, let's not kid ourselves. Identity isn't the most important thing in politics. It's the only thing. Always has been, always will be, at least until the Son of Man returns in glory. Pronouncing those on the other side of whatever divides have become salient "racists" is psychologically satisfying, but ultimately stupid.
Posted by PithLord at 7:57 PM
Thursday, April 24, 2008
To its credit, the wonkosphere has been atizzy about the fact that the three Presidential candidates have all endorsed the scientifically untenable view that vaccination causes autism, or at least the idea that there is a genuine controversy. (Canada has had its own moral panic in regard to BPA and our politicians have reacted with similar intergrity and respect for science. Long story, short: babies will be protected from a non-existent health problem by giving them breakable glass bottles.)
Inevitably, some smartass shows up in the comments box and points out that none of the empirical studies prove the lack of a link. Rather, they just don't demonstrate a link. And then the smartass inevitably says, "Absence of evidence isn't evidence of absence." (These are always the same dudes who tell you that "causation isn't evidence of correlation" and that Karl Popper is relevant to some matter at hand.)
B is evidence of A if p(A|B)>p(A). In other words, if your belief that something is the case is rationally stronger once the fact is in than it had been before, you have evidence.
Bayes theorem tells us that p(A|B) = p(B|A)p(A)/p(B) where all quantities are greater than 0 and less than or equal to 1.
Let X be that there is a causal relationship between autism and vaccination. Let Y be that there is evidence of such a link after a number of methodologically sound studies.
There is evidence of absence if p(~X|~Y)>p(~X)
p(~X|~Y)>p(~X) iff. p(~X|~Y)/p(~X)>1
By Bayes' theorem, p(~X|~Y)/p(~X)=p(~Y|~X)/p(~Y)
Therefore, there is evidence of absence if p(~Y|~X)/p(~Y)>1 or, equivalently, if p(~Y|~X)>p(~Y)
The absence of a causal relationship between autism and vaccination is never going to make it more likely that there will be evidence of such a relationship. So the only plausible case where p(~X|~Y) will not be greater than p(~X) is if p(~Y|~X)=p(~Y).
In English, the absence of evidence is evidence of absence of a link or an entity when it is more likely that there will be no evidence if the link or entity doesn't exist than if it does. In better English, if we expect that something will have observable effects if it exists, and it doesn't have observable effects, it probably doesn't exist. The stronger our prior belief that something would, if it existed, have observable effects, the more absence of evidence is evidence of absence.
We will expect very, very, very small causal links out there in the world not to have empirical effects in ordinary studies. If exposure to the polio vaccine raises your baby's autism risk by one billionth, we'd never know. However, very, very, very small causal links between exposure to a chemical and bad health outcomes just aren't worth worrying about. To be more precise, no matter how risk averse you may be, very small risks are not worth any cost, certainly not the cost of risking a polio epidemic. As the hypothesized risk gets larger, the evidence of absence from the existing studies gets stronger, so that we could in fact state a level of risk we are highly certain (19 times out of twenty) is the upper bound of the actual risk.
You could say the same thing about God. If your conception of God makes (if God exists, there would be evidence) reasonably likely and there is no evidence, then that counts against your conception of God.
Tuesday, April 22, 2008
Unless you are going to just accept the democracy as it wonderfully is, you need a concept of false consciousness.
If we are animals whose cognitive powers arise from natural selection, we must be subject to radical false consciousness.
The Leninist error is not the doctrine of false consciousness, but the belief that the Leninist is free from false consciousness.
The only way anyone could be free from false consciousness is if something that transcends history somehow made itself immanent in history, and set up the conditions for freeing us from false consciousness.
Because we cannot really be sure that there was something that transcends history that made itself immanent in history, we cling to politics.
However, if we are halfway reflective, we must know that our side in any political controversy is as steeped in false consciousness as the other side.
Monday, April 21, 2008
Ross Douthat defends the practice of asking politicians about their relationship to their flag pins, rather than their health care plans, thusly:
Or cast your mind further back, to 1992, and consider something as seemingly insubstantial as the controversy over Bill Clinton's draft-dodging - or something less substantial still, like the mini-controversy over Hillary (Rodham) Clinton's now-she-uses-it, now-she-doesn't approach to keeping, or not keeping, her maiden name. I think you can make a pretty strong case that Clinton's peculiarly Boomerish relationship to the military brass - the mix of suspicion, condescension and ignorance on both sides - had a more decisive impact on American foreign policy in the 1990s than, say, what Clinton-the-candidate said about China policy in the run-up to the '92 vote. And while there's a sense, obviously, in which nothing could be further from the actual work of governing than the question of whether the First Lady of the United States has her husband's last name, in hindsight I think that the mix of echt-feminist principle and political opportunism that Hillary displayed in her changing choice of last and middle names probably told us as much about her approach to politics than most of the speeches she gave in the course of the campaign against George H.W. Bush.
Douthat admits that it is pretty hard to reliably make these inferences, though, so I'm not sure what it proves. Still, it is hard to deny that people talk a lot about the "personality" of their politicians, although I doubt it has a big impact on voting behaviour.
Of course "personality" =! personality. I have known a few politicians, and have known a lot more people who know politicians. And one consistent result is that their personalities, as perceived by those who know them, bear no resemblence to their popular personas. Those the public think of as aloof aren't. Those the public think of as smart aren't. Those the public think of as nice aren't. I wouldn't go so far as to say there is a negative correlation between public persona and actual personality, but there is definitely a zero correlation.
On the other hand, there is actually a pretty strong correlation between election platform and what is implemented in office -- the reason we remember it otherwise is because the exception is more prominent mentally than the rule.
Ross's post just shows the benefit of constitutional monarchy. I don't doubt the existence of a hunger for a relationship with the persona of public figures, whether positive or negative. It just should be supplied by hereditary monarchs and their families, not by politicians who should be considered unglamorous professionals, like dentists. The increasingly-presidential style of Canadian politics shows how much we have lost as the Liberals have undermined the monarchy, but the recent US election does at least provide a warning of how much further there is to go.
It is obvious that the language of a statute must be understood in the sense in which it was understood when it was passed, and those who lived at or near the time when it was passed may reasonably be supposed to be better acquainted than their descendents with the cicumstances to which it had relation, as well as with the sense then attached to legislative expressions.
The fixation thesis was the source of the maxim contemporanea expositio est fortissima in lege. The contemporaneous exposition need not be legally binding. If Lord Coke thought a statute meant X, then that was evidence it meant X, even when legislative history could not be admitted for interpreting recent statutes.
The phrase "circumstances to which it had relation" might seem to indicate an "expected application" theory of meaning. However, the English courts only applied the contemporanea expositio principle to very old statutes (more than a century) for which it could reasonably be assumed that linguistic change in the semantics of words had taken place: Campbell College, Belfast v. Commissioner of Valuation for Northern Ireland,  1 W.L.R. 912 (H.L.) at p. 941. So the expected application of long ago was only relevant to the semantic/intensional meaning that could be inferred from it.
Interestingly, at a time when stare decisis was still considered absolute, it did not apply to mistaken statutory interpretations on constitutional grounds.
Saturday, April 19, 2008
Wednesday, April 16, 2008
Larry Solum has posted a lengthy paper defending "semantic originalism" as the way to interpret (but not construct!) a written constitution.
The upshot is that originalism is right, but doesn't matter nearly as much as everyone used to think.
As Solum tells it, semantic originalism involves four claims:
1. The fixation thesis. The semantic meaning of the constitution (what is says, not what it does) is fixed at the moment it is adopted. Linguistic change since 1867 does not change what the BNA Act means.
Importantly, this does not imply that change other than in the meanings of words since 1867 will make no difference in how constitutional cases will be decided.
2. The clause meaning thesis. What matters is not what the authors of the constitutional text intended, but what a competent reader at the time would understand. Competent readers might be the general public, politicians, lawyers or possibly different groups for different clauses.
3. The contribution thesis. The meaning of the Constitution has some effect on the law of the constitution. Not necessarily a big one, though.
4. The fidelity thesis. We ought to respect the law, including constitutional law, unless there is a good reason not to.
Let's take the facts of Edwards v. Canada,  A.C. 124 (P.C.) to see how this plays out. The British North America Act, written in 1867, permitted the Governor General to name "qualified persons" to the Senate. In 1867, women, including peeresses in their own right, were under a legal disability from voting in Parliament.
The Privy Council decided that women could be Senators. It could have done so by referring to the meaning of "person" in 1930, by referring to a secret intention of John A. MacDonald to have women as senators, by deciding that the constitutional law had changed in the interim or by deciding that excluding women from the Senate was too unjust a law to obey. If you attended U. of T. law school, you would be forgiven to think that that is what they did, although of course, they didn't.
The Constitution makers in 1867 presumably thought this disability would continue. However, as the Privy Council decided, the term "person", if unqualified, included women. Even if it was taken more narrowly to include only individuals with legal capacity, by 1930, married women had such capacity and therefore had become "persons," although they would not have been sixty years earlier. The Privy Council was aware that if the BNA Act had used the phrase "qualified men", then it would clearly be saying that women could not be Senators, regardless of whether that was a just result.
Solum distinguishes between "constituional interpretation" (which derives the meaning of the text) and "constitutional construction" (which is what judges do when the meaning runs out. Most cases are decided at the construction stage.
Solum says that "constitutional construction" involves vagueness and pragmatics (meaning of utterance, rather than utterance-type). Here I would tend to disagree. Pragmatics about the constitutional utterance itself go to interpretation. We know that the "United States" means the United States of America because of whose constitution it is, just as we know that "I did it" refers to the Pithlord because of who said those words.
Where vagueness goes is more of a matter of choice, but vaguness definitely does not exhaust the post-interpretive issues of constitutional litigation. The issue in constitutional construction is not usually what side of a vague line a statute is on, but whether certain social/moral facts are true. Whether lethal injection is "cruel and unusual" turns on the social fact of whether there is a less painful method to kill people and the moral fact of whether killing people that way is cruel. Whether the Ocean Dumping Control Act interferes with property and civil rights within the province depends on whether ocean dumping is a trans-border externality that requires a regulatory scheme to address. Whether the pre-1988 abortion law is contrary to the principles of fundamental justice depends on whether the tribunals it set up were unbiased and reasonably speedy.
Solum's form of originalism may not matter very much north of the border. In the Candian case, since our most controversial constitutional provisions are just over 25 years old, there has not been any linguistic change for the fixation thesis to operate on. Almost none of the Charter decisions turn on the semantic meanings of the words.
The exception may be those provisions where the words arguably had a "term of art" meaning in 1982. The critical example was "principles of fundamental justice," which had acquired among lawyers a purely procedural meaning as a result of previous Supreme Court decisions. Unfortunately, in 1985 when this provision was considered, we did not have a sophisticated originalism up here, and the Canadian courts would have been naturally resistant to Reaganite terminology.
Thursday, April 10, 2008
In response to the my defence of post-modernism, "Antirealist" asks two different questions:
Are you saying that prior to the time when people grasped the concept 'living thing', there were no living things, or no facts about whether, say, algae is alive?
The answer to the first is "no" and the second is "yes". On the plausible assumption that bacteria have no concept of life and death, there were innumerable (if yucky) living things before there was a concept of "living thing." However, there were no facts about living things, at least not if facts are true propositions. You can't have propositions without concepts, so you clearly can't have true propositions without them.
It may be that there is now a fact about whether there were bacteria 4 billion years ago. But there wasn't back then.
Update: "realist" says, I'm assuming you'd agree that the truth of straight empirical propositions like this one depends on goings on in the world
Here is where we might locate the difference. I would more or less endorse Foucault's views on this issue. Empirical propositions do not really stand on their own. They are situated either in a science (or other specialized discipline like engineering, accounting or law) or as part of common sense. In other words, without all the background that makes up the science or or other technical discipline or common sense (collectively, "discourses"), the proposition wouldn't be meaningful, and therefore wouldn't be capable of being true or false.
"Discourse" may be a misleading term because Foucault confirms that the discourse embodies both linguistic and non-linguistic elements. By definition, *empirical* discourses use some physical interaction with the extra-linguistic world as part of their way of determining whether propositions are true or false. A proposition in chemistry has to lead you to some lab experiment that verifies or falsifies the proposition (or, at very minimum, raises or lowers your Bayesian prior about that proposition).
So, yes, the truth of a proposition in an empirical discourse depends on extra-linguistic goings on in the world. But what goings on it depends on is part of what makes it the discourse it is. Which external events trigger truth/falsity depends on the discourse, not the external world. And until the discourse comes into being, nothing "out there" in the world has any effect on the truth or falsity of any propositions.
What's interesting about all this is that the production of new concepts is a historical event. It occurs because someone sees the new concept as useful and others agree. Figuring out why they see the new concept as useful depends on figuring out what problems they think the new concept helps them solve. And figuring out why other people oppose the new concept depends on figuring out what new problems it creates for those people. In other words, the rise or decline of a concept is a political event.
Some common-sense concepts (like the distinction between living and non-living things) are so basic to the human condition that it is hard to see them as politcal. But they aren't political in the same sense that a completely settled issue of public policy (like whether the Stuart line will be restored to the throne or who will get Alsace Lorraine) isn't political. No one has an interest in fighting about it. And the concepts of a technical discourse usually aren't contested except by the participants in the technical discourse, who only contest the ones on the margin.
But then there are concepts like "racism", which are contested, and for which understanding the contest requires suspension of worrying about whether it is true or false that A is a racist.
Sigh. Just what we need in a global economic crisis. Stupid protectionism. This would never happen if Stephen Harper were Prime Minister.
Mr. Justice Bastarache has decided to call it quits. This gives the Tories the chance to fill the Atlantic seat on the Supreme Court.
The only reasonable candidate that the general public is likely to have heard of is Clyde Wells, and he seems like a highly contrarian choice for a Conservative government seeking to make inroads in Quebec. So I guess we will just have to see.
Tuesday, April 08, 2008
Post-modernism comes in for its share of ridicule on the Internet. And some of it is deserved: one should only read Jacques Lacan, for example, firmly understanding that most of the time he is pulling your leg. And while I am second to no one in demanding that the world recognize Mao as morally equivalent to Stalin and Hitler, when undergraduates respond to every normative or positive statement with "That's just their culture, man", I sympathize with the idea of having them spend some time doing farm labour.
But there was an important point underlying all of the bafflegab and French pseudo-profundity. While there is nothing inherently difficult about distinguishing a true proposition from a false one, propositions are made from concepts. And concepts are neither true nor false. As the pragmatists know, they are either useful or not useful. And as the pragmatists tended not to emphasize, something isn't just useful in general, it is useful for somebody who wants to do something. In other words, the process by which concepts arise and die is a political process. You don't refute a concept - you persuade people to abandon it.
Now, this persuasion can be more or less rational. For example, you could try to argue that the concept is useless and dangerous (taking for granted, of course, that your interlocutor shares some sense of what consequences are good and what are bad). Or you could get your interlocutor in a small room and start a chant, "Positivist conceptions of law are vacuous! Positivist conceptions of law are vacuous!" Other than the fact that no such persuasion exercise is one of pure logic, we can't necessarily say ahead of time what will and will not work.
All of which is prologue to the task I am going to undertake. I want to persuade you that the concept of "racism" is basically useless. That is distinct from persuading you that no one (or everyone) is or is not racist. I'm just saying that this language game no longer accomplishes what it once did, and we need to have a sounder sense of how to accomplish a civilized ethnic politics.
The trouble with "racism" as a concept is that it is an obstacle to clear thought on these matters. I also suspect that, as a concept, it will primarily be employed against the uneducated in general and disadvantaged minorities in particular. Once upon a time, racism may have been the tool of the man, but today "racism" is the tool of the man, man.
1. The first move is to point that racial/ethnic differences are profoundly important, politically and socially. This may be the most obvious thing anyone ever said, but the obvious is a good starting point when you are trying to bust the paradigm. Everywhere you go, ethnic groups entere into coalitions and struggles with each other to change the rules to their benefit.
2. And everywhere you go, ethnic groups do differently in the market (or under any set of neutral rules). That's because human capital is always built ethnically. Some may say that some ethnic groups have genetic advantages or disadvantages in building particular forms of human capital. That is unproven. What is indisputable is that different ethnic groups in fact have very different levels of human capital. Expropriate the Ismailis of Eastern Africa, force them into refugee camps, let them find a place with a halfway market economy and a generation later they will be richer than the locals. Do the same (but in a much milder way) to Australian Aborigines, and you have a perpetual nightmare. These differences may be entirely cultural, but they are nonetheless enduring and resistant to straightforward policy fixes.
3. Given #2, it follows that different ethnic groups do not have the same political interests. It also follows that there are potential economic gains from trade when they interact (it's called comparative advantage, man). But however nice it is to think that people could interact economically for mutual gain, people are not going to stop using politics to promote rules that work in their favour.
4. If it were possible to have a completely ethnically homogenous polity, it might resolve the problem of ethnic politics. However, it would give rise to all sorts of other self-interested coalitions whose power would be hard to overcome, and it would be culturally sterile (here is where I lose the paleos who will start complaining about ethnic food). Those of us who do not hail from Iceland unavoidably live in a multi-ethnic polity. Human nature being what it is, that means we are going to have conflict. However, it is not beyond the realm of possibility to manage this conflict in a way that means we still gain from the possibility of ethnic competition and economic co-operation.
5. The problems faced by ethnic groups whose human capital does not get a big price on the market are not primarily caused by discrimination -- at least not in contemporary Canada and the United States. That's not to say that discrimination is non-existent or morally OK or anything. It's just to say that the big problem is the lack of human capital -- the lack of bourgeois habits, the lack of skills, etc. Since the days of the Moynihan report, it has become more or less possible to say this in the United States. Obama says it. It is still very diffilcult to say in Canada, at least if you care about your reputation.
6. But Canada has a serious problem arising in the next generation. Depending on the extent of white flight, aboriginals will be a majority or a very large minority in the Prairies very shortly. Public services for aboriginals are terrible. I live near an urban reserve. You can tell where the reserve is, because there are no sidewalks, even though the reserve borders on two arterial roads. The Building Code's writ does not run, and the addresses on the reserve's main road are not sequential. There are two schools in the area. One is diverse with kids from everywhere in the world. The other has Indian kids, and it would be considered child abuse by parents of any other ethnic group to allow your children to go there. Every day, I see sixteen year olds pushing strollers along the shoulder of the busy road, and just have to hope no one gets killed. And this is in a liberal city and undoubtedly one of the better run reserves.
7. There are no obvious answers to these problems, but if our public discourse can't get to the point the Moynihan report got to over thirty years ago, there aren't going to be any.
8. Political correctness on the subject of race is difficult to learn. You aren't going to pick it up at a reserve school where you'd be lucky to get basic arithmetic. I have no brief for David Ahenakew, but I see the Tories reaction as a harbinger of a future of right-wing political correctness (also on display in the whole Jeremiah Wright business). It will be highly insensitive and hurtful of any racial minority to advance its own interests in the political sphere. But we also won't point out how the political dynamics on the reserves are impoverishing the majority and enriching the elite.
9. It comes down to the problem with "racism" as a frame. It worked in the post-war world because it tied continuing de jure segregation to the defeated Nazis. But it ignored the reality that ethnocentrism is univeral and, in its mild forms, harmless. As long as Anglo hegemony could be taken as unthreatened, we could just say that all other groups are permitted their ethnocentrism and the burden should be given to the Anglos, since they run anything anyway. That was reasonable then, but it isn't going to continue to work.
10. To the extent the "racism" frame is taken seriously internationally, it makes sensible ethnic accommodation impossible. Malaysia worked out a decent compromise between the Malays and the Chinese by being "racist." Maybe it is time for that compromise to be rethought, but it was itself a good thing because it let a lot of people live and prosper who wouldn't otherwise have done so. The "racism" frame is completley useless in the Middle East, and has been one cause of recent Western stupidity there.
11. The better way to look at things is to accept the inevitability of ethnic politics, and then distinguish between bad negative-sum ethnic politics and good positive-sum ethnic politics.
To the extent I support Obama, it is because I think he is closer to realizing all this than most. That is the key political message of visiting Kenya in Dreams.
Friday, April 04, 2008
Our old friend, the hardest working man in showbusiness and published poet, the Literatus writes in:
Oh hey [name redacted], you Obama blusher you: sure, every political person likely had unsavoury radical friends in their youth. I believe you yourself associated with the likes of Sarah Polley, Warren Kinsella and even Garth the Albino (shudder) back in the Trotskyite anti-racism day, right? OK. But you haven't exactly clasped any such nutter by the shoulder and slipped him $50 every week for the past two decades, have you...? Obama's foaming cleric is his priest, is his confessor, is his family's spiritual advisor, not some regrettable campus acquaintance from old times.
I kinda like 'em both, mind you; Wright at least is among the great roaring creatures of American religion, and Obama is undeniably a fine-tuned political receiver/and amplifier. Not that it's much of our business; not that it makes much difference.
In the event the Pithlord were to seek elective office, it would be trivially easy to put together an oppo file. That's why I've decided to confine my political activities to being a smartass on the Internet.
Thursday, April 03, 2008
In addition to asking some interesting questions in my comment box, Steve Sailer also gave me a link and called me "Obama's most sophisticated defender."
I appreciate it, but I'm not sure I can quite accept. As one of Her Majesty's loyal subjects, it really is no business of mine who the Great Republic chooses as their chief executive. Whether it is McCain or Obama, I'm sure we will continue to do fine. Like most of my countrypersons, I react negatively to the younger Mr. Bush, and will be happy to see him go no matter what, but it really isn't any of my concern what health plan the US federal government enacts or what flavour of Supreme Court justice is appointed.
I do think that the Iraq and Afghanistan wars raise issues of larger significance. And here I think the way Obama thinks will be more helpful than the way McCain thinks. Not because I hope that the Muslim world will react with such gratitude to a President whose middle name is "Hussein" that they will drop all their sectarian and tribalist craziness and become Belgians with loose clothing made of natural fibres. But because Iraq is precisely the sort of problem where victory/defeat is a useless frame and how-do-we-minimize-our-losses-while-letting-everyone-save-face is the way to go.
Perhaps I could also note that we in the Commonwealth are aware that even the blandest of centre-left politicians (and not infrequently the sternest of conservative ones) typically have some radical friends from their twenties. To explain what Gordon Brown and David Miliband were up to when they were young and foolish would require an extremely boring dissertation in micro-left groups with three-letter acronyms. This is not to say that genuinely right-wing people should vote for them, but it is no big deal either.
Wednesday, April 02, 2008
In this thread, Steve Sailer asks two good questions. First, what the hell does "incompletely theorized common ground across more comprehensive narratives" mean? And, second, where do Barack Hussein Obama's loyalties lie?
I am a little reluctant to get into a discussion of Rawls in light of the fact that I know one of my occasional readers is a genuine expert on the subject. I just read Political Liberalism once, and tried to make it through A Theory of Justice. Rawls actually refers to "comprehensive conceptions of the good" and I foisted the po-mo "narratives" on him. But basically, the idea is that the liberal state brackets the more fundamental questions of meaning and morality, and instead tries to find essentially procedural rules that allows everyone to more-or-less do their own thing without stepping on anyone else's toes too much. In contrast to the ancient ideal, the modern liberal state relegates the pursuit of virtue or perfection to civil society and excludes it from politics. It accepts that its citizens will tell themselves different stories about who they are and what is important in life, and just makes sure that they all drive on the same side of the road and don't make left turns without signalling.
But for Rawls (or for Trudeau), this compromise has to be a principled one. Anyone who comes to the modern state with a story about how his ancestors were treated gets told that we can only be just in our time. Deal. The state can't recognize your identity - that's civil society's job.
Like Mulroney, Obama thinks this isn't going to work. Just because everyone would be better off just letting the past go doesn't mean that it can happen. On the other hand, Obama, like Mulroney, has considerable confidence in his own ability to recognize the source of each side's cussedness look enough for everyone to realize the mutual gains from resolving their non-zero-sum conflict. So the basis for the compromise comes from somehow framing each side's version as part of a single story, and the compromise itself turns out not to be principled liberalism, but something genuinely contingent.
Obama's not a "technocrat" at all, except maybe by comparison with recent Republican nominees for President, because he tends to think the finding the mutual gains is the easy part.
Now we Canadians know that Mulroney's confidence didn't quite pan out. He was indeed a talented man, and IMHO, a great prime minister, but he couldn't quite figure out how to compromise issues of identity. (Compromising issues of interest is relatively easy.) Hence, the Meech Lake fiasco. In the end, the Anglos -- and even more, the relocated market-dominant minorities that make up the leadership of the New Canadians -- were too invested in the liberal, procedural compromise to accept that the "distinct society" clause was a pretty minor concession in the scheme of things.
As for Obama's loyalties, I have no doubt he considers himself attached to the black population of the South Side of Chicago, albeit by adoption, not birth. That's only a problem if you think that blacks and whites have opposing interests in the US, and I'm pretty sure he doesn't. Of course, all politicians -- especially "transformative" ones -- must first be loyal to their own star, and I have no doubt that Obama is no exception to that principle.
Peter Suderman wants to trademark the notion that regulations can become outdated for economic libertarians:
I continue to be bothered by the fact that despite [Obama's] recognition that the current financial regulation system is outdated, designed for another era, and his equal recognition that we've dealt "with threats to the financial system that weren't anticipated by regulators," the solution is, well, more regulators! It's as if he sees the consistent inability of bureaucracy and regulation to keep pace with market innovation and then says, "But if we just made it a little faster, maybe this time…"
But surely the issue isn't just "more" or "less" regulation. If you have regulation in place for a reason, and there are powerful incentives to get around it, you need to update your regulator strategies to address the regulatory arbitrage.
If the taxpayers are going to be insurers of last resort of certain financial transactions (and perhaps they should be), then like any other insurers, they need to control the insured's behaviour for excessive risk-taking. But when they do that, the insured has an incentive to find a way to keep the coverage and engage in the risk-taking. Sophisticated financial instruments make this easy, unless regulators are also sophisticated.
So a regulatory system can be "outdated" not only because it imposes unnecessary costs on those it regulates, but also because it no longer protects against the risk it is trying to mitigate.