Friday, September 7, 2012

“First Amendment Rights at Risk”

Sydney M. Williams

Thought of the Day
“First Amendment Rights at Risk”
September 7, 2012

Change is everywhere. Nothing in life is static. It makes no difference whether we are speaking of nature, politics, the economy or investments. Some change is beyond our control. Some is not. Some change is good. Some is bad.

Freedom is also subject to change. It can be gained or lost. Oppression causes people to yearn for the right to freely express themselves, worship as they choose and to trade with whomever they wish. On the other hand, a free and prosperous people functioning in a democratic, capitalistic state, ignorant of the restrictions of a totalitarian state, may be willing to forego certain rights they have long taken for granted in exchange for material comforts they feel are their due. The loss of freedom, in these cases, is incremental, not sudden or dramatic. Europe provides a laboratory of sorts. Those in the East, so recently under the yoke of Communism, recognize the appeal of freedom, while those in the West, having lived in democratic societies for several decades, appear to be willing to grant states more power, in exchange for the provision of a welfare system. Another example of their differing attitudes is in respect to missile defense. It is popular in the East, as protection against the Russians, but not in the West, for fear of alienating them.

Fundamental to the interests of free citizens is freedom of speech. Insults, hyperbole and distortions may be frowned upon by civil society, but are generally permitted under the Constitution. In the 1970s, a series of Supreme Court decisions extended that right to commercial speech. In 2010, the Supreme Court decided, in the Citizens United case, that the First Amendment prohibited the government from restricting independent political expenditures by corporations and unions.

What prompts this musing on First Amendment rights was an op-ed that appeared in Wednesday’s Wall Street Journal by Washington attorney and former assistant director of the SEC’s enforcement division, Russell G. Ryan. Mr. Ryan writes of the recent travails of Conrad Black who was held liable in a 2008 case for civil securities fraud, a charge that was largely based on a criminal case for which he was convicted and sentenced to jail. As Mr. Ryan points out, the U.S. Supreme Court partially overturned that conviction. Nevertheless, Mr. Black spent 42 months in prison and was just released this past May. The SEC has now determined that Mr. Black deserves the harshest civil penalties under the law. As justification for this sentence, and what bothers Mr. Ryan, is the Commission’s claim that Mr. Black is apparently “unrepentant” and “impenitent.” (I always thought those two words meant the same, but perhaps to a lawyer they do not.)

Last year, Mr. Black published a book, A Matter of Principle, in which he, as Mr. Ryan wrote, “leveled harsh criticism at the SEC and some of the judges who ruled against him.” The book was not received well by the Commission. The book, the SEC argued, proved their point that “impenitence of this magnitude is deserving of significant penalties.” (In this case, about $4.2 million.) It is true, as Mr. Ryan points out, that courts will often ameliorate sentences when the defendant pleads guilty, acknowledges wrong doing and demonstrates real remorse. However, as Mr. Ryan writes, “it is a dangerous and chilling proposition” when defendants have the temerity to challenge their accusers, and the accusers (a government agency) retaliate with the stiffest possible fine. To me, it is frighteningly reminiscent of North Korean and North Vietnamese captors who tried to get American POWs to admit they were guilty of war crimes and to condemn the United States.

Conrad Black, a Canadian by birth, was the controlling shareholder of Hollinger International, the third largest conglomeration of newspapers in the world. He is an author of numerous biographies and has written for conservative publications like “National Review” and “The American Spectator.” Still blunt and an economic conservative, he recently penned a piece in the Financial Times, entitled “Republicans can end 15 Years of US Stupidity.”

Writing last August in the Wall Street Journal, Russell Ryan noted that independent administrative agencies such as the SEC operate outside the control of the Attorney General. They are headed “by unelected officers who are neither Cabinet members nor removable by will by the President.” Mr. Ryan further points out that during its first fifty years the Commission could ask a court to stop violations and prohibit future misconduct, but it could not impose penalties. It was a regulator, not a law-enforcement agency. Now, empowered by Dodd-Frank with law-enforcement capabilities, the SEC lacks many of the due-process safeguards that are taken for granted in criminal law. While the SEC cannot incarcerate violators, it can impose severe financial fines, destroying reputations and livelihoods, via non-jury proceedings, subject to a review by courts only after the fact.

In his August 15th article, Mr. Ryan wrote: “There is scant evidence that increasing penalties would improve deterrence or financial compliance, but that is a secondary concern with the bill. More troubling is that Congress is incrementally blurring the line between civil and regulatory enforcement and criminal punishment, reflecting an eerie indifference to due process and the proper constitutional allocation of law-enforcement responsibility.”

In the desire to find cause for the financial crisis of 2008, Congress has pinned the blame on the cowboy-like antics of some Wall Street traders. Certainly, there were many who were guilty and who crossed the boundaries of fiduciary responsibility. Greed is not unknown on Wall Street. There is no question that the guilty should be punished. But, it is also clear to anyone who toils in these vineyards that government policies over the past few decades allowed for what happened – the push to expand home ownership and the forcing of banks to lend to less-than-creditworthy borrowers are two examples. Unfortunately, when government opened the doors, Wall Street never questioned the wisdom; they looked at the opening as an opportunity. Additionally, regulators failed in their regulatory duties, permitting Bernie Madoff to operate for years, despite information provided them that questioned his alleged returns. Blame has many masters. What the situation created was a crisis that Rahm Emmanuel declared was something not to waste.

The trouble is that the medicine may be worse than the disease. To the extent that our rights are further limited, as seems likely given Mr. Ryan’s analysis of the SEC case against Conrad Black, we are worse off than before. In a country of over three hundred million people of diverse backgrounds, the one thing that binds us is the Constitution and our Bill of Rights. The Constitution is a document of about 4600 words. There are fewer words in that document than there are pages in Mr. Obama’s two landmark pieces of legislation – the Dodd-Frank Bill and the Affordable Care Act., both of which encroach on our rights as free citizens. Of the words in the Constitution, a mere 45 are devoted to the First Amendment, yet the power and meaning of those few words are more important to the cause of freedom than anything in laws or bills that have been enacted since. Change is inevitable, but it is our basic rights embedded in our Constitution that make America America. And, it is the simple words that comprise the First Amendment against which all change to our fundamental rights should be measured.

The right of free speech that seemingly is being breached by an over-reaching Securities & Exchange Commission is only one aspect of an encroaching government, but it is symptomatic of what I believe to be the most fundamentally important election since 1980. What seems a shame is that I found in my recent trip to Prague and London that Europeans seem far more aware than are we of the importance of this election and what it says about the consequences of an impending, unaffordable welfare state. Behind the sniping and the lies is an election about what kind of society do we want that we can afford. Mitt Romney, in his acceptance speech, said that the U.S. was built on the idea of “a system that is dedicated to creating tomorrow’s prosperity rather than trying to redistribute today’s.” Janet Daley, writing recently in London’s Daily Telegraph, noted: “It has become apparent to anyone with a grip on economic reality that free markets simply cannot produce enough wealth to support the universal entitlement programmes which the populations of democratic nations have come to expect.” While higher taxes may be in the offing, anyone with a calculator knows that raising taxes on the rich (ignoring the dubious merits of “fairness”) will not solve the problem. The problem is far larger. This is a debate the Western world needs to hear. What should the role of government be? How big should it be? How responsible should citizens be for their own actions? When does dependency become suffocating? What can we legitimately afford?

When we let the Press focus on the antics of Joe Biden or the athletic exaggerations of Paul Ryan, we trivialize the importance of the election; for it causes us to ignore the critical nature of free speech, or the destiny of our capitalist system.



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