Last week, UCLA Law Professor and Volokh Conspiracy blog author Eugene Volokh and I talked about “Justice, Faith and the Human Condition” at a Veritas Forum at UCLA.  (Elizabeth Bawden was the excellent moderator.)  Eugene raised lots of wonderfully interesting questions: how can I talk about a Christian vision of justice when there have been so many different Christian stances on different issues?  Might Americans a century from now view our era as horribly unjust because we continue to eat meat?

Eugene described his own approach to justice as “muddling through,” and this became a recurring theme in our discussion.  I think muddling through is an apt and evocative description of the approach many Americans take to justice.  They wrestle with a particular issue, and reach a conclusion that seems most likely to further justice as they understand it.  The problem with this approach, in my view, is that it doesn’t provide any objective basis for thinking about justice.  If someone like Eugene is doing the muddling, the outcomes will be quite good, because he is extraordinarily bright and sensible.  But the same approach is equally compatible with awful results in the hands of decision makers who are, to give just one example, not especially interested in human rights.

I’ll save my discussion of a Christian perspective of justice for other posts, other than to note that the starting point is a vision of proper relationships within a society, based on the belief that each of us is made in the image of God.  I’ll also make the perhaps tendentious point that, when muddling through produces good results, especially in this country, it’s often because the muddlers are piggybacking on a Christian conception of justice.  They aren’t truly starting from scratch.

I can’t resist ending this post with a Eugene Volokh story I heard from one of Eugene’s colleagues.  Eugene was a child prodigy, starting college at UCLA at the age of 15, and later going to law school at UCLA.  When he applied for a Supreme Court clerkship with Justice Sandra Day O’Connor, the UCLA faculty gave Eugene rave recommendations.  (As most readers will know, a Supreme Court clerkship is the highest possible honor for a law student, available only to students at the absolute top of the class).  After his clerkship, as UCLA’s law school was considering Eugene for a faculty position, the hiring committee called Justice O’Connor to get her impressions of him.  Why do you want my recommendation, she quite sensibly asked, given that you were the ones who recommended him to me?  The hiring committee’s somewhat sheepish answer was that they were interested in hearing whether Justice O’Connor thought Eugene would work well with those who are not quite at his intelligence level, given that many of Eugene’s students wouldn’t be as bright as he is.  Justice O’Connor’s reply?  From what she’d seen, Eugene seemed to get along quite well with the other Supreme Court clerks.

As Detroit’s bankruptcy heads into the homestretch, with the big hearing on its proposed restructuring plan currently scheduled for mid-July, Detroit is increasingly using settlements with key constituencies to line up additional payments for its pension beneficiaries.  The most dramatic illustration of this is Detroit’s art-for-pensions deal.  Under the proposed deal, the Detroit Institute of Arts would sell its art for $816 million to a nonprofit organization that will commit to keep the art in Detroit.  The $816 million, which would come from a group of foundations, the state of Michigan, and others, would be used to fund a higher payout for Detroit’s pension beneficiaries than they would otherwise receive.  More recently, Detroit entered into a settlement with a small group of its bondholders who have argued that they have a lien and are entitled to highest priority.  Under the settlement, the bondholders would receive roughly two-thirds of what they are owed, and a large side payment would be made to Detroit’s pension beneficiaries.

These arrangements seem to me to be doing a good thing in a very dangerous way.  It’s right, in my view, for pension beneficiaries to receive somewhat more than other general creditors, and this can be justified under existing municipal bankruptcy law  (as I have argued elsewhere, for example, here).  But the new arrangements take money that might otherwise go to all general creditors, and give it to one group of these creditors—pension beneficiaries.  In a short new magazine article (here), I point out that the strategy used in the art-for-pension deal is remarkably similar to the most problematic features of the 2009 Chrysler bailout.

I can imagine several technical (but unpersuasive) arguments Detroit might use to try to justify the art-for-pension deal and the side payment to pensioners under the bond deal.  I will perhaps delve into the particulars in future posts.  But the bottom line is that the new settlements are deeply problematic from a rule of law perspective, and should be rejected by the bankruptcy judge.  It’s essential to minimize the hardship of Detroit’s bankruptcy on pensioners, but it’s also important not to run roughshod over the rule of law, at the expense of Detroit’s other creditors, along the way.