There are two kinds of fine print lawyers create and interpret as part of their core functions as transaction cost engineers and the shock troopers of the "rule of law (capitalisms deal with the state to enforce private contracts). One is built into the framework of our laws themselves, and the other is built into the commercial framework of daily life. Taken together, a pair of recently published books reveal just how profound the influence of all that fine print has become.
David Cay Johnstona Reuters reporter who won a Pulitzer Prize during his tenure with The New York Times and also serves as a lecturer at Syracuse Universitys law school, takes on the first kind. Legislative captureowning or renting legislators via campaign contributions, access, and lobbyingpermits big business to create windfalls for itself at taxpayers and consumers expense via obscure provisions of the tax code, appropriations bills, and other laws and regulations. We, along with industry lobbyists, draft that sort of fine print, and merit Johnstons populist scorn for doing so.
Margaret Jane Radin, a law professor at the University of Michigan, takes on the other kind. Companies market power and the acquiescence of courts makes boilerplatethose terms that we click to accept, sign, or just end up bound by whenever we download an app, withdraw our money from an ATM, park our cars in a lot, buy insurance, sign an employment agreement, hire a stockbroker, or engage in almost any other commercial transactionenforceable, even though it is not a contract representing a bargained-for outcome of the sort we studied in law school. We help our clients draft these so-called agreements and litigate the cases that extend their scope and effectiveness, and merit Radins considered judgment that by doing so we undermine the very rule of law we purport to uphold.
Reading these two fine books together provides a disturbing panorama of how deeply fine print has infiltrated our culture, the harm it causes both to our pocketbooks and the foundations of civil society itself, and the challenges involved in containing or rolling back its pernicious advance.
The Fine Print is the capstone of Johnstons trilogy anatomizing the growing inequities of our tax and regulatory systems during our new Gilded Age. Like its predecessors, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick you With the Bill (2007) and Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super-Richand Cheat Everybody Else (2003), the title of Johnstons latest book offers a pretty good summary of his thesis. But he puts his facts where his rhetoric is, and his superb skills as an investigative reporter produce convincing evidence of just how skewed things have gotten in favor of the already privileged.
Most important, Johnston exposes the big lie that has dominated all the blather in Washington, D.C., about closing tax loopholes and eliminating government inefficiency to cut the deficit during the debt ceiling, fiscal cliff, sequester, and other phony budget crises that have played out over the last two years. You certainly heard lots about why ordinary folks no longer need the homeowners or charitable deductions, or extended unemployment benefits, or more food stamps, or why the country can no longer afford to properly index Social Security for inflation or pay for Medicare and Medicaid or even keep the Postal Service running. But there are lots of ways to cut the deficit other than on the backs of the 99 percent. How many of the following kinds of tax expenditures and regulatory failures buried in the fine print Johnston is bent on exposing did you hear about?
We expect states to give big corporations tax incentives to locate operations in their jurisdictions. But did you know that more than 2,700 companies have deals that let them keep all of the state income taxes withheld from their employees in return for purportedly creating local jobs (most of which are actually part of the zero-sum game of moving the same jobs around the country)? Examples Johnston cites:
AMC Theaters, now owned by Chinese investors, got to keep $47M of withheld taxes for moving its headquarters ten miles from Kansas City, Missouri, to Leawood, Kansas, this year, after being based in Kansas City since its founding in 1920.
Before being bought by Google, in 2011, Motorola Mobility was allowed to withhold for itself $136M from its Illinois employees paychecks in return for not moving its operations out of state. Its departing CEO then got a severance payout worth $66Ma sum that was more than offset by the tax dollars flowing to Google rather than the state treasury.
