What would Brandeis do with Banking and Healthcare?

I am in the midst of editing a book of some of Louis Brandeis’s unpublished lectures and I am struck by how similar the issues that confronted him are to the issues that we confront.  Brandeis might have much to say this week, as the Senate Banking Committee is on the verge of approving a bill that would establish a new Consumer Financial Protection Bureau and the House prepares to vote on a health care proposal that may be posted on the internet at any moment.  My guess is that Brandeis’s answers to these problems would be unlike either what we hear today from the left or the right.  

Brandeis was quite critical of the investment banks, insurance companies, and big corporations of his day. He would have been outraged that we have businesses that are “too big to fail.”  One of his few books (and constant themes) was The Curse of Bigness—in business and government. 

 Another of his books, Other People’s Money, took on investment bankers and large corporations.  He says,

“This failure of banker-management is not surprising. The surprise is that men should have supposed it would succeed.  For banker-management contravenes the fundamental laws of human limitations:  First, that no man can serve two masters; second, that a man cannot at the same time do many things well.” 

Of life insurance companies, Brandeis said:  “[T]he power which the American people have entrusted to the managers of these large [life insurance] companies” has been exercised “[s]ubstantially as all irresponsible power since the beginning of the world: selfishly, dishonestly, and in the long run, inefficiently.”  Yet Brandeis expressed skepticism about government insurance programs “until the government adequately performed the tasks it has already taken on.”  Ultimately he advocated workers’ compensation, a hybrid, government/private system with a “life insurance” component. 

But Brandeis was as skeptical about big government as he was about big business.  “The federal government must not become too big just as corporations should not be permitted to become too big.”  He would have shared the distress expressed today in David Brooks’ New York Times column (drawing on the Brandeis-like writings of British writer Phillip Bond) at “a centralized monoculture which requires a gigantic government to audit its activities.”   

Brandeis lauded federalism.  “The attainment of our American ideals is impossible unless the states guard jealously their field of governmental action and perform zealously their appropriate duties.” He argued in New State Ice Co. “It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country….”  In a 1931 interview in The Progressive, he advised:  “Go Back home and tackle something which is within your power.  It is not federal legislation but a quickened community within each state which is the country’s greatest need.” 

 Brandeis saw risks in the provision of too many social services, arguing that the United States could have housing, food, and education for all, and yet be “a nation of slaves.”  His law clerk David Reisman, Jr., found Brandeis’ views “a challenge, an abrasive against which to rub panaceas.” Brandeis was first and foremost a proponent of individual and local community freedom and an opponent of concentrations of power, whether in large corporations or large governments. 

 What would Brandeis do with the big issues we face today?  I suspect he would disagree with both the do-everything Democrats and the do-nothing Republicans.  He would encourage decentralization, experimentation, and competition.  I suspect he would break up big banks and big corporations, at the least as a condition of financial rescue, rather than create a new regulatory agency.  I also suspect that he would prod states to develop creative approaches to the health care crisis, rather than create a uniform federal program.