Thursday, June 30, 2016
Overview of ABF Research (Part III): Law & Globalization and Legal History
In this last post on ABF research, let me describe two parts of our research portfolio that reflect both our sense of the past and our transnational perspective on the present. From its founding in the 1950s through today, the ABF has been focused on studying how law, legal institutions, and legal processes operate across place and time. Our scholarship and programming on law & globalization and our work in legal history reflect these enduring commitments.
Let me start with a brief description of our research on law & globalization.
Law & Globalization
Globalization, to be sure, is not a new phenomenon, but it has taken on a greater sense of urgency in recent decades. Like many academic and research organizations, the ABF has become increasingly interested in the causes and consequences of globalization and its relation to law. For many years, we have had numerous international faculty members conducting research throughout the world.
Most recently, our legal sociologists Terry Halliday and Sida Liu have been collaborating on a long-term project about Chinese criminal defense lawyers and their role in political mobilization. As I’m sure many Prawf readers know the Chinese state in recent years has been intimidating and persecuting Chinese lawyers because of their political activism. Terry and Sida have conducted hundreds of interviews with Chinese lawyers to learn more about how the everyday work of criminal defense lawyers has become a political project. Drawing on a long line of scholarship about lawyers and political liberalism (much of it written by Terry), their forthcoming book will one of the first to examine empirically how the seemingly ordinary work of criminal defense lawyers in China can have far reaching transnational political and social implications. Although the book won’t be out for another year or so, this fascinating research has already garnered significant media attention across the globe.
Another area of ABF research on globalization focuses on comparative constitutions. Our joint-appointee Tom Ginsburg (U. of Chicago Law & ABF) has been at the forefront of research about the origins and international diffusion of rights in national constitutions. For many years, Tom and his collaborators have been collecting data on the countless constitutions that have been in existence since 1789 to the present (you can learn more about their Comparative Constitutions Project here). This project has documented the important role of domestic political factors and country characteristics in understanding the development and diffusion of constitutional rights.
While Tom Ginsburg’s research focuses on the material aspects of the rule of law, one of our other colleagues working on globalization, Jothie Rajah, explores the more theoretical underpinnings of rule of law discourse. Following up on her first book about rule of law in Singapore, Jothie’s latest project analyses the different ways in which global institutional actors (the UN, the World Bank, the International Commission of Jurists, the World Justice Project) define “rule of law.” Through a close reading of the texts and practices of these institutions, Jothie analyzes the development of global norms and the efficacy of rule of law indicators.
ABF research on globalization also examines the diffusion of legal rules across nation-states. Our joint-appointee Carol Heimer (ABF/Northwestern Sociology) is studying how laws, regulations and other rules are actually used in HIV research and treatment in the United States, Uganda, South Africa, and Thailand. Her book project investigates what happens when laws, regulations, and guidelines, admittedly created with the best of intentions, are transported to new sites where they confront the realities of medical care, clinical research, and healthcare administration in developing countries. Carol is currently finishing up a fellowship year at Stanford’s Center on Advanced Study in Behavioral Sciences, where she is completing her book manuscript.
In addition to our work on Law & Globalization, the ABF has also had a long tradition of research on legal history, writ large. Many years ago, the ABF had a Legal History Society of some kind that hosted regular events advancing scholarship in legal history. Although the formal society doesn’t exist anymore, the ABF continues to play an important role in supporting and promoting legal history. From our faculty members like Vicky Woeste, whose recent research focuses on hate speech (here’s a link to her latest book on Henry Ford and Hate Speech), to our regular Chicago-area seminar on legal history, to our recent support for a junior scholars conference on Law in Capitalism, the ABF remains committed to supporting innovative and influential research on how law and legal institutions have operated in the past, and on how these historical legacies continue to influence the present.
Indeed, our recent conference, which was co-hosted by the University of Chicago Law School, and supported by a consortium of schools and the American Society for Legal History, brought together a stellar group of junior scholars working at the intersection of law and the new histories of capitalism. These advanced grad students and junior faculty members had a chance to share their work and receive feedback from senior scholars in the field. We were delighted to host this group at our Chicago location, and we look forward to having more ABF events on legal history.
Like the other categories I’ve discussed earlier, these two ABF research streams are just examples of a much deeper body of scholarship. To learn more about our research, please visit our website.
Now that I’ve given readers a sense of the type of empirical and interdisciplinary research the ABF conducts, perhaps in my last post (if I haven’t already over stayed my welcome as a guest blogger) I can address a couple of pragmatic issues about ABF funding and the role that legal academics play in both supporting and helping disseminate ABF research.
Tuesday, June 07, 2016
Overview of ABF Research (Part I): Criminal Justice, Legal Education & the Profession
In my previous post, I highlighted some ABF research that was on display at LSA. I’m sure I missed several other ABF-related panels at the conference. Even so, the LSA panels reflect only part of the ABF’s broader research portfolio. Let me mention some other projects. At its core, the ABF is an empirical and interdisciplinary research institute, and thus most of our research goes beyond purely doctrinal or theoretical questions to analyze “law in action,” as the legal realists put it. In this and the next set of posts, I’ll describe a few clusters of our research that reflect this focus on how law operates in society and on the ground.
Since its founding in the 1950s, the ABF has had a strong research focus on criminal justice. One of the ABF’s first projects, funded in large part by the Ford Foundation, explored the processing of offenders from arrest to prison. Led by Frank J. Remington, this study culminated in a scholarly edited volume (Discretion in Criminal Justice), as well as a larger publication (A Plane for a Survey) that highlighted the many areas of discretionary decision-making in the criminal justice system (thanks to former ABF doctoral fellow Meredith Roundtree for pointing me to this storied history).
More recently, ABF scholars have been continuing the tradition of analyzing criminal justice issues. Several are conducting research on the social and political implications of mass incarceration. ABF Research Professor and Northwestern Sociologist John Hagan and his co-author Holly Foster (Texas A&M) have been documenting how parental incarceration of non-violent offenders has had tremendous deleterious effects on children. With support from the National Science Foundation, the ABF held a White House Conference on this important topic. Similarly, Traci Burch (ABF/Northwestern Political Science) in her recent award-winning book (Trading Democracy for Justice) has shown the pervasive political and social consequences of mass incarceration, and how the criminal justice system has helped reproduce massive inequality.
Another area of ABF research related to criminal justice is Jim Heckman’s work on early childhood interventions. Jim, who is a U. of Chicago Nobel laureate economist and an ABF Research Professor, has been investigating how investments in early education and healthcare for disadvantaged children from birth to age 5 can have significant long-term effects on boosting graduation rates, improving health outcomes, and reducing violent crime. In a sense, Jim is studying ways to break down the school-to-prison pipeline that has been preoccupying many criminologists and lawmakers.
Legal Education & the Profession
In a previous post, I mentioned the ABF’s signature “After the JD” project, which continues the Foundation’s hallmark work on the legal profession. Directly connected to this line of research is more recent work on legal education. Beth Mertz (ABF/Wisconsin Law) has long been studying the relationship between language and the law. In recent years, she has been examining how law schools operate as a site for the training of lawyers in the language of law. Her award-winning book, The Language of Law Schools, draws on deep ethnographies to explain the important role of language in the socialization of law students. Beth is following up that earlier project with new research on the post-tenure experience of U.S. law professors.
In a similar vein, ABF Research Professor Steve Daniels has been conducting research on many aspects of the legal profession and legal education. Following up on his recent book (co-authored with Joanne Martin) about the Texas plaintiff’s bar, Steve is currently working on changing patterns within legal education. With support from the Access Group, Steve will be building on his experience as a consultant for the ABA’s Task Force on the Financing of Legal Education to explore how law schools have been responding to the current challenges facing legal education.
Criminal Justice and Legal Education & the Profession are just two historically prominent areas of ABF research. In my next post, I’ll describe other more recent areas of research.
Wednesday, April 13, 2016
Ferguson's Fault Lines
Ferguson's Fault Lines: The Race Quake That Rocked a Nation, edited by Kimberly Jade Norwood (Wash. U.), has been published by the ABA. I contributed a chapter on body cameras; there also are contributions from a host of legal and non-legal academics. Recommended, as they say.
Friday, February 05, 2016
The Rule of Law in the Real World.
This round of prawfsblawgging comes at an exciting and terrifying time for me: my first book, The Rule of Law in the Real World, comes out in a few days, courtesy of Cambridge University Press. It's an attempt to reconcile the philosophical, legal, and empirical literature on the ideal of "the rule of law," and show its symbiotic relationship with genuine legal equality. I think the official release date is February 11, although at least one person has already gotten her hands on a copy (before me!). Pre-orders are open (Cambridge, Amazon). I've also put up a website at rulelaw.net, mainly as a home for some cool interactive data visualizations---but I also hope to make it a live, ongoing thing, collecting other rule of law scholarship, data, and knowledge in general.
So the exciting is obvious, buy why terrifying? Well, I think that all of us academics are subject to quite a bit of imposter syndrome, and none more than those of us doing interdisciplinary work. No matter how good you are, even if you're Richard Posner Himself, you can't produce high-quality scholarly work in every discipline at once. So anyone who publishes an extremely interdisciplinary book---and this book is that, in spades, delving into political philosophy, classics, game theory, empirical analysis, and other areas---surely must live in terror of opening up the journals or getting a Google Scholar alert to see his or her book get shredded by someone who actually is good at one of the disciplines the book has invaded. And while there are treatments for this condition---serious cross-training, showing your work to people who know more than you before rather than after publishing it--- there is no certain cure.
Yet some research topics really can only be handled by using methods from every field at once. The rule of law is definitely one of those: it has such a long historical provenance, has been the object of so many conflicting interpretations from lawyers, philosophers, historians, economists, political scientists, and others (Waldron once called it an "essentially contested concept"), and has such growing policy relevance in a world where hundreds of millions of dollars are spent promoting it (or the promoters' conception of what it might be) in places like Afghanistan, that the only way to really get any traction and make any progress is to try to bring something together from those disparate domains. This is, I think, why Brian Tamanaha's wonderful rule of law work has become so influential: he really made the first big attempt to listen to all the diverse conversations on the subject.
So hopefully the terror of the review pages will prove unfounded, and it'll turn out that I'm really not faking competence in all those things. The next half a year or so will tell. In the meantime, I'll be blogging about The Rule of Law in the Real World throughout the month, along with whatever other crazy topics happen to cross my mind. Onward!
Friday, January 29, 2016
Even Wiseguys Need Health Insurance
Goodbye to Vincent Albert "Buddy" Cianci, Jr. -- a man who, whatever you think of him, certainly left his mark on the City of Providence. I would say that he was a Providence original if I didn't recall that though he was born in Providence he was a true son of Cranston and then, only later, the Mayor of Providence.
My absolute favorite excerpts from the eventual trial transcripts of "Operation Plunder Dome" (essentially, a RICO tapes case) were the parts discussing the selling points of various "no-show" or "low-show" jobs distributed by then Mayor Cianci. Steven Antonson, a Cianci-appointed City of Providence Building Board member, wasn't quite lucky enough to get that no-show or low-show appointment, however. Apparently, then Mayor Cianci really wanted him to show at Building Board meetings involving Providence's University Club and to wholeheartedly oppose all University Club petitions for building variances necessary for a pending re-model unless and until Mayor Cianci was offered a free lifetime membership in the University Club. What made it pure Buddy Cianci was not the apparent extortion but the ironic twist that the chief value of free lifetime membership in Providence's University Club appears to have been as payback for a rejected Buddy Cianci membership application to the Providence University Club in the early 1970's, decades earlier.
My favorite part of Buddy Cianci's sell of the Building Board appointment was Mayor Cianci's schooling of Steven Antonson on why it would be a smart move to accept it: "Remember, I appoint people to this board. You get Blue Cross. You get a check. You always said safety was important. Well, this is it."
Yes, Steven Antonson was among several would be appointees who chased the Mayor of Providence relentlessly for health insurance. Even wiseguys need health insurance. Go figure. Or, as they say on South Coast, "Go Figah."
Steven Antonson eventually wore a wire and proved to be a fertile source of Buddy Cianci stories, many more of which you might glean from Mike Stanton's 2003 book, The Prince of Providence: The True Story of Buddy Cianci, America's Most Notorious Mayor, Some Wiseguys, and the Feds.
Monday, December 14, 2015
Publishing with a Trade Press
Because I've chosen to publish with trade presses rather than university presses (even the book I'm working on for Stanford University Press is probably going to be published by the press's new trade imprint Redwood Press), scholars who are thinking about going that route sometimes ask me what they should do--do they need an agent, how do you find one, etc. So I thought I'd share some of the things I usually say when I'm asked. I'm sure others who have published with trade presses will have their own thoughts on the issue, and I hope they'll share their advice as well.
First, trade presses buy books on the basis of proposals, rather than full manuscripts (this is for non-fiction; for fiction the whole book needs to be done). The proposal generally consists of a short overview section which describes what the book will be about, a short bio, an annotated table of contents, a short "publication specification" section that says when the book will be done, how long it will be, and whether it will have any special features like maps or charts or paintings of fruit saying weird things, a "marketing analysis," which is where the author tries to describe who might buy the book (trade presses are very interested in who the audience for the book is going to be), and a section that lists "comparable titles," which is not a literature review but rather a list of what books are out there that are like your book and how your book is different from them. Finally, you usually need to include a sample chapter, which should not be the first chapter. Of course, through the sample chapter and the overview, you need to communicate that you can write for the general public. For goodness sakes, do not include footnotes. There's a great book called "Thinking Like Your Editor" which describes the proposal-writing process really well. I highly recommend it.
Once you have a proposal, you have to decide whether to try and get an agent. To sell to the big trade publishers, you absolutely need one. But there are some awesome smaller trade presses which will accept non-agented submissions. My thrice-publisher Beacon Press is one of them, and the trade imprints of university presses will also take submissions directly from authors. Just go to their websites and find the right editor and send him or her a catchy query email asking if they would like to read your proposal (see below).If you want to try and sell your idea to a big, for-profit publisher so they can send you on a national book tour on their private Lear jet, then you will need to get an agent. First, try to identify a set of 10 or 15 or so agents who you think might like your book. You should certainly start by asking people you know who have an agent whether they will recommend you to their agent (assuming they like their agent), but beyond that, you can try and find out who represents authors who write stuff like you write. Use the internet. Also, you can subscribe to Publisher's Marketplace for $20 a month and find out all sorts of information about who sells what and how well they sell it. Once you get your list together, send each agent a short and catchy query email and ask them if they'd like to read the proposal (don't send the proposal without being asked to, unless the agent's website tells you to). Agents read hundreds of these a week, so you have to get their attention quickly. Do not be scholarly. Do not say "orthogonal" or "problematize." Show them you can write for a general audience and sell millions of books
Some agents will reject you within minutes. For others it will take days. Some will never respond to you. There's actually a site called Query Tracker or something like that which will tell you the average response times for each agent. Hopefully one or more agents will be excited about your project and want to talk more about it. Then one will agree to represent you, and you will sign a contract that gives 15% of your earnings to her or him. The agent will take over from there. If you're lucky, you will be on the jet drinking goblets of Remy Martin Louis XII on your way to readings in San Francisco and London and Istanbul within no time.
Sunday, October 11, 2015
Lisa McElroy's "Called On"
Lisa McElroy (Drexel) has published Called On, a novel about law school that Tony Mauro calls "This Generation's One L." Lisa tells me that Dan encouraged her in this project early on and she mentions him in the acknowledgements.
Tuesday, September 22, 2015
JOTWELL: Vladeck on Hart & Wechsler
The latest Courts Law essay comes from our own Steve Vladeck, reviewing the new Seventh Edition of Hart & Wechsler's The Federal Courts and the Federal System. I am a Low, Jeffries, and Bradley person myself, but Steve's review at least makes me want to take a look.
Wednesday, September 02, 2015
New Jersey’s Legislature Takes a “Grave” Misstep
Other than fellow “property law geeks,” not many people may wonder about property rights in cemeteries, but it is a surprisingly complex and varied topic about which I’ve pondered and about which Professor Tanya Marsh of Wake Forest has developed national expertise. She has recently written the definitive casebook on cemetery law (co-authored by recent law school graduate Daniel Gibson), has launched a venture with the Urban Death Project to work for “ecologically beneficial meaningful death care” worldwide, and has recently been quoted in the national media with respect to death and internment issues. Monday, in a short but completely compelling piece on Huffington Post, Professor Marsh took the New Jersey legislature to task for passing a law limiting churches’ ability to manufacture and sell tombstones, vaults, and private mausoleums.
As Professor Marsh clearly explains, creation and care for tombstones in church-owned and operated cemeteries is a religious practice. After all “rituals that mark the transition from life to death are a central part of most modern religions.” (I’d go even further and say that such rituals have always been a central part of all religions.) But this new New Jersey law, Bill 3840, that was signed into law by Governor Chris Christie in March 2015, limits churches’ ability to fully participate in those rituals – even on their own land and on behalf of their own members. The law seems to be a blatant anti-competitive, special-interest-group spearheaded “win” by the Monument Builders of New Jersey, who agitated for government assistance to preserve their de facto monopoly on manufacturing graves, memorials and vaults. Not only does this law serve no state interest at all – let alone a compelling one – it violates religious freedom in an essential and inexcusable way. Professor Marsh sums it up thus:
This law is an amazing act by the New Jersey legislature and governor. It was adopted at the behest of a group of private market participants for a reason no more noble than to protect themselves from competition. This blatantly anti-competitive effort is even more stunning because the product at issue–headstones and memorial tablets–are not regulated. No license is required to manufacture or sell them. Literally anyone in New Jersey can manufacture and sell tombstones, vaults, and private mausoleums–everyone, that is, except religious organizations and non-profit corporations that own or manage cemeteries.
Happily for those who care about justice and religious freedom and economic liberty, the Archdiosese of Newark, assisted by the Institute for Justice, have brought a lawsuit against the State of New Jersey, seeking to have the law struck down. There are several asserted grounds pursuant to which the court could invalidate the law, including violations of Due Process, Equal Protection, the Privileges and Immunities Clauses, and the Contracts Clause (Art. 1, Section 1) of the Constitution.
Tuesday, August 18, 2015
Coming: A "Tilted" List of Recommended New Titles in Law and Religion [WITH UPDATE]
I've been laid up for a good deal of the summer and it's been a good time to read in my field---or browse, anyway, although some of my reading gets done properly. There is no question that law and religion scholarship has exploded in quantity and interest lately, for obvious reasons. I may not agree with all the directions that the literature has taken, but these have certainly been interesting times for it, with a lot of new writers whose primary interests have come to overlap with law and religion. Over the next few months I'll be mentioning some new titles of particular interest. They will primarily be books, not articles. The recent profusion of published monographs and collections in and around the field has been just as impressive as that of journal articles, and with the usual gains in thoughtfulness and expertise--particularly on religion itself, whose treatment in the new legal literature is weaker--that books bring compared to law journal articles. [NOTE: A slight update is offered at the bottom of the post.]
Although I certainly welcome and have been reading "all comers," my list of notices and recommendations will be tilted. In this post, I wanted to say something about how and why. The list will have something of a religious and/or conservative tilt. (The "and/or" definitely applies here.) This has little or nothing to do with my own religious views or politics, and a lot to do with academic diversity and pluralism.
Successful academics in the fields I read in most tend to be heavily networked, and fairly conventionalist in their views. They do a good job of discussing and promoting decent books in their field that come from roughly within their circles and are not too heterodox for that circle, including political heterodoxy of a generally liberal or left-of-center kind. At least in my academic/cultural milieu, if a book meets those qualifications I can rest assured that I will see discussions of the book, generally positive and supportive, everywhere--if one defines "everywhere" in the way that Pauline Kael once defined the universe of anti-Nixon voters. They will be noted on my Facebook feed, given substantial attention on the blogs I read, and, despite being academic books, will receive a number of reviews in those mainstream liberal publications that still review books. Amazon's algorithms will recommend a dozen other books of roughly similar views--and their authors, I notice, are often the same ones conducting the favorable discussions online.
To take an example, I'm currently working on a review (for a print magazine reaching a sub-sector of the same liberal audience, thus underscoring my point above) of Andrew Hartman's A War for the Soul of America: A History of the Culture Wars. Since I'm still reading it, I won't comment on its merits. But it's fair to say that it's within the political mainstream of the academic milieu I'm talking about--my milieu--and that, for an academic title, it has gotten an enviable amount of attention from the usual academic and journalistic sources; it picked up another review, for an intellectual but general audience, just yesterday. It's not especially surprising that I read the U.S. Intellectual History Blog, or that it has gotten plenty of discussion there, or that Hartman writes on that blog, or that, from my perspective, the blog's community largely shares the same priors. Given that they share some basic assumptions, it's also unsurprising that the reviewers have generally been positive and supportive, despite some disagreements on particulars.
All that is to be expected. It's the way things--our limited attention spans, online algorithms, the current politically polarized culture, the culture and politics of the mainstream academy, elites, and/or the "symbolic analyst" class--work. As Miss Brodie said, "For those who like that sort of thing, that is the sort of thing they like." Although I'm happy to acknowledge it's natural, however, I won't say it's fine, especially for academics. It's lazy, contrary to academic values, and perpetuates an unhealthy form of elitism. It hides from view large numbers of ideas, arguments, and information that ought to be a part of the "standard" conversation and are not--are, indeed, in some sense treated as both beneath notice and below the salt.
Not all of this is ideological, by any means. There are both conservatives and traditionalist religious believers who are given attention within the conventional milieu, although they are exceptional, and these individuals are usually well-networked members of the elite who share some of its conventions. But it is certainly true that given the academy's conventionalism and given the politics of my sector of the academy, a lot of conservative and/or religious writers and books end up hidden from notice, out of the loop, out of the algorithms, not part of "the discussion." (There is an additional and, I think, related problem. A lot of good books that fall within mainstream liberal or progressive thought, or that are more radically leftist or "critical," and that do receive reviews and attention from conventional academics, have potential payoffs and benefits for conservative or religiously traditionalist arguments and groups. Those possibilities are generally neglected. I suspect that wouldn't be as likely if the reviewers gave more thought to books, ideas, and groups outside their usual political and intellectual milieu.)
Doubtless these authors, neglected within what I would consider the mainstream academic milieu, have milieux of their own, although I doubt they have an equal tendency to ignore conventional academic works in their field. But whether they do or not does not excuse anyone else from the general duty to read more widely and give appropriate attention and publicity to a wider range of books and views. Of course, many of the books and articles I read fall within the mainstream of what "everyone" else is reading, and my recommendations will often reflect that. But it seems to me that many heavily discussed books that fit the usual, not-to-be-spoken of qualifications receive too much attention, while many other books get none at all, and for the wrong reasons. I hope to even out the balance a bit, and to tilt a lance or two in doing so.
UPDATE: Elsewhere, a friend writes in with this observation: "I'm not sure whether the category is politically or theologically conservative, or both -- and how these relate to 'traditionalist.' One may be theologically conservative, traditionalist, and yet also quite left on critical issues, in a narrow-political sense." Fair point. I was assuming two categories: politically conservative, especially on social issues--at least in the legal academy, fiscal conservatism does not necessarily lead to one being ejected from the club or ignored by the conversation--and religious in a traditionalist way, since it's obviously possible to belong to the milieu I'm discussing here while privately holding religious beliefs, or to be religious in a milquetoast mainline way, or to be religious in a way that affects one's desire for justice but still make arguments in essentially a secular or secularist way. Deep attachment to a traditionalist religious community with thick beliefs and practices and the desire to witness those commitments in one's arguments, on the other hand, is I suspect not going to be characteristic of most people who make it into the conversation. I suspect that is even true for some whose views are left but still deeply traditionalist--I am guessing, to borrow a Catholic term, that it depends on how much of your seamless garment you let show--but admittedly I had traditionalist religious conservatives primarily in mind. Although this may help clarify--a little--what I meant by the terms I used, I agree that the terms raise a number of questions, and I'm not sure I chose the best descriptors.
Wednesday, August 12, 2015
Benforado on cameras and perspective
Adam Benforado (Drexel) has this Slate essay (excerpted from his new book). He discusses the role of perspective in evaluating video evidence and the need to "underst[and] how footage can influence perception," so "we can change how we use cameras to address that distortion." I have been making similar arguments, here and elsewhere. And I like some of Adam's suggestions about finding ways to obtain and use video with different or wider perspectives.
Friday, July 24, 2015
Liability for Lifesaving Inventions?
I saw that Evenflo has produced a new car seat (which will be sold by Walmart), which is designed to "jingle" when a child is left in the car seat after the ignition turns off. In light of the seemingly increasing number of horrific deaths of children accidentally left in carseats, this new car seat could be an important, lifesaving device. And, yet, the lawyer in me found myself immediately wondering about the liability issues, and accompanying normative questions. Walmart's director of corporate communications has apparently advertised that "this car seat will eliminate the chance of a baby being forgotten in a car." Of course, that is only true if the car seat is used properly, in a compatible car, with compatible technology, and if the device doesn't malfunction (among other things). The actual car seat and instructions will no doubt contain such warnings in bold print all over the place. And yet, despite such warnings, will a product that is designed precisely to ameliorate inattention (which, thereby, may reasonably encourage more of it), and which is advertised publicly as "eliminating the possibility of a baby being forgotten in a car" really be able to escape liability if some slight inattention in the use of the product causes it to malfunction? In this regard, if this particular product does not work as a result of misuse, it seems that the legal issues may be different than a run-of-the-mill product that fails to function properly because of misuse. Since the very purpose of the product is to protect against inattention, does it somehow bear a heavier burden to work despite inattention in use? In assessing such a claim, would a court take into the positive externalities (for the poor, helpless children otherwise trapped in car seats) from the product (in the cases in which it works)? Although I have not thought about torts in a rigorous way in quite some time, I do not believe there is a formal, doctrinal way to consider such positive externalities in assessing a liability claim regarding the carseat. And yet, it seems that normatively it should matter that an overly sensitive liability regime may discourage the production of this lifesaving product, and the positive externalities for the otherwise trapped children. What do others think?
Wednesday, July 15, 2015
"We Begin with the Assumption that Contracts Matter...."
One of my reads this summer, because it's relevant to my piece on "lexical opportunism," has been a fascinating little book by Mitu Gulati (Duke, left) and Robert Scott (Columbia, right), The 3 1/2 Minute Transaction: Boilerplate and the Limits of Contract Design (Chicago, 2012). The subject matter is a puzzler: why did sophisticated law firms keep including a particular contract provision (the "pari passu" clause) in sovereign debt agreements when (a) almost nobody could present a credible explanation of its purpose, and (b) a highly publicized case affirmed an interpretation of the clause that threatened to undermine all attempts to restructure sovereign debt?
Let me start with words of praise. This is a good read and good work. Anybody seriously looking at issues in contract theory ought to be reading it. But it's refreshing to read the results of an academic, empirical piece where the authors are so frank about their bemusement and their inability to come up with a satisfying explanatory theory. Professors Gulati and Scott come at the problem with a neoclassical economic perspective, and find that "these hard-nosed Wall Street lawyers told us stores about rituals, talismans, alchemy, the search for the Holy Grail, and Zeus." (5) It's pretty clear 173 pages later they'd agree that the conclusion - sticky boilerplate and herd behavior - is a whimper rather than a bang.
I confess that Ayn Rand's The Fountainhead and Atlas Shrugged were staples of my intellectual youth. I've since come to terms with some of the hokum and inherent contradictions in the philosophy (she hated Kant, and I kind of know why - her response to the limits of reason was to opt for an orthodoxy of logic, including the foundational posits that logic requires), but many of her bon mots come back to me at opportune times. The apropos quote here is from Francisco d'Anconia to Dagny Taggart: "Contradictions do not exist. Whenever you think that you are facing a contradiction, check your premises. You will find that one of them is wrong."
So.... One of the fundamental puzzles for Gulati and Scott is why sovereigns incur any costs toward lowering the cost of capital by way of contract design, and yet economists seem to think that contract design is irrelevant. The bridge from that to their assessment begins as follows: "In any case, as contracts scholars, we begin with the assumption that contracts matter." (23)
That bothers me. Let's try these variants. "As philosophers, we begin with the assumption that metaphysics matter." "As human anatomy scholars, we begin with the assumption that appendixes matter." "As physicists, we begin with the assumption that phlogiston matters." What's going on is a demonstration of the subtle ways in which descriptive theory has a normative component, even if the normative element is as basic as something like "this activity should be amenable to explanation by way of theory." If you start with neo-classical welfare-maximizing as the default in human decision-making - i.e., ceteris paribus, that's how the world ought to operate - no wonder it's a puzzle when it doesn't turn out to work that way. (I'm not sure if old Ayn ever got to the part of the Critique of Pure Reason that works through this - it's buried in an Appendix to the Transcendental Dialectic, beginning at pages A643/B671.)
If we check our premises, maybe contracts don't matter.
Thursday, June 04, 2015
Hello -- my name is Megan La Belle, and I'd like to thank Howard and PrawfsBlawg for the opportunity to guest blog here this month. I am an associate professor at Catholic University of America, Columbus School of Law, where I teach and research in the areas of intellectual property, civil procedure, and administrative law. I am looking forward to sharing some ideas about patent litigation and other topics with the PrawfsBlawg community.
Sunday, March 01, 2015
Recommending Highly The Black Box Society by Professor Frank Pasquale
This is my last post for this stint (my third) on Prawfsblawg and I want to thank again for inviting me Howard Wasserman and the others who are doing the work of keeping going what Dan Markel, ZT”L started.
I also wanted to share a very interesting, well-written and important book that I’ve been reading this month by PrawfsBlawg alumni @frankpasquale called The Black Box Society: The Secret Algorithms that Control Money and Information. (Amazon). Professor Pasquale is a professor at the University of Maryland Francis King Carey School of Law School of Law. In this book, Frank explains in clear, non-technical English what exactly is going on behind the internet technology we use every day. He explains how the sites we access on the internet are not just collecting information from us, but are selling it to others who are using that information in shaping the information we get back. So, and this among the more benign points, what you get when you run a Google (or other) search is probably very different than what I would. Google is not an automated index nor is a database like Lexis or Westlaw. Moreover, the information collected isn’t just shaping the advertisements we see on the screen, it’s controlling our access to jobs, credit, insurance, security clearances, and housing. As he explains, “you can’t form a trusting relationship with a black box.”
What makes the book of special interest to law professors is that it doesn’t just present the issue, it addresses the lack of legal restraints in the United States to regulate (or even monitor) the information private companies collect and the ways they use it. Frank makes a strong case, as he has in his scholarship, for the role of regulation not just in promoting transparency, but in regulating behavior. As he explains, “If credit scores can be regulated, why not the scoring systems used by digital advertisers and employers?”
Whether we directly use the internet to apply for credit, insurance or jobs, those offering these things to us have full access to extensive data about what we like, what we do, and how we are likely to behave. For example, they know whether we are willing to pay above market price for convenience. We are, he tells us, voluntarily opening our entire lives to commercial organizations who not only lack any obligation to keep our confidences, whose business model is to package and sell them.
While we were worrying about the government listening to our phone calls, we didn’t notice that “the state’s immense powers of compulsion and enforcement can now be enlisted in support of the black box technologies of the search, reputation, and finance sectors.”
I commend the book to you highly, as well as his NY Times Op-Ed overview but in the event you need more convincing, please see what others have said in Science, The New Republic, Slate, and The New York Times.
Monday, February 02, 2015
The Legacy of Ruth Bader Ginsburg
Congratulations to occasional-guest Prawf Scott Dodson (Hastings) on publication of his edited volume, The Legacy of Ruth Bader Ginsburg (Cambridge), featuring a great line-up of contributors. Al Brophy has a full write-up on the book.
Monday, January 19, 2015
Bedside Collections Visits in the Emergency Room
Should acute care hospitals be prohibited from attempting to collect health insurance co-pays and other forms of co-insurance bedside in the emergency room?
There isn't actually that much to garner a laugh in Steven Brill's new book America's Bitter Pill, but his description of how medical debt collector Accretive Health sells its services to its acute care hospital customers brought a smile to my lips. First, this was because the "Accretive Secret Sauce" is bedside Emergency Room collection and second, because Steven Brill had apparently never heard of this practice until researching this book.
Just where has he been making visits to the ER with his children? It is reported that at least half of acute care hospitals nationwide have been charging upfront ER fees. We are on the cusp of an era of changing constraints on hospital debt collection practices, including a change to the rules about bedside debt collection in the Emergency Room. Most of the new rules focus on those who likely would ultimately be eligible for free or reduced care and how they are to treated pending that determination. But what about the Bruce Folkens of the world-- the ones who most likely will not be eligible for free or reduced fee care? Will upfront fees in the ER remain the rule for them?
After all, could it be that New York Presbyterian, whose expertise in resolving aortic aneurisms such as the one Steven Brill suffered and describes as the narrative framework for much of his book, does not engage in this practice? If not, is it because their post-Emergency Room discharge collection numbers are stronger than those of Fairview Ridges Hospital in Burnsville, Minnesota?
We'll never know because, like a great many important topics in Steven Brill's book, we only know the anecdotal, the one off event. So, let's pause and do justice to Steven Brill's account of Bruce Folken's several hour visit to Fairview Ridges Hospital in Burnsville, Minnesota for chest pain where, yes, a hospital employee asked him about his plans to pay the remaining $493 left on his annual deductible.
Bruce Folken's experience at Fairview Ridges Hospital was not unusual in several ways. First, chest pain is one of the most common reported symptoms that drives Emergency Room visits in the U.S. and Bruce Folken's outcome (a diagnosis of indigestion) is also not atypical. Second, it is further not unusual that ruling out a significant cardiac event does not come cheap for reasons that the rest of Steven Brill's book struggles to explain.
So, once Brucke Folken (described as half way through his visit and resting in bed with an IV) was ruled-out as an emergency cardiac patient, why the rush to obtain payment? Could it have been that the hospital has been monitoring its collection rate and noted that Emergency Room bad debt is a disproportionate share of acute care hospital bad debt? Of course, the fine line here is between bedside debt collection from those using the ER for genuinely emergent care and those using it for urgent or even routine care and Accretive has, more than once, found itself on the wrong side of that line. Bruce Folken's situation is right on the line -- perhaps genuinely emergent at the beginning but morphing into urgent by the time bedside debt collection was undertaken.
If this offends, perhaps it is because of the retrospective determination of the validity of use of emergent care under the prudent layperson standard or some other standard found in Bruce Folken's policy, but surely not in having a substantial co-pay outstanding at the time of an ER visit.
You see, this is a scenario that will only increase in frequency. More and more of us are enrolled in high deductible plans and the trendline points upward. So, of course there are now and will be many more Bruce Folkens among those of us with unmet high deductibles and Emergency Room needs.
Don't forget your wallet.
Saturday, January 17, 2015
The Little Legal Academy and the Big Idea Book
Why does law insist on remaining an article field? In law schools, many professors never aspire to write books. Perhaps worse, many don’t have a book idea in them. In my view, our lack of emphasis on books—and especially on "big idea" books—is detrimental. When legal scholars get together, their conversations seldom concern big idea books. There are too many articles, opinions, and statutes to discern. Law review articles are the coin of the realm, and, as a result, we face a dearth of big idea books—by which I mean books that try to capture or espouse a grand theory or strategy of life. Without big idea books, we are left with far fewer big ideas.
In other fields, big idea books proliferate. Take foreign affairs, where such books are a fixture. Indeed, they are the only game in town. From Samuel Huntington’s The Clash of Civilizations, to Francis Fukuyama’s The End of History, to Joseph Nye’s Soft Power, to Henry Kissinger's many home runs, ideas are backed by books. And big ideas by big idea books. Every foreign policy thinker whose ideas have withstood the test of time has written a big idea book. In the think tank world, such books are also ubiquitous. Think of Robert Kagan’s Of Paradise and Power, In many other fields, they similarly abound. Consider Stephen Hawkings’s A Brief History of Time in physics, James Waston’s The Double Helix in biology and genetics, and the many such books in economics. Thomas Piketty’s Capital is a recent example.
I’m not claiming that we don’t have best-selling authors in the legal academy. We do. And I’m not claiming that we don’t have books. That would be silly. Obviously, we have plenty of both. I’m not even claiming that we don’t have big idea books. Rather, what I’m arguing is that we don’t have enough of them. And that we don’t place enough emphasis on them, either. A law professor friend told me recently that he had no time for such books. They took too long to write, did not fit his research needs, and were not available (wait for it ... wait for it) on Hein-on-Line.
Alas, that’s a problem. To me, this kind of thinking makes the legal academy seem small-minded. Its ideas, confined to the four corners of a single document, become inconsequential to the big idea men (and women) of the world. I believe that articles play an important role, don't get me wrong. But they do not provide the proper forum for big ideas—which are better sold through books. These are the most important ideas we want our fellow citizens to understand, ideas that by their very nature draw a simple, common, and shared thread from the legal academy to the greater, outside world. For such ideas to proliferate, it is time for legal scholars to change their view of books. A new generation must stand up for big ideas.
Even our big idea thnkers realize that not all of their ideas are as big as they could be. In Lincoln Caplan's recent profile of Cass Sunstein, Sunstein said of the Chicago economist Richard Thaler, a frequent coauthor with whom Sunstein wrote Nudge, “If you look at his academic articles and his very few books, he tends not to hit singles and doubles, he likes to hit home runs, and that’s just not my style. I have itchier fingers than you can have if you’re only looking for home runs.”
I'll submit that more home runs come from books. I'll also admit that in Paul Horwitz’s excellent schema of the kinds of readers you meet, I’m the Publisher's Agent, though I prefer to call it "the Bookie.” Come see me with an article idea, and I'll likely talk you into turning it into a book. Either that or I will tell you that you should not be wasting your time on the idea in the first place. But who has ever workshopped a book? Well, it's time we start.
Tuesday, January 06, 2015
Harvard Gets a Taste of Its Own Medicine
The transformation of the employer sponsored health care plans offered by Harvard University has hit the press. Heck, it was even discussed at AALS. Harvard has insulated its employees longer and more fully from the transformation -- begun before the passage of the ACA but accelerated by its implementation -- of its employer sponsored health insurance from a risk shifting to a risk sharing model. By this I mean that Harvard's employees are being introduced to a world of higher cost-share (deductibles, co-pays, etc.). Some Harvard employees are not happy at all.
I am agnostic on the question of whether Harvard ought single-handedly bear the cost of expanded health insurance. Conversations about Harvard's endowment are inherently fraught.
Regrettably, what has gotten less attention is the idea that Harvard might -- as some employers have -- embrace narrow networks in at least some of its offerings in order to offer a variety of plans that trade off choice and cost. The New York Times did note: "But Harvard’s ability to create such networks is complicated by the fact that some of Boston’s best-known, most expensive hospitals are affiliated with Harvard Medical School. To create a network of high-value providers, Harvard would probably need to exclude some of its own teaching hospitals, or discourage their use."
Oh, so much more could have been said. Harvard's teaching hospitals are, in fact, a leading contributor to health care inflation in Massachusetts, as the Massachusetts Attorney General's 2013 report on the matter amply demonstrates. The increased concentration of hospitals in Massachusetts, particularly those under the Harvard affiliated banner, has also played a significant role in high health care inflation in Massachusetts. And the proposed Partners Health merger, combining Harvard teaching hospitals with community hospitals has some people concerned that the post-merger entity will bring community hospitals under the Harvard teaching hospital reimbursement rate system.
If Drew Gilpin Faust were really serious about controlling health care costs for her employees, she might have to consider steering her own employees past Harvard affiliated facilities. But that may not pass the political laugh test.
Harvard may be learning what academic medical centers have been learning for a long time: it can be difficult to operate a medical center that serves your own employees at a cost effective price point, a bitter pill indeed.
Thursday, January 01, 2015
Maybe The Knick Needs a Few Midwives
I am, I concede, an odd television fan. I probably spend more time reading about television than actually viewing it. I actually enjoy reading reviews of television programs that I have no intention of ever viewing. Occasionally, however, a review or series of reviews makes me want to see something for myself.
And so it was with "The Knick", a bravura Steven Soderbergh creation (now with its second season in production) -- a medical procedural set in a turn of the century New York City hospital. With almost its first scene a heartbreaking and gut wrenching failed cesarean section, whatever else The Knick represents, it is vivid. It is also somewhat clinically detached. Eventually we learn that the failed cesarian had been attempted unsuccessfully twelve times before by the same team. As one reviewer wrote, "The Knick uses historical distance to make sickness into something strange and unfamiliar, giving its doctors the aura of scientific adventurers." Adventurers they were. Later footage depicting brave experiments with unknown forms of anesthesia tip us off that the character of Dr. Thackery may, in fact, be based on extraordinary real-life surgeon Dr. William Halstead.
It would be an understatement to describe Dr. Halstead as an adventurer. I do have to wonder if the series does him justice in one important regard. Noone comforts the crying (very soon to be dying) young cesarian candidate as she is wheeled into the operating theatre in "The Knick." It is apparent she senses she is near death but it is unacknowledged, although it is clear the risk is grave.
Dr. William Halstead, in fact, stood for a new gentler surgical approach, recognizing roughly handled tissues were often lost. No less than H.L. Mencken noted "[h]e showed that manhandled tissues, though they could not yell, could yet suffer and die."
The critics' reviews on "The Knick" are mixed. For each "Steven Soderbergh Made a Gilded-Age 'ER' and It's Riveting" review there is an equal and opposite "Surgical Strikeout." "The Knick," it seems, suffers by comparison with PBS's "Call the Midwife" (soon to be showing its fourth season with a fifth in production). "The Knick" is being criticized for lack of character development when compared with the well-developed characters of both health care providers and patients in "Call the Midwife."
In all fairness, "Call the Midwife" has had far longer to develop the characters involved but these critics may have a point. Patients in "The Knick" are often unnamed, breathtakingly mute or near-mute. Patients in "Call the Midwife" may even serve as recurring characters, as they did in Jennifer Worth's memoir on which the series, through season three, has been based.
Some of this is a difference in perspective. Jennifer Worth has left us her personal, professional, and spiritual autobiography in her three volume memoir of her time in East London. Hers is a meditation on her personal transformation through service in a low income, low health literacy community. Over time, Jennifer Worth did not flinch to discuss the desperation of women with too many children and too little money. "Call the Midwife" is not for the faint of heart despite all those wonderful sepia colored images you may have seen of midwife Jenny Lee pedaling to a house call through the clotheslines of the East End tenements. The series itself is far grittier and Jennifer Worth's memoir grittier still.
We will see where "The Knick" takes us. Given that Dr. Halsted performed the first successful radical mastectomy for breast cancer in the United States, never mind transfused himself on the spot to save his sister's life post-partum, I can only imagine that more compelling drama is ahead. Oh, and did I mention he was a stickler for complete sterility in the surgical suite? I hope we get to see a more well-rounded presentation of this compelling, complex, and astonishing man.
And the mute young mother-to-be who never lived to grow into her role? She teaches us something as well about how the human touch, whether felt in carefully restrained surgery or attentive midwifery, can comfort and strengthen, even unto the last moments of life.
Thank you to my friends at Prawfsblawg for the opportunity to visit with you this month and for the opportunity to ponder things health law related.
Friday, December 26, 2014
Robert Howse, Leo Strauss: Man of Peace
Happy holidays to all. If you have an Amazon or Barnes & Noble or what-have-you book certificate lying around from the holidays, I'm happy to recommend a new-ish book by our friend and occasional Prawfsblawgger (and one of my former teachers) Robert Howse, Leo Strauss: Man of Peace. We have been behind the times here recently at Prawfsblawg. On the whole, given the times, I think that's a good place to be. But there are exceptions, and this is one of them: the official publication date of the book was mid-September, and we should have been shouting it from the rooftops long before now. My attention was called to the book by this review of it at The National Interest. And here is a review in the LA Review of Books. The book is also available on Kindle, so there's no reason you shouldn't own it seconds after looking at this post. Congrulations on the book, Rob! Here's a book description from Amazon:
Leo Strauss is known to many people as a thinker of the right, who inspired hawkish views on national security and perhaps even advocated war without limits. Moving beyond gossip and innuendo about Strauss's followers and the Bush administration, this book provides the first comprehensive analysis of Strauss's writings on political violence, considering also what he taught in the classroom on this subject. In stark contrast to popular perception, Strauss emerges as a man of peace, favorably disposed to international law and skeptical of imperialism - a critic of radical ideologies (right and left) who warns of the dangers to free thought and civil society when philosophers and intellectuals ally themselves with movements that advocate violence. Robert Howse provides new readings of Strauss's confrontation with fascist/Nazi jurist Carl Schmitt, his debate with Alexandre Kojève about philosophy and tyranny, and his works on Machiavelli and Thucydides and examines Strauss's lectures on Kant's Perpetual Peace and Grotius's Rights of War and Peace.
Wednesday, September 03, 2014
First, by way of introduction, I am an associate professor at Barry University Dwayne O. Andreas School of Law in Orlando, and I teach Torts, Business Organizations, Health Care Law, and several Health Care Law Related Seminars. I write about topics at the intersection of science and the law, most recently in areas related to contraception in the Affordable Care Act, egg freezing, surrogacy, and prenatal testing ( SSRN author link here). I hope to write about some of the new issues cropping up in these areas over the next few weeks.
As most you can empathize, the beginning of the semester is extremely busy. I am chairing our Appointments Committee again this year--but the other reason for the hecticness is because I decided to switch my Torts and Business Organizations books this fall. This is my sixth year of teaching Torts and this is the third Torts book I have used (I switched to Farnsworth and Grady). This is my fifth year of teaching Business Organizations and this is the first time I have switched books (I am now using Smith and Williams). Of course, my grand plan was to prep the entire semester for both courses over the summer--and big shocker, that did not happen.Many colleagues warned me about the time suck of switching books and how much work it would be, and they were right. BUT I am loving the new books I am using--and it has made the material fresher and more interesting to me (and hopefully--as a result to my students). (By the way, I have no affiliation with either book or authors but I am enjoying teaching from them very much--and I know there are a lot of other excellent Torts and Business Organizations books out there as well) As someone who had gotten used to my old material, switching books has also allowed me to try out new teaching methods--especially incorporating many more problems into each class--to which the students seem to be responding really well. The new books are forcing me to be a student again-- I am rediscovering the material and it has been great. Don't get me wrong--if you find me up at midnight preparing for class, I am not always this positive. Some of my colleagues -(like Dan O' Gorman--perennial Professor of the Year at Barry and Fred Jonassen -who have similarly been unhappy with the books they were using) have written their own self published Contracts books that they, of course, love (and they are shopping it to publishers by the way) --but for those Prawfs who lack the time and/or motivation to do that--and don't completely adore their textbooks, I think the effort to review some examination copies of new textbooks - to see if something really fits one's teaching style and law school's student body better-is totally worth it. Now back to prepping for class...
Monday, June 23, 2014
Halliburton and the State of the Efficient Capital Markets Hypothesis
Very interesting set of opinions in Halliburton v. Erica P. John Fund, Inc. The continuing vitality of the efficient capital markets hypothesis is one of the big issues in the case, and there are numerous cites to law profs, including the law professors' amicus brief and articles by Lynn Stout, Don Langevoort, and James Cox, among others. Both big opinions cite to Lev and de Villiers. A very interesting example of when theory has a big role to play in doctrine.
From Chief Justice Roberts's majority opinion:
Even though the efficient capital markets hypothesis may have“garnered substantial criticism since Basic,” post, at 6 (THOMAS, J., concurring in judgment), Halliburton has not identified the kind of fundamental shift in economic theory that could justify overruling a precedent on the ground that it misunderstood, or has since been overtaken by, economic realities.
From Justice Thomas's concurrence in judgment:
The Court’s first assumption was that “most publicly available information”—including public misstatements—“is reflected in [the] market price” of a security. [Basic, 485 U.S.] at 247. The Court grounded that assumption in “empirical studies” testing a then-nascent economic theory known as the efficient capital markets hypothesis. Id., at 246–247. Specifically, the Court relied upon the “semi-strong” version of that theory, which posits that the average investor cannot earn above-market returns (i.e., “beat the market”) in an efficient market by trading on the basis of publicly available information. See, e.g., Stout, The Mechanisms of Market Inefficiency: An Introduction to the New Finance, 28 J. Corp. L. 635, 640, and n. 24 (2003) (citing Fama, Efficient Capital Markets: A Review of Theory and Empirical Work, 25 J. Finance 383, 388 (1970)). The upshot of the hypothesis is that “the market price of shares traded on well-developed markets [will] reflec[t] all publicly available information, and, hence, any material misrepresentations.” Basic, supra, at 246. At the time of Basic, this version of the efficient capital markets hypothesis was “widely accepted.” See Dunbar & Heller, [Fraud on the Market Meets Behavioral Finance, 31 Del. J. Corporate L. 455, 463–464 (2006)].
This view of market efficiency has since lost its luster. See, e.g., Langevoort, Basic at Twenty: Rethinking Fraud on the Market, 2009 Wis. L. Rev. 151, 175 (“Doubts about the strength and pervasiveness of market efficiency are much greater today than they were in the mid-1980s”). . . .
Monday, June 16, 2014
Wrap-Up for "Making the Modern American Fiscal State"
Many thanks for all our participants, especially Ajay Mehrotra, for our club on "Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877-1929." Here is a list of the posts:
- Bank: The Rise of Progressive Taxation: What Does it Mean to be Progressive?
- Parrillo: American Fiscal State-Building, Crisis, and Contingency
- Morse: Mehrotra tackles two mysteries in Making the Modern American Fiscal State
- Avi-Yonah: Avi-Yonah on "Making the Modern American Fiscal State"
- Lindsay: “You didn’t build that” and the “Benefits” Theory of Taxation
- Mehrotra: Making the Modern American Fiscal State, Central Themes and Claims
- Lindsay: The Citizen-Consumer and the Origins of Progressive Income Taxation
- Mehrotra: Taxation, Civic Identity, and the Future of Consumption Taxes
Many thanks to all our participants for a great club. And if you enjoyed this club, check out the online symposium at Balkinization for Nick Parrillo's book, Against the Profit Motive: The Salary Revolution in American Government, 1780-1940.
Friday, June 13, 2014
Taxation, Civic Identity, and the Future of Consumption Taxes
Thanks again to Matt Bodie and Prawfsblawg for hosting this discussion of my book, and for the commentators for their thoughtful questions and critiques. As I mentioned in my previous post, I thought I’d try to address some of the more specific questions raised by the readers and comments in their earlier posts. But before I do that I also want to reply to Matt Lindsay’s fascinating comment about the historical relationship between the rise of progressive taxation and consumer citizenship.
Matt makes the brilliant observation that the progressive critique of the tariff as a regressive consumption tax became more salient at the turn of the twentieth century, and not earlier, because by then one’s capacity to consume became more central to new notions of civic identity. I think Matt is absolutely correct, and this is a parallel that is, admittedly, rather under-developed in my book.
I do make reference, as Matt notes, to the neo-Jacksonian critique of the tariff as the “mother of all trusts,” and thus as a form of “state capitalism” that many nineteenth-century reformers adamantly opposed. But I don’t do enough with the literature on shifting notions of civic identity between production and consumption. Part of the reason was because I had a hard time squaring my periodization with the historiography which frequently contends that the rise of consumer citizenship came later, generally in the mid-twentieth century. Matt is quite right that the movement for a living wage, which many of the progressive economists I study supported, is the early version of this shift in civic identity. I just didn’t see many of my historical actors making this connection.
What I tried to do, instead, was frame this change in civic identity as part and parcel of a broader shift in visions of state power. Unlike the neo-Jacksonians who were critical of government from a “classical liberal” perspective, the reformers in my book were more open to the exercise of public power. The University of Wisconsin political economist famously noted that he and his cohort of “new school” economists believed that the state was “an ethical agency whose positive aid was an indispensable condition of human progress.” In this sense, these reformers were an essential part of what historian Mary Furner has referred to as the rise of a “new liberalism” in American law and political economy. Progressive taxation based on the principle of “ability to pay” was, I argue, a key element of that new liberalism.
Matt’s observation also reminds me that part of what I’m trying to do in the book is stress the importance of pre-WWI foundations. Nick Parrillo also draws attention to this pre-crisis institution-building. I try to show in the book that these pre-war tasks – from laying the intellectual and emotional spadework, to creating the constitutional and legal foundations, to implementing administrative innovations (like a crude form of withholding) – were all absolutely crucial to the accelerating development of the modern fiscal state during the war, and also responsible for its resiliency after the war. Thus, what might appear as comparatively small-scale changes (though amending the constitution was hardly small scale), were in the long duree quite significant.
Reuven Avi-Yonah raises another important, historically-specific question about Edwin Seligman and how he seemed to take an inconsistent position on the different theories underlying early twentieth-century tax policy. Reuven rightly notes that Seligman played a major role in the 1920s and later in shaping the international tax regime based on the benefits principle of taxation, not ability to pay.
This is a critical observation. Although I do not deal directly in the book with the development of 1920s international tax policy, I can say that Seligman and his cohort of “new school” economists did not believe that any one theory could be used transhistorically to support all tax policies everywhere. As German-trained historicists, they firmly believed that policy was a function of changing contexts and conditions, and they were quite clear in arguing that while the ability to pay rational was appropriate in supporting progressive income and wealth-transfer taxes at the national level, benefits theory still had an important part to play at other levels of government, particular the local level.
From this, I think we can extrapolate that the new school economists led by Seligman would have been more than comfortable in using benefits theory for international tax policy, without seeing their move as somehow intellectually inconsistent. International tax policy was fundamentally different from national tax policy, especially during the height of industrial capitalism, and thus they would have been open to alternative theoretical justifications.
Let me conclude by addressing a couple of questions raised by Susie Morse, Reuven, and Matt Lindsay about what my tale may tell us about today’s tax debates. In the conclusion, I gesture to how the “fiscal myopia” I trace in the book may be partially responsible for why American tax theorists and policy analysts continue to fixate on the progressivity of our tax system, while neglecting how a more holistic view of the tax-and-transfer system could address issues of inequality and regressive taxation. Susie, Matt, and Reuven each wonder whether the bias I identify has locked us into a resistance to consumption taxes and a neglect of how progressive spending can outweigh regressive revenue extraction. The book has a rather pessimistic view, listing several reasons why we might be locked-into this bias – not the least of which is the kind of American exceptionalism that Matt identifies.
Recently, though, I’ve become slightly more optimistic about this issue. If we’ve learned anything from American political or policy history, it’s that moments of crisis can lead to transformative changes. And if the policy analysts are correct that the U.S. is about to face a major fiscal imbalance when entitlement spending far outstrips revenue projections, perhaps we will be able to overcome this fiscal myopia – perhaps we will see something like a VAT that can generate the revenue necessary to underwrite our commitment to a modern regulatory, administrative, social-welfare state.
We’ll have to see. My book is just a humble story about the past – it’s not a bold prediction about the future.
Thanks again to Matt and PrawfsBlawg for hosting this discussion.
Thursday, June 12, 2014
The Citizen-Consumer and the Origins of Progressive Income Taxation
By way of underscoring Ajay’s emphasis on the importance of the pre-crisis conceptual transformation (and adding, perhaps unnecessarily, to the already-complex question of historical causation) I wanted to build on Ajay’s notion of fiscal citizenship to propose a further way of thinking about the relationship between the evolving political economy of citizenship and the rise of progressive income taxation. There is now a sizeable literature analyzing the shift in civic identity in the late-19th and early 20th century, from production to consumption—more specifically, from understanding work itself as a source of independence, dignity and virtue; to understanding a worker’s ability to maintain a respectable standard of living as a measure those citizenly qualities. This capacity to consume was at the center of union movements for a living wage, and for harnessing purchasing power (though boycotts and union label campaigns) to create a more just labor system. (I’ve argued in my own work that the standard of consumption likewise became an important measure of fitness for citizenship in debates over federal immigration policy.)
This left me wondering whether this shift in the political economy of civic identity helped to shape the transformation of the fiscal state by giving new resonance to the long-standing critique of the tariff and fueling support for a non-consumption-based revenue system. Ajay demonstrates that the tariff was widely viewed as inherently regressive, extracting more from those with less by surreptitiously folding the tax into the price of consumer goods. And even if it had, at an earlier time, plausibly served to protect infant industries, with the maturation of American capitalism in the final decades of the 19th century it was increasingly viewed as an illegitimate special privilege bestowed on political favorites. That’s basically a neo-Jacksonian critique of class legislation that, by the 1890s, had been around for decades. (And as Ajay notes, it had been forcefully advanced against the tariff by figures like Thomas Cooley and David Wells.)
I wonder, though, whether that critique gained such traction when it did because it stressed the impact of the tariff on the cost of life’s necessities at precisely the moment when a worker’s capacity to consume—to maintain a respectable standard of living—was becoming a measure of not only personal independence but also, and more broadly, of the basic compatibility between the industrial labor system and equal citizenship. This isn’t to doubt the vitality of neo-Jacksonian critique or the important role of the progressive economists in popularizing it; but rather to propose a further, perhaps complementary, way of understanding why political receptivity to a non-consumption-based alternative to the tariff system (i.e. the income tax) gained traction after the turn of the century. In short, was painting the tariff as a regressive consumption tax more salient at the turn of the century than it had been just a couple decades earlier, precisely because one’s capacity to consume had become so much more central to American civic identity? And while I’m at it, does the relative prominence of “consumer citizenship” in modern American political culture continue to serve as an impediment to serious consideration of broad-based consumption taxes?
Wednesday, June 11, 2014
Making the Modern American Fiscal State, Central Themes and Claims
First, let me begin by thanking Matt Bodie and the other folks at PrawfsBlawg for hosting this online book symposium, and the readers for their insightful commentaries. Many of the readers/commentators have seen this book project evolve over time and I’ve learned immensely from their earlier feedback and their own scholarship. I’ve also enjoyed reading the other book club posts at this blog, and I’m honored and delighted to have the opportunity to discuss my new book with PrawfsBlawg readers.
With this initial post, I thought I’d try to address some of the book’s more general themes and central claims – many of which have already been eloquently summarized by several of the commentators. I’ll follow up soon with a second post addressing some of the more, historically-specific questions posed by the readers and comments.
So, let me begin by addressing two key issues drawn from the commentators’ posts: (1) the political consequences of the rise of the modern fiscal state – intended and unintended; and (2) the importance of crisis and contingency – as they relate to theories of historical change.
Political consequences – intended and unintended. Steve Bank accurately notes that the reformers and state-builders who are the key protagonists of my story were seeking to create a moderate fiscal state. Although there were calls from the far left for more radically redistributive taxes, it was the middle-ground progressive activists, thinkers, lawmakers and administrators who ultimately prevailed. One reason they did so, as Matt Lindsay notes in his commentary, is because they had to work within the confines of an American political culture that was suspicious of centralized state power. The existing historiography tends to overemphasize, in my view, the strength of this anti-statist strand of American politics. And thus one of the main objectives of my book is to show that turn-of-the-century progressive reformers were able to take advantage of economic crises and national emergencies to overcome conservative resistance and create a more social-democratic fiscal state. Indeed, Thomas Piketty seems to agree that the United States in the early twentieth century was pioneer in adopting direct and graduated taxation.
In this sense, I do not believe that many of the historical actors in my account intended the new tax regime to be a temporary or fleeting part of the revenue system. To be sure, they advocated graduated income and wealth-transfer taxes as a counter-balance to the regressive incidence of the existing regime of national tariffs and excise taxes – at a time (the first Gilded Age) when American society was riddled with massive economic inequalities. But many of my historical characters contended that this new tax system would be essential for much more than just raising revenue or recalibrating the distribution of tax burdens. They sincerely believed that taxes, as part of the social contract, could also reconfigure notions of civic identity – or what I refer to as “fiscal citizenship.” Many of them also came to see direct and progressive taxes as a way to shape political institutions by building a vital administrative infrastructure, as Nick Parrillo has observed in his comments, and as he has argued in parts of his recent book. These were the intended consequences of the progressive fiscal state-building agenda.
But there were also several unintended consequences. Indeed, one of the great ironies that frame the book is how the so-called “success” of the “ability-to-pay” logic supporting the progressive income tax may have forestalled a more holistic American understanding of the tax-and-transfer process. In the book, I argue that by rejecting the “benefits theory” of taxation and exalting the “ability to pay” rationale, reformers severed the link between state spending and revenue generation. By stigmatizing nearly all consumption taxes as regressive and outdated expressions of the benefits principle, they limited the imagination of future American tax theorists and reformers. By defining fiscal justice exclusively by the progressivity of a tax system based on ability to pay, reformers created what I refer to as a kind of “fiscal myopia” that foreclosed the consideration of broad-based, European-style consumption taxes as a means to finance modern social-welfare spending. Thus, one of the “presentist” upshots of my book, as Susie Morse and Reuven Avi-Yonah note, is to explain how the origins of our current tax system may partially explain why the U.S. tax system, which lacks a value-added tax (VAT), is such an outlier compared to its OECD counterparts. Incidentally, in the book’s introduction, I gesture toward how intellectual currents may have contributed to other causes explaining why the U.S. has not adopted a VAT.
Matt Lindsay acutely notes another irony or unintended consequence in my story. By referencing the recent “you didn’t build that” controversy, Matt makes a great case for how “the defeat of the benefits theory a century ago has made it possible to deny any element of reciprocity, and thus to assert a kind of fiscal atomism that’s more strident than ever.” I think he is absolutely correct. But I’m not sure if this is a legacy of the progressive period, or whether it is a representation of a more recent fiscal transformation. As I try to explain in the book’s conclusion, I believe that since the 1960s, we have entered a new fiscal epoch – one in which there is a diminished sense of social responsibility and democratic obligation. Whether we refer to this period as an era of Bowling Alone or as Age of Fracture, there’s no denying that we’ve witnessed the growing disintegration of the social. In this sense, my book is really about a lost moment in American history – a moment when progressive reformers, thinkers, lawmakers, administrators and ordinary citizens believed in social solidarity and collective obligations.
Crisis and contingency – theories of historical change. In his thought-provoking commentary, Nick Parrillo has pushed me to elaborate on my theory of American political development, or more broadly on my understanding of historical change. Nick and Susie both correctly observe that WWI is in some ways the climax or linchpin of my story, but that I’m also resistant to the conventional account of war as the handmaiden of state-formation (a la Charles Tilly, et al.). Indeed, just as I am skeptical of the existing literature’s overemphasis on American anti-statism, I have been equally uncomfortable with the claims of historical social scientists that “war makes states” (Tilly 1985). Thus, the book tries to show that war is not simply an exogenous variable that ineluctably determines the size and shape of nation-states. In contrast to this Darwin logic of natural selection, I try to show how social movements, political activists, public intellectuals, power lawmakers, and key government administrators all engaged in a highly contested, contingent, and uncertain battle over the ideas, laws, and institutions that would come to define the new fiscal polity.
Still, one may wonder, as Nick does, whether my account would have been dramatically different if the United States had not adopted the intellectual and legal foundations for direct and progressive taxation before the national crisis of the Great War. Nick poses just such a counterfactual. This is an intriguing question. And as Nick no doubt knows historical counterfactuals can be both illuminating and dangerous. If I had to guess, I would think that the U.S. would have adopted a more moderate and perhaps temporary income tax, based on the Civil War precedents, to raise the revenue to wage a global war. The other options seem less likely.
All this, of course, raises the central question whether my historical narrative is in tension with my theory of historical change. Susie and Nick have both pushed me to re-examine whether war is or is not the explanatory variable. To answer this critical question, I think one needs to draw a distinction between fundamental causes of historical change versus triggering or catalytic events. As I see it, the fundamental causes of the fiscal transformation I have set out to explain were afoot well before the war emergency: the pre-crisis conceptual shift, which itself was rooted in the rise of industrialization and a more interdependent society; a constitutional amendment (16th); a new legislative basis; and the beginnings of an administrative apparatus – all these were the drivers of the fiscal revolution. The war was mainly a triggering event that accelerated a process that had begun much earlier. I’m not sure if I make this distinction between causes and triggers clear in the book, but this might be one way to reconcile my historical account with my theory of American political development.
In my next post, I hope to take on the more specific questions raised (or yet to be raised) by my thoughtful interlocutors and any other commentators.
Tuesday, June 10, 2014
“You didn’t build that” and the “Benefits” Theory of Taxation
There’s a great deal to admire about Ajay Mehrotra’s terrific new book, Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive taxation, 1877-1929. In this initial post, I’ll describe the book’s central themes and a few of its many virtues, and then raise a question about the long-run consequences of the legal-intellectual transformation that Ajay describes.
At the center of Ajay’s account is a wonderfully engaging intellectual history of a group of progressive American economists, including Richard Ely, Henry Carter Adams, and Edwin Seligman. It was these scholar-activists, among others, who did the foundational intellectual work of displacing the then-prevailing “benefits” or “compensatory” theory of taxation, which imagined tax-paying as one side of a reciprocal exchange between the taxpayer and the state; and replacing it with the “ability to pay,” or “faculty” theory, premised on new model of fiscal citizenship grounded in the social democratic values of solidarity and ethical duty.
Having absorbed the historicism and empiricism of the German Historical School of Economics in which they were trained, the progressive economists eschewed the purported timelessness and universality of classical British political economy. Instead, they emphasized the historical contingency of fiscal policy; its embedded-ness in the social and ideological context in which it operated. In practice, this meant drawing on the lived experience of modern industrial life to critique the classical liberal divisions between public and private, and between the laissez-faire state and the self-possessed individual; and forging a much larger role for the state in mitigating the economic inequality and conflict inherent in modern industrial capitalism. The progressive economists strove to accomplish all this, moreover, while steering clear of the more “communal” and redistributive views of their German mentors. To do so, Ajay writes, they needed to “graft continental ideas onto the stock of Anglo-American thought; they needed to make German economic theories palatable for modern American institutions and culture.”
The ability to pay theory of taxation, with its new vocabulary of duty and solidarity, proved essential to this project because it allowed the progressive economists to explain how an income tax regime that featured a high exemption and steeply graduated rates could shift a greater share of the tax burden to the wealthy, without undermining the principal tenets of market capitalism. As an intellectual history of this process of grafting, or translation, Making the Modern American Fiscal State is an engaging and instructive read. But it is also much more than that.
It is fundamentally a study of ideas in action—as Ajay writes, of how “[s]ocial movements, political activists, public intellectuals, powerful lawmakers, and key government administrators engaged in a highly contested, contingent, and uncertain battle over the ideas, laws and institutions that would come to define the fiscal polity.” (p. 25) To tell this story, Ajay expertly interweaves several parallel histories. Public intellectuals responding to broad structural economic forces like industrialization, corporate consolidation, and cyclical economic depression occupy a central role in Ajay’s analysis. But Making the Modern American Fiscal State is also a political history of the long-running battle between Republican defenders of the “regressive” federal tariff, and Democratic and Populist advocates of progressive income taxation; a constitutional history of the Pollock case (striking down the first federal income tax), the adoption of the 16th Amendment, and the Supreme Court’s post-Amendment decisions mostly ratifying emerging federal tax policy; and an administrative history of how tax reformers, lawmakers and Treasury officials created a more centralized and professionally administered fiscal bureaucracy.
Finally, and most surprisingly for me, it is also a history of American citizenship—specifically, of how the act of paying taxes became imbued with the citizenly virtues of ethical and patriotic duty, and of equal sacrifice for the benefit of the public. I have to confess that when this theme was first introduced, I wondered whether it might be somewhat overdrawn, and I was skeptical that citizenship had been more than a rhetorical trope used by advocates of a progressive income tax. But that skepticism dissolved once I encountered abundant evidence drawn from a rich and varied array of sources, and I came away highly persuaded that Ajay describes what was, in fact, a fundamental change in the very meaning of paying taxes, not only for tax reformers and policymakers, but also for many of the wealthy taxpayers who bore the brunt of the graduated income tax.
Now I’d like to turn to the long-run consequences of abandoning the benefits theory of taxation, and think about Making the Modern American Fiscal State specifically as a history of the present. Ajay argues that, by rejecting the benefits rationale so emphatically and completely; by stigmatizing all consumption taxes as hopelessly regressive; and by defining fiscal fairness exclusively as a matter of reallocating tax burdens according to the ability to pay, the progressive economists and their political allies created a kind of “fiscal myopia,” foreclosing consideration of broad-based, European-style consumptions taxes as a way to finance modern social welfare spending.
As I’ve been thinking about this and other various historical legacies of the transformation that Ajay describes, I keep returning to the famous “You didn’t build that” controversy of the 2012 Presidential campaign, which was prompted when President Obama mangled a passage of a speech intended to make the basic point that people don’t acquire wealth in a vacuum, independent of various public, tax-payer funded resources. Senate candidate Elizabeth Warren made a similar argument much more effectively it in a 2011 youtube video that's been viewed more a million times. As she told a group of supporters:
There is nobody in this country who got rich on his own — nobody. You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did. Now look, you built a factory and it turned into something terrific…. God bless — keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay it forward for the next kid who comes along.
Now, neither the President nor Senator Warren adheres to the 19th-century benefits theory, in the sense of wanting to limit tax contributions to the measurable benefits that each individual and business receives in return. But perhaps it’s nevertheless telling that leading contemporary advocates of progressive fiscal policy feel the need to invoke the social contract, and to make the argument that business owners do, indeed, benefit from public expenditures; and further, that reminding people of that fact inevitably elicits charges of “socialism.”
At the very least, it suggests that the vision of fiscal citizenship that Ajay describes is less robust today than many of us might like. But it also made me consider whether, for all of the limitations of the benefits theory (it’s regressive, transactional, atomistic, etc.), at least it had the virtue of reminding us as taxpayers that we do, in fact, receive reciprocal benefits for the payment of taxes—a fact that today is no longer a truism. In other words, I wondered whether the defeat of the benefits theory a century ago has made it possible to deny any element of reciprocity, and thus to assert a kind of fiscal atomism that’s more strident than ever. So the question is, should we add to the list of unintended consequences a second variety of fiscal myopia—specifically, an inability or unwillingness to see the embedded-ness of economic success in the broader matrix of publically financed amenities in which that success is achieved?
Avi-Yonah on "Making the Modern American Fiscal State"
The following is a post from Reuven Avi-Yonah:
This is an important and exciting book. Two questions:
1. To what extent did the lack of emphasis on the expenditure side of the budget in assessing progressivity, which Ajay characterizes as a mistake, lead to the current imbalance in U.S. tax policy (no VAT)?
2. Ajay emphasizes the role of Seligman in moving from benefits to ability to pay taxation. But Seligman was also a major figure shaping the international tax regime on a benefits basis. How can the two be reconciled, and what are the implications for the current attempts to revive benefits theories of taxation?
Mehrotra tackles two mysteries in Making the Modern American Fiscal State
Here are two mysteries of United States public finance. First, how was the 1913 ratification of a Constitutional amendment permitting the imposition of a powerful new federal income tax even possible? Second, why doesn’t the United States have a value-added tax or other broad-based national consumption tax? Ajay Mehrohtra grapples with both in his recent book, Making the Modern American Fiscal State.
Ajay calls his approach “neo-progressive,” but “contingent,” and he builds a careful history of American tax law and policy from the 1890s to the 1920s. The story covers the adoption of the corporate and individual income tax at both federal and state levels and the relative decline of excise taxes and custom duties, as well as efforts to improve the breadth and administration of the property taxes relied on by many municipalities. It ends before the explosive tax moment of the New Deal and World War II, which saw the institution of Social Security and other payroll taxes and the expansion of the income tax to a “mass tax.”
The income tax developments form the focal point of this political class warfare story.Economists may not have satisfied themselves about the consumer incidence of excise taxes and custom duties, but less-well-off consumers apparently felt it, and demanded a tax based on the sonorous and malleable metric of “ability to pay” – a practical relative of endowment or “faculty” taxation -- rather than the exchange-based concept of “benefits taxation.” That the 1893 Panic drove a Populist-and-rogue-Democrat passage of the first peacetime income tax in U.S. history is believable. It is what comes after that generates the mystery.
In class, I used to tell it like this: In a 5-4 1895 decision in Pollack v. Farmer’s Loan & Trust Co., SCOTUS held the federal income tax unconstitutional because it violated the requirement that “direct” taxes must be “apportioned.” It reasoned that since property taxes are direct taxes, taxes on income from property must also be treated as direct taxes. This ridiculously broad interpretation of “direct tax” was sensibly reversed by the 1913 ratification of the Sixteenth Amendment to the Constitution.
What? Because of sensible state legislatures, we got a federal income tax? Plaintiffs who had the resources to persuade a Supreme Court majority just decided to sit down and shut up? Wasn’t the Republican party dominant nationally? Were we at war? Was there some financial crisis?
The story Ajay tells does not have a simple motivating cause. There are at least three strands. First, there was a perception of increasingly unequal distribution of wealth and income, highlighted by the growing power of corporations and some rich families and a financial panic in 1906-07. Second, the states, especially Wisconsin with its individual income tax, successfully experimented, including with the administration of the tax. Third, academics strongly advocated the view that a federal income tax should not violate the constitution and indeed would make sensible policy. This view was voiced by Edwin Seligman of Columbia, apparently partly to atone for spinning out hypotheticals to the contrary at the request of the Pollock taxpayer plaintiffs. Ajay suggests that Seligman’s efforts helped tip the balance in favor of ratification in New York.
The story of this first mystery, the birth of the U.S. national income tax, perhaps partly explains the second mystery – why the United States does not have a value-added or other broad-based consumption tax. Of course, VAT technology developed later, after World War II. Nevertheless, Ajay argues that if the framework set up by the Pollock debate continued to dominate in later decades, it helps explain why the U.S. differs from every other OECD nation on the VAT question.
Like other flat-rate consumption taxes, VATs are regressive. This is often justified outside the U.S. by their capacity to fund broad social welfare programs. But the U.S. income tax debate at the turn of the century only focused on half the issue: only on whether certain types of taxpayers should pay more, rather than on how the money was spent. A focus on how the money was spent could have put income tax advocates back into the excise-tax-dominated benefits-tax box from which they wished to escape.
So perhaps turn-of-the-century policymakers developed the mental habit of sharply segregating taxation and public spending in their thinking to permit them to make a coherent argument to reverse Pollock. But it is striking that we maintain that habit today. It is a standard underlying feature of much analysis in a standard law school tax class and an explicit assumption of optimal tax theory. We measure the distribution of tax changes with predictable political skews, but more rarely attempt to say who benefits from changes in public spending. With Ajay’s book, we understand better why we have this bias. Whether we have the capacity to expand our view in a disciplined fashion remains an unanswered question.
American Fiscal State-Building, Crisis, and Contingency
In his sweeping and sophisticated new book, Making the Modern American Fiscal State, Ajay Mehrotra takes on a transformation of profound and enduring importance: America’s shift from a tax regime that was relatively regressive and indirect (centered on the federal tariff) to one that is relatively progressive and direct (centered on the federal income tax). Chapter 1 of the book sets the stage by introducing us to the old tax regime that prevailed as of the 1880s, especially the tariff. Chapters 2 through 5 explain how the new regime first gained a foothold in American government -- in the spheres of intellectual discourse, law, and government institutional capacity. At the end of Chapter 5, the year is 1915: the Sixteenth Amendment has been ratified, Congress has enacted an income tax targeted at the highest earners and corporations, and the Treasury Department has begun its collections, using the crucial administrative technology known as “stoppage-at-source” -- a crude early form of withholding. We can, at this point in the story, recognize the essential features of our present regime. Yet they exist only in embryo: the income tax itself is still tiny, with a top rate of 7%, accounting for only 8% of federal revenue (p. 352). It takes the crisis of the First World War -- with its tremendous revenue demands -- to cause the federal income tax to grow from a mere embryo into the workhorse of the American state. The Great War takes up Chapter 6, and it is the climax of Mehrotra’s story. The income tax's top rate skyrockets to 77%, and it ends up providing most federal revenue (p. 300, 352). The revolution is locked in: even in the putatively reactionary 1920s, as Mehrotra argues in his concluding Chapter 7, the top rate doesn’t go below 25% (more than triple the prewar figure), and the tax accounts for about 50% of federal revenue (p. 352).
Yet despite the centrality of the WWI crisis to the transformation Mehrotra chronicles, he is keen to resist a simple functionalist account in which (to paraphrase Charles Tilly) the war makes the state. As Mehrotra insists: “the wartime fiscal revolution was not merely a functionalist response to the need for revenue .... The wartime tax regime embodied, instead, a complex continuation of the conceptual shift in public finance advanced by prewar progressive intellectuals and political leaders ....” (p. 295; see also pp. 22-25). Mehrotra assigns great importance to this pre-crisis conceptual shift -- he devotes more than half the book to it (Chapter 2-5), in which he explains how reformers provided the income tax with a well-articulated economic and moral justification, a constitutional space, a legislative basis, and the beginnings of a bureaucratic apparatus.
I think that Mehrotra’s rendering of this story reflects (or, at least, can be invoked to support) a certain theory of political development, one that I would like to discuss in this post. To do so, let me pose a counter-factual. Say that WWI had occurred just ten years earlier. Had the United States gone to war against Germany in 1907, rather than 1917, the prospect of ramping up the income tax to pay for the war would’ve looked very different. It would’ve been constitutionally doubtful, would’ve demanded a much bigger leap in terms of new legislation, and would’ve required building a collection apparatus (e.g., stoppage at source) from scratch, rather than scaling-up a prototype. Further, the intellectual justifications would’ve been less developed. One can imagine that, in such circumstances, the U.S. government might’ve tried to finance the war by intensifying the old regressive regime, paying for the conflict with heightened tariffs, expanded excises, and borrowing. This might’ve entrenched the old regime further and/or made the U.S. war effort less successful. Alternatively (or in addition), the U.S. government might’ve tried an income tax, but it would’ve had to be “on the fly,” without the foundation-laying that Mehrotra emphasizes in Chapters 2-5. That is, it would’ve been similar to what did in fact happen in 1917-18 with the War Industries Board, whose management of production and procurement was far less successful than the Treasury’s financing operations (and note the WIB didn’t survive once the crisis ended).
That the income tax performed so well in WWI suggests that a comparatively small amount of pre-crisis institution-building -- consisting mostly of pre-organizational tasks like justifying the policy, carving out the constitutional space, and enacting the statute, plus a few initial organizational tasks like implementing stoppage-at-source on a small scale -- can go a long way in terms of intra-crisis (and post-crisis) operations.
On this point, it’s illuminating to compare Mehrotra’s book with a classic study of crisis-driven American state-building, Theda Skocpol and Kenneth Finegold, “State Capacity and Economic Intervention in the Early New Deal,” Political Science Quarterly 97 (1982): 255-278, elaborated in their book, State and Party in America’s New Deal (Madison: Univ. of Wisconsin Press, 1995). Focusing on the economic crisis of 1933, Skocpol and Finegold argue that the Agricultural Adjustment Act succeeded while the National Industrial Recovery Act failed because the AAA drew upon the mature, long-developed policy thinking and implementational knowhow of the U.S. Department of Agriculture, whereas the NRA had no mature state apparatus to rely upon. Personally, I find Skocpol and Finegold’s account of these two programs compelling. But their study is limited in what it can tell us, because their two cases are both so extreme. NRA had zero pre-crisis institutional capacity, whereas the USDA was extraordinary in that regard, having built routinized and attractive career paths for its personnel over the preceding decades.
The Treasury Department’s income-tax apparatus in WWI, as reconstructed by Mehrotra, presents an intermediate case: it had not enjoyed nearly as deep a process of maturation as USDA had by 1933, but neither was it forced to start from zero like NRA. When it comes to institution-building, crisis is opportunity (to paraphrase Rahm Emanuel). But laying the foundations for institutions -- even if these are largely intellectual or legal (i.e., merely “on paper”) -- may determine what kinds of opportunities the crisis presents.
Seen in this light, the exact timing of WWI (determined by events exogenous to America and thus arbitrary from the American perspective) seems fortuitous and highly consequential for American political development. Consistent with path-dependence theory (to which Mehrotra is sensitive, e.g., p. 354), major consequences arise from relatively small initial events and are to some degree random. I’d like to hear what Mehrotra thinks of this reading. How much is our present-day fiscal regime an accident of timing? Had the Treasury Department’s progress not happened to be a few years ahead of the German U-boats, would we all be paying different taxes today?
The Rise of Progressive Taxation: What Does it Mean to be Progressive?
Ajay Mehrotra is a leader of a new generation of tax historians and a pioneer in the field of fiscal sociology. Befitting his richly interdisciplinary training and acculturation, Ajay’s work is not merely a history of the tax laws, but offers an almost anthropological peek at the development of the fiscal architecture in this country. Indeed, Ajay is one of those writers where I’m tempted to read the footnotes before I read the main text. His citations to authority often provide an unparalleled literature review of the field. As an added bonus, many of his footnotes actually have pinpoint cites, unlike some historical books where the reader is left to wonder whether the author has actually read the books he is citing. With Ajay, there is no such worry. He reminds me of fellow tax historian Assaf Likhovski of Tel Aviv University in his polyglot-like fluency in the literature of multiple disciplines.
In Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877-1929, all of the best qualities of Ajay’s work are on display. The book is careful, nuanced, informative, and comprehensive. Although Ajay is not the first to observe this, the book beautifully describes how the revenue system was radically re-made over this period and beyond, shifting from a system focused on regressive customs duties and excise taxes (based upon the “necessity to consume”) to a system primarily based on taxing incomes and intergenerational wealth transfers (based upon the “ability to pay”). As befitting someone steeped in the Elliot Brownlee tradition of economic history, Ajay devotes ample time to profiling the pioneering public finance economists who Ajay gives credit for this progressive transformation, including Henry Carter Adams, Richard T. Ely, and Edwin R.A. Seligman. Perhaps his greatest contribution is in the book’s detailed description of the centralization of fiscal authority and the concomitant development of the administrative apparatus to operate the new system.
What I fear what may be lost amidst the subtitle and the momentous nature of the transformation is the extent to which the progressivism involved in the shift was more contextual, political, and contingent than the rhetoric might suggest. Although there were certainly those who envisioned a radically redistributive type of progressive taxation, they weren’t exactly the winners in this debate. Arguably, the prevailing theory of income taxation was one that is hardly ever discussed today and I did not see mentioned in Making the Modern American Fiscal State – one Edwin Seligman called the “special compensatory theory.” This was distinguished from the general compensatory theory, which posited that the income tax was necessary to offset “the inequalities consecrated by custom and by law” whereby “the legal conditions of society naturally favor the rich.” Under the special compensatory theory, the revenue system is viewed as a whole and one form of taxation is made progressive to make up for the regressive effects of another specific form of taxation. As Seligman wrote in the 1908 edition of his treatise on Progressive Taxation in Theory and Practice, the income tax and other similar direct taxes are “designed to act as an engine of reparation” against the regressivity of the customs duties and excise taxes. “In order to obtain equal treatment the regressive indirect taxes must be counterbalanced by the progressive direct tax.” (Seligman, pp. 144-146)
It’s not that Ajay ignores this part of the story. For example, Ajay explains that in 1894 “[income tax advocates . . . reminded their opponents that the proposed income tax was merely a supplement to a larger tariff regime, and that national taxation was just one part of a broader fiscal order that included many forms of regressive taxation.” (p. 128). It’s just that Ajay characterizes this as a political compromise that served as a weigh station on the road to the true progressivity of an income-centric tax system, rather than being a part of the design itself. Under this latter perspective, the transformation in the revenue system that began during this period envisioned an income tax in which the base and the rates ratcheted up or down based on the makeup of the remainder of the system. Indeed, during the debates over the first post-Sixteenth Amendment income tax bill in 1913, Senator John Sharp Williams, the leader of the Democratic caucus, argued that “when the good day comes – the golden day – when there will be no taxes upon consumption at all . . . and no import duties at all except countervailing duties to offset them [then] everybody will pay in proportion to his income,” meaning a flat rate. In effect, the transformation Ajay describes was important and it was progressive (in no small part due to the advance of fiscal citizenship that is one of Ajay’s themes), but it was not necessarily designed to lead to progressive income taxation as a permanent feature of the revenue system.
Perhaps this is why the “retrenchment” Ajay describes in the 1920s was not really a retreat from the principles of progressivity that helped motivate the original income tax. Instead, it was more a reflection of the post-World War I return to the mean for income taxation in its service as a mild counterbalance to the continued presence of regressive features, including, in more modern times, the regressivity arising from the unequal distribution of tax evasion opportunities. In many respects, the fundamentally moderate or even conservative underpinnings of the original income tax continues to describe the tax system and frustrate reformers, such as those who see Thomas Piketty’s recent tome as a clarion call for new forms of wealth taxation.
Book club on "Making the Modern American Fiscal State"
Our book club for "Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877-1929" begins today. Our club-goers will be:
- Reuven Avi-Yonah, University of Michigan Law School
- Steven Bank, UCLA School of Law
- Matthew Lindsay, University of Baltimore School of Law
- Susan Morse, University of Texas School of Law
- Julia Ott, The New School
- Nicholas Parrillo, Yale Law School, and
- Ajay Mehrotra, Indiana University Maurer School of Law
Looking forward to a great club!
Wednesday, June 04, 2014
Stress and Dissent: Reading Geithner and Warren
If you’ve read the books and academic articles or even watched the movies about the financial crisis, you’ve mostly heard a unified and compelling narrative. On the cynical end, Geithner, Paulson, and Bernanke were Wall Street cronies in bed with the largest banks, the vampire squids like Goldman Sachs, and they used taxpayer money to bail them out. The more generous and nuanced view is that they made unprecedented moves to bail out TBTF banks because the big banks had too much power and sway over them.
Geithner’s cleverly-named “Stress Test” is the Treasury Secretary’s attempt to convince us that everything we believed was wrong. (You can feel the struggle of Geithner trying to pull at the dominant narrative by watching the painful and uncharacteristically not-funny 45-minute interview with Jon Stewart .) Geithner sat at the very center of the storm from beginning to end. First as head of the New York Federal Reserve, the regulator most entwined with the Wall Street firms, he oversaw the early rumblings of crisis as well as the rescue of Bear Stearns and the failure of Lehman Brothers. Then, as Treasury Secretary, he oversaw TARP, the auto bailout, Dodd-Frank and every other aspect of the financial rescue. Geithner knows what we think happened and he addresses each of our facts with other facts, each opinion with an insider’s take and each objection with a “reality check.” He did not want to bail out banks for the bank’s sake. He expresses disdain for their excess, stupidity, and herd behavior. He wants us to know that his team bailed them out to save the economy and the public from their collapse. The fear that drove him was not Wall Street failure, but America’s demise. He and his team were convinced that “there would have been shantytowns again” if they mishandled the crisis. And once the war was started, it was necessary to use "overwhelming force."
Geithner is not an arrogant hot-head as all the public accounts seem to indicate (See books by Neil Barofsky, Sheila Bair, and even Warren). He comes off as humble and down-to-earth. His greatest flaw, and it’s a big one given his position, is that he lacks the gravitas and clarity to speak to the public and instill confidence. His signature is on all of our paper money and he sits at the center of a monetary system that is based purely on public trust. He readily admits that that is the one thing he “sucked” at. (He says the night before he started as Chairman of the New York Fed, he was carded when he tried to buy a beer). He is so aware of his failures in this arena that he runs through a list of media criticisms of some of his biggest public speaking flops, like the speech he gave about TARP that set off a stock market sell-off-- a speech that the Wall Street Journal commentator described as “Shock and uh.” He repeats these quips and more to “marinate” us in his shortcomings, which he also did with the President before he appointed him as Treasury Secretary. Geithner describes himself as an ordinary guy with average grades and average ambitions--or none, really. He goes to work for the government because he didn’t have a clear sense of what he was good at, didn’t want to go to Wall Street, and because that’s what his dad did. Unlike almost every other memoir or autobiography, Geithner doesn’t offer any past narratives colored by the present—he didn’t for example, realize he was “good with money” by running a lemonade stand and he didn’t learn how to deal with crisis because of his childhood spent living abroad. His narrative is an honest, just-the-facts story without much self-reflection or moralizing.
Geitner’s basic message is that he and his team were first responders in a financial collapse and their goal and major achievement was to prevent the U.S. financial system to go over a cliff. His book demands that we measure their success by that metric. They saved us from collapse and earned a profit to boot! What’s everyone whining about? He calls some of his critics “populists,” “moral hazard fundamentalists,” and those who wanted “Old Testament Justice.” Geithner had no time for such grandstanding and rhetoric. He keeps repeating: “plan beats no plan.” He had a fire to put out and he was singularly focused on putting it out. His mantra was “no more Lehmans.” According to Geithner, his failure to bail out Lehman, due in part to the Brits dropping the ball and not having enough authority, was the avoidable problem that set off an irrational panic. In this account, it’s hard to argue that Geithner was nothing short of heroic--or as Michael Lewis says, “unusually brave.” He steered a sinking ship to safety by putting his head down and working tirelessly despite relentless criticism (and mockery) from all sides.
But if Geithner is the hero in this story and the bailouts were the only thing between us and another Great Depression, then why is it still so hard to feel grateful? Part of it is that many people are still suffering. But the other part is that any story in which the protagonist saves us all from disaster by giving cash to big banks is not a story that can easily put us at ease.
Geithner is invested in writing the history of the crisis from his perspective and he is honest and thorough as he does it, but maybe what he views as noisy naysayers and “fundamentalists” weren’t just obstructionists who didn’t appreciate the gravity of the situation. Maybe they just wanted to play a different game.
Elizabeth Warren’s “A Fighting Chance” is an account from one of those populists demanding “Old Testament Justice." “No perp walks. No mass indictments ... Where were the armies of auditors, seizing hard drives and poring over the financial statements?” (Although Warren’s book reads much more like a campaign book—it’s basically “Dreams of My Father” and “Audacity of Hope” rolled into one—short on details and heavy on grandkids, dogs and peach cobbler.) If Geithner’s repeated mantra is “No more Lehman’s” and “haircuts are always a bad idea,” Warren’s is: “the game is rigged.”
Geithner played by the rules of the game to achieve the goals of that game and he did a great, even heroic job. And Warren wants to change the rules of the game so that “winning” has nothing to do with bank profits. She refers to Geithner in her book as someone who always had her back, but whose main interest was to “foam the runway” for banks--make the crash landing as painless as possible and return them to profitability as quickly as possible. And this is where Geithner’s background does prove something. Geithner was not a Goldman executive as everyone thought. He makes this clear over and over again. He was not a Wall Street guy. But he was an umpire in that game. It’s possible he spent so long marinating in the rules of that game, that he couldn’t see anything past the stadium.
Warren talks about a Time magazine cover in which she, Sheila Bair (FDIC), and Mary Schapiro (SEC) are labeled “The New Sheriffs of Wall Street.” Why were the Sheriff’s of Wall Street all women, she muses, when the majority of Wall Street all men? Because they weren’t invited into the stadium--they were outsiders: “I had never inhabited the world of high finance, never played golf with a foursome of CEOs, never smoked cigars at the club. Some people argue that if you are never in the club, you can’t understand it.” The financial system and the crisis are so complex that few people inside or out understand it and Geithner defends himself against the attacks by saying that people just didn’t understand the complexity or the stakes. He is critical of both Sheila Bair and Brooksley Born (former CFTC chairman who proposed that derivatives should be regulated when no one else saw them as a threat). Geithner’s condescending analysis is that Sheila just didn’t understand the problem they were dealing with and Born’s proposal for regulating OTC derivatives was “noble,” but she lacked a “concrete and plausible plan.” Warren, he says, didn’t have a workable plan that was better than his--and “plan beats no plan.”
In a democracy, dissent can’t just be dismissed because it comes from outsiders "without a plan." And complexity isn’t a shield from criticism. It’s clear that Geithner did everything he could do. Everything except ditch the play book. Or ask foundational questions: were the Wall Street banks actually providing a benefit to the economy? Why funnel the rescue through the banks in the first place? Is our current banking system the right intermediary for credit? Warren, on the other hand, does just that because as she says “not being in the club means never drinking the club’s Kool-Aid. I had studied the banking system from the outside so none of it was sacred to me.”
In the end, I was surprised by how much I actually liked Geithner. And I’ve never believed that the game was “rigged.” Or at least no one is doing the rigging—no “bad guys” or vampire squids. Just a dogma so pervasive that everyone on the inside seems oblivious to life outside the sacred walls of Wall Street finance. And like religious fundamentalists, all challengers to their faith are seen as wrong or misguided. But we don’t live in a Wall Street theocracy and we need to have a public discourse about what kind of banking system works for all of us.
Tuesday, May 27, 2014
Book club on "Making the Modern American Fiscal State"
Just wanted to provide a heads-up that on Tuesday, June 10, we'll be hosting a book club on Ajay Mehrotra's new book, "Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877-1929." Joining us for the club will be:
- Reuven Avi-Yonah, University of Michigan Law School
- Steven Bank, UCLA School of Law
- Matthew Lindsay, University of Baltimore School of Law
- Susan Morse, University of Texas School of Law
- Julia Ott, The New School
- Nicholas Parrillo, Yale Law School
Hope you can join us.
Thursday, May 15, 2014
Wrap-Up for Book Club on "Corporate Governance in the Common-Law World"
Many thanks to all our clubbers, particularly Christopher Bruner, for a terrific discussion on "Corporate Governance in the Common-Law World: The Political Foundations of Shareholder Power." Here are the posts from the club:
- Introductory Post
- Sokol: Common Law Corporate Governance
- McDonnell: Corporate Governance and Shareholder Dispersion
- Gold: Common Law Corporate Governance and Legal Ambivalence
- Heminway: Uncommon Law: Social Welfare and Corporate Governance in the Common-Law World
- Bruner: Is the UK really more shareholder-centric than the US?
- McDonnell: The Timing of Corporate Law Developments: Two Questions
- Cioffi: Chris Bruner on Corporate Governance in the Common Law World-Is There a New Grand Bargain Underlying the Varieties of Liberalism?
- Bruner: Corporate governance and social welfare policy -- what's the mechanism?
- Bodie: Bruner Book Club: The Relationship between the Corporation, Employees, and Social Welfare
- Bruner: Corporate governance and social welfare -- mapping the explanatory domain
- Bruner: Corporate governance and social welfare -- stability and change
- Cioffi: Bruner Book Club, continued: Mechanisms, Institutions, & (In)coherence
Many thanks to everyone for a great club.
Tuesday, May 13, 2014
Bruner Book Club: The Relationship between the Corporation, Employees, and Social Welfare
Many thanks to the participants in the club for a great set of responses. I'm coming in late, and given my location here on the employment side of the corporate governance/social welfare axis, I'm going to focus on the social welfare variable in Christopher's equation.
Corporate Governance in a Common-Law World does a great service in expanding and deepening the debate over the nature of corporate governance. Employees have been pretty much left out of the corporate-governance models in legal academia, going back at least to Easterbrook and Fischel, and perhaps as far as Berle and Means. That has changed somewhat, recently: for example, Bruner aptly provides some nice attention to the Gourevitch and Shinn book, which (among others, including John Cioffi) brings employees into the traditional manager/shareholder corporate-governance duality. But Bruner himself has gone a step further: he argues that corporate goverance policies are inextricably intertwined with employee-related social policies -- characterized in his book as "social welfare." By drawing a connection between corporate law and labor and employment law, Bruner has expanded the scope of "the law of the firm," for lack of a better term, to include not just shareholders, boards, and top-level executives, but rather all the participants in the firm, especially employees.
However, there are three issues I would like to raise in this post for further consideration. First, I want to question the definition of "social welfare" within Bruner's model. There has been a lot of focus on the scope of the "corporate governance" variable in his analysis, and I think Brett rightly brings up the roles of shareholder suits and executive compensation. But how about the social welfare side of the equation? I would have appreciated a greater effort by Bruner to develop his social welfare variable more rigorously, by explaining exactly what factors into it. The book does this for corporate governance, using a series of charts to compare differences between the common-law countries as to specific policies. However, his approach to social welfare is more anecdotal, and lumps in a rather large and somewhat amorphous set of policies.
To some extent, Bruner arguably simplifies "corporate governance" into takeover policy, and "social welfare" into unemployment protections. The easy correlation is that the risk of job loss from mergers and acquisitions would be balanced by national health insurance, unemployment insurance, and job retraining programs. But while his work is clearly not limited to that dynamic, it is unclear how far out it expands, particularly with respect to social welfare. He also relies on the work of the late, great David Charny, who set out a list of policies related to what he termed "the employee welfare state." But Bruner does not extensively develop Charny's list. He also focuses on the health care programs in the various countries, comparing the NHS in Britain (and similar systems in Australia and Canada) with the U.S.'s patchwork system of insurance and care. But social welfare policy cannot be limited to health insurance, can it? It would be interesting to see Bruner develop a sharper definition of this category in future work, with a more nuanced approach to subcategories. Is all of "social welfare" correlated with corporate governance, or can we narrow it down to specific subcategories of employee protections?
I bring up the underdeveloped concept of social welfare especially since Bruner makes some very nice observations about the lack of nuance in existing comparative corporate governance models. His criticisms of LLSV, for example, for failing to account for differences between common-law countries make a nice point about the importance of going beyond rather chunky categorizations. But his social welfare category risks making the same mistake. Just as a very particularized example, Sam Estreicher and Jeff Hirsch have recently challenged the notion that U.S. unjust dismissal law is much less employee-friendly than that of other developed countries. And this challenge is on a particular aspect of social welfare policy that most commentators would have thought to be well-settled. So I think we need a sharper definition of the social welfare category, and more nuanced comparisons within that definition, if social welfare is to be a meaningful variable in Bruner's equation.
Second, and perhaps a more interesting question from my perspective, is: what forces drove the societal balancing act into these two sets of policy spheres? Why, in particular, did employees not demand more ownership of the enterprise, rather than simply pushing for beefed-up social welfare programs? Social welfare policy seems like a second-best set of ameliorative efforts to address the lack of power that employees have within their own firms. Labor law is the most direct "social welfare" effort to address that internal power imbalance. However, that set of laws has been very careful calibrated to avoid any infringement upon the so-called "core of entrepreneurial control." Labor law carves out a space for employee power, but that power falls outside the decision-making center of the firm. It's not inevitable that employees must look to generate power outside of the firm, is it? And if not, then why did employees and other members of society choose the social welfare policies at issue as their means of balancing out pro-shareholder corporate governance policies? Bruner mentions two minor aspects of British company law that protect employees: statutory authority to consider shareholder interests and a statutory mechanism for providing payments to employees in the face of bankruptcy or closure. But such protections are, in Bruner's words, still "fundamentally quite shareholder-centric" in their orientation (p. 158). Why didn't or haven't employees pressed for more within corporate law?
Third, Bruner's model implicitly assumes that a pro-shareholder approach is necessarily an anti-stakeholder, particularly anti-employee, approach, at least to the extent that it needs to be balanced out by pro-employee social welfare policies. However, some of the recent battles between shareholders and managers do not seem to fit this rubric. Lucian Bebchuk, for example, is perhaps the scholar most associated with shareholder primacy, but he has been excoriated by business groups for being a tool of not only activist shareholders but also public-employee pension funds. The late Larry Ribstein was deeply suspicious of pro-shareholder reforms such as proxy access and say-on-pay, as he believed they allowed unions to have an undue influence over corporate policy. Bruner is careful in places to acknowledge that pro-shareholder is not necessarily conservative or liberal, but I think his model implicitly assumes that pro-shareholder is anti-employee. To some extent, the efforts of union pension funds to increase shareholder rights seems to belie this notion. Australia's superannuation program, discussed by Bruner, is another interesting example of how this contrast is breaking down in some places and spaces.
I have all these questions because Christopher has written such a provocative, original, and thoughtful study of the relationship between corporations, shareholders, employees, and society. His contribution has significantly added to the extensive literature on these issues, and I'm sure that this book is just the beginning.
Uncommon Law: Social Welfare and Corporate Governance in the Common-Law World
Reports of the uniformity of corporate governance among common law jurisdictions are greatly exaggerated (at least when it comes to shareholder rights and security, anyway). This is an essential descriptive thesis of Chris Bruner's Corporate Governance in the Common-Law World: The Political Foundations of Shareholder Power. It also is undoubtedly an engaging topic for a book--one that demanded my attention and resonated with me almost immediately. In research I did a few years ago for what ultimately became a draft paper and book chapter, I had explored the validity of claims of international convergence in insider trading regulation and found much the same thing that Bruner finds in this book: facial similarities in legal structures and doctrine may mask more interesting and telling differences.
The descriptive account is important, but it is not the heart and soul of the book. Rather, the core value of the book is that it strikes out beyond culture, history, and economics to politics--specifically, social welfare politics--to explain the differences among the corporate governance systems in the four jurisdictions studied--the United States, the United Kingdom, Australia, and Canada. By demonstrating that changes in shareholder power and protections vary with social welfare dynamics, the book begs a far more significant conclusion: that corporate governance oppresses and empowers the populace in much the same way that state government does and that the corporation therefore may be an arm of or a substitute for state government in promoting or effectuating policy. This take-away is unsurprising to me; it is intuitive and sometimes obvious in other contexts. Nevertheless, the weight of proof is hard to come by, and I am grateful for Bruner's work in providing it.
Many elements of the story are compelling.In light of debates here in the United States about the role of shareholders in the corporate form, it was of particular interest to me that the U.K. Companies Act (which I have not independently studied to an significant degree) casts shareholders in the role of principals that can dictate the activities of corporate directors. I had seen evidence of shareholder centrism in takeover regulation in the U.K. (which I teach in Comparative Mergers & Acquisitions, when I get the chance to teach that course), but the revelation that this shareholder-friendliness extends to the broader management function of the firm helped to explain and normalize the pro-shareholder mergers and acquisitions doctrine.
This observation about the doctrine also demonstrates a fundamental difference between the doctrine in the United States and the United Kingdom: in the United Kingdom, the board is an agent of the shareholders. While folks try to make that argument under U.S. law, the agency is not complete given, among other things, the inability of shareholders to direct the board (in most cases). In this aspect, the book's account of U.S. corporate governance offers support, at least from a comparative perspective, for the descriptive accuracy of Steve Bainbridge's evolving director primacy theory. At the very least, as Bruner notes, it is "explicable as a rejection of strict shareholder primacy." See p. 44. On that note, for those who haven't watched the videos of the recent UCLA Lowell Milken Institute event, A Conference and Micro-Symposium on Competing Theories of Corporate Governance, I highly recommend them.
I wonder (and I do not mean for this to be a mere rhetorical question) what, in light of Bruner's observations on U.S. corporate law, he might have to say about the introduction of social enterprise entities into state corporate law in the United States. In the past few years, we have seen in the United States the rise of benefit corporations, flexible purpose corporations, and the like (following on the introduction of B Corp certification and low-profit limited liability companies--L3Cs). This social enterprise entity movement (if you will) is in part a response to the lack of shareholder power under U.S. law to manage the business and affairs of the corporation--specifically, to ensure that the directors take into account social and environmental concerns in addition to traditional, financial shareholder wealth maximization. Yet, that account differs from Bruner's assessment in the book on other-constituency statutes like those in Indiana and Connecticut, see p. 44, which he characterizes as a "marginalization of shareholders." See also pp. 171-73. (I see Andrew also picks up on this thread.) The cultural, historical, economic, and political aspects of the emergence of social enterprise entities raise interesting questions that I would find to be a fruitful subject for further commentary. To the extent they may affect public companies (who may become and are acquiring social enterprise entities), the matter deserves thoughtful consideration. I can see how a treatment of this issue could both substantiate and challenge Bruner's observations about shareholder power under U.S. corporate law.
On a lighter note, as a securities law teacher and researcher, I also enjoyed the brief part of the book that explained the allocation of securities regulation authority in the various federal systems represented by the United States, Australia, and Canada. See p. 78. The issue of where authority in securities regulation resides in state governments outside the United States is always troublesome for those of us who desire to teach foreign law but have spent our time in the thickets of U.S. securities law. In other words, it's always difficult to find securities law in a new jurisdiction when searching for it from an ethnocentric perspective . . . . Here, I was admittedly a bit chagrined that U.S. securities law was classified as national law both as a default and in practice. Although the book only purports to address public companies (which admittedly are largely regulated under federal securities law in the United States), I would argue that a lawyer for a public company who forgets to check on the applicability of state securities law for a particular transaction is committing malpractice. This is true notwithstanding the breadth of constitutional power under the Commerce Clause and the resulting strong preemption provisions in the National Securities Markets Improvement Act of 1996. But I may be misunderstanding Bruner's analysis here.
No matter. The book is a good read (well written and provocative) and promises to generate much conversation here at Prawfs and elsewhere. It conveys a lot of information in a relatable and accessible way. I recommend it for your summer reading list.
Monday, May 12, 2014
Law Profs' Role in Bar Passage--and Bar Reform
ABA Standard 301 commands that “A law school shall maintain rigorous educational program that prepares its students for (1) admission to the bar and (2) effective, ethical and responsible participation in the legal profession.” Yet we in legal education have an odd relationship with the bar exam.
We know, of course, that it is the hurdle almost all of our students will have to clear before they are eligible to practice law. Most of us have passed it ourselves. We also know that bar passage has become a highly publicized metric of success. But for reasons that I have never fully understood, law schools have turned their back on the exam by leaving “bar review” to commercial companies. And by doing so have allowed the exam to become a test of cramming, not learning. Here are some ideas about how to better prepare our students not just for one “make or break” exam but also for the many years of law practice ahead of them.
- Lets get over the idea that it’s inappropriate for law schools to help students prepare for the bar exam. We all need to make ourselves aware of what areas of our subjects the students will be tested on.
- Support a movement to divide the bar exam into sections (or steps as in medical school) given over the course of law school, not all at once. This is not the same as taking the bar exam early. It is an organized system of objective exams that cover the first year topics the first year and then move on to more complex, scenario based questions that ask the students to actually use the information they have learned.
The written state essay exams are mostly very consumer oriented—they look at legal problems potential clients might bring to a new lawyer. Wills, divorce, arrest, property division, partnership, consumer fraud. But there is tremendous variety with each state being able to make its own decision. This may change if more states adopt the multistate essay exam.
The MBE, on the other hand, is a complex game of “gotcha.” (go look at some problems) And it may well have gotten that way because the bar review process supports it. Everyone’s research (public and private) finds that the most reliable indicia of bar failure is poor performance in law school. Professor Robert Anderson has put out comes at the same idea, how good are you taking tests, using LSAT scores as a factor. But it’s not clear to me if we understand what that really means. Could it be that students who perform poorly in law school perform poorly in bar review?
As Jane Yankowitz points out, we know very little about what happens to the students who fail. If what the bar exam is really testing is the ability to learn a lot of things very quickly (and that’s important for a lawyer) then aside for the hazing aspect of bar study what is it really adding to the cause of protecting clients?
So what to do?
First, we could help the students more with the existing bar exam by being more aware of what is going to be tested and how. The MBE is quite clear about the scope of what they test. Professor Steve Friedland has put out a book, One Hundred Rules You Need to Know to Pass the Bar Exam. I’m using it to audit my Torts Syllabus. Here’s a website with a lot of information about bar passage.
Second, we could get more involved in developing a series of standardized exams given throughout law school. The timing and content of the bar exam are strange. Neuroscience/Common Sense 101 tells us that everyone remembers best what they learned most recently. Yet the multistate bar exam tests, in enormous detail, many first year topics
I’ve written before that medical education struggles with many of the same problems we do, and is by no means satisfied with their testing system. But have a look at how they structure standardized testing. Step 1 comes at the end of the first two “classroom” years, step 2 after two more years of closely supervised clinical training and step 3 after residency. (Yes, they too have "commercial review courses" but medical students still do much of this exam prep themselves with practice question books and actual review--here and here) Note that step 2 also has a skills component including, among other things, observing a student interview and counsel a patient (who has been trained to present the symptoms of a specific disease).
Sure, you’ve heard criticisms of the bar before. And a common response is to shrug, say it’s not perfect but it’s the best we have given limited ability to actually watch students practice law. But I think we can give a better test that would hold students to a standard higher than cramming ability.
My goal in this blog post is not to convince or debate, but rather to start a conversation about imaging law school without commercial bar "review."
Saturday, May 03, 2014
Sen Elizabeth Warren's New Memoir of Special Interest to Law Profs
There are a lot of reasons why law professors should read Senator Elizabeth Warren’s recently published memoir--“A Fighting Chance." The top two are that it's well-written and frequently very funny. (for full effect--I suggest the audio version that the Senator narrates herself).
Beyond that, not only is it a lucid explanation of the banking industry’s efforts to limit the ability of creditors to make a fresh start through declaring bankruptcy, it is an account of her extraordinary academic career--one that she achieved without any of the traditional criteria such as academic pedigree, powerful mentors, family connections, prestigious fellowships or judicial clerkships. For those unfamiliar with her as Bankruptcy Professor-here are some posts she has made on the Credit Slips blog.
She also closely documents her struggles to balance family, both her children and elderly parents (and pets). There is a lot for law professors to unpack here--including how her interest in the people behind the laws has shaped her career.
But more generally, I look forward to discussing how critical it is for the future of legal education that Senator Warren succeed in convincing her colleagues of the need to reform the way higher education is financed. Whether she herself has the best plan for fixing student loans—well different people have different views-including just eliminating them. But unless we can stop the ever increasing cycle of debt that is making our students’ lives so difficult, any of the important changes that need to be made in legal education risk being about as effective as bailing out a sinking boat with a bucket that itself has a hole in it.
As I will elaborate later, I’m very optimistic that we can all create a program about which students can say 5, 10, 15 years later that they are better off for having gone to our law school. But we’re probably not there now. Rather, we are in a situation similar to being attacked by a hive of bees. Every individual bee, lack of job opportunities, bimodal salary distributions, drop in state support for public institutions, lack of transparency about student outcomes, out dated curriculums, disconnect between the classroom and the practice of law, imposition of a value system that drives law students into disproportionate levels of depression that may well follow them throughout their careers, is capable of inflicting painful or even lethal stings. But the breach in the hive comes from a level of student loan debt that cannot be supported by any reasonably obtainable career path. It’s not a perfect metaphor—student loan reform is necessary but not sufficient to developing a legal education that better prepares our students for the important role they will play in society.
Monday, April 28, 2014
Over at his blog, Stephen Bainbridge posted today about a Stanford Business School short case study arguing that a CEO divorce might impact a corporation and its shareholders, and therefore shareholders should take into account the personal lives of CEOs when making investment decisions. He concludes in his post that the corporation's directors likely do not have any legal obligation to affirmatively monitor the CEO's personal life, including his/her marriage. http://www.professorbainbridge.com/professorbainbridgecom/2014/04/the-impact-of-ceo-divorce-on-shareholders-and-the-fiduciary-duty-of-directors.html
While I agree with that conclusion regarding duty to monitor, as I have written about previously, it is a more ambiguous question under the current law whether a corporation that is actively aware of a situation in the personal life of the executive has any obligation to disclose that information to the shareholders.
In my scholarship, I have focused on a closely related question: not whether corporations do have to disclose personal information about its executives to its shareholders, but rather should corporations have to disclose such information to their shareholders?
On the one hand, the Stanford case study is probably correct that a CEO divorce (or other difficult situation including family death, or health situations) might impact a corporation and its shareholders. This general conclusion is not new, as finance scholars at NYU empirical studies studied data from Denmark and found statistically significant drops in company profitability following the death of a CEO's child or parent (although not after the death of a mother-in-law).
That is not the complete story, however, in deciding the normative question. In addition to the shareholders' interest in obtaining potentially relevant (one might arguably say material) information about the CEO, there is also a competing interest by the executive in being able to keep personal information about such deeply personal matters as health information, family deaths, and marital troubles to themselves and their circle of loved ones.
How do we balance these two competing interests? In my 2013 Florida State Law Review article "Disclosing Corporate Disclosure Obligations" I argue that the best way to balance and value these competing interests is to amend the existing corporate disclosure requirements to allow corporations and executives to negotiate and contract up front what the corporation's disclosure policy will be with regard to the personal information of that executive. The corporation will then disclose that disclosure policy to the shareholders. More details about the proposal are of course available in the full version of the paper available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2267414##
In my next post later this week, I will talk about the next portion of the project, where I consider if there might be reasons that we want executives to be able to hold on to some level of privacy because executive privacy might tell us something about how corporations then treat the privacy of their employees and consumes.
Saturday, March 01, 2014
Waldron v. Seidman, and the obligations of officials and the rest of us
"Never Mind the Constitution." That's the awesome title of this characteristically sharp and learned essay by Jeremy Waldron, reviewing in the HLR Mike Seidman's new book, On Constitutional Disobedience. Seidman's got a cheeky and funny short reply to Waldron, entitled, appropriately enough, "Why Jeremy Waldron Really Agrees With Me." I wonder if Seidman's Response will continue the apparent trend of the personal title for scholarship, e.g., Why Jack Balkin is Disgusting. If Susan Crawford's Response in the Harv. L. Rev. Forum to the review of her book by Chris Yoo is any indication, I suspect at most we can use these few data points only to identify a trend in favor of the "meta" title and not make broader generalizations just yet.
Moving past the title to something like the merits, I'll confess I'm pretty skeptical toward the general thrust of Seidman's argument (as characterized by Waldron and as evidenced in his NYT oped from last year). He is, as Waldron notes, basically a philosophical anarchist and that's a position I find largely untenable under particular conditions of a reasonable well-working liberal democracy. (Importantly, some of Waldron's work on political obligation was what led me down that path but little of Waldron's work on that subject figures into his review of Seidman.) One last mildly interesting thing to note is that Seidman's embrace of philosophical anarchism and his export of it to constitutional theory basically coincides with the thrust of Abner Greene's recent book, Against Obligation. There are differences between them, some of which are discussed here (review of Seidman by Greene) and here (review of Greene by Seidman). For those interested in these overlapping and important projects, the BU Law Review published a symposium on these two books last year, and you can find the contributions here, which I'm looking forward to exploring further, since, full disclosure, I am writing dreaming up something inspired by these various works on the moral and political obligations of prison or other corrections officials as a distinct class of officials).
Monday, February 17, 2014
Law Schools Competing on Course Material Prices
Christine Hurt's post about the sales model of legal scholarship included a new approach for providing students with course materials:
The direct-to-student model for casebooks. I've been thinking about this since I discovered how much a new edition of the Torts book I use cost (gasp). So, currently, I can use my work time to write a casebook that is then sold to law students, including mine, who pay $200/ea, and I get $20/ea. For doing my job. (I know, others deviate from this model, including paying their own students back their royalties .) But why not just self-publish? I spend my summer coming up with my own materials (as many do for their own courses anyway) and make them free for my students online? All the cases are available on the internet, and so are all the statutes/Restatement sections/etc. The only thing missing is the commentary and the questions (which I usually skip). This could save students $1000/semester. I'm teaching a course for the first time this semester, BA II, and I put together my own materials -- cases, law review articles, public disclosure documents. It takes a lot of time, but it's not crazy. What about first-time professors? Well, I would be happy to share my materials. In fact, all the Torts professors here could combine forces. Just a thought.
I have written (here and here!) about moving to an open-source model for casebooks. But it hasn't happened yet. I think there are pretty clear reasons why: (1) casebooks provide value to professors by organizing and synthesizing complex material, and (2) professors and law schools do not have to pay the costs of those materials directly or personally.
Ian Ayers, in the op-ed cited by Christine, argued that schools should have a "textbook maintenance organization" that provides students with books as part of tuition. So I was thinking about revisiting this idea now, and adding a twist: schools could compete against each other on course material prices. Here's what one enterprising law school could do:
- Instead of having students buy their own books, have students pay the school a yearly "course materials fee," and then the school would provide them with all the books or other materials assigned for their courses.
- The school would then buy books for its students (and, in theory, negotiate a cheaper bulk rate) or pay its professors to produce their own materials for their classes.
This system would incentivize not only cheaper casebook prices, but it would also incentivize the production of course materials more specifically tailored to that set of students. So schools with a local employment base could, for example, teach the criminal law of that particular state using state-oriented materials. I think (almost) everyone wins here:
- Students would pay less overall, as the school would have an incentive to keeps its fee lower given the salience and openness of the fee. And they also might get course materials more directly targeted to their educational needs.
- Schools would get the money for course materials directly and then either pay the publishers lower prices (by negotiating) or pay their own profs to produce teaching materials.
- Profs who produce their own materials locally could get some compensation for the value they add.
- And even though it might not be "good" for them, it would incentivize casebook publishers to add more value for what they are selling, so profs continue to use them. (Ayres argues that publishers would sell more books, which is possible but seems unlikely to me.) Plus, the school would not cover supplemental materials and/or study aids, so publishers would still be able to get full value there.
Ayres argues for textbook maintenance organizations as an efficient and fair reform. But couldn't it also be grounds for competition? Schools would have to make clear that they were working hard to save their students money overall, rather than just hitting them with another fee. So one school could advertise: "Students at most schools can pay over $2000 in course materials per year. At X School of Law, we'll cover all your course materials for only $500."
The response to educational market change seems to be slow and sticky. But given the ever-increasing cost of casebooks, paired with the new incentives for schools to compete on price, some schools might find some success here if they are willing to be first-movers.
BTW: if you need more evidence about the crazy inflation of casebook prices, check out this line from Ayres's 2005 op-ed: "We're used to paying $25 for a hardcover novel, but my casebook on contracts now sells to students for $103 . . . ." The 2014 price is here.
Tuesday, July 09, 2013
The Checklist Manifesto: A Book that Altered How I View the World
Perhaps I am late to the party, as it came out in 2009, but I recently finished reading The Checklist Manifesto, by Atul Gawande, and it changed how I view the world. Gawande is a surgeon, but he wrote this book for a general audience to probe how checklists can help to eradicate simple errors in the increasingly complicated things that we do.
As Gawande recounts, we live in a world of tremendously complex knowledge, yet we still make many harmful mistakes. Surgeries cause infections. Planes (unfortunately, as this past weekend's news reminded us) crash. Investors make poor decisions. How can we fix these problems?
The idea is quite simple: use a checklist. Well-constructed checklists, when employed at pause points in a complex process, help to ensure that we do not allow our huge array of knowledge to cloud the routine but essential steps we must perform in a given procedure. Buildings do not generally collapse because engineers use checklists at each step in the building process. Implementing a simple checklist in the operating room significantly reduces infections. Charles "Sully" Sullenberger used a checklist to successfully land his damaged plane in the Hudson River. (It is not clear whether the Asiana Airlines pilots in this past weekend's crash used a checklist once they realized they were in danger.)
Yet we still do not use checklists on a routine basis in lots of things that we do.Indeed, at a instinctual level checklists are often anathema to many people. Surgeons generally reject checklists because they believe they are the "experts" and know how to run their operating rooms. I experienced a knee-jerk anti-checklist mentality myself without even realizing it: The day after finishing the book I was on the telephone with an after-hours nurse hotline to ask a simple question about an allergy medicine, and I became very frustrated when the nurse kept asking me seemingly-unrelated questions about my symptoms. She continued to probe me on an array of irrelevant matters that, I thought, had nothing to do with my issue. Only after I hung up did I realize -- she was using a checklist! Sure, I might actually have a simple question regarding a medicine, but someone else calling with that same issue could be experiencing a more serious health issue that required immediate attention. Using a checklist could allow the nurse to catch the emergency situations.
Almost every endeavor we undertake could benefit from a checklist. Law is no exception. Litigators could use checklists in a deposition or when questioning a witness on the stand. Commercial lawyers can employ checklists at different stages of the dealmaking process. Brief writers might look to a checklist to ensure they include all of the necessary elements in their written submissions. We often tell law students to create checklists for their exams to make sure they are hitting all of the issues. But although there are obvious benefits, checklists are generally underused.
This is certainly true in my own field of election law. This all leads to one of my current research projects, an article tentatively titled "A Checklist Manifesto for Election Day." My initial research shows that states and counties provide poll workers with long, detailed training materials but no easy-to-use checklist to which they can refer on Election Day. Yet, as the continued flurry of post-election litigation demonstrates, we make election mistakes in every election. Perhaps a checklist can help.
It is rare that a book I read for pleasure turns not only into a research agenda but also changes the way I view so many aspects of what we do as a society. Faithful readers (hi Mom!), are there other books that have had same affect on you? Do you use checklists?
Saturday, June 08, 2013
"I Ought To Like, But Don't"
The weekend seems like the appropriate time for a frivolous and non-law post. I recently had the pleasure of seeing the Studio Theatre's excellent production of Tom Stoppard's The Real Thing. The Real Thing was already my favorite play, but seeing this production made me appreciate parts of it even more. My theater companion was not so impressed, and remarked that given his theater tastes, Stoppard was "one of those things I ought to like, but don't."
I was intrigued by the concept. Amazon and Netflix now regularly make confident assertions about things I'll like, given the other things I like, and given what people who like those things like. And while those assertions are often right, they occasionally misfire. Similarly, even without the algorithms, I suspect that each of us have books or movies or other tastes that we "ought to like," given the tastes of those similar to us, but don't.
Mine's The Lord of the Rings. I read a lot of fantasy novels and given what others like, I ought to like these. But while I finally managed to finally slog through the first two books by pretending that they'd been written by George R.R. Martin, I still got stuck early on in The Return of the King. I ought to like them much more than I do.
How about you?
Wednesday, May 29, 2013
On "Moving On"
I really enjoyed, and was challenged by, Stanley Fish's recent "Opinionator" column, "Moving On." I have a lot of books, at home and in the office, and (I confess!) I like having a lot of books . . . in piles, on shelves, across the desk, in one of those wheel-cart things. I write in them (imagining ludicrously that I or someone else will someday be curious about my in-the-margins reactions) and just cannot buy the idea that Kindles and Audible.com are substitutes. Yes, I know, this "like" of mine reveals both an insecurity and a less-than-commendable showoffyness. Still, like the Facebook group that "judges you when you use bad grammar", I cannot pretend that I don't judge when I'm in a house with no books. And, giving them away -- even ones I didn't like -- has always been kind of hard.
Fish reports, though, that, after getting rid of a whole bunch of his own (heavily annotated, I assume!) books, he "felt nothing":
In the hours and days following the exodus of the books I monitored myself for a post-mortem (please excuse the hyperbole) reaction. Would I feel regret? Nostalgia? Panic? Relief? I felt nothing. What should have been a momentous event barely registered as I moved on to what seemed the more important task of choosing a new carpet. I was reminded of what a colleague who had left a university after 23 years replied when I asked him if it was difficult to do. He said, “It was like checking out of a motel.”
Really? "Nothing"? That's striking. And, I think, impressive. To be able to look at piles of notes, and annotated books and articles, and "to do" files, and shelves with banker-boxes labelled with various laughably-over-ambitious project-names, and "say," as Fish reports having said:
What I saw on the shelves was work to which I would never return, the writings of fellow critics whom I will no longer engage, interpretive dilemmas someone else will have to address. The conversations I had participated in for decades have now gone in another direction (indeed, in several other directions), and I have neither the time nor, if truth be told, the intellectual energy required to catch up. Farewell to all that. So long, it’s been good to know you. I’m sure you’ll do fine without me.
This strikes me as very . . . "healthy", and not just because Fish is, he says, moving toward retirement. The fact that the "conversations" in which we are (or imagine we are, or aspire to be) participating were happening before us, and will go on after us, and are probably indifferent to (most of) us is a tough one for academics to confront, I think. After all, we are required to assert confidently and often the novelty and importance of our interventions in these conversations. And, it seems fair to say, Fish's actually have been pretty important. He can still say, so long, it’s been good to know you. I’m sure you’ll do fine without me. Again, impressive.
Monday, March 18, 2013
Prawfs Guest Tim Lytton Has a New Book: Check It Out!
Timothy D. Lytton is the Albert & Angela Farone Distinguished Professor of Law at Albany Law School. To read an interview with the author, click here.
Generating over $12 billion in annual sales, kosher food is big business. It is also an unheralded story of private-sector regulation in an era of growing public concern over the government’s ability to regulate the food industry. Kosheruncovers how independent certification agencies rescued American kosher supervision from corruption and turned it into a model of nongovernmental administration.
“Kosher is one terrific book. It’s a wonderfully entertaining account of the squabbles, finger-pointing, and cutthroat competition that turned kosher certification from scandalous corruption to a respectable—and highly profitable—business. Today, if a food is labeled kosher, it is kosher, which is more than can be said of most claims on food labels. You don’t have to be Jewish to appreciate the fun in Timothy Lytton’s presentation of an unusually successful case study.”
— Marion Nestle, New York University, and author of Food Politics
In overcoming many of the problems of insufficient resources and weak enforcement that hamper the government, private kosher certification holds important lessons for improving food regulation. The growing popularity of kosher food is a response to a more general cultural anxiety about industrialization of the food supply. Like the organic and locavore movements, a growing number of consumers see rabbinic supervision as a way to personalize today’s complex, globalized system of food production.
Thursday, January 31, 2013
Wrap-Up for Book Club on "Justifying Intellectual Property"
- Introductory Post
- Gordon: Thoughts on Justifying Intellectual Property
- Masur: The New Institutional Philosophy of Rob Merges
- Merges: Merges on Gordon on Rawls and IP
- Gordon: Replying to Rob Merges, Justifying Intellectual Property
- Bracha: What Good are Midlevel Principles in IP? [Thoughts on Justifying IP]
- Merges: Midlevel Principles: Response to Jonathan Masur
- Merges: Even More on Midlevel Principles in IP Law - Response to Bracha
- Duffy: Merges and Descartes
- Hughes: More on Rawls and Intellectual Property
- Bracha: Still on Midlevel Principles in IP: A Reply to Rob Merges
- Masur: Masur on Merges on Masur on Merges
- Merges: Justifying IP: Putting the Horse Before Descartes (Response to Duffy)
Wednesday, January 30, 2013
ost Book Club: Justifying IP -- Putting the Horse Before Descartes (Response to Duffy)
In this, my final response to the many interesting posts in my book, I want to traverse some comments that John Duffy made. To the other authors of posts, especially those who wrote reactions to my responses -- we will have to continue offline. I have taken too much space already. And the many readers of Prawfsblawg who care nothing for IP are I am sure tired of all this.
I am going to skip over the blush-inducing praise in John's post, and get right to his main point. He says:
" [I]f we are frustrated with the complexities of economic theories and are searching for a more solid foundation for justifying the rules of intellectual property, is Kant (or Locke or Rawls or Nozick) really going to help lead us out of the wilderness?"
John says no. He says further that just as Descartes' doubts drove him to embrace foundations that were thoroughly unhelpful when it came to elucidating actual physical reality, such as planetary motion, so my doubt-induced search for solid foundations will lead nowhere (at best), and maybe to some very bad places (at worst).
This argument may be seen to resolve to a simple point, one often made in legal theory circles: "It takes a theory to beat a theory." (Lawrence Solum has an excellent entry on this topic in his Legal Theory Lexicon, posted on his Legal Theory Blog some time back.) The idea here is that utilitarian theory is a true theory, because it is capable of proof or refutation and because it guides inquiry in ways that could lead to better predictions about the real world. By this criterion, deontic theories are not real theories because they cannot be either proven or refuted. Einstein's famous quip comes to mind; after a presentation by another scientist, Einstein supposedly said "Well, he wasn't right. But what's worse is, he wasn't even wrong."
My response starts with some stark facts. We do not know whether IP law is net social welfare positive. Yet many of us feel strongly that this body of law, this social and legal institution, has a place in a well-functioning society. Now ,we can say the data are not all in yet, but we nevertheless should maintain our IP system on the hope that someday we will have adequate data to justify it. The problem with this approach is, where does that leave us in the interim? We could say that we will adhere to utilitarian theory because it stands the best chance of justifying our field at some future date -- when adequate data are in hand. But meanwhile, what is our status? We are adhering, we say, to a theory that may someday prove true. By its own criteria it is not true today, not to the level of certainty we require of it (and that it in some sense requires of itself.) But because it will be "more true" than other theories on that magic day when convincing data finally arrive, we should stick to it.
My approach was to turn this all upside-down, I started with the fact that the data are not adequate at this time. And I admitted that I nevertheless felt strongly that IP makes sense as a field; that it seems warranted and even necessary as a social institition. So it was on account of these facts that I began my search for a better theoretical foundation for IP law.
If you have followed me so far, you will not be surprised when I say that for me, Locke, Kant and Rawls better account for the facts as I find them than other theries -- including utilitarianism. Deontic considerations explain, to me at least, why we have an IP system in the absence of convincing empirical evidence regarding net social welfare. Put simply: We have IP, regardless of its (proven) effect on social welfare -- so maybe (I said to myself) *it's not ultimately about social welfare*.
This is the sense in which, to me, deontic theory provides a "better" theory of IP law. It fits the facts in hand today, including the inconvenient fact of the absence of facts. Of course, we may learn in years to come that the utilitarian case can be made convincingly. I explicitly provide for this in JIP, when I say that there is "room at the bottom," at the foundational level, for different ultimate foundations and even new ultimate foundations. It's just that for me, given the current data, I cannot today make that case convincingly. And it would be a strange empirically-based theory that asks me to ignore this key piece of factual information in adopting foundations for the field. To those who say deontic theories cannot be either proven or disproven, I offer the aforementioned facts, and say in effect that an amalgam of deontic theory does a better job explaining why we have IP law than other theories. And therefore that it is in this sense "more true" than utilitarian theory. Again, it fits the facts that (1) we do not have adequate data about net social welfare; and (2) we nevertheless feel IP is an important social institution in our society and perhaps any society that claims to believe in individual autonomy, rewards for deserving effort, and basic fairness.
One final point: to connect Kant with Hegel with Marx, as John does, is a legitimate move philosophically. But I have to add that for many interpreters of Marx, he is the ultimate utilitarian. What is materialism, as in Marxist historical materialism, but a system that makes radically egalitarian economic outcomes the paramount concern of the state? The famous suppression of individual differences and individual rights under much of applied Marxist theory represents the full working out of the utilitarian program under which all individuals can be reduced to their economic needs, and all government can be reduced to a mechanistic system for meeting those needs (as equally as possible)? If we are going to worry about where our preferred theories might lead if they get into the wrong hands, I'll take Locke and Kant and Rawls any day. In at least one form, radical utilitarian-materialism has already caused enough trouble.
This is hardly all there is to say, but it is all I have time to say. So I will keep plodding along, like a steady plow horse, trying not only to sort out the foundational issues, but also to engage in policy discussion and doctrinal analysis. And with this image I close, having once again put the (plow) horse before Descartes in the world of IP theory.
Masur on Merges on Masur on Mergers
I greatly appreciate Rob Merges' generosity in taking the time to respond to my original post. His response is, characteristically for Rob, incisive and thoughtful. I am not sure, in the end, how much we really disagree. But I will take a shot at briefly disentangling and clarifying a few points with the goal of identifying whether or not disagreement actually exists.
Rob is absolutely correct that there are two separate questions: 1) whether an IP system can be justified at all; and 2) how well a particular system is performing. Rob argues that, with respect to question #1, the IP system cannot be justified on economic (by which we mean utilitarian or welfarist) grounds. Why would this be? One possibility is that utilitarianism or welfarism or consequentialism (which is what we mean when we talk about an "economic" foundation) cannot provide a morally satisfactory basis for intellectual property rights. There is a short section in the book (pages 151-153) that coulud be read as developing this argument, but that section is better understood as a critique of a completely unfettered free market, a point with which few economists would disagree. As a general matter, the book does not appear to be making this point, and indeed it would be a mammoth undertaking to do so (even for Rob Merges and this book) given the extensive arguments that scholars have been making for centuries about welfarism as a moral foundation. Rob will correct me if I am wrong, but I do not understand this to be his main argument.
A second possibility is that economics (read: utilitarianism or welfarism) cannot generate the midlevel principles that operate in intellectual property. But as I pointed out in my previous post, it can generate them -- or at least the ones that are really central to the American IP system.
The third possibility, and the one I understand Rob to be advancing, is that the IP system, as it is currently constituted, does not actually promote the utilitarian ends that an economic approach would demand. That is: as an empirical matter, IP doctrines as they operate today do not actually increase social welfare. As Rob wrote in his post:
"The data required by a comprehensive utilitarian perspective are simply not in evidence in this field -- at least not yet. Put simply, I do not think we can say with the requisite degree of certainty that IP systems create net positive social welfare."
That seems exactly right to me, and this is why I believe that Rob and I are actually in violent agreement as to most of the important issues. But this means that economics fails in response to Rob's question #2 -- how well is the system actually performing? -- rather than question #1, which is how the IP system can be justified on a theoretical basis. That is why I wrote that economics has failed an empirical test, while Rob's deontic theory has passed a theoretical test. This touches upon an excellent point made by a commenter to my first post. This is not a reason to abandon deontic theory; rather, the point is simply that when we evaluate different types of theories, we should do on comparable grounds.
Nor do I mean at all to say that Rob's deontic theory is not correct, or compelling, or even superior to economics. It is certainly the first two and maybe the third as well. It is just that I do not believe a utilitarian economic theory can be ruled out on the theoretical grounds used to evaluate Lockean and Kantian deontic theories. Economics is part of the overlapping consensus as well.