July 28, 2010

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Three Defenses of Markets

posted by Nate Oman

Broadly speaking, I think that there are three families of arguments that can be made in defense of markets. Most commonly within the legal academy markets are defended on the basis of efficiency. The central question is distributive: How do we move resources to agents in such a way as to maximize the aggregate welfare? Markets, so the argument, do this very well. Expressed preferences are the coin of the realm in market transactions, and we assume that expressed preferences are the best guide to welfare. Indeed, on some theories welfare simply IS the satisfaction of expressed preferences. Provided that we can have a regime that insures that transactions are voluntary, externalities are internalized, and transaction costs are overcome, markets will allocated resources better than any competing social institution. Thus the efficiency argument.

The second defense of markets is libertarian. This looks a lot of like the efficiency argument but is actually quite different, notwithstanding the fact that libertarians frequently confuse the two. In the libertarian argument what matters is not welfare but freedom. Freedom is taken as a good in and of itself, even if choices might result in reductions of welfare for the chooser. Paternalism is bad because is shows a disrespect for the autonomy of market participants. Depending on how one conceptualizes welfare the libertarian and efficiency arguments very nearly merge with one another. If welfare simply IS the satisfaction of expressed preferences then choice and welfare are very nearly synonymous. Notice, however, that there is nothing about the structure of the libertarian position that requires that one take such a position on the meaning of welfare. One might acknowledge the reality of welfare-reducing choices, while prioritizing choice over welfare normatively. Notice that in this argument there is nothing special about markets. They are simply a locus of choice, but so are many other institutions and practices from love affairs to soccer clubs. Thus the libertarian argument.

The third argument is a defense of markets as markets. Read the rest of this post »

  July 28, 2010 at 10:48 pm   Posted in: Contract Law & Beyond   Print This Post   Comments (17)

Dodd-Frank on Pay: Neutrality, Signaling, and Exposé

posted by Lawrence Cunningham

Neutrality, signaling and exposé are the tonics served up on executive compensation in the new law nominally aimed against Wall Street and for consumers. The 848-page statute also named for its sponsors, Senator Dodd and Representative Frank, makes public companies put neutral committees at the pay-setting helm, lets shareholders cast precatory votes on the results, and shines a potentially embarrassing spotlight on prevailing pay realities and ratios.  It puts a heavy hand on big bank pay setting.

Those incrementally averse to regulation will be appalled while those fearing serious flaws in pay practices enthralled. But neither group seems right, as these efforts reflect real problems, yet they are not likely to achieve their objectives. Even so, here’s a run-down of our new federal executive compensation laws, and predicted effects.

Read the rest of this post »

  July 28, 2010 at 8:26 pm   Posted in: Contract Law & Beyond, Corporate Law, Securities Regulation   Print This Post   Comments (0)

New Hires

posted by Sarah Waldeck

As the end of August approaches, I’ve been thinking about what schools should do to support those who are about to begin their first years as law professors. 

I’m hoping readers will share any useful measures their schools take to help ensure success.  I’m not soliciting ideas about large scale institutional measures such as pre-tenure leave or yearly performance reviews, valuable as these might be.  Instead I’m interested in more discrete steps that schools can take during the first and second years of an academic career to help promote quality scholarship, improve performance in the classroom, and inculcate norms about institutional service.

  July 28, 2010 at 1:23 pm   Posted in: Law School (Teaching)   Print This Post   Comments (1)

A Gummy Lawsuit

posted by Dave Hoffman

A man has bad teeth.  He chews Trident Xtra Care gum, which promises that it “Strengthens and Rebuilds Teeth” by “fill[ing] in the tiny crevices where cavities can form and leav[ing] teeth more resistant to plaque acids.”  His teeth remain rotten.  It’s America.  So he sues for deceptive business practices, and seeks to represent a class of gum purchasers.   You name the defenses.

  July 28, 2010 at 9:46 am   Posted in: Advertising, Consumer Protection Law, Contract Law & Beyond   Print This Post   Comments (1)

July 27, 2010

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The George Washington Law Review, Issue 78:5 (July 2010)

posted by George Washington Law Review

The George Washington Law Review, Issue 78:5 (July 2010)

(Contents of current and past issues are available from our website.)

ANNUAL REVIEW OF ADMINISTRATIVE LAW

Foreword

Jerry L. Mashaw, The American Model of Federal Administrative Law: Remembering the First One Hundred Years, 78 Geo. Wash. L. Rev. 975 (2010)

Case Study

Wayne A. Logan, The Adam Walsh Act and the Failed Promise of Administrative Federalism, 78 Geo. Wash. L. Rev. 993 (2010)

Administrative Law Essays

Matthew Albanese, Reasonably Untimely: The Difficulty of Knowing When to File a Claim for Attorney’s Fees in Social Security Cases, and an Administrative Solution, 78 Geo. Wash. L. Rev. 1014 (2010)

Robert Hatch, Reforming the Murky Depths of Wall Street: Putting the Spotlight on the Securities and Exchange Commission’s Regulatory Proposal Concerning Dark Pools of Liquidity, 78 Geo. Wash. L. Rev. 1032 (2010) 

Joseph A. Peters, The Meaningful Vote Commission: Restraining Gerrymanders with a Federal Agency, 78 Geo. Wash. L. Rev. 1051 (2010)

Peter E. Shapiro, Union Shops, Not Border Shops: Updating NRLB Sanctions to Help Organize Immigrant Workers After Hoffman, 78 Geo. Wash. L. Rev. 1069 (2010)

Paul T. Stepnowsky, Deference to Presidential Signing Statements in Administrative Law, 78 Geo. Wash. L. Rev. 1086 (2010)

Mark Taticchi, Avoiding the Chill: A Proposal to Impose the Avoidance Canon on the FCC, 78 Geo. Wash. L. Rev. 1102 (2010)

  July 27, 2010 at 9:15 pm   Posted in: Law Rev (GW)   Print This Post   Comments (0)

Dystopian Fiction Intersects with the Academy

posted by Frank Pasquale

Gary Shteyngart’s new novel, Super Sad True Love Story, looks to be every bit as good as Absurdistan. It’s a dystopian, futuristic work. In a radio show, Shteyngart was asked how far in the future the novel was set, and (without missing a beat) he replied “next Tuesday.” Consider the following from Michiko Kakutani’s glowing review of the book (and the links to various legal and policy thinkers), and judge for yourself:

It’s a novel that gives us a cutting comic portrait of a futuristic America, nearly ungovernable and perched on the abyss of fiscal collapse. . . .“Super Sad” takes place in the near future, and Mr. Shteyngart has extrapolated every toxic development already at large in America to farcical extremes. . . . Books are regarded as a distasteful, papery-smelling anachronism by young people who know only how to text-scan for data, and privacy has become a relic of the past.

Everyone carries around a device called an äppärät, which can live-stream its owner’s thoughts and conversations, and broadcast their “hotness” quotient to others. People are obsessed with their health — Lenny works as a Life Lovers Outreach Coordinator (Grade G) for a firm that specializes in life extension — and shopping is the favorite pastime of anyone with money. . . .

The United States is at war in Venezuela, and its national debt has soared to the point where the Chinese are threatening to pull the plug. There are National Guard checkpoints around New York, and riots in the city’s parks.

Shteyngart mentioned Ray Kurzweil and Aubrey de Grey in an interview as influences on the book’s futurism. I hope some of the ideas in the links above percolated in as well.

  July 27, 2010 at 7:30 pm   Posted in: Health Law, Humor, Politics, Privacy, Privacy (Gossip & Shaming), Technology, Uncategorized, Weird   Print This Post   Comments (1)

Doctrine as Empathetic Umpire

posted by Lawrence Cunningham

Testifying before the Senate committee reviewing his 2005 nomination as Chief Justice of the United States, John Roberts famously told those assembled that the job of being a justice is like being an umpire. The job is calling balls and strikes; not making rules up, just applying those already laid down. President Obama later rejected that analogy, when appointing both Sonia Sotomoyer and Elena Kagan to the Court, saying justices can’t be mere umpires.   They need to have empathy, he said.

Each of these viewpoints contains different partial truths; both emphatically demonstrate that personality plays a vital role in the docket of the Supreme Court. This underscores the political and ideological nature of the popular cases it grapples with. In that Court and in those disputes, political theory and hence ideology often prove pivotal. It’s easy to classify justices as liberal or conservative and the Court’s direction as toward the right or toward the left.

For less politically-freighted fields of law, or where the terrain is more reliably settled, it’s less accurate to speak of judges applying law in those terms—as being a mere umpire or needing empathy. Take contract law, where doctrine itself is a kind of organic empathetic umpire.

Read the rest of this post »

  July 27, 2010 at 10:59 am   Posted in: Constitutional Law, Contract Law & Beyond, Jurisprudence, Supreme Court   Print This Post   Comments (0)

Global Inequality & Access to Health Care

posted by Frank Pasquale

According to a recent study in The Lancet, “The world’s wealthiest two billion people get 75 percent of all the surgery done each year, while the poorest two billion get only 4 percent and often die or live in misery as a result.” It’s a striking fact; how are we to interpret it?

There are two metanarrative accounts of the relationship between inequality and health care. On a Whiggish, optimistic view, vast inequality can generate the capital necessary to fund investment in innovative health care technologies. Scholars like Richard Epstein have celebrated both general economic inequality and unequal access to health care particularly because, they claim, buying power at the top promotes investment in medical advances. On this view, innovations in the wealthy world can diffuse throughout lesser developed regions. Moreover, the rich can also subsidize the poor locally, paying for infrastructure that serves a broader community.

Interpreted less charitably, inequality enables the well-off to bid away resources and opportunities from the poor. Richer nations and persons may snap up limited resources; for instance, in 2009, Jeanne Whalen at the Wall Street Journal wrote an article entitled Rich Nations Lock In Flu Vaccine as Poor Ones Fret:

A scramble among wealthy nations to guard against a swine-flu pandemic is raising concerns that billions of people in poorer countries could be left without adequate supplies of vaccine. . . . The emerging battle between the haves and have-nots underscores a major weakness in the global health system: Pharmaceutical companies have severely limited capacity to produce flu vaccines in emergencies.

Inequalities can be even more stark at the R&D phase. If an anti-baldness cure can generate billions of dollars in revenue while a new therapy for tuberculosis only generates hundreds of millions, for-profit pharmaceutical companies may well have a fiduciary duty to invest scarce research dollars in the unhirsute rather than the truly unhealthy.

Lawrence Gostin’s recent article “Redressing the Unconscionable Global Health Gap” offers some practical ways of addressing these disparities:
Read the rest of this post »

  July 27, 2010 at 9:23 am   Posted in: Uncategorized   Print This Post   Comments (3)

The End of Forgetting, Rosen-Style

posted by Danielle Citron

Jeffrey Rosen has written a superb piece entitled The End of Forgetting in Sunday’s New York Times Magazine. The piece explores how, in our information age, damaging personal information often cannot be forgotten. It recalls Friedrich Nietzsche’s “eternal return” quandary:

What, if some day or night a demon were to steal after you into your loneliest loneliness and say to you: ‘This life as you now live it and have lived it, you will have to live once more and innumerable times more’ . . . . Would you not throw yourself down and gnash your teeth and curse the demon who spoke thus?”

Rosen’s piece offers insights and potential solutions from Concurring Opinions favorites — our very own Dan Solove, guest blogger Paul Ohm, star author Jonathan Zittrain whose book The Future of the Internet (And How to Stop It) will be the focus on an online symposium in early September, and Bright Ideas scholar M. Ryan Calo — as well as other exciting scholars like Cass Sunstein, Viktör Mayer-Schonberger and Alessandro Acquisti.

Read it!

UPDATE: Mike Madison at Madisonian has a superb post on the piece as well.

  July 27, 2010 at 8:31 am   Posted in: Privacy, Privacy (Consumer Privacy), Technology, Web 2.0   Print This Post   Comments (0)

July 25, 2010

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Anti-Business? Or Anti-The Worst Businesses?

posted by Frank Pasquale

A good, socially responsible business can’t make a profit if its competitors are free to trash the environment, impoverish and injure their workers, and evade the law. Don Blankenship knows that, and that’s why he’s on the warpath against the Obama Administration:

As CEO of Massey Energy, [Blankenship] has presided over a coal company that had thousands of violations in recent years, leading up to the April explosion that killed 29 of his miners. . . . [At the National Press Club, the] CEO was asked what he could have done to prevent the deadly explosion. “I probably should’ve sued MSHA” — that’s the federal Mine Safety and Health Administration — “rather than waiting” until now, he said. In the future, he added, “you’ll see not only coal companies but many companies resist the efforts of EPA and others that are impeding their ability to pursue their careers, or their happiness.” . . . .”There’s 42,000 people killed a year on the highways,” the coal boss offered as a way to put his miners’ deaths in perspective.

As James K. Galbraith noted in his book, The Predator State, there are too many members of our political class who want to help Mr. Blankenship pursue his law of the jungle vision of capitalism. Promoters of carte blanche deregulation are not “pro-business;” rather, they’re helping one, irresponsible part of the private sector outcompete other parts of it. As Galbraith argues,

Imposing standards, and enforcing them, is . . . the general policy response to . . . the reactionary forces within business who see to maintain competitiveness without technological improvement, without environmental control, without attending to product or workplace safety. They are the forces behind deregulation.

The business community is diverse; some companies care a great deal about their workers, whereas other treat them as little more than an expendable human resource. For example, in one time period, BP had over 700 “egregious, willful” OSHA violations, and Exxon had only one. A civilized society does not allow companies like BP and Massey to gain a competitive edge by endangering workers and the environment. Only a kakistocracy accepts a kakisteconomy.

Image Credit: Poster for the film The Corporation, which includes an interview with an inspirational figure for sustainable business, Ray Anderson (the CEO of Interface, the world’s largest carpet manufacturer).

  July 25, 2010 at 9:43 am   Posted in: Administrative Law, Economic Analysis of Law, Technology, Uncategorized   Print This Post   Comments (9)

NJLEEP–A Great Law-Related Program

posted by Mark Alexander

For the past several years I have had the pleasure of watching the New Jersey Law and Education Empowerment Program (NJ LEEP) build and grow as it works to help local kids achieve their full potential. NJ LEEP was founded in 2006 in partnership with Seton Hall Law. It works to empower low-income minority youth to perform academically and earn admission to four year colleges and universities.
NJ LEEP provides afterschool tutoring, grammar and writing classes, SAT preparation and various other tools aimed at helping high school students work towards their goal of a college education. The program is modeled off of Legal Outreach, a program that has been working with youth in New York City for 25 years. NJ LEEP’s successes are already apparent. For example, on average NJ LEEP students scored 260 points higher than the average Newark resident on the 2009 SAT. That positive change can be traced directly back to the dedication and importance of this program.
A vital part of NJ LEEP is a mentoring program which pairs lawyers and law students with a NJ LEEP student. Aside from providing a positive role model, mentors help coach the students for four constitutional law debates that are held throughout the year. Constitutional law is a challenging and complicated subject that has a way of baffling law students and lawyers alike, yet these high school students grasp the key legal concepts and present a 5 minute oral argument with great skill and intelligence. This progress would not be possible without the dedicated LEEP staff and also the volunteer mentors. NJ LEEP also places law students in city schools to teach constitutional law and trial practice. To date, NJ LEEP has worked with 13 urban high school and elementary schools through this program.
I am consistently impressed with the positive impact NJ LEEP programming has on its students. As someone who loves the Constitution and believes in the power of education, I fully believe in the way NJ LEEP uses the law and education to empower these young adults towards achieving their full potential. I strongly encourage you to contact the program and find out more—and I challenge you to pitch in, in your community. You can find out more about NJLEEP at www.njleep.org.

  July 25, 2010 at 6:30 am  Tags: high school, law and education, mentor, Newark, Seton Hall Law  Posted in: Uncategorized   Print This Post   Comments (0)

July 23, 2010

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More on the New Neutralities

posted by Frank Pasquale

As more bottlenecks emerge online, we’re going to hear about “new neutralities” beyond net neutrality. For a state of the art discussion of the issue, check out Mark Patterson’s article in the Fordham L. Rev. (“Non-Network Barriers to Network Neutrality”):

Even though search engines are presumably outside the jurisdiction of the FCC, if we do indeed have a national Internet policy that makes it impermissible to “significantly impede[] consumers’ ability to access the content and use the applications of their choice,” it is hard to see why both requirements of neutrality and disclosures of non-neutrality would not apply just as strongly, and perhaps even more strongly, to search engines as to access providers. . . .

Read the rest of this post »

  July 23, 2010 at 9:17 pm   Posted in: Cyberlaw, Google & Search Engines, Intellectual Property, Privacy   Print This Post   Comments (2)

The Importance of a Graduated Inheritance Tax

posted by Frank Pasquale

Bernie Sanders makes some valuable points in The Nation this week:

The 400 richest families in America, who saw their wealth increase by some $400 billion during the Bush years, have now accumulated $1.27 trillion in wealth. . . . During the last fifteen years, while these enormously rich people became much richer their effective tax rates were slashed almost in half. While the highest-paid 400 Americans had an average income of $345 million in 2007. . . they now pay an effective tax rate of 16.6 percent, the lowest on record.

Last year, the top twenty-five hedge fund managers made a combined $25 billion but because of tax policy their lobbyists helped write, they pay a lower effective tax rate than many teachers, nurses and police officers. As a result of tax havens in the Cayman Islands, Bermuda and elsewhere, the wealthy and large corporations are evading some $100 billion a year in U.S. taxes.

Whatever our nation’s tax future, these are vital facts to consider during the debate. Sanders has proposed the “Responsible Estate Tax Act (S.3533),” which would “raise $318 billion over the next decade by establishing a graduated inheritance tax on estates over $3.5 million.” Deficit hawks should applaud his approach.

  July 23, 2010 at 6:48 pm   Posted in: Economic Analysis of Law, Tax   Print This Post   Comments (6)

Where, Oh Where Shall They Sue?

posted by Jaya Ramji-Nogales

When I was a young law firm associate, we had tobacco, diet drugs, and Jeep rollovers.  These big money-making mass tort cases were known for sucking the life out of young attorneys, who could spend years of their lives in windowless rooms conducting document review tasks that could be performed by highly paid monkeys.  Next year’s class of monkeys will have a whole new nemesis: the Gulf oil spill litigation.

With over 200 federal civil lawsuits already filed, today’s Wall Street Journal outlines the battle shaping up among lawyers over where these cases will be heard, and most importantly, who will hear them.  Arguments on potential consolidation will be heard in one hour next week before a panel of seven judges in Boise, Idaho.  Pay attention, young associates!!  These decisions could determine your future residence, even if you thought you were signing onto a law firm so that you could live in New York.

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  July 23, 2010 at 3:06 pm   Posted in: Civil Procedure   Print This Post   Comments (0)

The Influence of Law Blogs (2006-Present)

posted by Dave Hoffman

I asked my wonderful research assistant, Robert Blumberg (TLS ‘12), to update the Yospe/Best study on court citation of blogs and the Best 2006 study on law review citation of blogs.  He used as a dataset the 2009 legal educator blog census (which we are currently updating – see future posts for details), excluded some general sites which happen to have a law professor as rare contributor (the Huffington Post), and ran searches in WL’s JLR database.  Since 2006, under those conditions, law blogs have been cited in the journals 5460 times.  Here are the top twenty sites since 2006.  Total citations are in (parenthesis), 2006 rank in [brackets]:

1. FindLaw’s Writ (618)
2. The Volokh Conspiracy (402) [2]
3. SCOTUSBlog (305) [4]
4. Balkinization (259) [3]
5. Patently-O: Patent Law Blog (211) [8]
6. Concurring Opinions (162)
7. Sentencing Law and Policy (160) [1]
8. JURIST – Paper Chase (130)
9. PrawfsBlawg (122)
10. The Becker-Posner Blog (104) [10]
11. Ideas [http://daviddfriedman.blogspot.com/] (103)
12. Conglomerate (102)
13. White Collar Crime Prof Blog (89) [12]
14. Election Law @ Mortiz (85)
15. Legal Theory Blog (85) [5]
16. The University of Chicago Law School Faculty Blog (76)
17. Technology & Marketing Law Blog (74)
18. Lessig Blog (73) [6]
19. The Harvard Law School Forum on Corporate Goverance and Financial Regulation (72)
20. Ideoblog (72)

Overall, the top 20 represented around 63% of all citations over the four year study period.  In 2006, the top 20 represented 76% of  852 citations.  In 2007, the top 20 represented 68% of 1095 citations.  In 2008, the top 20 represented 61% of 1388 citations.  In 2009, the top 20 represented 63% of 1441 citations.  Finally, in 2010 (so far) the top 20 has represented 65% of 562 citations.  It is difficult to make out any clear trend lines in the data.  Even taking into account the lag time of publication for 2009 and 2010 volumes, the rate of citations to law blogs is not increasing. There is a very mild trend toward diffusion in influence, although the top blogs still appear to drive the conversation, even as the number of professors blogging increased.  In the aggregate, the top few  blogs would each (if considered to be individual scholars) be worthies on Leiter’s citation lists.

Read the rest of this post »

  July 23, 2010 at 11:36 am   Posted in: Blogging, Empirical Analysis of Law, Law Professor Blogger Census, Law School (Rankings), Law School (Scholarship)   Print This Post   Comments (12)

The Inactivity Principle

posted by Gerard Magliocca

Yesterday I read the briefs in Virginia v Sebelius, which is the most developed lawsuit challenging the constitutionality of the individual health insurance mandate.  I was struck by two aspects of the arguments made in those briefs.

First, the case boils down to whether there is a meaningful distinction between congressional regulation of commercial activity and inactivity.  Coercing people without private insurance to buy some fits well within the “substantial effects” test of the Commerce Clause and the relevant principles governing the taxing power.  Nevertheless, opponents say that these doctrines all presuppose that the objects of the regulation are or would like to participate in the relevant market. Making the unwilling buy a product or enter a market, they contend, is unprecedented and should be deemed out-of-bounds as an infringement of individual liberty.

How should this argument be assessed?  It is easy as pie for lawyers or philosophers to explain why there is no moral or practical difference between activity and inactivity.  For example, one could say that people without health insurance are participants in the market because they exacerbate the adverse selection effect and drive up costs.  On the other hand, the law makes distinctions between action and inaction all the time.  Active euthanasia and passive euthanasia are treated differently.  State inaction can lead to the same harmful effects as state action, but the former is generally not a problem while the latter is.  Thus, I’m not sure why that distinction should be excluded from the commerce and taxing area (or from health care specifically).

One possible response is that there are areas where Congress can “draft” citizens into action.  Military conscription and jury service are two examples.  In these cases, though, one could say that there are specific textual provisions involved or that there is a long tradition of congressional authority in the area.  Neither is true for health care.  Turning this around, however, one could also say that what links these compulsive powers is that they are core elements of citizenship.

Is health care a core element of citizenship?  Well, the statute passed this year is certainly trying to make it so, and there is some support for that view among the public.  This is why the results of the 2010 and 2012 elections matter.  They will either lend credence to this position or not, which in turn will influence how the courts view the inactivity principle.

  July 23, 2010 at 9:16 am   Posted in: Constitutional Law   Print This Post   Comments (1)

Book Review: Bank’s From Sword to Shield: The Transformation of the Corporate Income Tax, 1861 to Present

posted by Samuel Brunson

  July 23, 2010 at 12:08 am   Posted in: Book Reviews, Corporate Finance, Corporate Law, Tax   Print This Post   Comments (1)

July 22, 2010

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War-Gaming CyberStruggle, Circa 1999

posted by Frank Pasquale

Given recent debates over the size of the threat posed by cyberwar, I thought I’d mention the following simulation that was done by the RAND Corporation in 1999. The excerpt is from Brian Persico’s article Under Siege: The Jurisdictional And Interagency Problems Of Protecting The National Information Infrastructure, in the CommLaw Conspectus:

The object of the study was to assess the decision making process during a major hypothetical “information warfare” attack launched against the United States during a crisis in the Persian Gulf region. Based upon the RAND Corporation’s projected trends in the world’s geopolitical balance of power, the exercise’s scenario was based upon a fictitious split between members of the Organization of Petroleum Exporting Countries (“OPEC”) over levels of oil production. Simultaneous with the study’s fictitious disruption in relations, simulated infrastructure break-downs occurred in Saudi Arabia, Egypt, and the United States.

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  July 22, 2010 at 9:39 pm   Posted in: Military Law, Uncategorized   Print This Post   Comments (0)

Inequality and the Great Recession

posted by Frank Pasquale

Over at Religious Left Law, Steve Shiffrin has blogged on Robert Reich’s recent analysis of the relationship between inequality and the recession. As Shiffrin explains, “when wealth is concentrated at the top, the rest do not have enough purchasing power to support the economy.” I wanted to elaborate on that point; I’ll try to address some challenges to it in future posts.

1) Paul Krugman appears to disagree with Reich’s (and others’) “underconsumption theory.” For Krugman, inequality’s negative impact on macroeconomic stability (if it exists at all) is mediated by the political system. Politics gets more polarized during times of inequality, and that polarization may be preventing constructive, cooperative approaches to developing the infrastructure that a thriving market needs.

2) Robert Brenner predicted a “crisis of overproduction” years ago, and we may well be in it now. We know that “businesses are only producing 3 percent fewer goods and services than when the recession started, but Americans are working 10 percent fewer hours.” Economic theory might predict that more productive employers will hire more workers. But when unemployment is as high as it is now, employers can also choose to force the “survivors” at their firms into working longer hours for the same amount of pay.
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  July 22, 2010 at 8:31 pm   Posted in: Economic Analysis of Law, Law and Inequality, Philosophy of Social Science, Politics   Print This Post   Comments (2)

The Spending Power

posted by Gerard Magliocca

As part of my draft paper on “Federal Remedies for Dysfunctional States,” I thought I’d pose the following hypothetical. Suppose that a state goes to Congress for a federal bailout.  Congress responds that the money will be provided on condition that the Governor resign.  (And let’s say there are some findings made that the Governor is corrupt/inept/a spendthift, etc.) Would this be constitutional?

One answer is yes because the state is free to refuse the money.  Under that theory, there could never be an unconstitutional exercise of the Spending Power.  Another answer, following South Dakota v. Dole, is that there must be a sufficient link between the spending and the condition to uphold Congress’s decision.  (So it would depend on the nature of the factual findings).  Finally, one could say that nullifying a state election (even through a carrot) violates the Tenth Amendment in the absence of a declaration that the state is no longer “republican” under the Guarantee Clause.

What do you think?

  July 22, 2010 at 8:25 am   Posted in: Constitutional Law   Print This Post   Comments (3)

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