Comments on: Frank Partnoy on Derivatives http://www.concurringopinions.com/archives/2009/03/frank_partnoy_o.html The Law, the Universe, and Everything Tue, 14 Feb 2012 05:18:12 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: A.J. Sutter http://www.concurringopinions.com/archives/2009/03/frank_partnoy_o.html/comment-page-1#comment-43770 A.J. Sutter Sat, 28 Mar 2009 06:12:23 +0000 http://www.solove.org/archives/2009/03/frank-partnoy-on-derivatives.html#comment-43770 Michael, I think you overestimate the freedom of the market for ideas. The existence of intellectual property regimes in the US and elsewhere suggest otherwise: but for them, e.g., the second (and subsequent)-to-invent, or second (and subsequent)-to-file with the PTO (if there were even a need for a PTO), would be entitled to use their inventions without restriction. IPR regimes are a way in which governments create artificial scarcities of ideas. Apropos of the topic of this thread, derivatives are great counterexample to the claims that without IPR there wouldn't be any incentive to innovate. Michael, I think you overestimate the freedom of the market for ideas. The existence of intellectual property regimes in the US and elsewhere suggest otherwise: but for them, e.g., the second (and subsequent)-to-invent, or second (and subsequent)-to-file with the PTO (if there were even a need for a PTO), would be entitled to use their inventions without restriction. IPR regimes are a way in which governments create artificial scarcities of ideas. Apropos of the topic of this thread, derivatives are great counterexample to the claims that without IPR there wouldn’t be any incentive to innovate.

]]> By: Michael E. Russell http://www.concurringopinions.com/archives/2009/03/frank_partnoy_o.html/comment-page-1#comment-43769 Michael E. Russell Sat, 28 Mar 2009 04:51:36 +0000 http://www.solove.org/archives/2009/03/frank-partnoy-on-derivatives.html#comment-43769 What the free market libertarians seem oblivious to, is the fact that it is not a free market of goods and services, it is a free market of ideas, and our government is part of that market. Thus, government regulation IS the action of a free market to protect itself and remove the disease of manipulation and fraud, increasing market health and restoring efficiency. Dumb-ass Greenspan What the free market libertarians seem oblivious to, is the fact that it is not a free market of goods and services, it is a free market of ideas, and our government is part of that market. Thus, government regulation IS the action of a free market to protect itself and remove the disease of manipulation and fraud, increasing market health and restoring efficiency. Dumb-ass Greenspan

]]> By: A.J. Sutter http://www.concurringopinions.com/archives/2009/03/frank_partnoy_o.html/comment-page-1#comment-43768 A.J. Sutter Fri, 27 Mar 2009 04:25:31 +0000 http://www.solove.org/archives/2009/03/frank-partnoy-on-derivatives.html#comment-43768 OTOH, was Greenspan wrong about Madoff? The pertinent problem is that econ theory doesn't deal with time scales. One could argue that Greenspan's notions were correct in this case; the only problem was that it took an unduly long time to discover the fraud and for the bad reputation to develop. In this case a regulatory system was in place -- but it didn't directly reduce the time to discovery either. At most, it added to Madoff's sense of guilt, or at least to his fear of consequences for his family, whom he maybe feared could be implicated or left penniless. But we have no way of knowing whether it was indeed the regulations or else some stirring of moral feeling that led him to confess what he had done. (Of course, in the latter case one could also argue that, pace Greenspan, it was moral sentiments rather than the invisible hand that led to the confession.) OTOH, was Greenspan wrong about Madoff? The pertinent problem is that econ theory doesn’t deal with time scales. One could argue that Greenspan’s notions were correct in this case; the only problem was that it took an unduly long time to discover the fraud and for the bad reputation to develop.

In this case a regulatory system was in place — but it didn’t directly reduce the time to discovery either. At most, it added to Madoff’s sense of guilt, or at least to his fear of consequences for his family, whom he maybe feared could be implicated or left penniless. But we have no way of knowing whether it was indeed the regulations or else some stirring of moral feeling that led him to confess what he had done. (Of course, in the latter case one could also argue that, pace Greenspan, it was moral sentiments rather than the invisible hand that led to the confession.)

]]> By: Frank http://www.concurringopinions.com/archives/2009/03/frank_partnoy_o.html/comment-page-1#comment-43767 Frank Thu, 26 Mar 2009 03:02:03 +0000 http://www.solove.org/archives/2009/03/frank-partnoy-on-derivatives.html#comment-43767 Thanks for featuring Partnoy. I think he was deeply insightful on the current crisis, bordering on the prophetic. People like him and Daniel Tarrullo will be in the "law prof hall of fame" when the history of the current crisis is written. It's too bad they were treated like Cassandras for so long. Thanks for featuring Partnoy. I think he was deeply insightful on the current crisis, bordering on the prophetic. People like him and Daniel Tarrullo will be in the “law prof hall of fame” when the history of the current crisis is written. It’s too bad they were treated like Cassandras for so long.

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