Thanks and Some Additional Comments
I wanted to thank Frank Pasquale for organizing and hosting this symposium and all of the participants for the time they took reading The Economic Dynamics of Law and providing their thoughts. I wanted to say a little about the most recent posts, even though it’s possible that something more might appear before the weekend is out.
I’m happy to accept Livermore’s suggestion that systemic risk avoidance and keeping open a robust set of economic opportunities can be thought of as an incompletely theorized agreement about goals. He may be right that in fact avoiding systemic risk is efficient, but I doubt that all climate disruption cost-benefit analysis (CBA) would necessarily reveal that. Showing that most current CBA would call for some action on climate disruption does not suffice to show the congruence between CBA and avoidance of systemic risk taking into account collateral negative consequences (which is narrower than taking into account all costs under my normative framework). First, there is a historical problem. Prominent early CBA and much of the CBA from a few years ago would not invite vigorous measures to address climate disruption (although some CBA did early on). Even today, there may be a discrepancy between what scientists tell us we need to minimize significant risk, a phase-out of fossil fuels, and what some of the CBA is telling us. CBA is basically guesswork, and does not yield a reasonably specific answer when substantial uncertainties exist.
The virtue of the norms I advocate for addressing collateral negative consequences is that they answer the question Arden Rowell poses in comment on that post: How far should our commitments take us? Although cost analysis certainly is relevant to evaluating whether the means we use to avoid climate risks shut down so many economic opportunities that they ought not be pursued, it’s hard to see why comparing costs to quantified benefits would contribute anything to evaluating collateral negative consequences given how I’ve defined them. And CBA does not answer the question of how far should our commitments go; it just provides a particular representation of information that might be used to answer that question. If our normative commitment is to balance costs and benefits at the margin, then we have no particular commitment to avoiding systemic risk.
Jennifer Taub’s post brings us back to a point that I made earlier. Even if CBA does work well as a means of avoiding systemic risk (which I very much doubt) embrace of efficiency-based thinking in general tends to support market glorification that undermines sensible efforts to avoid systemic risk. One can detect the link between CBA endorsement and market glorification in the Congressional statement she highlights. The committee uses CBA to give intellectual credence to its effort, but its effort is aimed at making sure that the status quo (continuation of all of the financial products that created the crisis) is not disturbed. A great deal of OIRA review works similarly. It uses CBA as justification for a greater number of antiregulatory moves that CBA itself could justify. These ideological uses of CBA do not support technocratic argument against CBA as a technique, but raise concerns about the larger world view that the entire theory of law and economics supports, many of the particulars of which were highlighted in the McCluskey post.
I appreciate Sanja Bogojevic’s points that economic dynamic theory reminds environmental law scholars that ideas transcending environmental law have a large impact on our field and that adaptive management may provide a useful tool for achieving the theory’s goals in our field.
At the same time, my suggestion that we should choose forms of analysis that advance normative goals we have chosen politically might be read as giving law a more prominent place in law and economics. Too often, the regulatory reform debate proceeds as if no law existed that might legitimately shape our choices of analytical methods.