Author: Mark Edwards

7

In the bleak midwinter . . .

A little inside baseball discussion for the professoriate: it seems that law review submission time is upon us. 

My current submission strategy

My current submission strategy

Many of us are trying to put the finishing touches on articles during the winter teaching break. And, according to ExpressO, a number of highly-regarded reviews that have been closed to submissions are opening themselves again in the very near future.  Therefore, I think it’s safe to say a tsunami of footnotes is bearing down upon many law review offices.

For the relatively new, untenured among us – oh say, for instance, me – this is an especially important moment, and it’s important to get it right.  The pressure can make us a little loopy.  Last week I sat listening to the lovely Christmas carol In the Bleak Midwinter, and when it got to the verse, “What have I to offer, poor as I am?” the image that flashed in my mind was me, face smudged with dirt, sending out a crinkled copy of my current draft article.

Me, immediately following article submission

Me, immediately following article submission

A wonderful professor of mine – then untenured, now safely ensconced in the tenured embrace of the Ivy league – once dressed for Halloween as ‘Notenuratu,’ a vampire-like creature whose cape was covered with pages of his draft articles. 

But how, exactly, does one get the submission process right?  It’s a question that I suspect takes up a lot of chat time among us junior scholars.   Do you have a submission strategy?  Want to share it?  Pretty please?

4

Anwar Awlaki and the Power of Arrest

Anwar Awlaki is very bad news.  He is a cleric who has a history of advising people who later commit mass murder.  He met with three of the hijackers before the thousands of murders of 9/11; he was a confidant and e-mail correspondent with Nidal Hassan, who murdered and maimed dozens of soldiers at Ft. Hood; and it is now suspected that he was the recruiter of Umar Farouk Abdulmattulab, who yesterday attempted to murder 300 people over the skies of Detroit.

Very bad news (AP Photo)

Very bad news (AP Photo)

In 1990, he also mis-stated the city of his birth on application for a U.S. social security number.  Now, that may sound as trivial as Jeffrey Dahmer tearing a tag off his mattress, but it’s not quite so meaningless.

Joint Terrorism Task Force investigators discovered his false statement in 2002, after the statute of limitations has passed for social security fraud.  But they also discovered that in 1993, he had used the social security number he had fraudulently obtained, in order to obtain a United States passport.  The statute of limitations for passport application fraud had not passed.  Therefore, in June 2002, the investigators convinced the U.S. Attorney’s office in Denver to file a criminal complaint against Awlaki, which it did.  It also applied for, and obtained, an arrest warrant for Awlaki for passport fraud.

Awlaki attempted to enter the U.S. four months later on a flight arriving at JFK International Airport, and was seized at the airport.  But there was a problem: the arrest warrant had been rescinded the previous day, at the request of the same U.S. Attorney who had obtained it.  Awlaki was released.  Alerted by his airport seizure that he was being targeted, he left the United States and settled in Yemen where, among other things, he recruited for Al Qaeda.

Why was the arrest warrant rescinded?

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1

A Modest Proposal

Lost in the glare of the health care reform conflagration: the House passed the Wall Street Reform and Consumer Protection Act of 2009.  If you had told me one year ago that Washington’s massive proposed long-term response to the worst financial crisis since the Great Depression would gather relatively little notice, I wouldn’t have believed it.  Or, at least, I wouldn’t have wanted to.

Believe it or not, even though mortgage lending sparked the crisis, the Act doesn’t provide much guidance on how the system should be reformed.  In essence, it punts the question to regulators, telling them to enact regulations that provide mortgage loan orginators with the proper incentives to create a competitive market that provides both affordable, and sustainable, mortgage loans.  Feel better?

I’ve spent a fair amount of time writing and talking about mortgage lending reform.  It seems to me that the most effective way to improve mortgage loan origination in the United States is to adjust the risk faced by mortgage loan originators.  Readers of Concurring Opinions probably already know that mortgage loan origination underwent a fundamental change in the latter half of the 20th century.  Unknown to most borrowers, the banks from whom they obtained their mortgage loans did not keep them.  They sold them, and the right to receive payments on them, to securitizers, who then bundled loans together and sold securities in the bundles to institutional investors.  The system had the positive effect of creating a robust market in mortgage lending, making home buying more affordable.  It also had  the negative effect of creating a market in which loan orginators received reward without risk, since the failure of the borrowers to repay the loan was no longer the originator’s problem.  That, in turn, created an enormous incentive for loan originators to make loans — any loans, to anyone, regardless of their ability to repay them.  Hello, subprime lending and the race to the bottom.  Remember Lending Tree‘s ad slogan: “When Banks Compete, You Win“?  Turns out, not so much, unless by “win” you mean “live in economically disastrous times.”

His People Know Mortgage Loan Origination

His People Know Mortgage Loan Origination

What to do then?  For guidance, look north.  The Great White North, specifically.  Canada came through the mortgage crisis just aboot fine.  There are lots of differences between the Canadian and U.S. banking systems [ironically, the Canadians based their system on Alexander Hamilton's national bank model, which we discarded] but there are enough similarities to make a couple of simple reforms modeled on the Canadian system.  In my opinion, they would go a long way to preventing a recurrence of the crisis.

First, a simple rule: mortgage originators must keep a certain percentage — say 10% — of the loans they originate in-house: no selling them on the secondary market allowed.  But here’s the rub: the orignators don’t get to choose which 10% stay in-house.  That’s done randomly, through a lottery system.  Now we have both a robust secondary market, and a strong incentive for originators to make quality loans.  A good balance of risk and reward.  One reason Canadian banks originated solid mortgage loans is that a high percentage of those loans stay in-house.  Consider the toxic asset metaphor: it’s one thing to produce toxic waste if you know you can dump it all someone else’s yard; quite another to produce it if you know you might have to keep it in your living room. 

If — and only if — we enacted the first rule, I’d suggest another, also borrowed from the Canadians: no fixed-interest rate loans longer than five years.  This redistributes some risk from the originating banks to the borrowers.  If a bank is caught in an interest rate squeeze because of a long-term fixed rate, the external effects are potentially much worse than if you or I are.  If banks have to hold some loans in-house, we want to make sure they don’t go under when interest rates increase.

Anyway, those are my ideas.  What are yours?

2

Collective Action, Copenhagen, and the Deus ex Machina

Today in Copenhagen, as the prospects for a workable climate change treaty grew very dim, President Obama said, “our ability to engage in collective action is in doubt.”  This couldn’t have been a revelation for a man who taught law at Chicago.  I think I could make a pretty good argument that what has made Chicago Chicago during the past half century is the attention its faculty has paid to the enormous obstacles to welfare-maximizing collective action in the management of a resource. 

There are several potential responses, of course, to the difficulties of welfare-maximization presented by collective action.  Most Chicagoan, perhaps, is to recognize that collective action is an inadequate instrument, and to overcome it by the allocation of private property rights in the resource instead.  This bottom-up approach works very well in many instances, but not very well between sovereign nations with regard to atmospheric emissions.  Among other reasons, attempting to create a system of allocation is itself beset by the collective action problems inherent in the management of the resource.

Another response to the collective action problem is to simply impose restrictions from above.  State-planned economies (including, in some respects and at some times, the United States) do this, in some cases disastrously, in some cases pretty well.  But there is no authority that can impose restrictions from above on sovereign nations with regard to atmospheric emissions. 

What we have, then, is the tragedy of commons without the usual means of overcoming it — dispensing with collective action.  If alternatives to welfare-maximization through collective action aren’t possible, what is left, other than collective action?  Not much.  That may be why even a man who taught at Chicago has pinned his hopes to that unlikely instrument. 

In my natural resources law seminar last semester, I had the students play a typical ‘tragedy of the commons’ game, in which a common resource was sufficient for the group to survive, but only if each member acted against her own strict self-interest, and someone was willing to incur the transactions costs associated with coordinatiing a group welfare-maximizing allocation system.  As Hardin would have predicted, the resource was soon destroyed and the students starved.  Something a student said to me then struck me as I watched President Obama’s speech today: “what we really needed was you to come in here and show us what we should do.”

In other words, what they needed — if they were to succeed collectively — was a deus ex machina to appear and, with the force of logic and moral suasion, persuade them to overcome their collective action problem.  It reminded me of Sophocles’s Philoctetes: even the good-hearted Neoptolemus cannot persuade Philoctetes give up satisfying his justifiable grudge against the Greek army at Troy, and by doing so make himself and the rest of the Greek army better off.  Only the last-minute intervention of Heracles, now a type of deity, can persuade him.  

mask3

Perhaps that is what President Obama is trying to be for the Copenhagen talks today.  It seems unlikely to work — after all, what makes the deus ex machina a deus is that it exists apart from the petty interests of the group.  President Obama will not be heard other than as the voice of one member of the group — a member which the others would rightly regard with suspicion, since it is likely to pursue its own self-interest.  I respect President Obama for trying, but I’m pessimistic.  Try as he might, he’s Neoptolemus, not Heracles.

Sorry if this sounds dramatic (so to speak), but consider this: one definition of tragedy is man’s realization that he can never be a god; that not matter how much he struggles, he is trapped within the bounds of human existence.  If that’s true, then if, as seems likely, we see President Obama fail today to successfully play the deus ex machina and persuade the individual nations from adherence to their own strict self-interest, then we will be witnessing a type of tragedy in the traditional sense of the word.  The inability of any one member of the group to assume a role above his self-interested existence, even if that is what he intends to do — in other words, to become a deus — would not surprise Sophocles.  But it’s sad to witness as member of the chorus.

5

My favorite interrogation scene

It’s disturbing to realize I have a favorite interrogation scene, but now isn’t the time for introspection.  My students are taking their criminal procedure final tomorrow, and interrogation is much on my mind.  Thus I present you with what I believe is the finest interrogation in television history, and perhaps the most realistic fictional one, from the fantastic HBO series The Wire.

Bunk shows how it’s done

bunk

I love showing this clip to my students.  It’s a great antidote to the myopia that develops from breathing too much of the rarified air of Supreme Court opinions.  Warning: every third word is m@#$!%$*&^!r.

Do you have any clips you love to show your students — interrogations or otherwise?

7

Man who unwittingly inspired greatest federal statute dies

Here’s a quiz: who is the creature defined by 16 United States Code sec. 580p(1) as a “fanciful owl” who wears forest green “slacks,” a brown belt, and “a Robin Hood style hat” with a red feather.  

The answer, of course, is Woodsy. 

A fanciful owl

A fanciful owl

It’s unhealthy, but I’ve spent at least a few hours of my limited earthly existence pondering the so-called Woodsy Owl-Smokey Bear Act of 1974 and its implementing regulations.  Maybe it’s because I teach natural resources law.  Maybe it’s because I had recurrent nightmares about Woodsy as a kid (those huge eyes!).  Maybe it’s because I’m seriously screwed up.

In any case, in addition to defining Woodsy as described above, the Act defines “Smokey Bear” as “Smokey Bear” (no further description needed, apparently) and “Secretary” as the Secretary of Agriculture (sadly, the statute does not say what color slacks the Secretary of Agriculture wore, or his preferred style of hat.  That would have been awesome.).

A few questions:

Why did Congress feel the need to define Woodsy as a “fanciful” owl?  Was it concerned that the statute might be overbroad, unintentionally encompassing real owls who wear green slacks and hats with feathers?

The Act claims that the United States government owns the phrase, “Give a hoot, don’t pollute.”  Later, the Department of Agriculture claimed rights in a second phrase: “Lend a Hand, Care for the Land.”  Did the Department of Agriculture exceed the scope of its authority under the Act?

Who came up with a lame saying like “Lend a Hand, Care for the Land,” and did they notice it doesn’t scan?

What circumstances compelled the Department to state in its Smokey Bear Guidelines  (March 2009 at 13) that “The costumed bear should not force itself on anyone”?

Unfortunately, a man who might have been able to shed some light on these questions has died.  Herbert Bell, who died at age 90 last week, created Woodsy with a group of forest rangers.  He also marketed Smokey, Lassie, and Mr. Magoo.

According to his obituary in the New York Times, Mr. Bell considered using a trout instead of an owl.  A trout.  Now that would have caused nightmares . . . . but it could have been a great statute.

1

Do Initial Allocations of Property Rights Matter?

If the last two years of American economic life have demonstrated anything, it is that property rights are not static.  Sometimes things that were once private property become public property (see, e.g., Motors, General).  Sometimes things that were once public property become private property, then become public property again, before they presumably become private property again (see, e.g., Mae, Fannie).  And sometimes things that were once considered inherently communal and thus inamenable to private property rights at all, become divided and privatized (see,e.g., the air).

Tradeable carbon emissions allowances are an example of the latter.  There’s a lot to like in the cap-and-trade programs proposed under the Waxman-Markey and Kerry-Boxer bills.  I hope some robust version of them passes and becomes law.  But one sticky issue that needs to be resolved is how initial allowances to fill airspace with carbon gases should be allocated.  Options include auctioning off all of the allowances, giving the allowances to existing carbon producers, and, most politically palatable, something  in between — some mixed proportion of free allocations and auctions.

coase-nobel-a

Economist Robert Stavins, in the Coasean tradtion, has insightfully argued that  (with some caveats, including that transaction costs in this cap-and-trade program are similar to the transaction costs in others) the initial allocation of allowances doesn’t matter in most significant ways:  it will have no effect on the distribution of allowances after trading, and will have no effect on the total magnitude of emissions and their attendant social costs.

But there is another factor economists have not addressed, that could effect the total magnitude of emissions and their attendant social costs, and that may well depend in part on the method of initial allocations: compliance.

Law Professor Christine Parker and political scientist Peter May, among others, have demonstrated that compliance with business regulation is highest when the regulated businesses believe that the regulatory regime is fair.  Lower levels of compliance reduce the effectiveness of the regulation in producing the desired outcome, and increase the costs of achieving it.  In the world of carbon emissions, this would mean a higher total magnitude of emissions and a reduced benefit to the public through the higher costs required to achieve them.

HakonSnaefellsnesi

My research into Icelandic fisheries suggests that in moving natural resources from communal to private property through cap and trade programs, initial allocations of rights do have an important effect on the perceived fairness of the regulatory regime, and thus on the willingness of the regulated to comply with it.

In Iceland, the government decided to protect fish stocks by freely allocating tradeable fishing rights and implementing catch quotas.  Permits were issued to fishing vessel owners based on their average catches during a three-year test period.  New entrants to the industry must now buy their way in by purchasing or leasing rights from others through the Icelandic Quota Exchange.  Although the system has been successful in reducing the overall catch, the perception that it is unfair has led to open defiance.  In an extraordinary case before the Icelandic Supreme Court, one fishing company did openly what many apparently do quietly — defied the system on the grounds that it was unfair.  

Transactions costs, of course, are inevitable, but it is not transaction costs that have produced resistance to the Icelandic system.  Rather, resistance is itself is a type of transaction cost, broadly construed, produced by the perceived unfairness of the initial allocation of rights.  In other words, the initial allocation of rights does indeed effect the overall effectiveness of a private property system. 

There has been considerable uproar over the potential free allocation rights to current carbon emissions producers.  Whether or not, as a matter of classical economic theory, the initial allocation of rights should effect the overall effectiveness of the program, the perception of fairness or unfairness will probably effect compliance with the system, and that in turn will effect its overall effectiveness.  It is important, therefore, for policy makers to bear in mind that the perceived fairness of initial allocations of property rights does indeed matter.

4

Of Domes and Homes

I’m very happy to be back adding my two cents to Concurring Opinions.  Thanks very much, Dan, for the invite, and Sarah, for the introduction. 

I was watching the NFL Vikings carve up the Bears yesterday, trying to decide what to post about first, and my eyes were drawn not to quarterback Brett Favre, running back Adrian Petersen . . . or even the freak who dresses like a viking and leads cheers inside the Metrodome, the Vikings’ domed stadium.  I kept looking at the shots of the stadium itself, and thinking about two recent court orders. OneTouch 4.0 Scanned Documents

One was issued last Monday, lifting an injunction on the previous week’s sale by auction of the 94,000 square foot, 80,300 seat Pontiac Silverdome, along with an adjacent fieldhouse and 127 acres of land.  There were four bids.  The winning bid? $583,000.  Total.  After auction fees, the current owner — the City of Pontiac, Michigan — will net about $430,000.  When professional sports tenants such as the Detroit Lions left, a property that cost $56 million to build was rendered practically worthless.  In fact, Pontiac was prepared to accept any bid for the property, since maintaining it was costing the City $1.5 million per year. 

The other order was issued in September by Judge Berrigan of the U.S. District Court for the District of Eastern Louisiana, ordering St. Bernard Parish not to interfere with the construction of a mixed market-rate and low income housing project.  The Parish, faced with an influx of low income tenants, had refused to issue building permits for the project, imposed a moratorium on building apartment complexes, and passed an ordinance making it illegal to rent to anyone other than a blood relative without special permission.  The New Orleans area faces an extreme shortage of low income housing, despite the population diaspora from the area generally.  Most of the housing destroyed by Katrina was low income. 

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3

Drop Everything and Emulate, IV

What a joy it has been blogging here at Concurring Opinions. I thank Dan Solove and the rest of the crew for the opportunity, and I thank the commenters for the great e-conversations that have followed my posts. For my last post, I want to enter the last installment in the Drop Everything and Emulate series.

shelley house plaque.jpg

In 1948, a graduate of an undistinguished and then defunct law school, whose parents had been born in slavery, stood before the Supreme Court and, against the urging of some of the greatest legal minds of the 20th century, made an argument that had been unanimously rejected by state and federal courts, including the Supreme Court: that court enforcement of private racially restrictive covenants constituted state action and, as such, was a violation of the Equal Protection Clause of the 14th Amendment.

Against all odds, he won, and Shelley v. Kraemer became a guidepost for the civil rights revolution that followed. Less than two years later, he was dead, and today is rarely remembered.

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6

Need a Great Torts Exam Fact Pattern?

school bus.jpgdeer.jpgmushroom cloud.jpg

Every once in a while, God inexplicably smiles upon law professors. To wit:

Driver of school bus full of middle school basketball players hits deer. Driver doesn’t stop. Deer gets caught beneath bus. Deer ruptures fuel line. Bus, on fire, pulls into school parking lot, and explodes.

Behold.

Best of all: no one was hurt.