Archive for the ‘Economic Analysis of Law’ Category
posted by Stephen Galoob
Day 2 of the conference saw a spirited panel (featuring Scott Shaprio, Ken Ehrenberg, Michael Guidice, and Brian Tamanaha) about the (ir)reconcilability of legal anthropology and sociolegal studies with analytic jurisprudence. Much of the discussion (not to mention the spirit) here concerned the appropriate definition of a “concept.” If that kind of question does not induce somnolence for you, then read on! Read the rest of this post »
posted by Andrew Blair-Stanek
Regardless of your take on the IRS targeting conservative groups applying for 501(c)(4) status, the episode demonstrates once again that Congress, the Administration, and the media have multiple avenues to pressure the IRS to act or to reconsider earlier actions. This susceptibility to political pressure has broad, counterintuitive implications for how to best deter violations of requirements throughout tax law.
In their path-breaking law & economics article, Calabresi & Melamed observed that every entitlement can be protected by either a property rule (e.g. injunctions, disgorgement of profits) or a liability rule (e.g. compensatory damages). The same is true in tax law. When a taxpayer violates a requirement for a favorable tax status, the tax code either imposes additional tax proportionate to the harm (a liability rule) or imposes the draconian penalty of taking away the tax status entirely (a property rule).
Which rule is most likely to deter a well-connected organization from violating a requirement imposed on it by tax law? At first glance, property rules (i.e. yanking the organization’s favorable tax status) appear to be the most effective deterrent. But the IRS routinely hesitates to take this draconian step, which would result in complaints to Congress, the Administration, the media, and other organizations. Even if the tax code, as written, imposes this property-rule remedy, the IRS can and often does decline to impose it in practice.
Examples of this problem abound throughout tax law. My favorite example is a real estate investment trust (or “REIT”) that had its IPO in 2007 and revealed in its SEC filing that it was in clear violation of one of the requirements (I.R.C. § 856(a)(2)) to qualify as a REIT for tax purposes. How brazen! But what was the IRS to do? The requirement is protected by a property rule: the only remedy available to the IRS was to take away the REIT’s favorable tax status entirely. This would have been draconian. All the REIT’s shareholders would have complained to their congresspersons, the financial press would have run stories, and the National Association of Real Estate Investment Trusts would have raised a ruckus. The IRS didn’t dare impose this property-rule remedy. The IRS did nothing, and the REIT suffered no consequences for the violation.
Would this REIT have been so brazen if the requirement had, instead, been protected by a liability rule, which would merely have imposed additional tax proportional to the violation? Almost certainly not. And that is the counterintuitive result: liability rules are often more effective in practice than draconian property rules in deterring taxpayers from violating tax-law requirements.
The relative merits of property rules and liability rules in tax law are explored in depth by this forthcoming Virginia Law Review article.
June 4, 2013 at 11:18 am Tags: Calabresi and Melamed, law and economics, liability rules, property rules, tax law Posted in: Economic Analysis of Law, Law Rev (Virginia), Tax Print This Post 2 Comments
posted by Jay Kesten
Before I sign off, I’d like to thank Danielle et al. for their hospitality. I’m very glad to have had this opportunity to share some of my thoughts, and to get some great feedback. Let me finish up by offering an alternative rationale – grounded in public choice theory – for limited shareholder authority over corporate political spending.
Shareholder regulation of corporate political activity may not only decrease agency costs within the firm, it may improve overall societal welfare. First, diversified shareholders might be able to constrain the costs of rent-seeking behavior that merely redistributes wealth between portfolio firms. Second, all shareholders may want to reduce the possibility of political extortion by removing from management the final say on certain kinds of political expenditures. Allowing shareholders to regulate corporate political activity could limit these social welfare-decreasing activities, and channel corporate resources to more productive uses. I sketch these arguments in more detail below. Read the rest of this post »
posted by Jay Kesten
Nearly half a century ago, Albert Hirschman formalized two ways in which members of organizations could express their displeasure: exit and voice. Exit is market-based expression, and is typically quiet, impersonal and cheap. Voice, by contrast, is political expression — it is usually loud, messy, and expensive. From an efficiency perspective, exit is thus generally favored as a matter of institutional design.
Corporate law largely track Hirschman’s theory. Shareholders’ voice rights are, by default, quite constricted, and the business judgment rule imposes an important limitation on seeking judicial remedies. In most cases, unhappy shareholders’ only practical method of expressing their discontent is to exit the firm by selling their shares.
But Hirschman warns that in certain circumstances, such as where the barriers to exit are sufficiently high, it is preferable to adjust institutional design to facilitate or strengthen members’ voice rights. Corporate political activity presents exactly such a case, because the standard shareholder remedies – suing, voting for the board of directors, and selling their shares – are either unavailing or exceptionally costly. I treat this range of options in more detail elsewhere, but below I will briefly describe these problems with a focus one key area in which corporate political activity differs markedly from other types of corporate action, and then turn to an important objection. Read the rest of this post »
posted by Ryan Calo
Judge Richard Posner took the occasion of the Boston bombing to remind us of his view that privacy should lose out to other values. Privacy, argues Judge Posner, is largely about concealing truths “that, if known, would make it more difficult for us to achieve our personal goals.” For instance: privacy helps the victims of domestic violence achieve their personal goal of living free from fear; it helps the elderly achieve their personal goal of staying off of marketing “sucker lists;” and it helps children achieve their personal goal of avoiding sexual predators online.
To be fair, Judge Posner acknowledges that some concealment is fine and that privacy laws may even “do some good.” He worries rather about civil libertarians who would limit the expansion of surveillance to the point that we can neither deter, nor apprehend terrorists like the men responsible for bombing the marathon. “There is a tendency to exaggerate the social value of privacy,” Judge Posner believes, and it just might get us killed.
Judge Posner is a founding member of the law and economics movement and, as such, it would seem fair to analyze his claim from the perspective of incentives. Does video surveillance deter crime in general? Empirical evidence suggests that cameras merely displace crime, and Judge Posner concedes that picking terrorists out of a crowd before they act is impracticable. Does video surveillance help with identification? Sure. But the quick identification of the Boston bombers from private footage suggests we have enough surveillance. Moreover, hardened terrorists have proven willing to die in an attack, making identification moot.
Then there are the unintended consequences—a mainstay of economic analyses of the law. The fact that an act of terrorism will be caught on video and spread to every screen in America greatly enhances its intended impact, which in turn makes the option more attractive to our enemies.
One can quibble with my data points. But any honest, empirically-informed cost-benefit analysis of additional surveillance will yield at best a mixed picture. I submit that Judge Posner’s argument yesterday is dead wrong by the terms of the very movement he founded.
posted by Taunya Banks
The original title for this post was The People’s Supreme Court? because it was triggered by an article in last week’s New York Times about the increased use by law firms of place-holders (paid stand-ins) for seats at the United States Supreme Court. According to the article, “place holding is common at Congressional hearings and is on the rise at the Supreme Court, where seats for last month’s arguments went for as much as $6,000.” An earlier piece, published around the time the same-sex marriage cases were argued, noted that the practice has its detractors, including former Congressman Barney Frank, whose proffered remedy is televised Supreme Court arguments.
I changed the title of this post after an incident on Friday. While returning to my law school midday I passed a scraggly group picketing in front of a neighboring Marriott Hotel. The signs said that the protesters were picketing because the Carpenters Union had a beef with the management. As my very general description suggestions, I did not look at the signs too closely. I was distracted because many of the protests were so drunk or drugged that they could not walk in a circle. A colleague with whom I was walking informed me that some labor unions now hire homeless people to walk picket lines for them. Surely the Union did not think that the picketing would be effective. I was astonished that actual Union members were shirking their membership responsibilities, but did I have a right to be appalled?
Hiring stand-ins for pay is a very American institution. Read the rest of this post »
posted by Frank Pasquale
I was honored to see Prof. John Banzhaf weigh in on a recent post on wellness programs. That post suggested parallels between the addictiveness of tobacco, and that of many food products. Little did I know the NYT was about to publish a blockbuster article on exactly that issue:
[In a 1999 meeting of food industry leaders,] [t]he first speaker was a vice president of Kraft named Michael Mudd. . . . As he spoke, Mudd clicked through a deck of slides — 114 in all — projected on a large screen behind him. The figures were staggering. More than half of American adults were now considered overweight, with nearly one-quarter of the adult population — 40 million people — clinically defined as obese. Among children, the rates had more than doubled since 1980.
Mudd then did the unthinkable. He drew a connection to the last thing in the world the C.E.O.’s wanted linked to their products: cigarettes. First came a quote from a Yale University professor of psychology and public health, Kelly Brownell, who was an especially vocal proponent of the view that the processed-food industry should be seen as a public health menace: “As a culture, we’ve become upset by the tobacco companies advertising to children, but we sit idly by while the food companies do the very same thing. And we could make a claim that the toll taken on the public health by a poor diet rivals that taken by tobacco.”
Illustration: Via Engadget article on interactive ad patents.
posted by Deven Desai
Ghostbusters, Die Hard, my lunch in grade school all had Twinkies (OK my lunch also alternated with Ding Dongs). In Ghostbusters the Twinkie symbolized psychokinetic energy, in Die Hard it substituted for a cop’s doughnuts, in my lunch it was I guess dessert but substituted for real food. The Wall Street Journal reports, however, that the era is over. Hostess Brands, Inc. is seeking permission to liquidate the company. It’s attempt at reorganization has failed. According to WSJ, “A victim of changing consumer tastes, high commodity costs and, most importantly, strained labor relations, Hostess ultimately was brought to its knees by a national strike orchestrated by its second-largest union.”
There are real people, places, and assets behind these brands. 18,000 workers will lose their jobs. 36 plants will close. The facilities and land will be sold. There is product inventory too. “Loaves of bread and plastic packages of icing-filled desserts” need to go. WSJ suggested that big box stores will be where the food stuff ends up. I remember when Coke changed its formula and folks hoarded the original Real Thing. I wonder whether that will happen with Twinkies. (Given the supposed shelf-life of a Twinkie, a strange pastry cellar built for and owned by some fanatic seems plausible to me).
And, Hostess Brands will sell…its brands. That is where the most money may be made. As I point out in From Trademarks to Brands, brands are not the same thing as trademarks. In the early days of trademarks, one could not sell a brand without the facilities. Today the brand as assest is a given. Selling it as thing is sanctioned by the law even though such practices do not do well within the law economics explanations for trademarks. I argue that a way to understand the move from direct competition to anonymous source, the growth of goodwill, and the expansive view of merchandising and licensing can be explained by brand practices much more than Landes and Posner’s law and economics view. (64 Florida L. Rev. 981, 1009-1019).
I wonder how folks will perceive the sale. If a company buys the name Twinkie or Ding Dong and then makes the cakes with different ingredients or sources for the ingredients, will that matter? What if the taste varies? What if in a year people think Hostess still makes Twinkies and buys the brand based on that error? Is that confusion we care about? Maybe we should not care about any of these. Then again if someone buys Twinkie and uses a new recipe, and then someone makes Twinkies with the original recipe, should that be allowed? Probably not but why is unclear. A healthy market that assumes rational consumers should be able to let information about such variances drive the market, right? Of course we don’t do that in trademark law.
Hmm, perhaps some sugar will help fuel thinking through these points. Better get Twinkies and Ding Dongs before this incarnation is gone.
posted by Deven Desai
Everyone thinks jobs are being outsourced; they are, in fact, being desourced. When Mitt Romney claims he will create jobs, when Barak Obama claims the same, when Google, Apple, or Amazon assert they build out the economy, they all overstate. Worse, they ignore the reality that both manufacturing and service jobs are dying. Robots, artificial intelligence, and the new information-at-scale industries all but assure that outcome. The ability to build and sell without humans is already here. I am not saying that these shifts are inherently bad. They may even be inevitable. What we do next is the question. To answer that question, we need to understand the ways humans will be eliminated from manufacturing and service jobs. We need to understand what I call desourcing.
Focus on manufacturing is a distraction, a sideshow; so too is faith in service jobs. A recent New York Times article about Apple, noted that manufacturing accounts for only about eight percent of the U.S. labor force. And, The Atlantic’s Making It in America piece shows how manufacturing is being changed by robots and other automation. According to some, the real engine is service labor “and any recovery with real legs, labor experts say, will be powered and sustained by this segment of the economy.” That is where desourcing comes in. Many talk about the non-career path of service sector jobs. A future of jobs that have low pay and little room to rise is scary and a problem. Amazon explains why that world might be heaven.
The world of low wage, high stress service work is being replaced by automation. Amazon gave up its fight against state taxes, because it is moving to a model of local distribution centers so that it can deliver same-day delivery of goods. According to Slate, Amazon will spend more than $1 billion to build centers all over the U.S. and hire thousands of people for those centers. The real story is that like any company Amazon wants to reduce operation costs; it must automate or perish as Technology Review put it. It will do that, in part, by using robots to handle the goods. Self-driving cars and autonomous stocking clerks are the logical steps after ATMs and self-serve kiosks at movie theaters and grocery stores. I am always amazed at the folks who line up at movie theater ticket windows rather than use the kiosks. A friend said to me that we should walk up to the window to keep those jobs. It is a nice idea, but I think untenable. We all want to move faster and pay less. Welcome to desourcing.
Desourcing means reducing or eliminating humans from the production or service equation. Humans are friction points. More and more we can reduce those points of contact. We no longer need to send work to other humans.
There are many economic questions that are beyond what can be addressed in a short piece. But here are some ideas on which to chew. The returns from this approach are tremendous for the companies that desource. For example, by one account, Apple makes $473,000 per employee; yet “About 30,000 of the 43,000 Apple employees in this country work in Apple Stores, as members of the service economy, and many of them earn about $25,000 a year.” So we may satisfy our need for instant gratification as companies reduce their costs, but that money will go to corporate bottom lines. Whether it will really reach the rest of the economy is not so clear precisely because a smart company will invest in desourcing. I suppose at some point companies will have to realize that they need masses who can buy stuff. Yet I think some studies indicate that serving the upper end of the economy works better than serving the masses. In theory, a company may offer goods at lower prices but to do that, it will need lower production costs. And less workers means lower costs.
I am not saying I know what will solve this riddle. I offer desourcing, because I have not seen a satisfying answer to the issue. There may not be one; for we may be stil sorting what to do as the digital age takes full hold. As the computer science folks say in early training, “Hello world.”
posted by Mike Carroll
Like the other commenters on From Goods to a Good Life, I also enjoyed the book and applaud Professor Sunder’s initiative in engaging more explicitly in the values conversation than has been conventionally done in IP scholarship. I also agree with most of what the other commenters have said. I want to offer plaudits, a few challenges, and some suggestions about future directions for this conversation.
September 21, 2012 at 11:13 am Posted in: Book Reviews, Civil Rights, Culture, Cyberlaw, Economic Analysis of Law, Innovation, Intellectual Property, Jurisprudence, Law and Humanities, Law and Inequality, Politics, Property Law, Symposium (From Goods to a Good Life), Technology, Trade Print This Post No Comments
posted by Dave Hoffman
So this is interesting:
“The mediator who managed the Sept. 11 victims-compensation fund and settlements with those affected by the 2010 BP Gulf oil spill has been hired by Pennsylvania State University in the hope of settling the civil claims of Jerry Sandusky’s victims.
The university announced Thursday that it had hired Kenneth R. Feinberg to facilitate negotiations for the four current lawsuits and more expected to be filed by those sexually abused by the former assistant football coach.”
One way to read this is that PSU is going to make available a large pool of money to a diverse victim class, and has hired Feinberg for his expertise dividing complex pies in ways that leave most folks relatively satisfied. But there’s another reading that seems at least plausible. Associating with Feinberg transmutes the human errors which enabled Sandusky’s crimes into a “disaster”, implying less particularized responsibility. Plaintiffs refusing to partake in the common pool can potentially be framed as selfish, grasping, etc. That so even though almost by definition, these disaster pools allocate less money to every plaintiff than their individual claims are “worth”.
posted by Deven Desai
Why bother to have intellectual property rights? That question is the question for IP. Madhavi Sunder has answers. Some excellent work on the subject has looked at whether economics has new answers about IP rights and their structure. Others have taken a hard look at whether any economic argument works. Like books by James Boyle, Brett Frischmann, and Julie Cohen, Sunder’s book runs right at intellectual property law and tackles the hard question. Sunder proposes that we have left off asking what is the good; not just the good produced but the good for all of us. In the tradition of critique she asks about power dynamics and whether free culture is also fair culture. She forces us to consider the realities of exchange culture and rules that bind our ability to engage and thus limit our freedom to author ourselves. In my work on trademarks, brands, and culture, I looked at specific ways we have moved from one-way mass market systems to two-way interactive ones as I questioned whether trademark rules make sense and improve society. I love this book because Sunder takes this point and drills into local, national, and global levels. She challenges current narratives about how and why we create with concrete examples of overflowing creation, unfair results, and troubling societal outcomes all of which abound despite claims about incentives and social welfare creation in IP law. Still, she believes the law has the foundations for “plural values at stake in cultural production.” Her prescription is that we should be “ripping, mixing, and burning” law to get to the world where we have not only goods, but a good life. I recommend the book and look forward to our discussion here at Concurring Opinions.
September 11, 2012 at 1:40 am Posted in: Culture, Cyberlaw, DRM, Economic Analysis of Law, Innovation, Intellectual Property, Symposium (From Goods to a Good Life), Web 2.0 Print This Post No Comments
posted by Deven Desai
This week Concurring Opinions is hosting a symposium on Madhavi Sunder’s From Goods to a Good Life (Amazon) published by Yale Press which offers a preview. Madhavi’s work has pushed how many colleagues and I think about intellectual property. I am honored to organize this discussion.
I have more to say about the book, but to whet your appetites, I offer this quote:
The full cultural and economic consequences of intellectual property policies are hidden. We focus instead on the fruits of innovation—more iPods, more bestsellers, more blockbuster drugs—without concern for what is being produced, by whom, and for whose benefit. But make no mistake: intellectual property laws have profound effects on human capabilities…
The symposium will include contributions from Mike Carroll, Laura DeNardis, Brett Frischmann, Mike Madison, Mark McKenna, Frank Pasquale, Zahr Said, Lea Bishop Shaver, Jessica Silbey, and Molly Van Houweling.
September 10, 2012 at 11:24 pm Posted in: Culture, Cyberlaw, DRM, Economic Analysis of Law, Innovation, Intellectual Property, Political Economy, Symposium (From Goods to a Good Life), Web 2.0 Print This Post 7 Comments
posted by Michael Kang
The Center for American Progress has just issued a report on judicial campaign finance that documents the increasing costs of campaigning in judicial elections and raises alarm that “[i]nstead of serving as a last resort for Americans seeking justice, judges are bending the law to satisfy the concerns of their corporate donors.” Jeffrey Toobin followed up in the New Yorker that “the last thing you want to worry about is whether the judge is more accountable to a campaign contributor or an ideological group than to the law. . . . [b]ut it’s clear now that in many states you should worry—a lot.”
My colleague Joanna Shepherd and I study judicial campaign finance and argue that what is regularly missed in this simple narrative is the crucial role of the major parties. In our empirical work, we find a very real relationship between contributions to judges and judicial decisions favorable to contributors, but the intuitive narrative of direct exchanges of money for decisions between individual contributors and judges is too simplistic to describe the larger realities of modern judicial elections. The Republican and Democratic Parties broker connections between contributors and their candidates, and we argue that parties, not elections, seem to be the key to money’s influence on judges.
In a new paper still in progress, The Partisan Foundations of Judicial Campaign Finance, we identify broad left- and right-leaning political coalitions, allied with the Democratic and Republican Parties, whose collective contributions exercise systematic influence across the range of decisions by judges who receive their money. The parties appear to coordinate judicial campaign finance under partisan elections where their investment and involvement is greatest, and what is more, we find that the robust relationship between money and judicial decisions largely disappeared in our data for judges elected in nonpartisan elections where parties are relatively less involved.
In addition, we go on to find a striking partisan asymmetry between Republicans and Democrats in judicial campaign finance. Money from conservative groups in the Republican coalition, as well as from the party itself, is associated with more conservative judicial decisionmaking by Republican judges, even controlling for individual ideology. However, decisionmaking by Republican judges is not responsive to money from liberal sources. Decisionmaking by Democratic judges, by contrast, is influenced by campaign support from both liberal and conservative sources and thus cross pressured in opposite directions. The result is that judicial campaign finance reinforces party cohesion for Republicans while undermining it for Democrats. Campaign finance thus predicts judicial decisionmaking by judges from both parties in some sense, but is much more successful in serving partisan ends for Republicans, netting out in a conservative direction between the two parties.
posted by Stanford Law Review
Volume 64 • Issue 5 • May 2012
Securities Class Actions Against Foreign Issuers
How Much Should Judges Be Paid?
June 19, 2012 at 1:37 am Posted in: Administrative Law, Anonymity, Behavioral Law and Economics, Civil Rights, Courts, Disability Law, Economic Analysis of Law, Employment Law, Financial Institutions, Law Rev (Stanford), Law Rev Contents Print This Post No Comments
posted by Frank Pasquale
There are many memorable images in Rob Nixon’s book Slow Violence and the Environmentalism of the Poor. Describing the “risk relocation” that is a prime function of the global economy, he offers this vision of Nigeria:
Often, as a community contends with attritional assaults on its ecological networks, it isn’t granted equitable access (or any access at all) to modernity’s basic infrastructural networks . . . . Like those Niger Delta villages where children for decades had no access to electricity for studying at night, while above their communities Shell’s gas flares created toxic nocturnal illumination. Too dark for education, too bright for sleep: modernity’s false dawn. (42)
Exxon is now “a corporation so large and powerful — operating in some 200 nations and territories — that it really has its own foreign policy.” As Steve Coll observes, the US “gives Chad only a few millions dollars a year in aid, while Exxon’s taxes and royalties can be worth as much as $500 million.” Had Exxon directed only 10% of its 2008 profits to political expenditures that year, it would have spent “more than every candidate for President and every candidate for Senate spent at the last election.” In a surprising number of contexts, corporations enjoy far more freedom of action, and secrecy, than states.
Is it any wonder, then, that universities are beginning to shift allegiance, to pursue the agenda of corporate donors instead of public values? Conferences like EduFactory have chronicled the long history of the corporate university; Philip Mirowski has critiqued it in books and edited collections. But it feels like we are on the verge of a phase change, an irreversible acceleration of dynamics once muted and slowed by the ancient cultural identity of the university. Consider these developments:
1) Martha McCluskey has described “economics scholars simultaneously acting as academic experts on the public interest and as sellers of this expertise to the highest private bidder.” She has chronicled a number of troubling aspects of a recent report on fracking issued by the “Shale Resources and Society Institute” (SRSI) of SUNY Buffalo:
Read the rest of this post »
posted by Peter Swire
At the recent Security and Human Behavior conference, I got into a conversation that highlighted perhaps my favorite legal book ever, Arthur Leff’s “Swindling and Selling.” Although it is out of print, one measure of its wonderfulness is that used copies sell now for $125. Then, in my class this week on The Ethics of Washington Lawyering (yes, it’s a fun title), I realized that a key insight from Leff’s book applies to two other areas – what is allowed in campaign finance and what counts as extortion in political office.
Swindling/selling. The insight I always remember from Leff is to look at the definition of swindling: “Alice sells something to Bob that Bob thinks has value.” Here is the definition of selling: “Alice sells something to Bob that Bob thinks has value.” See? The exchange is identical – Bob hands Alice money. The difference is sociological (what society values) and economic (can Bob resell the item). But the structure of the transaction is the same.
Bribing/contributing. So here is a bribe: “Alice gives Senator Bob $10,000 and Bob later does things that benefit Alice, such as a tax break.” Here is a campaign contribution: “Alice gives Senator Bob $10,000 and Bob later does things that benefit Alice, such as a tax break.” Again, the structure of the transaction is identical. There are two likely differences: (1) to prove the bribe, the prosecutor has to show that Bob did the later action because of the $10,000; and (2) Alice is probably careful enough to give the money to Bob’s campaign, and not to him personally.
Extorting/taxing. Here is the classic political extortion: “Alice hires Bob, and Bob has to hand back ten percent of his salary to Alice each year.” Here is how it works when a federal or state government hires someone: “Alice hires Bob, and Bob has to hand back ten percent of his salary to Alice each year.” The structure of the transaction is the same – Bob keeps 90% of the salary and gives 10% to Alice. The difference here? Like the previous example, the existence of bureaucracy turns the bad thing (bribing or extorting) into the acceptable thing (contributing/taxing). In the modern government, Alice hires Bob, and Bob sends the payment to the IRS. The 10% does not go to Alice’s personal use, but the payment on Bob’s side may feel much the same.
For each of these, drawing the legal distinction will be really hard because the structure of the transaction is identical for the lawful thing (selling, contributing, taxing) and for the criminal thing (swindling, bribing, extorting). Skeptics can see every transaction as the latter, and there is no objective way to prove that the transaction is actually legitimate.
I am wondering, did people know this already? Are there citations to previous works that explain all of this? Or, perhaps, is this a simple framework for describing things that sheds some light and merits further discussion?
posted by Danielle Citron
On Friday, I learned that Professor Barbara van Schewick would be releasing a ground-breaking white paper entitled Network Neutrality and Quality of Service: What a Non-Discrimination Rule Should Look Like. Lucky for us, Professor van Schewick agreed to come aboard to talk to us about her white paper, which she released on Monday, see her post here. Her paper provides the first detailed analysis of the Federal Communications Commissions’ non-discrimination rule and of its implications for network providers’ ability to manage their networks and offer Quality of Service. Crucially, it proposes a non-discrimination rule that policy makers can, and should, adopt around the world – a rule that the FCC adopted at least in part.
Professor van Schewick is an Associate Professor of Law and Helen L. Crocker Faculty Scholar at Stanford Law School, an Associate Professor (by courtesy) of Electrical Engineering in Stanford University’s Department of Electrical Engineering, and Director of Stanford Law School’s Center for Internet and Society.
This post is a terrific prelude to our online symposium on van Schewick’s book Internet Architecture and Innovation (MIT Press 2010), which is considered the seminal work on the science, economics and policy of network neutrality. We will be holding our symposium in honor of the book’s paperback release in the early fall.
Thanks so much for coming aboard, and I hope this post gets you excited for our discussion in the fall.
H/T: Marvin Ammori and Elaine Adolfo
posted by Peter Swire
It’s been a very interesting first day at the Security and Human Behavior 2012 conference, chaired by computer security guru Bruce Schneier.
A number of speakers agreed on a basic description of computer security vulnerabilities: (1) there is a long run-up period where vulnerabilities exist but are not exploited; and (2) an exploit is developed and other attackers adopt it rapidly.
That raises the question — are the hackers (collectively) being efficient? The analogy is to the debate in economics about the Efficient Capital Markets Hypothesis (ECMH). The ECMH essentially says that you cannot expect to get above-normal returns — the market is efficient and you can’t beat the market. (Since the 2008 crash there has been lots of new doubt about the ECMH among mainstream economists.)
The long period of non-attacks at least raises the possibility that there is “inefficiently low investment in hacking.” I use “inefficient” here in a special sense — the market is “inefficient” if there are attack strategies for the hackers that are likely to get a high risk-adjusted return. When there are so many vulnerabilities that are not attacked, the idea is that hackers collectively quite possibly are leaving money on the table.
Of course, a certain level of non-attacks is rational. Suppose you expect to spend $1000 in time and effort to write an attack, and the expected pay-off is only $700. Then we rationally don’t see that attack. But the large number of existing vulnerabilities at least hints that if you spend $1000 then you might expect a big pay-off, such as $5000. After all, the attacks get used a lot once they are publicized, showing a potential pay-off.
I actually wrote about the ECMH and computer security in a 2004 article called “A Model for When Disclosure Helps Security: What is Different About Computer and Network Security?” But it was a short discussion at the end of a piece that people read for other reasons. The computer security folks at the conference today hadn’t worked through the comparison and seemed intrigued — I think it might be a fruitful way to think about vulnerabilities and hacker behavior.
posted by Joseph Blocher
On Friday, I asked why there seems to be no inter-governmental market for sovereign territory, at least in the United States. Many of the thoughtful comments to the post suggested important political considerations that might prevent the market from clearing, particularly in the international context. I’ll try to address some of those considerations in my next post, but first I want to focus on the domestic context, and specifically on what limits the Constitution might place on inter-state sales of sovereign territory.