Archive for the ‘Law and Inequality’ Category

Inspirational Healthcare In(ter)ventions

posted by Frank Pasquale

The New York Times has an excellent section on “low-cost innovations that can save thousands of lives.” A conversation today focuses on Dr. Paul Polak, a 78-year-old former psychiatrist.

[Dr. Polak] has focused on creating devices that will improve the lives of 2.6 billion people living on less than $2 a day. But, he insists, they must be so cheap and effective that the poor will actually buy them, since charity disappears when donors find new causes.

His greatest success has been a treadle pump that lets farmers raise groundwater in the dry season, when crops fetch more money. He has sold more than two million, he said. He also helped develop a $25 artificial knee and a $400 hospital lamp to save newborns with life-threatening jaundice.

Dr. Polak’s work reminded me of an inspirational conference in Boston, organized by Kevin Outterson, the Ewing Marion Kauffman Foundation, the Rhode Island College of Pharmacy, Universities Allied for Essential Medicines & Mind the Health Gap. Una Ryan, President & Chief Executive Officer of Diagnostics for All, gave a powerful presentation on her company’s quest to bring tests to individuals for pennies. Developments like these indicate that conditions for the world’s poorest can actually improve.

September 27, 2011 at 10:46 pm Posted in: Health Law, Law and Inequality Print This Post 3 Comments

Revolt of the Elites

posted by Frank Pasquale

Bernard Harcourt has analyzed new forms of radicalism adopted by the most and least privileged. Umair Haque at the Harvard Business Review has also identified dispositions shared by street looters and certain elites. As the chief political commentator at London’s Daily Telegraph has observed, “The moral decay of our society is as bad at the top as the bottom.” Yet there are very different consequences for each group’s transgressions.

The more disruptive the disenfranchised become, the more they provoke harsh responses from authorities, thus worsening their already marginal position. By contrast, finance and government elites have positioned themselves to gain from whatever risks they shift onto society at large, via bailouts, emergency powers, and the revolving door. As Ross Douthat observed, “The economic crisis is producing consolidation rather than revolution, the entrenchment of authority rather than its diffusion, and the concentration of power in the hands of the same elite that presided over the disasters in the first place.”
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September 4, 2011 at 10:04 am Posted in: Financial Institutions, First Amendment, Law and Inequality, Politics, Privacy, Privacy (Law Enforcement), Privacy (National Security) Print This Post 46 Comments

Assessing Medicaid Managed Care

posted by Frank Pasquale

The Washington Post has featured two interesting pieces recently on Medicaid managed care. Christopher Weaver reported on a battle between providers and insurers in Texas. Noting that “federal health law calls for a huge expansion of the Medicaid program in 2014,” Weaver shows how eager insurers are to enroll poor individuals in their plans. Each enrollee would “yield on average $7 a month profit,” according to recent calculations. Cost-cutting legislators see potential fiscal gains, too, once the market starts working its magic.

There’s only one problem with those projections: it turns out that “moving Medicaid recipients into managed care ‘did not lead to lower Medicaid spending during the 1991 to 2003 period,’” according to a report published by the National Bureau of Economic Research this month. Sarah Kliff is surprised to find that this is “the first national look at whether Medicaid managed care has actually done a key thing that states want it to do.”
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August 29, 2011 at 3:31 pm Posted in: Empirical Analysis of Law, Health Law, Law and Inequality Print This Post No Comments

From Safety Net to Dragnet

posted by Frank Pasquale

The fourth Class Crits conference will be held in DC in about a month. Titled “Criminalizing Economic Inequality,” it focuses on the US’s “increasing reliance on the criminal justice system to make and enforce economic policy.” A few recent items highlight the conference’s timeliness:

1) Barbara Ehrenreich on “How America Turned Poverty Into a Crime:” It’s hard to believe that Ehrenreich’s Nickeled and Dimed came out 10 years ago. As she’s written in the book’s re-issue, things have only gotten worse for the struggling families whose plight she chronicled in the book. Ehrenreich describes how officials at public assistance programs treat many beneficiaries with contempt. One needy mom named Kristen says caseworkers “treat you like a bum. They act like every dollar you get is coming out of their own paychecks.”

Nationally, according to Kaaryn Gustafson of the University of Connecticut Law School, “applying for welfare is a lot like being booked by the police.” There may be a mug shot, fingerprinting, and lengthy interrogations as to one’s children’s true paternity. The ostensible goal is to prevent welfare fraud, but the psychological impact is to turn poverty itself into a kind of crime. Read the rest of this post »

August 19, 2011 at 10:17 pm Posted in: Criminal Law, Culture, Current Events, Immigration, Law and Inequality, Privacy Print This Post One Comment

Inequality: Facts and Values

posted by Frank Pasquale

There were a number of interesting comments on my last post. I want to address some of the critical ones.

To recap, my post argued the following points:

1) Some people are doing extremely well in today’s economy, a large number are worried or struggling, and a growing class is experiencing desperate privation. This situation demands some legitimating explanation.
2) It is hard to demonstrate factually that the top 0.1%, which has seen a near 400% increase in its income since 1980, has become four times more valuable to the economy since 1980.
3) So defenders of this vast inequality argue that those in the middle and lower classes deserve to work harder and to make do with less.

Let’s take criticism of each step of the argument in turn. Read the rest of this post »

August 14, 2011 at 10:19 pm Posted in: Law and Inequality Print This Post 7 Comments

The Redemptive Role of Founding Principles

posted by Alexander Tsesis

Among the most interesting topics discussed in Jack Balkin’s Constitutional Redemption is the relevance of the Declaration of Independence. I found his thoughts very helpful for one of my current projects, Representative Self-Government and the Declaration of Independence, on the legal relevance of the Declaration to contemporary civil rights and campaign finance issues.

Many scholars have mistakenly taken the document to be a vestige of the past, but that is not the case with Balkin. He believes that “American constitutionalism is and must be a commitment to the promises of the Declaration makes about our future as a people.” Going even further, Balkin asserts that “the Declaration is our constitution . . . because it . . . constitutes us a people.” This statement has deep implications, but needs further fleshing out, which I have sought to do in my draft.

Unlike the Constitution, the Declaration of Independence lacks an enforcement clause: There is no Necessary and Proper Clause for protecting “life, liberty, and the pursuit of happiness,” which the Declaration asserts to be the innate rights of all people. And as Balkin correctly points out, courts typically give no substantive value to the Declaration. Yet the document remains a statement of the national ethos. Social movements–like abolitionists, feminists, and labor organizers–have shown time and again that the statements of rights found in the Declaration’s second paragraph has a significant influence on ordinary people’s understanding of governmental obligations, objectives, and achievements.

With that in mind, I turn to two comments from yesterday’s posts. First, with Mark Graber’s characterization of Lincoln. I agree with him that Lincoln “believed that egalitarian principles had to be balanced with other principles of equal constitutional pedigree” but don’t think that regarding him as a redemptive figure need bedazzle us to his imperfections. While Lincoln certainly was not a Garrisonian abolitionist, neither was he a Stephen Douglas Democrat. He was rather a man whose views on slavery, political and civil equality, and free labor evolved until John Wilkes Booth arrested that development. Their different positions on slavery and free blacks were clear to the audiences of the Lincoln/Douglas debates. Among other things they disagreed about the (in)validity of Dred Scott and the (il)legitimacy of popular governance in the territories. In 1860, presidential campaign literature clearly contrasted Douglas’s placation of slave interests and Lincoln’s opposition to slavery in the territories. Speaking at Cooper Union in February 1860, Lincoln explicitly stated that Republicans “in common with our fathers, who framed the Government under which we live, declare our belief that slavery is wrong.” But, what rightfully troubles us today, is his persistent statements that same year proclaiming the unconstitutionality of interfering with slavery in states where it already existed. That was a commonly held framework of the Republican party, and if he had taken a more radical position it is highly unlikely that he would have won the presidential election. Furthermore, even though his perspective had not yet matured to the point of emancipation and later support for the Thirteenth Amendment, one of the campaign songs of 1860, “Lincoln and Liberty”, included the lyrics: “Our David’s good sling is unerring, The Slaveocrats’ giant he slew, The shout for the Freedom-preferring for Lincoln and Liberty too!”. Thus even then, before South Carolina had even attacked Fort Sumter, Lincoln was conceived by voters as a redemptive figure capable of returning the nation to the unfulfilled promises of the nation’s framing.

There is much to criticize in Lincoln’s position in refusing on constitutional grounds to overtly support repealing the Fugitive Slave Act of 1850 and his support for the Corwin Amendment upon ascending to the presidency. But he also spearheaded the Emancipation Proclamation, which although limited in scope changed the central purpose of the Civil War to liberation of slaves and unification under the principles of the Declaration of Independence; a time of redemption, if you will or, in the words of Charles L. Black, “a new birth of freedom.” But Lincoln was too complex a character to describe him merely as a pragmatist, which can be said about most politicians, without adding that he was an authentic idealist as well. Lincoln was certainly a man who believed that America’s founding documents had a redemptive quality, often referring to the Declaration of Independence as a substantive guarantee of human equality.

On a separate point, yesterday Gerard Magliocca asked the important question of how we can identify whether a framework of redemption is legitimate. He points out that the South conceived of constitutional redemption to be a return to the antebellum acceptance of racial supremacy. The question is how do we know that we have reached the finality of redemption; the end point of our effort to achieve fundamental justice. While I suppose that it is an ongoing process, with no end in sight, I believe that the founding documents offer us a response here as well.

Core standards that can play a redemptive role are stated in neutral terms: The Declaration of Independence spoke in terms of “unalienable rights” that all men–a term that feminists like Elizabeth Cady Stanton and Lucy Stone understood to mean “all people”–were created equal. The preamble speaks of “We the People of the United States” forming “a more perfect Union” for the sake of improving “the general Welfare.” The Ninth Amendment uses the neutral term of rights “retained by the people.” The Fourteenth Amendment’s statement about “the privileges or immunities of” all citizens, or the entitlement of all people to enjoy life, liberty and property without arbitrary state interference. There is no racialist supremacy in these words.

All of these provisions are in need of parsing, none is self-evident in meaning, but I think that none can be reasonably understood to reflect a herrenvolk democracy in a way that, say, the Confederate Constitution did. The existence of herrenvolk democracy in U.S. history–take Jacksonian America as an example–need not reflect negatively of the founding standards to which Balkin refers. As principled statements of national aspiration, to which I interpret Balkin’s redemptive constitutionalism to refer, these principles of representative democracy refer to all the people of the United States (E Pluribus Unum) not only a subset of them. The endpoint, therefore, appears through cultural refinement of our understanding of first principles, and, where necessary, the amendment of them to better protect the people’s fundamental rights.

August 2, 2011 at 11:23 am Posted in: Book Reviews, Civil Rights, Constitutional Law, Constitutional Redemption Symposium, History of Law, Law and Inequality Print This Post No Comments

Constitutional Redemption

posted by Alexander Tsesis

Jack M. Balkin’s profound book, Constitutional Redemption, develops an aspirational interpretation of the Constitution. The presentation is not nostalgic; rather, Balkin provides a hopeful picture of an evolving form of constitutional interpretation. His methodology requires the reexamination of existing social morality and political forms but not an abandonment of the Constitution’s commitments to standards and principles of justice.

Balkin’s narrative of redemption speaks of unfulfilled promises made at the nation’s founding. These promises, he argues, should guide reform. Improvement, amendment, and advancement are not merely results of blind flux, but concerted efforts to achieve the “promise[s] of the past.” He neither seeks nor engages in constitutional idolatry, but a belief that the ideals of liberty and equality imbedded into the document can mold public opinion against injustices that violate them.

Such a grand vision is based on faith that the Constitution’s flexible framework will be instrumental to the achievement of social justice. Balkin’s perspective is positioned with the leanings of scholars like Mark Tushnet, , Sanford Levinson, William Eskridge, and Larry Kramer, who regard social and political movements to be important actors for “shifting the boundaries” of what are considered to be reasonable and plausible alternatives to existing inequalities. According to Balkin’s perspective, the effect of civil rights groups on our understanding of the Constitution is reflected in cases like Brown v. Board of Education, Reed v. Reed, and Lawrence v. Texas. These decisions, indeed, bear witness to the ability of litigation groups–like the National Association for the Advancement of Colored People, Women’s Rights Project, and the Lambda Legal Defense and Education Fund–to integrate visionary popular activism into a constitutional framework compelling enough to alter Supreme Court decisionmaking.

I believe that in Balkin’s redemptive vision of constitutional interpretation lies, arguably, the central paradox of American history. The nation was built on the principled foundations of the Declaration of Independence, which recognizes universal inalienable rights like life, liberty and the pursuit of happiness, but from its inception the United States failed to fully carry those ideals into law. The Declaration too, I argue in a forthcoming book, offers the sort of visionary (or in Balkin’s language redemptive) possibilities that drove Abraham Lincoln’s vision of federal government and Martin Luther King, Jr.’s advocacy of reform.

While the founding document spoke in terms of liberal equality, not quite twelve years after the Declaration was signed (on June 21, 1788 when New Hampshire became the ninth sate to adopt the Constitution) the Constitution’s notorious protections of slavery became binding. That is, the Constitution was not merely a step forward in the establishment of binding institutions pregnant with redemptive possibilities but also a document that compromised some of the ideals of the Revolution. Even the ratification of the Reconstruction Amendments did not lead to immediate redemptions of those original ideals. But I believe that Balkin is correct, that the Constitution just as its legal forerunner, the Declaration of Independence, contains the necessary kernels of wisdom that allow for the national and human evolution of understanding about the significance of due process, equal protection, and the pursuit of happiness.

Balkin correctly points out that the many failures to live up to the nation’s ideals do not diminish the value of anti-classist promises the nation made to improve of people’s welfare. His redemptive model helps explain why abolitionists could condemn the nation for its gross failures while clinging to its ideals. The original documents were useful for those who condemned the nation’s existing practices and for those who sought a jubilaic plan for its reform.

A letter published in abolitionist Frederick Douglass’s newspaper, The North Star, mocked the Declaration of Independence’s assertion that “all men are created equal.” The author insisted that the document should be rewritten to say, “All men are created equal; but many are made by their Creator, of baser material, and inferior origin, and are doomed now and forever to the sufferance of certain wrongs–amongst which is Slavery!” To blacks, the writer went on to say, the Fourth of July was “but a mockery and an insult.” To the advocates of slavery, he surmised, “liberty and equality” meant no more than the noises of firecrackers, raised flags, and other raucous festivities. J.D. “The Ever-glorious Fourth”, North Star (Rochester, NY), July 13, 1849.

But there was more to be said about America; it was not merely a composite of its failures but also a set of affective and effective norms. Despite the nation’s failures, the Declaration of Independence committed the country to liberal equality. In this context, an ex-slave’s daughter described her father’s awakening when he heard the Declaration read aloud. From that moment, she wrote, “he resolved that he would be free, and to this early determination, the cause of human freedom is indebted for one of its most effective advocates.” Biography of an American Bondman, by His Daughter 15-16 (1856). Her father, William Wells Brown, successfully escaped in 1834, later to become a prolific novelist and abolitionist lecturer.

The author of Douglass’s paper reflects the failure to live up to the substance of freedom. But Brown’s experience speaks to the possibility of unfulfilled aspiration to inspire and guide individuals, and perhaps even the nation, to liberal equality. This ability to animate hope even in the course of culturally accepted injustice demonstrates the Constitution’s redemptive quality, providing visionary revitalization of existing institutions and leading to social beneficial revision.

August 1, 2011 at 9:22 am Posted in: Civil Rights, Constitutional Law, Constitutional Redemption Symposium, History of Law, Law and Inequality, Legal Theory, Race Print This Post No Comments

Do the Rich Need the Rest?

posted by Frank Pasquale

The top 10% of Americans now make about as much as the bottom 90%. But within that group, an even smaller fraction dominates. Nobel Prize winning economist Joe Stiglitz has observed that the US is ruled by the top 1%, for the top 1%. And within that top 1%, the top tenth has been triumphant. Earning on average $5.6 million in 2008 (and at least $1.7 million), the group has seen its income rise 385% from 1970 to 2008, while earnings of the bottom 90% declined.

Worldwide, the rich are pulling away from the rest as well. Given this political reality, what kind of future is likely for the bottom 99%? Will the sort of precarious existence now common for the poor and lower-middle classes climb higher up the income ladder?

Michael Lind suggests this is likely, because so many jobs can be done by “less expensive and more deferential foreign nationals,” or prisoners. WSJ reporter Robert Frank has also observed a decoupling of destinies: “the economic fate of Richistan seems increasingly separate from the fate of the U.S.” (or any particular country).

Meanwhile, progressive thinkers like Bruce Judson, Robert Reich, and David Callahan have hoped for the rise of a conscientious superclass. In their view, any nation’s wealthy should see middle class prosperity as part of its own self-interest properly understood. Most of these thinkers hold up Germany or Sweden as models of egalitarianism that helps even those at the top. A book called “The Spirit Level” has made a complementary case, arguing that, as a statistical matter, even the richest in an unequal society tend to be less healthy and secure than those at the top of a more equal social order. (Consider, for instance, that even if you were in the oil-drilling elite of Equatorial Guinea, making $250,000 per year, you might well want to move to Sweden for a similar position paying $100,000 a year.)
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June 25, 2011 at 5:16 pm Posted in: Health Law, Law and Inequality, Politics, Tax Print This Post 4 Comments

All Eyes on Albany

posted by Ari Waldman

If the Co-Op world is interested, the New York State Senate is expected to meet today starting at 11 am Eastern (now-ish!) to consider at least two final issues before the end of the legislative session. At the top of the list are, you guessed right, rent control and property taxes.

Though Governor Cuomo’s team of staffers, Brian Ellner’s team of lobbyists and State Senate Republicans met all weekend to discuss the possibility of a vote on same-sex marriage, there are hints of progress, but no deal just yet. The bill passed the State Assembly for the third time by a wide margin, so the fate of gay New Yorkers wishing to take part in the tradition of marriage remains in the hands of a few Senate Republicans. We don’t know if a vote will even happen today.

Setting aside those who oppose same-sex marriage because they have a visceral opposition to gay people, the sticking point is religious exemptions to the law. Senators Ball, Grisanti and Galand, all upstate Republicans, want broad exemption language that would, in their opinion, prevent religious institutions or individuals from being forced to violate their opposition to same-sex marriage. The problem with that argument is two-fold: (1) those protections are already part of NY state law, and (2) it is one thing to say a church does not have to perform a same-sex wedding if same-sex relationships are incompatible with the church’s teachings (this is a bill about civil marriage, anyway); it is quite another to allow a hospital to ban a man from the death bed of his legally married spouse if the hospital to which EMTs rushed them is affiliated by this or that religious order. Should a same-sex couple, one member of which just had a stroke or a heart attack or was in an accident or was attacked, have to tell the EMTs to go an extra 20 miles to Elmira General because the local St. Peter’s refuses to treat gay people? That is just the kind of perverse situation in which gay New Yorkers would find themselves if Senator Ball’s overly broad exemptions are accepted. To be sure, there could be lawsuits, challenges and demand letters from the ACLU challenging the hospital’s refusal, but their potential success is irrelevant to the gay couples who may be victimized before the wheels of justice move forward.

One other point on this topic. I started a small Facebook group asking friends to commit to donating to NY Senate Republicans who voted for same-sex marriage, hoping to show them that it would be a good thing for their political careers and campaign coffers to vote in favor. Yet, a few lovely people I know found this idea offensive — an ex post donation as a thank-you for voting one way on a particular issue. Admittedly, I see a difference between that and generally supporting a politician every cycle, but how is this any different than upping your donation (or your commitment through volunteering) to a candidate in the next cycle after he or she votes the way you wanted on any given issue or issues?

June 20, 2011 at 11:18 am Posted in: Civil Rights, Law and Inequality, LGBT, Politics Print This Post No Comments

Review of Reconsidering Law and Policy Debates: A Public Health Perspective

posted by Frank Pasquale

Reconsidering Law and Policy Debates: A Public Health Perspective, edited by John Culhane, is a superb collection of thought-provoking essays which features some of the most well-regarded health law scholars in the US. It also includes contributors from schools of public health, public affairs, and public administration. The chapters are uniformly well-written and instructive. Though I cannot in this brief review give consideration to all of the essays, I will try to highlight contributions related to some of my own areas of interest in the intersection between public health and medico-legal research.

Several authors focus on the difficult questions raised by extreme inequality. For example, Vernellia R. Randall’s Dying While Black in America reflects on the disturbing disparity between white and black death rates in the US. A black American male can expect to live seven years less than a white American male, and black women face a four-year gap. Randall explores a number of potential explanations, including discriminatory policies and practices, lack of language and culturally competent care, inadequate inclusion in healthcare research, and hidden discrimination in rationing mechanisms. Randall argues that these disparities will never be addressed effectively until the legal system develops doctrines that can deter not only intentional discrimination, but also “negligent discrimination in healthcare:”
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June 1, 2011 at 10:08 am Posted in: Book Reviews, Civil Rights, Health Law, Law and Inequality, Tort Law Print This Post One Comment

The War Against Disclosure

posted by Frank Pasquale

Three remarkable recent lobbying campaigns go beyond the normal bounds of partisan sniping over “markets vs. regulation.” They threaten our capacity to understand how society is ordered: whom it serves, for what purposes, and at what costs. Consider these attacks on basic disclosure norms in politics and business:

1) Campaign Finance Disclosures: Regardless of ideology, almost everyone used to agree that campaign funding sources and amounts should be disclosed. 92% of Americans had that position in 2010. Justice Scalia has eloquently insisted that such disclosure laws violate no one’s rights. But thought leaders in the Republican party are now vigorously resisting disclosure, as Norm Ornstein observes:

The 2010 mid-term elections showed clearly how legal loopholes involving non-profit groups called 501(c)4s, and the failure to adopt clear regulations surrounding campaigns, can result in hundreds of millions of dollars of spending to influence campaigns that masked the identity of huge donors. In response to these realities, the Federal Communications Commission is considering requiring robust disclosure by TV stations of the major donors of political ads; the Securities and Exchange Commission is considering requiring public corporations to disclose to stockholders their spending on politics, and the White House has drafted an executive order to require companies applying for federal contracts to disclose their spending on political campaigns. . . .

Last month, Mitch McConnell [said] he views disclosure as “a cynical effort to muzzle critics of this administration and its allies in Congress.” . . . The Wall Street Journal’s full-throated support for transparency has disappeared as well; it blasted the FCC recently for considering requiring TV stations to put donors of campaign spots on the Internet . . .

John Yoo has also joined the debate, arguing that presidential power stops just short of the prerogative to require federal contractors to disclose their political donations.

2) Conflict Mineral and Extractive Industry Disclosures: One of the surprising victories for decency in the Dodd-Frank Act last year was a provision requiring certain disclosures from mining and resource extraction companies, and companies using “conflict minerals” from in or around the Congo. If you’re a consumer with preferences for certain industrial processes (say, those that don’t create incentives for rape, murder, and starvation), you want to be able to see which companies are fueling conflict and corruption and which are not. But intense corporate pressure is now delaying the rulemaking process needed to implement the disclosure provisions. According to Gerry Fay, “it is estimated that going ‘conflict free’ would cost companies just one penny per product.” But apparently that is too high a price to end corporate complicity in one of Africa’s bloodiest wars.
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May 15, 2011 at 3:32 pm Posted in: Constitutional Law, Corporate Law, Corruption, Government Secrecy, Law and Inequality, Politics, Privacy, Privacy (National Security), Technology Print This Post 15 Comments

Roger Lowenstein, Meet Bill Black

posted by Frank Pasquale

In an essay in Bloomberg Businessweek, financial journalist Roger Lowenstein compares those calling for more criminal investigation of Wall Street to 9/11 truthers and conspiracy theorists. He also distinguishes the current crisis from the S&L debacle by claiming that “The bankers convicted in the savings and loan scandal who dealt sweetheart loans to friends were fraudulent. These people had their hands, willfully, in the till—and knew it.”

You would think that anyone making that argument would want to engage with the work of William K. Black, who has repeatedly compared the finance practices of 2003-2008 to those which led to the S&L crisis. But no, Lowenstein appears too detached to confront Black’s ideas, which have been published in articles and finance sites, and repeatedly debated in televised programs. Praised for his prior work by Paul Volcker, George A. Akerlof, and many other luminaries, Black is off Lowenstein’s radar.

Lowenstein also fails to address the structural foundations of the recent lack of prosecutions; namely, the lack of referrals from financial regulators to law enforcers:

[D]ata supplied by the Justice Department and compiled by a group at Syracuse University show that over the last decade, regulators have referred substantially fewer cases to criminal investigators than previously. The university’s Transactional Records Access Clearinghouse indicates that in 1995, bank regulators referred 1,837 cases to the Justice Department. In 2006, that number had fallen to 75. In the four subsequent years, a period encompassing the worst of the crisis, an average of only 72 a year have been referred for criminal prosecution.

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May 15, 2011 at 12:27 am Posted in: Criminal Law, Financial Institutions, Law and Inequality Print This Post No Comments

Lochner in China

posted by Frank Pasquale

In the book Will the Boat Sink the Water? The Life of China’s Peasants, Chen Guidi and Wu Chuntao conclude that “the edifice of China’s industry is built from the flesh and blood of toiling peasants, and urban development was achieved through their pain and sacrifice.” It looks like the wonders of freedom of contract will spare some managers the hassle of dealing with the collateral damage:

In the wake of a huge wave of suicides at Foxconn plants, the company began reforming its practices related to the suicides. Among these changes included installing anti-suicide nets to catch workers who attempted to leap out of company windows. Yet workers are also being forced to sign a non-suicide pact as a condition of employment. As part of the pact, the employees families have to promise “not sue the company, bring excessive demands, take drastic actions that would damage the company’s reputation or cause trouble that would hurt normal operations” in the case of a suicide.

I highly recommend the entire report from Students & Scholars Against Corporate Misbehaviour (SACOM), a Hong Kong-based advocacy and research group that has studied the production process in some detail. Even more mundane aspects of some workers’ lives are hard to explore, given another contract they are free to sign. Some workers “did not dare to tell their basic salary, position, product that they produce, fearing that will constitute a breach of ‘confidential[ity] agreement[s].’” With a bit more vigorous contract enforcement, laissez-faire’s apologists may never have to hear again about squalid dormitories, 100-hour weeks, and shifts of standing for 14 hours in a row. Who knew the market could so efficiently reduce the negative externality of guilt-inducing news?

May 10, 2011 at 2:41 pm Posted in: Constitutional Law, Economic Analysis of Law, Law and Inequality Print This Post 6 Comments

Missing Care, Missing Drugs: Canaries in the Medical Coal Mine

posted by Frank Pasquale

While Washington has been focusing on repealing or rolling back parts of the Affordable Care Act, persistent embarrassments of the American health system show how untenable the status quo is. Both lower and middle class families are facing serious problems as they contend with providers’ and insurers’ cost constraints.

I’ll first address the familiar issue of health disparities. According to a recent news report, Lauren E. Wisk of the School of Medicine and Public Health at University of Wisconsin, Madison “examined data from the 2001-2006 Medical Expenditure Panel Surveys on 6,273 families with at least one child.” Wisk’s study shows that excessive financial burdens from cost-sharing are keeping many children from getting the care they need:

Families aren’t choosing to spend their money on going to the doctor when someone is sick because of how much it cost them to see the doctor last time. They’re sacrificing their health because it costs too much to be healthy. . . . We expect that if people aren’t getting the care they need, they’ll be sicker as a result. When you put this all together and look at the big picture, the cost of health care in the U.S. could actually be causing Americans to be sicker.

We might wonder: how can this be? Isn’t the economy in recovery? But we’ve seen this picture before, in the developing world. Growth does not help everyone. India, for example, has had astonishing economic growth, but it “is home to about a third of the world’s underweight and stunted children under the age of 5,” and “the impressive economic growth of the past decade has made only a modest dent into the obstinately high incidence of severe underweight and stunting of children in the country.” As Amartya Sen has shown, not only China, but also Bangladesh, are ahead of India in reducing the number of underweight children, despite the fact that “GNP per capita of $1,170″ in India, “compared with $590 in Bangladesh.” The critical number really is median GNP, and beyond that, real allocation to the sectors and concerns that matter. As the US surpasses Ivory Coast and Pakistan in inequality, don’t count on gains from growth to go to the people who need it.
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May 6, 2011 at 11:56 am Posted in: Economic Analysis of Law, Health Law, Intellectual Property, Law and Inequality Print This Post No Comments

Correlating Home Size and Seriousness

posted by Frank Pasquale

NBC anchor Brian Williams once complained about the amateurization of media in rather colorful terms:

All of my life, developing credentials to cover my field of work, and now I’m up against a guy named Vinny in an efficiency apartment in the Bronx who hasn’t left the efficiency apartment in two years.

Williams himself is careful to maintain his own credibility. According to a 2007 report, Williams “lives in a restored farmhouse in Connecticut where he parks his 477-horsepower black Porsche GT2 (that is, when he’s not decamping on the Upper East Side).” How else would you spend a $10 million annual salary?

Some have insinuated that Williams was trying to help his bosses when he failed to report on NBC’s parent company’s low tax rate. But perhaps it’s more likely that government spending just doesn’t register on Williams’s radar. Poor Vinny, cramped in his studio apartment, may worry about someday needing Medicaid, home heating assistance, or help for his mom in a nursing home. He might wonder why all these programs are under attack, while small changes in the tax system could support them for years, and larger changes could support them for decades. But those are not the serious concerns of serious people with seriously large houses. Perhaps only people like Williams should be able to vote, too.

April 20, 2011 at 3:58 pm Posted in: Law and Inequality, Politics, Tax, Uncategorized Print This Post No Comments

Tax Day Stats

posted by Frank Pasquale

A few stats & stories in honor of Tax Day:

A. This “could be the best tax day for rich since ’30s:”

17% . . . was the effective tax rate paid by the 400 Americans with the highest adjusted gross income in 2007, the most recent year with IRS data available. The figure is down from almost 30 percent in 2005. [W]ith top rates on ordinary income, capital gains, dividends, estates and gifts at or near historic lows,” [this year could be even better].

B. A tax loophole for the top 25 hedge funders is worth about 120,000 teachers’ salaries.

C. The favorite shelters and dodges of America’s wealthiest.

D. Journalist states that “”Tax havens have grown so fast in the era of globalization, since the 1970s, that they are now right at the heart of the global economy.”

E. David Cay Johnston states that, “during seven of the eight George W. Bush years, the IRS report on the top 400 taxpayers was labeled a state secret.” Johnston also notes that, “When it comes to state and local taxes, the poor bear a heavier burden than the rich in every state except Vermont.”

F. Joshua Holland compares changes in the tax burden over time:

The federal income tax bill for a person making $15,000 is 51 percent higher today than it was 30 years ago — a big jump. . . . If you brought in a half-million dollars, your tab would have dropped by 49.5 percent, saving you around $150,000. It’s about the same decrease for someone making a cool million.

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April 16, 2011 at 8:39 pm Posted in: Law and Inequality, Tax Print This Post 2 Comments

Economic Policy for the Worried Wealthy

posted by Frank Pasquale

Why is the austerity movement so powerful in the US? Many people are hurting, and corporate, CEO, and finance sector gains since 2008 have been enormous. Why not expect a little more from the wealthy? Why are states from Arizona to New York going after poor Medicaid patients and schools instead? We know the economic case for austerity in a deep recession is bunk. Why its enduring appeal?

Perhaps voters have lost faith in the ability of the state to do anything competently, including redistribution. The always-insightful Elisabeth Young-Bruehl suggests as much, noting:

[Americans] have been led to believe that their well-being and their democracy depend upon the success of capitalism, with its limitless growth ideology; but this very capitalism is taking over their state. They have been promised that if America has a strong, competitive, innovative economy, the benefit of that will trickle down to all, just as Ronald Reagan promised it would. Even Barack Obama speaks this language. But it is becoming obvious that there is not going to be any trickle down. . . . [The system] is a closed loop, which is not designed to trickle anything much down to support those who are not in the loop[.]

As plutonomy advances, buying power is being segregated by the very wealthy into closed circuits of spending and investment. Young-Bruehl makes a similar case about political power in a post-Citizens United world. As Martin Gilens has shown, in the US, “actual policy outcomes strongly reflect the preferences of the most affluent but bear virtually no relationship to the preferences of poor or middle income Americans.”

Yet that still leaves a puzzle. The wealthy in the US may have extraordinary influence over the political process, but they could use it in many different ways. Warren Buffett complained about being taxed less than his secretary, and Bill Gates’s father has fought for the estate tax. Progressive thinkers like Bruce Judson, Robert Reich, and David Callahan have all hoped for the rise of a conscientious superclass. At some point the marginal value of money diminishes; why not spread it around a bit?

Anxious at the Top

I think Reich, Callahan, and Judson have failed to take into account the enduring anxietes of of America’s rich. Consider two studies, and an anecdote, reflecting worry at the top of the income scale:
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April 2, 2011 at 3:46 pm Posted in: Law and Inequality, Tax Print This Post 3 Comments

“Linking Skepticisms” About the Finance Sector

posted by Frank Pasquale

Brian McKenna published an interesting piece in the Society for Applied Anthropology Newsletter, which is reprinted here. He quotes Financial Times Managing Editor Gillian Tett on one underexplored reason for lack of public attention to “financial innovation” pre-2008: “Once something is labeled boring, it’s the easiest way to hide it in plain sight.” He also reproduces a fascinating reflection from Annelise Riles, whose work Collateral Knowledge: Legal Reasoning in the Global Financial Markets will soon be released:

I think Tett’s diagnosis should cause academics to ask some hard questions about why we did not do more to highlight and critique the problems in the financial markets prior to the crash. For myself, for example, fieldwork in the derivatives markets had convinced me long before the crash that all was not well in these markets. My husband (also an ethnographer of finance) and I often joked way back around 2002 that our research had convinced us not to put a penny of our own money in these markets.

But our own disciplinary silo made us feel that it was impossible to counter the enthusiasm for financial models out there in the economics departments, the business schools, the law schools, the corridors of regulatory institutions. There surely was some truth to our sense that no one wanted to hear that markets were not rational in the sense assumed by the firms’ and regulators’ models. But maybe we should have tried a bit harder; it turns out many other people also had doubts and thought they too were alone. What might have happened if we had all found a way to link our skepticisms?

At this point, it may well be the case that most financial economists have so barren a theory of the social purpose of financial markets that they really are only teaching people how to succeed within the current system, rather than improving the system overall. It’s a bit like a divinity school run by “believers,” rather than a religious studies department trying to study the religious (to borrow a distinction from Paul Kahn’s Cultural Study of Law).
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March 11, 2011 at 2:06 pm Posted in: Financial Institutions, Law and Inequality, Philosophy of Social Science Print This Post 5 Comments

Neo-Feudalism: Shaxson on Tax Havens

posted by Frank Pasquale

Parag Khanna has frequently discussed the rise of a neo-feudal age, with power devolving from nation-states to cities. Why are nation-states losing relevance?

One important reason is that tax havens are diverting ever more revenue away from social needs. Powerless to confront the wealthy or powerful corporations which take advantage of them, states must tax their middle classes more or cut services. Many authors have noted the proliferation of tax havens in recent years. But one rarely sees the literal trappings of feudalism re-emerge, as Nicholas Shaxson describes in his provocative account of the “City of London Corporation:”

The term “tax haven” is a bit of a misnomer, because such places aren’t just about tax. What they sell is escape: from the laws, rules and taxes of jurisdictions elsewhere, usually with secrecy as their prime offering. The notion of elsewhere (hence the term “offshore”) is central. The Cayman Islands’ tax and secrecy laws are not designed for the benefit of the 50,000-odd Caymanians, but help wealthy people and corporations, mostly in the US and Europe, get around the rules of their own democratic societies. The outcome is one set of rules for a rich elite and another for the rest of us.

The City’s “elsewhere” status in Britain stems from a simple formula: over centuries, sovereigns and governments have sought City loans, and in exchange the City has extracted privileges and freedoms from rules and laws to which the rest of Britain must submit. The City does have a noble tradition of standing up for citizens’ freedoms against despotic sovereigns, but this has morphed into freedom for money.

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March 3, 2011 at 2:52 pm Posted in: Law and Inequality, Tax, Trade Print This Post 4 Comments

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