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Category: Political Economy

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Constitutional Limits on the Inter-State Market for Sovereign Territory

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.

 

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14

The Market for Sovereign Territory

I’m thrilled to be back at Co-Op, and I look forward to blogging about a few rough ideas that seem to be shaping up as summer research projects. The first of them starts with a story.

Once upon a time, sovereigns bought and sold themselves to one another. Specifically, they purchased sovereign territory. The United States, to take the easiest example, looks the way it does not just because of military conquest, but because of bold real estate deals, including most notably the Adams-Onis Treaty, the Louisiana Purchase, and the Alaska Purchase. Occasionally such sales were tied up with military action, as with the Treaty of Guadalupe Hidalgo, which ended the Mexican-American War, transferred the Mexican Cession, and committed the United States to pay Mexico $15 million “[i]n consideration of the extension acquired.”

Even within the United States, sales of sovereign territory were not unheard of at the time of the Founding. The Constitution’s Enclave Clause specifically refers to the federal government’s power to “purchase[]” and essentially govern “Places” within states. And the states themselves often altered their borders, sometimes for economic reasons. In 1784, for example, North Carolina ceded 29,000,000 acres to the federal government to help pay back the nation’s Revolutionary War debt–a generous but ill-fated gesture that led to the short, unhappy, and largely forgotten life of the State of Franklin.

Somewhere along the way, the market for sovereign territory seems to have dried up, at least as far as I can tell. To be sure, there is still an active market for proprietary interests in public land; the federal government, after all, owns approximately 30% of the nation’s land. But borders–sovereign territory, rather than property–do not seem to be for sale, especially domestically. Why?

 

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Why Do We Lack the Infrastructure that We Need?

Brett Frischmann’s book is a summa of infrastructural theory. Its tone and content approach the catechetical, patiently instructing the reader in each dimension and application of his work. It applies classic economic theory of transport networks and environmental resources to information age dilemmas. It thus takes its place among the liberal “big idea” books of today’s leading Internet scholars (including Benkler’s Wealth of Networks, van Schewick’s Internet Architecture and Innovation, Wu’s Master Switch, Zittrain’s Future of the Internet,and Lessig’s Code.) So careful is its drafting, and so myriad its qualifications and nuances, that is likely consistent with 95% of the policies (and perhaps theories) endorsed in those compelling books. And yet the US almost certainly won’t make the necessary investments in roads, basic research, and other general-purpose inputs that Frischmann promotes. Why is that?

Lawrence Lessig’s career suggests an answer. He presciently “re-marked” on Frischmann’s project in a Minnesota Law Review article. But after a decade at the cutting edge of Internet law, Lessig switched direction entirely. He committed himself to cleaning up the Augean stables of influence on Capitol Hill. He knew that even best academic research would have no practical impact in a corrupted political sphere.

Were Lessig to succeed, I have little doubt that the political system would be more open to ideas like Frischmann’s. Consider, for instance, the moral imperative and economic good sense of public investment in an era of insufficient aggregate demand and near-record-low interest rates:

The cost of borrowing to fund infrastructure projects, [as Economic Policy Institute analyst Ethan Pollack] points out, has hit record “low levels.” And the private construction companies that do infrastructure work remain desperate for contracts. They’re asking for less to do infrastructure work. “In other words,” says Pollack, “we’re getting much more bang for our buck than we usually do.”

And if we spend those bucks on infrastructure, we would also be creating badly needed jobs that could help juice up the economy. Notes Pollack: “This isn’t win-win, this is win-win-win-win.” Yet our political system seems totally incapable of seizing this “win-win-win-win” moment. What explains this incapacity? Center for American Progress analysts David Madland and Nick Bunker, see inequality as the prime culprit.

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Koch, Cato, and Nonprofit Takeovers

The Volokh Conspiracy has been providing a forum for discussion of the Koch/Cato lawsuit. According to Cato Senior Fellow Jerry Taylor, the Koch Brothers may want to “use their board majority to . . . transform our Institute into an intellectual ammo-shop for American for Prosperity and other allied (presumably, Koch-controlled) organizations.” All sides may be interested in this article by Dana Brakman Reiser (“Nonprofit Takeovers: Regulating the Market for Mission Control”). Here is part of the abstract:

For-profit takeovers create a robust market for corporate control, and the legal regimes that regulate them are well known. Far less appreciated, however, are efforts to seize control of nonprofit organizations in order to alter their missions or activities. This article explores the largely uncharted territory of nonprofit takeovers, the regulation of defenses to them, and repercussions of both for the nonprofit sector and society at large. . . . [C]ase studies demonstrate both a range of nonprofit takeover tactics and the harsh responses to them by incumbent fiduciaries and reviewing courts. . . . Within the context of these cases, the article critiques courts’ deference to nonprofits’ incumbents and intolerance of takeovers. In its place, the article advocates a nonprofit-specific approach, which will work to distinguish perilous from constructive takeover activity, and balance the opposing virtues of mission preservation and evolution. This framework will provide guidance to those who may become involved in these transactions. Moreover, it will focus nonprofit law on the crucial importance of mission and the challenges of policing that mission in organizations with multiple stakeholders.

As the latest of many battles for the soul of libertarianism, this lawsuit will be closely watched.

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The Memory Hole

On RocketLawyer’s Legally Easy podcast, I talk with Charley Moore and Eva Arevuo about the EU’s proposed “right to be forgotten” and privacy as censorship. I was inspired by Jeff Rosen and Jane Yakowitz‘s critiques of the approach, which actually appears to be a “right to lie effectively.” If you can disappear unflattering – and truthful – information, it lets you deceive others – in other words, you benefit and they are harmed. The EU’s approach is a blunderbuss where a scalpel is needed.

Cross-posted at Info/Law.

5

Cary Sherman and the Lost Generation

The RIAA’s Cary Sherman had a screed about the Stop Online Piracy and PROTECT IP Acts in the New York Times recently. Techdirt’s Mike Masnick brilliantly gutted it, and I’m not going to pile on – a tour de force requires no augmentation. What I want to suggest is that the recording industry – or, at least, its trade group – is dangerously out of touch.

Contrast this with at least part of the movie industry, as represented by Paramount Pictures. I received a letter from Al Perry, Paramount’s Vice President Worldwide Content Protection & Outreach. He proposed coming here to Brooklyn Law School to

exchange ideas about content theft, its challenges and possible ways to address it. We think about these issues on a daily basis. But, as these last few weeks [the SOPA and PROTECT IP debates] made painfully clear, we still have much to learn. We would love to come to campus and do exactly that.

Jason Mazzone, Jonathan Askin, and I are eagerly working to have Perry come to campus, both to present Paramount’s perspective and to discuss it with him. We’ll have input from students, faculty, and staff, and I expect there to be some pointed debate. We’re not naive – the goal here is to try to win support for Paramount’s position on dealing with IP infringement – but I’m impressed that Perry is willing to listen, and to enter the lion’s den (of a sort).

And that’s the key difference: Perry, and Paramount, recognize that Hollywood has lost a generation. For the last decade or so, students have grown up in a world where content is readily available via the Internet, through both licit and illicit means; where the content industries are the people who sue your friends and force you to watch anti-piracy warnings at the start of the movies you paid for; and where one aspires to be Larry Lessig, not Harvey Weinstein. Those of us who teach IP or Internet law have seen it up close. In another ten years, these young lawyers are going to be key Congressional staffers, think tank analysts, entrepreneurs, and law firm partners. And they think Hollywood is the enemy. I don’t share that view – I think the content industries are amoral profit maximizers, just like any other corporation – but I understand it.

And that’s where Sherman is wrong and Perry is right. The old moves no longer work. Buying Congresspeople to pass legislation drafted behind closed doors doesn’t really work (although maybe we’ll find out when we debate the Copyright Term Extension Act of 2018). Calling it “theft” when someone downloads a song they’d never otherwise pay for doesn’t work (even Perry is still on about this one).

One more thing about Sherman: his op-ed reminded me of Detective John Munch in Homicide, who breaks down and shouts at a suspect, “Don’t you ever lie to me like I’m Montel Williams. I am not Montel Williams.” Sherman lies to our faces and expects us not to notice. He writes, “the Protect Intellectual Property Act (or PIPA) was carefully devised, with nearly unanimous bipartisan support in the Senate, and its House counterpart, the Stop Online Piracy Act (or SOPA), was based on existing statutes and Supreme Court precedents.” Yes, it was carefully devised – by content industries. SOPA was introduced at the end of October, and the single hearing that was held on it was stacked with proponents of the bill. “Carefully devised?” Key proponents didn’t even know how its DNS filtering provisions worked. He argues, “Since when is it censorship to shut down an operation that an American court, upon a thorough review of evidence, has determined to be illegal?” Because censorship is when the government blocks you from accessing speech before a trial. “A thorough review of evidence” is a flat lie: SOPA enabled an injunction filtering a site based on an ex parte application by the government, in contravention of a hundred years of First Amendment precedent. And finally, he notes the massive opposition to SOPA and PROTECT IP, but then asks, “many of those e-mails were from the same people who attacked the Web sites of the Department of Justice, the Motion Picture Association of America, my organization and others as retribution for the seizure of Megaupload, an international digital piracy operation?” This is a McCarthyite tactic: associating the remarkable democratic opposition to the bills – in stark contrast to the smoke-filled rooms in which Sherman worked to push this legislation – with Anonymous and other miscreants.

But the risk for Sherman – and Paramount, and Sony, and other content industries – is not that we’ll be angry, or they’ll be opposed. It’s that they’ll be irrelevant. And if Hollywood takes the Sherman approach, rather than the Perry one, deservedly so.

Cross-posted at Info/Law.

0

The Daily You: A Mandatory Read

Over at the Business Insider, Doug Weaver has a terrific review of our guest blogger Joe Turow’s new book The Daily You, demonstrating its practical importance to people in the field like Weaver as well as to policymakers and scholars.Here’s the review:

Listening to the insider discussions and industry reporting about online marketing provides a numbing sense of false comfort.  But every so often, we go outside the bubble and hear civilians talking about what we do.  I’m sure most of us have had someone at a party or family gathering share their ‘creeped out’ moment;  that instance where they finally saw clearly that somehow they were being ‘followed’ online.   Other times, they offer us largely unformed general concerns about online privacy: they don’t really have a sense of what’s going on but they instinctively know they don’t like it.  And once in a great while you’ll hear from someone who’s really done their homework and brings crystal clarity to the issue from the consumer point of view.

That moment came for me when I stumbled on an NPR radio interview with Joseph Turow, author of “The Daily You: How the New Advertising Industry is Defining Your Identity and Your Worth.”  After using up my ten minute commute, I found myself sitting my car in the parking lot of my office for another 30 minutes just listening to this guy.  It was kind of like hearing someone talk about you in a bathroom when they don’t know you’re in one of the stalls.  Except they’re totally getting it right.  Turow, an associate dean at the Annenberg Communication school at Penn, has done a lot of homework.  The book is detailed and rigorous, but also extremely accessible to the curious consumer.  While it’s probably not going to sell millions of copies, I believe it’s going to be a hugely influential and important book for several reasons.

  • To my knowledge, it’s the first crossover book that’s attempted to explain in great detail our industry’s use of data to the consumer.  And while explaining it all to the consumer, Turow also explains it all to the business and consumer press.  Perhaps for the first time, they will really understand the digital marketing ecosystem.  And that understanding is almost certain to drive a lot more reporting.  Expect a lot more stories like the Wall Street Journal’s 2010 “What They Know” series, only better informed.
  • “The Daily You” is also clear eyed and inclusive.  Turow is not a wild eyed privacy crusader tilting at windmills.  A walk through his index and end notes is like thumbing through a digital marketing “who’s who” — you’ll recognize a lot of names, companies and concepts right off the bat.
  • And finally, the book builds an intellectual bridge that’s the link to a very powerful idea:  that on some level this is not just a privacy issue, but a human rights issue.  For Turow, the real issue is the digital caste system that’s being imposed on consumers without their knowledge or consent.  Over time, one consumer will enjoy better discounts and better access to quality brands and offers than his less fortunate counterpart.  Perhaps more important are the ways in which these two consumers content experiences will diverge as a result of all the profiling that’s been done.  Like it or not, each of us is getting an online data version of an invisible credit score.  Turow gets this and his readers will too.

For my money, “The Daily You” should be a mandatory read for anyone in our industry.  It’s the beginning of an important new conversation about sustainable and inclusive data practices, a conversation that will form much quicker than many of us might imagine.

Gamifying Control of the Scored Self

Social sorting is big business. Bosses and bankers crave “predictive analytics:” ways of deciding who will be the best worker, borrower, or customer. Our economy is less likely to reward someone who “builds a better mousetrap” than it is to fund a startup which will identify those most likely to buy a mousetrap. The critical resource here is data, the fossil fuel of the digital economy. Privacy advocates are digital environmentalists, worried that rapid exploitation of data either violates moral principles or sets in motion destructive processes we only vaguely understand now.*

Start-up fever fuels these concerns as new services debut and others grow in importance. For example, a leader at Lenddo, “the first credit scoring service that uses your online social network to assess credit,” has called for “thousands of engineers [to work] to assess creditworthiness.” We all know how well the “quants” have run Wall Street—but maybe this time will be different. His company aims to mine data derived from digital monitoring of relationships. ITWorld headlined the development: “How Facebook Can Hurt Your Credit Rating”–”It’s time to ditch those deadbeat friends.” It also brought up the disturbing prospect of redlined portions of the “social graph.”

There’s a lot of value in such “news you can use” reporting. However, I think it misses some problematic aspects of a pervasively evaluated and scored digital world. Big data’s fans will always counter that, for every person hurt by surveillance, there’s someone else who is helped by it. Let’s leave aside, for the moment, whether the game of reputation-building is truly zero-sum, and the far more important question of whether these judgments are fair. The data-meisters’ analytics deserve scrutiny on other grounds.
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An Important Post on Egypt from Nagla Rizk

At a time of global economic crisis, the renewed centrality of two origin points of modern civilization (Greece and Egypt) is uncanny. Nagla Rizk, a professor and dean at the American University in Cairo, has courageously offered a nuanced and critical perspective on tomorrow’s elections there and the past 10 months of political turmoil. I was privileged to meet Prof. Rizk while at Yale’s Access to Knowledge Global Academy, and I highly recommend following her work and twitter feed. A few insights from her:

When we stormed the streets last January, we chanted “Aish, Horreya, Adala Egtema’eya” (“Bread, Freedom, Social Justice”). . . . Ten months down the road, yesterday we chanted in Tahrir, “Aish, Horreya, Adala Egtema’eya” (“Bread, Freedom, Social Justice”). Why? . . .

Rather than tackling the root of the problem or starting a dialogue with the protesters, [the post-Mubarak SCAF regime] chose to order them to go home. To add insult to injury, SCAF and its government portrayed them as the cause of instability, turning the rest of Egypt against them.

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Our Fractured Age

The disconnect between what seem to the common interests and needs of most of us – now the 99% of us – and how we think about ourselves collectively has fascinated and troubled me for quite some time. Daniel T. Rodgers, Henry Charles Lea Professor of History at Princeton, has recently published a very interesting book entitled, “Age of Fracture,” that explores the intellectual basis for that disconnect. Looking at a broad set of social, economic, philosophical and political intellectual traditions, Rodgers explains how the intellectual underpinnings of our thought processes have shifted from the idea of collective identity to one of individualized freedom, but freedom from reality.  Reviewing the intellectual history of the late twentieth century until now, his analysis crosses the left-right divide to show how all of these different disciplines can by synthesized because they all vector in the same direction, this idealized sense of individual freedom.

Rodgers starts by describing the political rhetoric Presidents have used in their speeches. Presidential speechwriters rely on tropes that resonate because that rhetoric helps bolster Presidential leadership: The better the rhetoric connects to the prevailing mindsets of the people, the more effective the “bully pulpit.” Presidential rhetoric has interested me ever since I read Gary Wills’ Pulitzer Prize winning book, “Lincoln at Gettysburg: The Words That Remade America.” In essence, Wills analyzed President Lincoln’s use of rhetoric to show that it both reflected but helped reify a change in the concept of the nature of our country: Our  concept of American changed from, “The United States are . . .” to, “The United States is.” Rather than going back that far, Rodgers begins with the rhetoric of our Cold War era Presidents – for example, Kennedy’s “Ask not what this country can do for you; ask what you can do for this country” – calling us to gird our loins and stand united to advance our collective national interest in order to better confront the menace we faced by the menace of Communis and the Soviet Union. With the ending of the Cold War, President Reagan’s rhetoric moved away from that sense of collective identity and obligation toward an idealized, almost dream-like, sense of individual “freedom,” including freedom from the actual conditions of our lives as well as our from much sense of collective obligation. That predominant mindset allows us to escape hard choices and to assume a perfected life will be easy to achieve. It is not as if a Reagan’s rhetoric by itself caused the shift. Rather, presidential rhetoric both reflects but also amplifies the ideas that are already settling into our unexamined background mindset.

Having launched this project through the lens of presidential rhetoric, Rodgers then looks at developments across a wide swath of our intellectual life. He starts with economic theory and describes how the earlier macroeconomic Keynesian theory was supplanted – he quotes economist Robert Lucas, “The term ‘macroeconomics’ will simply disappear from use” — by microeconomic theory, the idealized world of individual rational actors motivated solely to maximize their profits. While he shows how disconnected this was from reality, Rodgers fits microeconomic theory within the broader conceptual view of the world of the individualized but unreal “freedom” reflected in President Reagan’s speeches. Rodger’s next chapter moves to politics and political theory. He traces the shift from Galbraith’s earlier view that the overwhelming  economic power of megacorporations gave them extraordinary political power to the microeconomic view that disconnects economic from political power by its focus on individual economic actors focused solely on their own economic agendas. In an interesting take, Rodgers shows how political theory moved toward rational choice analysis with its exclusive focus on the “power-seeking saturated world of politics” means that the problems of our powerless subordinated groups slip “out of the categories of analysis.” In a tour de force, he then describes how the divergent views of Gramsci, Genovese, Geertz and Foucault, nevertheless when taken together, conceptualize power as dispersed extremely broadly in “spheres of culture, ideas, everyday practices [and] science.” In sum, if microeconomic theory is all about individual economic gain disconnected from politics, political gain is all about special interest “rent seeking” divorce from collective needs and power is defined so broadly that it is so diffused as to exists everywhere, Rodgers asks whether power is in fact “nothing at all.” If power is nothing at all for us, that leaves most of us collectively powerless. Read More