• Two primary questions of this course:
• 1. How does the law effect incentives?
Under different arrangements of the law,
given the economic assumptions about
how people choose, what results do
different legal structures achieve?
• 2. Which structure of the law is efficient,
i.e., maximizes the combined gain to all
parties?
Three fundamental ideas of
economics
• Scarcity: Resources have conflicting uses. To use them
for one purpose is to forego using them for another. All
societies at all times have had to solve this problem one
way or another.
• Optimization: Economists assume that people have
well-defined goals, and that they rationally seek to do as
well as they can given the resource constraints (what
resources they control, the competing demands for
them) they face.
• Equilibrium: At both the individual and social levels, there
is a well-defined outcome in which everyone is doing the
best they can given that everyone else is also doing the
best they can. This outcome is called the equilibrium.
(Example: Supply/demand intersection)
Markets are one of many possible
problem-solving devices – a way to
resolve conflicting desires over how
scarce resources should be used. The
presumption is that markets generally
succeed in creating the most value – i.e.,
the most gain for the most people.
But how and why does the law help
markets work?
• First, property rights must be meaningful,
i.e. they must be credibly enforced. Here
law is a complement to mutually beneficial
trade.
• Second, some property rights cannot be
enforced. Here, law is a substitute for
trade.
The two sources of Anglo-American law
• Common law is created when new issues or situations
not addressed by statutory law are litigated via the court
system. The basic unit of common-law creation is the
case. When a dispute not subject to existing precedents
occurs, it works its way through the system until the high
court (e.g., U.S. Supreme Court) adjudicates it. The
common law is thus often evolutionary in nature.
• Statutory law (including the U.S. and state constitutions)
is drafted by the legislative and executive branches. It is
the product of the ordinary political process.
Two basic questions about property law
• What can be owned?
• What rights does ownership convey?
Benefits of well-defined property
law
• Prevents the deadweight loss of predatory
behavior.
• Makes transfer of property to highervalued uses easier.
• Avoids the tragedy of the commons.
• Makes it easier to cope with complexity
and unintended consequences. (Example:
highly planned cities become very childunfriendly.)
Trust, property and contract: how commerce fails
to happen without property and contract rights.
“My
friend goes very happily to his home and sees his wife. She says, ‘Now
wait a second. Think it over. This fellow, De Soto, you barely know him.
This fellow, De Soto, after a year will know who your clients are, whom to
sell to, when to sell, and how to sell to them. After a year, he won’t need
you. He will no longer keep on giving you 40% of the business…As a result,
my friend will choose instead to associate with a relative – someone in his
extended family. And that person won’t produce buttons as good as mine.
So they will have a little company that isn’t going to be very prosperous. I’ll
have to do the same. I’ll find someone to sell buttons who trusts me
because he happens to be family of mine. But he just doesn’t sell buttons
the way my friend can sell buttons. And, therefore, the two talents that were
required to make a successful industry in Lima will not be able to merge.
Then some anthropologists from Cornell University will come to Peru and
say, “Look at Peruvians. They like to work in small family units.”
- Hernando DeSoto, “What’s Wrong with Latin American Economies,”
Reason (October 1989), pp. 39-40.
A negative externality is costs
imposed by a particular economic
activity or transaction on parties
external to that activity or transaction.
Different legal rules under property law for
deciding a dispute over a negative externality
• (1) In a property rule, one party is awarded an
absolute property right.
• (1a) With a “no liability” finding, the defendant
has the absolute right to continue imposing the
externality.
• (1b) With an injunction, the plaintiff wins the
absolute property right, in that the defendant is
forbidden to impose the externality.
• (2) In a liability rule, the defendant may continue
imposing the externality but if he does he must
pay the plaintiff damages for the harm the
externality causes.
The Coase Theorem (Coase, 1960): In a
world of zero transaction costs, both
property remedies yield the same result,
in that the property ends up being used in
whatever way creates the most value
under a no liability finding or injunction.
But if transaction costs are high, the
initial allocation of the property right is
fully determinative. A liability rule is
thus preferable, particularly if there is
great uncertainty about which side
deserves the property right.
Source: Edward L. Glaeser, Joseph Gyourko, and Raven Saks, “Why Is Manhattan so
Expensive? Regulation and the Rising Housing Prices,” Journal of Law and Economics ,
October 2005.
Source: Randal O’Toole, “The Planning Penalty: How Smart Growth Makes Housing
Unaffordable,” http://www.independent.org/pdf/policy_reports/2006-04-03-housing.pdf
Types of intellectual property
• Patents are given for inventions. In exchange for limited monopoly
rights, inventors must reveal knowledge.
• Copyrights are limited monopoly rights given for works created by
the mind, in the arts, literature, the sciences, etc.
• Trademarks are potentially permanent monopoly rights given to
symbols or other widely known representations of a particular firm.
• Trade secrets are knowledge created by a producer that are not
revealed through patenting. If competitors acquire the knowledge in
violation of common-law principles (e.g., by an employee quitting
and bringing it to the competitor in violation of his previous
contractual obligation), they must pay damages. But if they discover
it independently, they may use it freely.
• The Congress shall have power…To
promote the progress of science and
useful arts, by securing for limited times to
authors and inventors the exclusive right
to their respective writings and
discoveries.
- U.S. Constitution, Article I, Section 8
The limits of patent law?
• Whoever invents or discovers any new
and useful process, machine,
manufacture, or composition of matter, or
any new and useful improvement thereof,
may obtain a patent therefore, subject to
the conditions and requirements of this
title. – “Patentability of Inventions,” 35
U.S.C. § 101 (1994)
Adverse possession – the commonlaw doctrine stating that property rights
that are not periodically asserted can
be lost.
Requirements for a successful
adverse-possession claim
• The property must be in actual, exclusive
use by the potential new owner.
• This fact must be open and known.
• The use must be continuous.
• The proposed transfer must be for a use
that is against the owner’s interest.
Under the principle of eminent domain,
private property cannot be taken except
for “public use” and with “just
compensation” (Amendment V, U.S.
Constitution).
No person shall be held to answer for a capital,
or otherwise infamous crime, unless on a
presentment or indictment of a grand jury,
except in cases arising in the land or naval
forces, or in the militia, when in actual service
in time of war or public danger; nor shall any
person be subject for the same offense to be
twice put in jeopardy of life or limb; nor shall be
compelled in any criminal case to be a witness
against himself, nor be deprived of life, liberty,
or property, without due process of law; nor
shall private property be taken for public
use, without just compensation.
- U.S. Constitution, Amendment V
The defendant-appellees contend, on the other hand,
that the controlling public purpose in taking this land
is to create an industrial site which will be used to
alleviate and prevent conditions of unemployment
and fiscal distress. The fact that it will be conveyed to
and ultimately used by a private manufacturer does
not defeat this predominant public purpose…The
power of eminent domain is to be used in this
instance primarily to accomplish the essential public
purposes of alleviating unemployment and revitalizing
the economic base of the community. The benefit to a
private interest is merely incidental…If the public
benefit was not so clear and significant, we would
hesitate to sanction approval of such a project.
- Poletown Neighborhood Council v. City of Detroit
(1981)
Every business, every productive unit in society, does, as
Justice Cooley noted, contribute in some way to the
commonweal. To justify the exercise of eminent domain
solely on the basis of the fact that the use of that property by
a private entity seeking its own profit might contribute to the
economy’s health is to render impotent our constitutional
limitations on the government’s power of eminent domain.
Poletown’s “economic benefit” rationale would validate
practically any exercise of the power of eminent domain on
behalf of a private entity. After all, if one’s ownership of
private property is forever subject to the government’s
determination that another private party would put one’s
land to better use, then the ownership of real property is
perpetually threatened by the expansion plans of any large
discount retailer, “megastore,” or the like.
- County of Wayne v. Hathcock, July 30, 2004.
The Pinnacle Project’s business and technology park is certainly not an
enterprise “whose very existence depends on the use of land that can be
assembled only by the coordination central government alone is capable of
achieving.” To the contrary, the landscape of our country is flecked with
shopping centers, office parks, clusters of hotels, and centers of
entertainment and commerce. We do not believe, and plaintiff does not
contend, that these constellations required the exercise of eminent domain
or any other form of collective public action for their formation…Finally,
there is nothing about the act of condemning defendants’ properties that
serves the public good in this case. The only public benefits cited by
plaintiff arise after the lands are acquired by the government and put to
private use…Every business, every productive unit in society, does, as
Justice COOLEY noted, contribute in some way to the commonweal.89 To
justify the exercise of eminent domain solely on the basis of the fact that
the use of that property by a private entity seeking its own profit might
contribute to the economy’s health is to render impotent our constitutional
limitations on the government’s power of eminent domain. Poletown’s
“economic benefit” rationale would validate practically any exercise of the
power of eminent domain on behalf of a private entity.
- County of Wayne v. Hathcock, 471 Mich. 445, 2004.
Promoting economic development is a traditional and long accepted function of
government. There is, moreover, no principled way of distinguishing economic
development from the other public purposes that we have recognized...Clearly,
there is no basis for exempting economic development from our traditionally
broad understanding of public purpose.
Petitioners contend that using eminent domain for economic development
impermissibly blurs the boundary between public and private takings. Again, our
cases foreclose this objection. Quite simply, the government’s pursuit of a public
purpose will often benefit individual private parties...It is further argued that
without a bright-line rule nothing would stop a city from transferring citizen A’s
property to citizen B for the sole reason that citizen B will put the property to a
more productive use and thus pay more taxes. Such a one-to-one transfer of
property, executed outside the confines of an integrated development plan, is
not presented in this case. While such an unusual exercise of government
power would certainly raise a suspicion that a private purpose was afoot, the
hypothetical cases posited by petitioners can be confronted if and when they
arise. They do not warrant the crafting of an artificial restriction on the concept
of public use.
- Susette Kelo, et al. v. City of New London, et al., 125 S. Ct. 2655 (2005)
A radical re-interpretation: for eminent-domain
purposes, interpret “public use” as a “public good.”
• Public goods have two features:
• (1) They are nonrivalrous, meaning that my consumption doesn’t
limit the amount available for you. (Example, up to a point: this
lecture).
• (2) They are nonexcludable, meaning that nonpayers can’t be
prevented from consuming the good.
• The public-good requirement prevents powerful private interests
from benefiting from coercive transfer from less powerful ones.
• While enabling the use of eminent domain to achieve the
construction of roads, utility equipment, schools and other goods
with some public-goods features, it does not solve the hold-up
problem.
• But in fact, historically eminent domain was not about solving the
holdup problem, but of protecting property owners from rapacious
behavior by the sovereign.
What makes a valid contract?
• Traditional legal view: a contract requires
consideration, an explicit promise of exchange
of one thing for another that occurs after
contemplation. There must be an offer,
consideration, and acceptance. A remedy for a
breached contract should make the party as well
off as if the breach did not occur.
• Economic view: Contracts facilitate resource
movement to higher-valued uses. To achieve
this they must pass standard economic
assumptions that are required for exchange to
create value.
The legal view: example of lack of
consideration
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The economic view: a hypothetical
perfect contract:
• Complete information
• No third-party effects
• Offered under conditions of perfect
competition
• Negotiated between rational decisionmakers
Two types of defense to breach of
contract
• Formation defenses: the contract was
never validly formed, so a legitimate
obligation was never created.
• Performance defenses: unanticipated
events make it unreasonable to require
that the contractual obligation be
discharged.
Some formation defenses:
•
•
•
•
•
Contract formed with minors;
Duress;
Fraud;
Mutual Mistake;
Unconscionability
The most common performance defense
is impossibility, which argues that an
unexpected contingency was so unlikely
and its consequences so severe that it is
impossible to reasonably expect that the
contractual obligation be carried out.
Two types of relief for breach of
contract
• Legal relief: monetary damages
• Equitable or performance relief: insistence
that the contracted promise be carried out.
Two types of legal relief – what does it mean to “make the
party as well off as if the breach did not occur?”
• Expectations damages make the promisee as
well off as if the contracted promise had been
carried out.
• Reliance damages make the promisee as well
off as if the bargain had never been agreed to.
(Note that nonperformance makes the promisee
worse off than if contract had not been agreed
to.)
The economics of legal relief
• Each party can take precautions against
nonperformance:
• Promisor can invest in precaution. More
investment in precaution means a lower
probability of inability to perform.
• Promisee can invest in reliance. The more
investment in reliance, the worse the
consequences in the event of
nonperformance.
Torts as lawyers see them
• To the lawyer, a tort is a breach of a duty owed
to a fellow citizen. Examples: Careless driving,
negligent care (malpractice) by a professional,
manufacture of a defective product. This is often
phrased as a question of the level of “care” the
defendant takes in his interaction with the
plaintiff.
• The question to be asked is whether the
defendant’s care fell short of the legal standard.
This standard can be set at several levels.
Torts as economists see them
• To the economist the goal of tort law is to
minimize the sum of accident and
accident- prevention costs.
• Care is costly, but lowers the chances of
an accident, which is also costly.
• The function of tort damages is to give
potential defendants an incentive to
internalize the external costs of their
actions.
Differing standards of tort liability
• Under negligence, the defendant’s conduct is measured
against the legal standard. If it is found to fall below that,
he is liable.
• Under contributory negligence the decision requires that
two things be true and the decision is all or nothing – i.e.,
the defendant is liable if his care level is below the legal
standard and the plaintiff’s is above his own separate
legal standard.
• Under comparative negligence the damages the
defendant must pay are awarded according to the
relative extent to which his and the plaintiff’s conduct
falls short of the legal standard.
• Under strict liability whenever an accident occurs and the
defendant’s action brings it about the defendant is liable.
Two questions to ask about the
appropriate tort-liability standard
• Is precaution bilateral? In other words,
could both litigants have made meaningful
contributions to reducing the probability of
an accident?
• Is the level of activity that leads to the
possibility of an accident adjustable? For
example, can people drive more or less?
(Yes.)
U.S. v. Carroll Towing Co.
• An important case for its mathematical
explanation of when a defendant should
be held liable.
• Court adopted formula of B < pL, where B
is burden (i.e. cost) of taking precaution, p
is probability of accident if precaution not
taken, and L is loss if accident happens. If
inequality holds, defendant should be
required to take precaution.
Vicarious liability
• Legal issue: Can an overseeing party – a
parent, an employer – be held liable for a
tort committed by an underling – a child,
an employee?
• Economic issue – How can deterrence be
provided most efficiently? By giving each
underling an incentive not to commit tort,
or by giving overseer an incentive to
monitor the underlings?
Joint and several liability
• Legal and economic issue: With multiple
contributors to an accident (two, say), can
either party alone completely prevent the
accident? If so, each party’s “marginal
product” in producing the accident is
100%, and the plaintiff should be permitted
to sue either of them.
Duty to rescue
• In a rescue situation (drowning, say), L is
very high, p is very high, transaction costs
for an agreement between rescuer and
rescuee are very high. Absent extremely
high B (risking one’s life, for example),
efficiency indicates that those who refuse
to rescue should be held liable.
Probabilistic causation
• Problem: Tort is committed, but only
probabilistically. (Example: toxic chemicals or
drug side effects.) Some people will be hurt in
the future, but at present it is impossible to say
who, and it may not be possible to trace a
specific injury to a specific tort by a specific
defendant.
• Why? Because evidence depreciates, and other
possible causes may intervene in the meantime.
• Solution: For each potential victim, award
damages discounted by probability of
occurrence, and converted to present value.
Defamation (libel and slander) –
private figures
• Any false and damaging statement is
actionable. In general, the defendant’s
care level is not a defense (i.e., the liability
standard is strict liability).
• False statements harm the plaintiff’s ability
to trade, and force him to incur costs of reestablishing his reputation. The more
widely spread the false statement, the
greater these costs.
Economics of defamation – public
figures
• An exception is made for speech about public
figures, those involved in government policy,
those (e.g., celebrities) already widely known, or
those who inject themselves into a public
controversy.
• In that case, according to Sullivan v. New York
Times, the plaintiff must show falsity, damage,
and a “reckless disregard for the truth” by the
defendant – a negligence standard (with a very
low level of x*).
Why the relaxed standard in
Sullivan?
• Because information is partly a public good, in
that it is nonrivalrous and easily copied.
Producers are inclined to under-produce it.
• In the case of politicians their decisions affect all
citizens simultaneously, and therefore the value
of information about them is even greater.
• Public figures have access to communications
technology, allowing them to defend themselves
at lower cost.
Weaknesses of the Sullivan
standard
• It can give media organizations an incentive to under-invest in
verification. Many false stories may be published, at great harm not
just to public figures but to society. (False information is a “public
bad.”)
• This in turn may lower the quality of public officials. A tougher
standard for liability for libel means that media can show less care.
For example, lower-quality organizations can now begin to more
aggressively and carelessly cover politicians’ “character” issues –
e.g., wild rumors about Presidents Clinton and Bush. Particularly if
high-quality politicians have high valuations of privacy or they value
their reputations highly, they may be deterred from going into
politics. Paradoxically, Sullivan can cause a selection effect for who
gets into politics that makes governance worse.
• The definition of public figures is too broad.
Two types of legal fees in tort
lawsuits (for plaintiffs’ attorneys)
• With hourly fees, plaintiff’s attorney is paid
by time worked.
• With contingent fees, plaintiff’s attorney is
paid with a predetermined share of the
recovery. If recovery is zero, attorney gets
nothing.
Two theories of contingent fees
• The risk preference theory: plaintiffs are
unwilling to risk paying huge fees if they
recover little or nothing.
• The moral hazard theory: unless the
attorney has a stake in the case, he has
an incentive to shirk, e.g. by running up
the bill for little work.
The evolution of product-liability
law
• Mass manufacturing and standardized products
permanently changed the relation between
buyers and sellers.
• Initially damage from product use governed by
privity of contract.
• Subsequently, a negligence standard took hold.
• Finally, strict liability became the norm in the US
over the course of the 20th century.
Is strict liability in products cases
efficient?
• Richard Posner – Yes; mass manufacturing means that
manufacturers are efficient risk bearers because they
can spread risk out over many sales, and because
modern products are too complex for consumers to
thoroughly understand.
• George Priest – No; courts adopted a mistaken model of
manufacturer market power in trying to explain the
standardized contracts that govern many product
purchases. In fact such contracts are also efficient, and
should be generally enforced. The revolution in products
liability is mostly rent-seeking by consumer groups.
How lawyers view crime
• Intention is required: “mens rea,” the guilty
mind.
• The plaintiff is not an individual, but the
state. Inference: some uniquely public
purpose must be served by criminal
prosecution.
• The burden of proof is higher than in a tort.
How economists view crime
• The criminal law should provide optimal
deterrence, not moral punishment or
rehabilitation (unless rehabilitation lowers the
probability of future offenses).
• While there can be efficient torts and efficient
breach of contract, crime is coercive despite low
transaction costs and is thus never efficient.
• But incomplete deterrence can be efficient. As
with torts, we wish to minimize the costs of crime
and the costs of deterring crime.
What are the “costs” of crime?
• The damage to the victim.
• The costs of private deterrence – burglar
bars, private security services.
• The opportunities for exchange that are
foregone because of the unwillingness to
do business in high-crime areas.
The tradeoffs of criminal-law
enforcement
• Probability vs. severity of punishment: Criminals will
respond both to an increased probability of being
punished as well as harsher punishment, although not
necessarily to the same degree. The marginal costs of
further deterrence will differ for each type. Efficient
deterrence is achieved by equating the marginal benefit
of increasing the probability to the marginal benefit of
increasing the severity.
• Fines vs. imprisonment: Fines are administratively
cheaper than imprisonment, but for some crimes
solvency constraints prevent them from being used. A
given amount of deterrence may unavoidable have to be
achieved in higher-cost ways.
Why punish second attempts more
severely than first ones?
• The marginal stigma cost of crime declines
as the number of convictions increases.
This has to be offset by harsher penalties
to achieve the same deterrence.
• Criminals get better at crime (i.e., they add
to their human capital) the more crimes
they commit. The chances they will be
caught therefore decline, and must be
offset with harsher penalties.
The punishment of unsuccessful
criminal attempts
• Punishment for success should be higher,
because the criminal will have acquired human
capital as a result of his failure the first time.
• Success imposes more social costs, and so
marginal deterrence also requires that it be
punished more harshly.
• Lesser punishment gives the criminal a chance
to change his mind before the crime is
completed.
• If he fails the chances are higher that he is
ultimately not very dangerous.
The economics of criminal
organizations
• Large criminal organizations, like any large
organizations, benefit from division of labor.
• Thus criminal conspiracy is often included as an
extra offense to achieve more deterrence.
• But, like all large organizations, they also suffer
from moral hazard problems.
• Finally, their compensation structures are a
striking confirmation of winner-take-all
economics (i.e., tournament theory) and, at
some levels, of competition.
Crime in developed countries, 2000
•
•
•
•
•
•
•
•
•
•
Country
Canada
Denmark
Eng. & Wales
France
Germany
Japan
Netherlands
New Zealand
U.S.
Overall
8117.75
9449.78
9766.73
6403.82
7621.32
1923.99
8211.54
11152.50
8517.79
Homicide
1.59
1.09
1.61
1.78
1.17
0.50
1.15
1.17
4.55
Assault
758.17
183.98
851.60
180.79
142.23
34.04
277.54
787.75
805.21
Burglary
952.65
1865.97
1579.10
629.87
233.43
573.25
1714.39
755.29
Data represent crimes/100,000 population.
Source: United Nations Surveys on Crime Trends and the Operations of
Criminal Justice Systems, 2000
Source: Peter Baldwin, “A Narrower Atlantic,” Prospect, May 2009.
Source: Bureau of Justice Statistics,
http://www.ojp.usdoj.gov/bjs/glance/cv2.htm
Source: BJS, http://www.ojp.usdoj.gov/bjs/glance/viort.htm
Source: BJS, http://www.ojp.usdoj.gov/bjs/glance/hmrt.htm
Source: BJS, http://www.ojp.usdoj.gov/bjs/glance/mvt.htm
Source: BJS, http://www.ojp.usdoj.gov/bjs/glance/burg.htm
Why did crime decline so much in the
1990s?(John Donohue III and Steven Levitt)
• A great economy? It rose dramatically during the
1960s boom; crime fall in 1990s was far greater
than historical relation to unemployment
changes; violent crime, which might be less
affected by the economy, also fell dramatically.
• Tougher sentencing: In 1972, 500,000
Americans in prison; by 2000, 2 million were.
• More and better police.
• Decline of the crack epidemic.
• Population aging – a factor, but not enough to
explain sudden sharp decline
Legalized abortion?
•
•
•
•
•
•
•
The decline appears to correlate closely with the period 17-30 years after
Roe v. Wade. Roe may have generated a selection effect – the children
who otherwise would’ve been born would’ve had, on average, high
propensities for crime.
States that legalized abortion before Roe saw crime rates go down earlier.
But:
The actual rate of homicide among the first post-Roe generation is actually
higher than the generations prior.
Such research as exists suggests that women who have abortions
disproportionately come from backgrounds where children are less likely to
have criminal propensities.
Many states enacted life/health-of-the-mother exceptions before 1973 that
led to many abortions being performed, and fail to show the later crime
drop.
In the U.K., where abortion data are better, the relationship of abortion
legalization and crime decline fails to hold. In particular, crime declined
during roughly the same time as in the U.S., but abortion was legalized
earlier in the U.K.
Source: BJS, http://www.ojp.usdoj.gov/bjs/homicide/teens.htm
Source: Kahane, Leo, David Paton and Rob Simmons (2008), ‘The AbortionCrime Link: evidence from England and Wales’, Economica, 75(297): 1-21.
Key principles of the Constitution
• Limited popular sovereignty
• Separation of powers/checks and
balances
• Federalism
• Protection of rights (in the old “negative
liberty” sense)
Negative v. positive liberty (Isaiah
Berlin)
• Negative liberty refers to the right not to be
constrained by the state – the right to say
what you wish, to contract as you wish,
etc.
• Positive liberty refers to the right to have a
particular set of opportunities – to a certain
level of education or health care, for
example.
Limited popular sovereignty
(Congress)
• House. I.2. The House of Representatives shall be
composed of members chosen every second year by the
people of the several states, and the electors of each
state shall have the qualifications requisite for electors of
the most numerous branch of the state legislature...
• Senate. I.3. The Senate of the United States shall be
composed of two senators from each state chosen by
the legislature thereof, for six years and each senator
shall have one vote.
•
Amendment 17. The Senate of the United States
shall be composed of two Senators from each state,
elected by the people thereof, for six years; and each
Senator shall have one vote.
Limited popular sovereignty
(President)
• President. Sec. II.1. Each state shall
appoint, in such manner as the legislature
thereof may direct, a number of electors,
equal to the whole number of senators and
representatives to which the state may be
entitled in the Congress; but no senator or
representative, or person holding an office
of trust or profit under the United States,
shall be appointed an elector.
Examples of checks and balances
and separation of powers
• The presidential veto and the two-thirds
override.
• Requirement that spending bills start in the
House.
• Requirement that judges (including
Supreme Court justices) be nominated by
President and confirmed by Senate.
Federalism – explicit central
government powers
•
•
•
•
•
•
•
•
•
•
•
•
I.8. The Congress shall have power
To lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the
common defense and general welfare of the United States; but all duties, imposts and excises
shall be uniform throughout the United States.
To borrow money on the credit of the United States;
To regulate commerce with foreign nations, and among the several states, and with the Indian
tribes;
To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies
throughout the United States;
To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and
measures;
…
To establish post offices and post roads;
To promote the progress of science and useful arts, by securing for limited times to authors and
inventors the exclusive right to their respective writings and discoveries;
The migration or importation of such persons as any of the states now existing shall think proper
to admit, shall not be prohibited by the Congress prior to the year one thousand eight hundred and
eight, but a tax or duty may be imposed on such importation, not exceeding ten dollars for each
person.
…
No tax or duty shall be laid on articles exported from any state. No preference shall be given by
any regulation of commerce or revenue to the ports of one state over those of another: nor shall
vessels bound to, or from, one state, be obliged to enter, clear, or pay duties in another.
Federalism – limits on the powers
of the states
• I.10. No state shall enter into any treaty, alliance, or
confederation; grant letters of marque and reprisal; coin
money; emit bills of credit; make any thing but gold and
silver coin a tender in payment of debts; pass any bill of
attainder, ex post facto law, or law impairing the
obligation of contracts, or grant any title of nobility.
• No state shall, without the consent of the Congress, lay
any imposts or duties on imports or exports, except what
may be absolutely necessary for executing its inspection
laws; and the net produce of all duties and imposts, laid
by any state on imports or exports, shall be for the use of
the Treasury of the United States; all such laws shall be
subject to the revision and control of the Congress.
Federalism – requirements of
states
• IV.1. Full faith and credit shall be given in each State to
the public act, records, and judicial proceedings of every
other State. And the Congress may, by general laws,
prescribe the manner in which such acts, records, and
proceedings shall be proved, and the effect thereof.
• IV.2. The citizens of each State shall be entitled to all
privileges and immunities of citizens in the several
States.
• IV.2.3. No person held to service or labor in one State,
under the laws thereof, escaping into another, shall, in
consequence of any law or regulation therein, be
discharged from such service or labor, but shall be
delivered up on claim of the party to whom such service
or labor may be due.
The economics of federalism
• It makes gaining control of the full
government harder, lessening the
government-monopoly problem (also
included in discussion of rights below).
• It promotes jurisdictional competition.
• But it also promotes inflicting negative
legal externalities on residents of other
jurisdictions.
"As long as I am allowed to redistribute wealth from out-ofstate companies to injured in-state plaintiffs, I shall
continue to do so. Not only is my sleep enhanced when I
give someone's else money away, but so is my job
security, because the in-state plaintiffs, their families, and
their friends will reelect me....It should be obvious that the
instate local plaintiff, his witnesses and his friends, can all
vote for the judge, while the out-of-state defendants can't
even be relied upon to send a campaign donation."
- West Virginia Supreme Court Richard Neely
The economics of rights
• Rights restrict the power of the
government to intimidate its opponents,
forcing greater political competition.
• They also make redistributive activity
harder.
“The focus of my work as a domestic
mediator is meeting the needs of the children
that I work with…and not the wants of their
parents. And I ask the three of you, how can
we, as symbolically the children of the future
president, expect the three of you to meet
our needs, the needs in housing and in crime
and you name it.”
- Denton Walthall, social worker, in question
to George H.W. Bush, Ross Perot and Bill
Clinton, during presidential debate, 1992.
Questions asked of Pres. Obama at appearance, Ft. Meyers, FL, Feb. 10, 2009
(Source:
http://www.realclearpolitics.com/articles/2009/02/obamas_townhall_in_fort_mye
rs.html)
•
•
•
•
“And, OK, I've been at the same job, which is McDonald's, for four-and-a-half years because of the fact
that I can't find another job. Now, with the fact that I've been there for as long as I've been there, do you
have any plan or any idea of making one that has been there for a long time receive any better benefits
than what they've already received?”
I have an urgent need, unemployment and homelessness, a very small vehicle for my family and I to live
in. We need urgent. And the housing authority has two years' waiting lists, and we need something more
than the vehicle and the parks to go to. We need our own kitchen and our own bathroom. Please help.
My name is Andy Irvin. I'm a local commercial contractor here in town. We have been building and
remodeling schools for the last 10 years or so. How in your stimulus plan do you get money down to the
states and down to the counties to continue that program?
And my question to you today is, as you stated earlier, there are many of us here in the area that are
unemployed and have been unemployed for some time, and probably some people here have large
families. And we have had the opportunity to receive unemployment, but yet we have not been able to
get any other type of governmental assistance to help us during this crisis so that we can kind of be able
to take the funds that we do have from unemployment to pay our bills. Usually what happens is, is when
you apply for governmental assistance, they say, "Well, you make too much money." How -- if you go
from making $3,000 a year -- a month to $1,100 a month, how are you able to take care of your families?
Why can't we have that to be automatic, that goes along with your unemployment tenure, that you can
get government assistance, that's an automatic for you?
•
•
•
•
“America needs positive, optimistic leadership to kind of turn this country
around, to see a revival of our national soul.” Mike Huckabee, 2008.
[I will work to] “rid the world of evil.” George W. Bush, Sept. 16, 2001.
“Because if we are willing to work for it, and fight for it, and believe in it, then
I am absolutely certain that generations from now, we will be able to
look back and tell our children that this was the moment when we
began to provide care for the sick and good jobs to the jobless; this
was the moment when the rise of the oceans began to slow and our
planet began to heal; this was the moment when we ended a war and
secured our nation and restored our image as the last, best hope on
Earth.” Barack Obama, June 18, 2008.
"I do solemnly swear (or affirm) that I will faithfully execute the office of
President of the United States, and will to the best of my ability, preserve,
protect and defend the Constitution of the United States.“ – The Presidential
Oath of Office.
Presidential speechmaking
• From George Washington to Andrew Jackson,
presidents gave on average 3 speeches a year.
• Bill Clinton gave 600 in his first year in office.
• From Washington through William Howard Taft,
State of the Union remarks given only in writing.
Wilson delivered it in person to enhance its (and
his) importance, a tradition continued by every
president after Harding and Coolidge.
In the State of the Union and
inaugural remarks, presidents:
• Never used the word “help” before 1859; used it
110 times 1859-1932, 784 1932-2000.
• Used the word “poverty” 17 times before 1932,
95 times 1932-2000.
• Gradually ceased speaking of “providence” and
“fate,” and replaced it with language like “I
assume unhesitatingly the leadership of this
great army of our people.” (FDR, 1932)
What about the right to commerce?
In traditional common law a right to
earn a living was recognized, but this
right was restricted beginning in the
late 1800s.
• “Individual liberty cannot be preserved if
the majority’s will must always triumph.”
- Janice Rogers Brown, then Justice,
California Supreme Court and now judge,
U.S. Court of Appeals, D.C. Circuit.
• "I do not count the Supreme Court decisions defending
contract or property rights from state regulations as Bill
of Rights decisions. None of these cases represents a
defense of civil liberties. The Court merely used
libertarian philosophy to protect the wealthy from
progressive legislation. The Court eventually rejected
these economic liberty decisions because they were not
connected with the text of the Constitution or any
philosophy with roots in the history and tradition of our
nation and its democratic processes. - John Nowak,
"Essay on the bill of Rights: The 'Sixty-Something'
Anniversary of the Bill of Rights," U. of Illinois Law
Review, Vol. 20 , 1992, p. 452
• “Legislators have great difficulty in
restraining freedom of speech, and almost
none in curtailing freedom of enterprise.”
– Bernard H. Siegan, “The Supreme
Court as Final Arbiter” (1985)
Property rights in Anglo-American
law
• All merchants are to be safe and secure in
leaving and entering England, and in staying
and traveling in England…to buy and sell from
all maletotes by the ancient and rightful customs,
except, in time of war, such as come from an
enemy country [who] shall be detained without
damage to their persons or goods, until we or
our chief justiciar know how the merchants of
our land are treated in the enemy country; and if
ours are safe there, the others shall be safe in
our land.
- Magna Carta, Sec. 41.
• “At common law, every man might use
what trade he pleased.” – from
Blackstone’s Commentaries on the
Common Law.
.
Property rights in Anglo-American
law
• "…at the common law, no man could be
prohibited from working in any lawful trade, for
the law abhors idleness, the mother of all evil . . .
especially in young men, who ought in their
youth, (which is their seed time) to learn lawful
sciences and trades, which are profitable to the
commonwealth, and whereof they might reap
the fruit in their old age, for idle in youth, poor in
age; and therefore the common law abhors all
monopolies, which prohibit any from working in
any lawful trade." (The Case of the Tailors, 77
Eng. Rep. 1218 [1615], at 1218)
Property rights in Anglo-American
law
• “[E]very many has a ‘property’ in his own
‘person.’ This nobody has any right to but
himself. The ‘labour’ of his body and the
‘work’ of his hands, we may say, are
properly his.”
- John Locke, Two Treatises of
Government.
Property rights in Anglo-American
law
• "That is not a just government, nor is property secure
under it, where arbitrary restrictions, exemptions, and
monopolies deny to part of its citizens that free use of
their faculties, and free choice of their occupations,
which not only constitute their property in the general
sense of the word; but are the means of acquiring
property strictly so called. What must be the spirit of
legislation where a manufacturer of linen cloth is
forbidden to bury his own child in a linen shroud, in order
to favor his neighbour who manufactures woolen cloth;
where the manufacturer and wearer of woolen cloth are
again forbidden the oeconomical use of buttons of that
material, in favor of the manufacturer of buttons of other
materials!" - James Madison, "Property"
Property rights in Anglo-American
law
• “[These privileges include] the enjoyment of life
and liberty, with the right to acquire and possess
property of every kind, subject only to such
restraints as the government may justly
prescribe for the general good of the whole. The
right of a citizen…to take, hold and dispose of
property, either real or personal; and an
exemption from higher taxes or impositions than
are paid by the other citizens of the state.”
- Corfield v. Coryell, 6 F. Cas. 546 (1823), 551-2.
Property rights in Anglo-American law?
Due process of law.
Amendment XIV. All persons born or naturalized in the
United States, and subject to the jurisdiction thereof, are
citizens of the United States and of the State wherein
they reside. No State shall make or enforce any law
which shall abridge the privileges or immunities of
citizens of the United States; nor shall any State deprive
any person of life, liberty, or property, without due
process of law, nor deny any person within its
jurisdiction the equal protection of the laws.
Property rights in Anglo-American
law
• “[All] citizens, of every race and color,” it held,
without regard to any previous condition of
slavery or involuntary servitude . . . shall have
the same right . . .to make and enforce
contracts, to sue, be parties, and give evidence,
to inherit, purchase, lease, sell, hold, and convey
real and personal property, and to full and equal
benefit of all laws and proceedings for the
security of person and property, as is enjoyed by
white citizens.”
- Constitutionalized Civil Rights Act of 1866.
A brief history of contract rights
•
•
•
•
English law of exchange traditionally had dealt primarily with property. Contract law
did not emerge as a separate field until perhaps the mid-18th century. The law began
to take account of intention, rather than mere possession, consent rather than status
(the latter a vestige of feudal law) as a cornerstone of rights. According to legal
historian William Maine, “The movement of progressive societies has hitherto been a
movement from Status to Contract.” (emphasis added)
In Champion v. Casey (Cir. Ct. R.I. 1792), US district court invalidated a Rhode
Island statute providing relief to debtors, on grounds that legislature had no authority
to annul valid contracts.
In Fletcher v. Peck 10 U.S. 87 (1810), Supreme Court annulled decision by Georgia
legislature to respond to outrage against corruption by the legislature and cancel land
sales of territory of what would become Alabama and Mississippi. Chief Justice
Marshall held the Constitutional contracts clause applied to “contracts of every
description,” including contracts by the government. Dartmouth v. Woodward, 17
U.S. (4 Wheat.) 518 (1819), similarly annulled an attempt by the state of New
Hampshire to alter the governance of Dartmouth University.
Many other cases upheld the principle that the government could not rewrite the
terms of existing contracts.
• No state shall enter into any treaty,
alliance, or confederation; grant letters of
marque and reprisal; coin money; emit
bills of credit; make any thing but gold and
silver coin a tender in payment of debts;
pass any bill of attainder, ex post facto
law, or law impairing the obligation of
contracts, or grant any title of nobility. U.S. Constitution, I.10 (emphasis added).
But what about contracts yet to be written? Could
their terms be limited through, e.g., minimum-wage
laws?
•
•
The legislature was always allowed to limit contracting rights in the name of
the “police power” – the need to regulate public health, safety and morals.
The doctrines limited the scope of this power – a prohibition against “class
legislation,” i.e. laws targeting only particular groups in society, and, later,
the the 14th Amendment’s “privileges and immunities” and “equal protection”
clauses. Congressional debate on ratification indicated that
contract/property rights were central to the meaning of the first phrase.
14th Amendment, Sec. 1
• “All persons born or naturalized in the United States, and subject to
the jurisdiction thereof, are citizens of the United States and of the
State wherein they reside. No State shall make or enforce any law
which shall abridge the privileges or immunities of citizens of the
United States; nor shall any State deprive any person of life, liberty,
or property, without due process of law; nor deny to any person
within its jurisdiction the equal protection of the laws. “
Landmarks on the road to the modern
regulatory state (pre-New Deal)
•
•
Slaughter House Cases (83 U.S. 36 [1872]): Held that granting a regional monopoly
to a New Orleans slaughterhouse on safety grounds was justifiable. The “police
power” exception to the “privileges and immunities” clause was defined to include
forcing all butcher work through one firm. Occupational licensing, and other
regulations of trade boomed afterward.
Still, the police power was generally presumed to be an invalid rationale for
preventing freedom of contract: ”Such legislation [banning cigar manufacturing in
New York] may invade one class of rights today and another tomorrow, and if it can
be sanctioned under the Constitution, while far removed in time we will not be far
away in practical statesmanship from those ages when government prefects
supervised the building of houses, the rearing of cattle, the sowing of seed and the
reaping of grain, and governmental ordinances regulated the movements and labor of
artisans, the rate of wages, the price of food, the diet and clothing of the people, and
a large range of other affairs long since in all civilized lands regarded as outside of
government functions. – New York Court of Appeals, Tenement House Cigar Cases.
Upholding contract rights within the bounds of the
police-power exception.
•
•
•
•
•
•
Allgeyer v. Louisiana, 165 U.S. 578 (1897) overturned a Lousiana requiring insurers
to be licensed, ruling it violated right of plaintiff to do business with unlicensed New
York firm.
Lochner v. New York (198 U.S. 45 [1905]): A New York law limiting hours bakers
could work was overturned as a restriction on the freedom to contract.
Truax v. Raich (239 U.S. 33 [1915]): An Arizona law requiring that noncitizens be no
more than 20% of an employer’s workforce was overturned, again on freedom
grounds.
Adkins v. Children’s Hospital (261 U.S. 525 [1923]): A minimum-wage law for women
only allegedly designed to preserve their “safety and morals” killed many of their jobs.
Court held that the women themselves were the best judges of their own contractual
terms.
Meyer v. Nebraska, 262 U.S. 390 (1923) overturned Nebraska law requiring that
children, even in private schools, be taught in English, on grounds that the teacher
and parents had a right to contract as they liked. Similarly, Pierce v. Society of
Sisters () 100 U.S. 1 296 Fed. 928, overtuned an Oregon law passed at the
instigation of the Klan that required all children to go to public schools.
New State Ice Co. v. Liebmann, 285 U.S. 262 (1932) held that due-process clause
prevented Oklahoma from controlling number of firms selling ice out of desire to
prevent “cutthroat competition.”
Landmarks on the road to the modern
regulatory state (post-New Deal)
• Under crush of Depression-era inflation, court in Nebbia
v. New York, 291 U.S. 502 (1934) allowed New York o
set minimum prices for milk, and in Home Building &
Loan Association v. Blaisdell, 290 U.S. 398 (1934) let
Minnesota provide debtor relief.
• U.S. v. Carolene Products (304 U.S. 144 [1937]): Milk
products containing oil had been federally outlawed on
safety grounds. Court upheld regulations, distinguishing
between “economic” and “fundamental” rights.
• West Coast Hotel Co. v. Parrish (300 U.S. 379 [1937]):
Upheld a minimum-wage law on grounds that the
justification for the law, that its absence would cause
poverty and taxpayer obligations, was “rational.” The
“due process” rationale for freedom of contract was
Freedom to contract and
segregation
• Plessy v. Ferguson (1896) upheld a Louisiana statute against a
claim by a private rail line. The law prohibited the rail line from
selling first-class tickets to black customers, as it wanted to do for
profit-maximizing reasons.
• In Buchanan v. Warley (1917), Supreme Court invalidated law
requiring that Louisville blocks be segregated. The primary
reasoning: “This attempt to prevent the alienation of the property in
question to a person of color…is in direct violation of the
fundamental law enacted in the Fourteenth Amendment of the
Constitution preventing state interference with property rights except
by due process of law…[The Amendment] operate[s] to qualify and
entitle a colored man to acquire property without state legislation
discriminating against him solely because of color.”
.8
.6
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PHL
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MKD
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SVK
TZA
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EST CHN
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Total number of procedures
DZA
80
Relation between government procedures required to contract, to register
property and to open business, and dislike of other ethnic groups.
The economics of search and
seizure
• Amendment IV: The right of the people to
be secure in their persons, houses,
papers, and effects, against unreasonable
searches and seizures, shall not be
violated, and no warrants shall issue, but
upon probable cause, supported by oath
or affirmation, and particularly describing
the place to be searched, and the persons
or things to be seized.
The economics of search and
seizure (continued)
• But what should be done if an illegal search
occurs?
• An illegal search is arguably a tort by law
enforcement officials; suing them is satisfactory
in analogous situations in the private sector.
• American law has since 1914 (Weeks v. U.S.)
promoted the exclusionary rule: any illegally
obtained evidence must be omitted from trial. Its
use in a trial is grounds for overturning a
conviction.
But the exclusionary rule is
inefficient for at least two reasons:
• It does not penalize the person who
committed the violation. The problem
therefore is not over-deterrence of law
enforcement but under-deterrence.
• It lowers the chances of a correct verdict
by removing information (evidence) from
the decision-maker (the jury).
Free markets in ideas: the First
Amendment
• Amendment I: Congress shall make no
law respecting an establishment of
religion, or prohibiting the free exercise
thereof; or abridging the freedom of
speech, or of the press; or of the right of
the people peaceably to assemble, and to
petition the government for a redress of
grievances.
Separation of church and state
• The prevailing legal standard is that of Lemon v. Kurtzman,
403 U.S. 602 [1971], which requires that any church/state mix
pass three tests: 1) it must have a secular purpose; (2) it must
have a primary secular effect; and (3) it must not involve the
government in an excessive entanglement with religion.
• But what does this mean? Open access or no access?
• No access may be a subsidy of anti-religious belief.
Economically, the goal should be to subsidize no particular
religious belief. This requires open access, not complete
divorce, if secularism is itself a belief.
• In countries with subsidized state churches and French-style
sterilization of religion from all “public space,” religious
observance is lower and less diverse.
Students don't understand First Amendment; 1 in 3 say it 'goes too far'
By The Associated Press
WASHINGTON -- The way many high school students see it, government
censorship of newspapers may not be a bad thing, and flag burning is hardly
protected free speech. It turns out the First Amendment is a second-rate issue to
many of those nearing their own adult independence, according to a study of high
school attitudes released today.
...
Yet, when told of the exact text of the First Amendment, more than one in three
high school students said it goes "too far" in the rights it guarantees. Only half of
the students said newspapers should be allowed to publish freely without
government approval of stories.
…
Three in four students said flag burning is illegal. It's not. About half the students
said the government can restrict any indecent material on the Internet. It can't.
- Associated Press, Jan. 31, 2005.
Is commercial speech different
from any other kind of speech?
• Businesses are not allowed to make fraudulent
statements about their products (“false advertising”). The
presumption in favor of speech for such claims is much
less than in other forms of speech.
• In general, if a state has a “substantial interest” in
whatever objective the regulation is supposed to control,
and if the regulation “directly advances” the objective,
the control is acceptable.
• But if an activist group claims a business runs
“sweatshops,” and in a PR campaign the business says
it doesn’t, is that “fraud”? Can it be sued under falseadvertising statutes?
“…because the messages in question were
directed by a commercial speaker to a
commercial audience, and because they made
representations of fact about the speaker ’s
own business operations for the purpose of
promoting sales of its products,...[the ]
messages are commercial speech.”
- Nike, Inc. v. Kasky, 27 Cal.4th
939,946,45 P.3d 243, 247 (2002). (Appeal to
US Supreme Court denied in 2003.)
“Hate speech,” obscenity, etc.: Can or should
speech be restricted on the grounds that it is
dramatically offensive?
•
•
$
•
Longstanding legal doctrine forbids imminently dangerous speech – “fire in a crowded
theater,” “fighting words.”
But American law in particular places a high priority on vigorous clashes of ideas.
- “Error of opinion may be tolerated where reason is left free to combat it.” – Jefferson
- "But when men have realized that time has upset many fighting faiths, they may
come to believe even more than they believe the very foundations of their own
conduct that the ultimate good desired is better reached by free trade in ideas -- that
the best test of truth is the power of the thought to get itself accepted in the
competition of the market ... . That at any rate is the theory of our Constitution.” –
Oliver Wendell Holmes, in dissenting opinion in Abrams v. U.S.
“Freedom of expression is not the freedom to insult or offend. Hate speech is always
abhorrent.” – Benito Ferrero-Waldner, European Union Commissioner for External
Relations and European Neighborhood Policy (2008)
The economic model of free speech – as guaranteeing a more competitive market for
ideas – sets the bar very high for restricting speech, which is analogous to restricting
competition.
Example 1: The WSU flag display
Prof. Robert Sumser’s office, Millett Hall.
Example 2: Comedian makes idiotic remarks about gays on a public campus,
and makes them specifically to a gay student who has challenged him:
Whereas, on the evening of August 26, 2004, at a performance on campus to
which the public was invited, a comedian hired by The University of Alabama
used against a University student statements which were, and were intended
to be, derogatory of gay persons, harassing and insulting both the student
and all gay persons;
…
Whereas, it is never appropriate to demean or reduce an individual based on
group affiliation or personal characteristics;
Whereas, it is never appropriate to promote hate or discrimination;
…
Be it further resolved, that University officials in charge of student
programming develop clear policies restricting any behavior which demeans
or reduces an individual based on group affiliation or personal
characteristics, or which promotes hate or discrimination, in any approved
University program or activity, and that these policies be incorporated into
any contract entered into by the University regarding participation in formal
University programs;
(University of Alabama Faculty Senate Resolution, Nov. 11, 2004)
Example 2 (continued):
WHEREAS, The right to free speech is an inalienable human and
civil right that is protected by the United States Constitution and
the Constitution of Alabama;
WHEREAS, Free speech is absolutely vital to the mission of any
university, where new and often controversial ideas must be
discussed openly and rationally in order to make advances in
knowledge;
…
WHEREAS, Speech codes have been used by other colleges and
universities to silence dissenting speech, not merely so-called
“hate speech”, and to persecute those with unpopular opinions;
…
THEREFORE BE IT RESOLVED THAT The University of
Alabama Student Senate most strongly urges the Administration
and the Faculty Senate of the University of Alabama to refrain
from adopting any form of speech code, even one that purports to
ban only so-called “hate speech”;
University of Alabama Student Senate resolution, Feb. 2005.
Example 2a: Anti-gay hate speech in Sweden
Sweden's Supreme Court has said it will review the acquittal of a Pentecostal pastor
who denounced homosexuality as "a deep cancer" in a sermon. Ake Green was
convicted of hate crimes in June 2004 and given a 30-day suspended prison
sentence. But then an appeals court in February threw out the case, saying it was
not illegal to offer an interpretation of the Bible and urge others to follow it.
Mr Green was the first priest convicted under Sweden's new hate crimes law.
‘Hate speech'
Passed in 2003, the legislation covers attacks against homosexuals.
Sweden's chief prosecutor said that in his view, Mr Green's comments did amount to
hate speech, and so he was seeking a review.
In a sermon, Mr Green told a congregation on the small south-eastern island of
Oland that homosexuals were "a deep cancer tumour on all of society".
He warned that Sweden risked a natural disaster because of its tolerance of
homosexuality. "Homosexuality is something sick," Mr Green said, comparing it to
paedophilia and bestiality. He said gays were likely to rape children and animals.
The Supreme Court has not yet given any date for the new trial.
Source: http://news.bbc.co.uk/2/hi/europe/4530209.stm
Example 3: The anti-affirmative action bake sale
SEATTLE, Washington (AP) -- Campus bake sales by conservatives who oppose
affirmative-action are cooking up discord -- and complaints about restrictions on
free speech.
Organizers charge white students $1 for a cookie, while blacks and other minorities
pay 25 to 95 cents. Doughnuts are available for 50 cents to everyone except Asian
Americans and whites, who cannot purchase them.
Unfair? So is affirmative action, organizers contend.
"It's a good example of what affirmative action does, judging people based on
race," said Jason Chambers, president of the University of Washington College
Republicans, which held a sale in October that shut down when some students
began attacking the booth.
"People were upset. People did feel offended," said Anthony Rose, president of the
UW Black Student Union. "You see something like that, you feel itemized."
…
"They cannot defend in public what they have done to the First Amendment at the
University of Washington," said Thor Halvorssen, CEO of the Foundation for
Individual Rights in Education. "There is no question that the administration would
never censor a group of students holding a peaceful protest in favor of affirmative
action."
Source: http://www.cnn.com/2003/US/West/12/24/affirmative.bake.sale.ap/
Hate speech – Is the remedy for
hate speech more speech or less?
•
Or perhaps Ms. Bailey's preferred type of Muslim immigrant is a chap like Sir Iqbal
Sacranie, a Muslim of such exemplary "moderation" he's been knighted by the
Queen. Sir Iqbal, head of the Muslim Council of Britain, was on the BBC the other
day and expressed the view that homosexuality was "immoral," "not acceptable,"
"spreads disease" and "damaged the very foundations of society." A gay group
complained and Sir Iqbal was investigated by Scotland Yard's "community safety unit"
which deals with "hate crimes" and "homophobia."
Independently but simultaneously, the magazine of GALHA (the Gay And Lesbian
Humanist Association) called Islam a "barmy doctrine" growing "like a canker" and
deeply "homophobic." In return, the London Race Hate Crime Forum asked Scotland
Yard to investigate GALHA for "Islamophobia."
Got that? If a Muslim says that Islam is opposed to homosexuality, he can be
investigated for homophobia; but if a gay says that Islam is opposed to
homosexuality, he can be investigated for Islamophobia…"Hate crimes" are thought
crimes, a concept more pernicious and harmful than whatever offence is caused by
any particular statement. So I'm in favour of everybody suing everybody else over
every imaginable phobia until the whole system collapses.
- Mark Steyn, “History Swings Both Ways – Islamists and Brokeback,” The Western
Standard (Canada), Feb. 27, 2006.
Since about 1930 everyone describable as an “intellectual” has lived in a state
of chronic discontent with the existing order. Necessarily so, because society
as it was constituted had no room for him . . . The intellectuals could find a
function for themselves only in the literary reviews and the left-wing political
parties.
The mentality of the English left-wing intelligentsia can be studied in half a
dozen weekly and monthly papers. The immediately striking thing about all
these papers is their generally negative, querulous attitude, their complete lack
at all times of any constructive suggestion. There is little in them except the
irresponsible carping of people who have never been and never expect to be in
a position of power. Another marked characteristic is the emotional shallowness
of people who live in a world of ideas and have little contact with physical reality
. . . And underlying this is the really important fact about so many of the English
intelligentsia—their severance from the common culture of the country.
- George Orwell, The Lion and the Unicorn: Socialism and the English Genius
(1941).
Example 4: The Academic Bill of Rights (Source:
http://www.studentsforacademicfreedom.org/)
•
•
•
•
•
1. All faculty shall be hired, fired, promoted and granted tenure on the basis of their
competence and appropriate knowledge in the field of their expertise and, in the
humanities, the social sciences, and the arts, with a view toward fostering a plurality
of methodologies and perspectives. No faculty shall be hired or fired or denied
promotion or tenure on the basis of his or her political or religious beliefs.
2. No faculty member will be excluded from tenure, search and hiring committees on
the basis of their political or religious beliefs.
3. Students will be graded solely on the basis of their reasoned answers and
appropriate knowledge of the subjects and disciplines they study, not on the basis of
their political or religious beliefs.
4. Curricula and reading lists in the humanities and social sciences should reflect the
uncertainty and unsettled character of all human knowledge in these areas by
providing students with dissenting sources and viewpoints where appropriate. While
teachers are and should be free to pursue their own findings and perspectives in
presenting their views, they should consider and make their students aware of other
viewpoints. Academic disciplines should welcome a diversity of approaches to
unsettled questions.
5. Exposing students to the spectrum of significant scholarly viewpoints on the
subjects examined in their courses is a major responsibility of faculty. Faculty will not
use their courses for the purpose of political, ideological, religious or anti-religious
indoctrination.
The Academic Bill of Rights
(continued)
•
•
•
6. Selection of speakers, allocation of funds for speakers programs and
other student activities will observe the principles of academic freedom
and promote intellectual pluralism.
7. An environment conducive to the civil exchange of ideas being an
essential component of a free university, the obstruction of invited
campus speakers, destruction of campus literature or other effort to
obstruct this exchange will not be tolerated.
8. Knowledge advances when individual scholars are left free to reach
their own conclusions about which methods, facts, and theories have
been validated by research. Academic institutions and professional
societies formed to advance knowledge within an area of research,
maintain the integrity of the research process, and organize the
professional lives of related researchers serve as indispensable venues
within which scholars circulate research findings and debate their
interpretation. To perform these functions adequately, academic
institutions and professional societies should maintain a posture of
organizational neutrality with respect to the substantive disagreements
that divide researchers on questions within, or outside, their fields of
inquiry.
The economics of negative
externalities revisited
• Negative externalities lead to inefficiency,
relative to an ideal world.
• But it is impossible to adequately address
all of them.
• This leads to the problem of when to use
negotiation (i.e., commerce) and when to
use coercion (i.e., government).
Negotiations, coercion and property
rights
• When transaction costs are low, negotiation is
generally preferable to coercion.
• The function of the state in economic theory is to
make transaction costs low, in part by
consistently enforcing property rights – the rules
of exchange. Consistent interpretations of such
rights decrease uncertainty, and therefore
promote greater wealth.
Change, expectations, and
property rights
• The law should generally be predisposed
not to upset expectations.
• But radical social change sometimes
requires radical rethinking or even initial
thinking of where people’s property rights
begin and end. Examples: mass
manufacturing, the photocopier, Internet
music downloading.
The division of labor between the
judiciary and the legislature
• In all government arenas, interest-group rent-seeking is
a problem. Rent-seeking is costly, especially if the
bargains made are unreliable.
• This suggests that there are gains to be made by limiting
the amount of rent-seeking via channeling it into one
arena, and by making rent-seeking bargains relatively
durable, preventing endless “cycling.”
• Therefore, there are gains to be made from an
independent judiciary that can reliably enforce legislative
rent-seeking bargains. Independence comes from long
(even life) terms, insulation from elections, etc.
The comparative advantage of the legislature in
making deals, and of the judiciary in enforcing
them.
• The common law is a very inefficient way
to redistribute income.
• Such devices as lifetime tenure and lack of
judicial elections make it easy to insulate
judges.
The economics of judicial
precedent (“stare decisis”)
• In a common-law system, previous judicial decisions are used to
justify outcomes in a particular case.
• Precedent thus allows for more certainty in planning – the beginning
and end of your property rights are well-defined.
• Adherence to precedent also reduces litigation costs by reducing
uncertainty.
• But as the society around a precedent changes, the value of that
precedent is likely to decline – precedent as a capital stock.
• Thus, the more rapidly a society advances technologically, the more
rapidly precedents should depreciate. To be too obedient to
precedent would cause path dependence – an inferior result
specifically linked to an arbitrary starting point. (Supposed
examples: Microsoft Windows, college football’s Bowl Championship
Series, QWERTY typewriter.)
The efficiency of the common law –
how the common law evolves
• The common law is evolutionary. It
responds to its environment, just like
biological organisms do.
• But what does “environment” mean?
• The efficiency theory says that over time
the legal rules that courts produce tend
toward efficient legal arrangements.
• Note that common-law rules are different
from statutory interpretation.
Why does the common law evolve
toward efficiency?
• It is easier for judges to base their decisions on actions
rather than the merits or moral claims of litigants.
• The standing requirement limits litigation to those parties
who are directly affected, rather than interest groups.
• With low transaction costs, parties will ignore or get
around inefficient rules, by contracting around them or
resorting to private arbitration.
• Even with high transaction costs, inefficient rules may be
more likely to be litigated, and hence statistically more
likely to be overturned (George Priest).
• The above argument depends on whether or not one
views court decisions as vulnerable to rent-seeking or
not (Hirsch/Osborne).
The efficiency of the common law –
the rule of law
• The judiciary insures that statutes are consistent with the
rule of law. This means that:
• (1) People in similar circumstances are always treated
similarly. In other words, the law is not used to arbitrarily
frustrate the goals of particular groups.
• (2) The law must be capable of being complied with.
• (3) There must be a procedure by which the facts
required to determine how the law is to be complied with
can be determined.
• The rule of law provides predictability, with the
associated benefits for entrepreneurial creativity.
The Rule of Law
“Stripped of all technicalities, this means that government is bound in all its
actions by rules fixed and announced beforehand – rules which make it possible to foresee
with fair certainty how the authority will use its coercive powers in given circumstances and
to plan one’s individual affairs on the basis of this knowledge…While every law restricts
individual freedom to some extent by altering the means which people may use in pursuit of
their aims, under the Rule of law the government is prevented from stultifying individual
efforts by ad hoc action. Within the rules of the game the individual is free to pursue his
personal ends and desires, certain that the powers of the government will not be used
deliberately to frustrate his efforts.
…
“The idea that there is no limit to the powers of the legislator is in part a result of
popular sovereignty and democratic government. It has been strengthened by the belief that,
so long as all actions of the state are duly authorized by legislation, the Rule of Law will be
preserved. But this is completely to misconceive the meaning of the Rule of Law. This rule
has little to do with the question whether all acts are legal in the juridical sense. They may
well be and yet not conform to the Rule of Law. The fact that someone has full legal
authority to act in the way he does gives no answer to the question whether the law gives
him power to act arbitrarily or whether the law prescribes unequivocally how he has to act.”
- Friedrich Hayek, The Road to Serfdom (1942)
“The rule of law differs from using the
law to rule.”
- Liu Junning, Chinese political
scientist.