Category Archives: Economics

New Article: For Every Rat Killed

New Article: Etienne C. Toussaint, For Every Rat Killed, 9 Critical Analysis of Law 1 (2022). Abstract below:

If my grandmother had survived the sickness of old age and were alive to witness the economic injustices wrought by capitalist culture, what would she think? If my grandmother were alive to observe familiar technologies for exterminating household pests—surveil-lance, capture, imprisonment, disposal—being increasingly aimed toward low-income Black communities, what would she believe? If my grandmother were alive to discover, in the palm of her hands, a digital platform for spreading information (and misinformation) to the masses and painting new futures into the minds of lawmakers and politicians, what would she say?

Studies have shown that low-income individuals are more likely to suffer physiological and psychological harms than middle- and high-income individuals due to the substandard conditions of their communities. Yet, such indignities are justified by market opportunities to grasp for better—to take “personal responsibility” and “pull yourself up by the bootstraps”—even when the process of grasping for upward social mobility inflicts its own trauma. Placing Richard Wright’s novel “Native Son” and Tara Bett’s poem “For Those Who Need A True Story” in conversation with my personal narrative, this Essay explores the trauma of grasping for better in the United States where wealth inequities only seem to be getting worse.

In so doing, it considers whether capitalism’s competitive and individualistic culture—a spirit that thrives on the exploitation of the weak to further the capital accumulation of the strong—not only normalizes violence as a mechanism for social mobility but sews division and strife where alternative futures, perhaps even Afro-futures, might finally set us all free.

New Article: Antitrust and Inequality

New Article: Eric A. Posner & Cass Sunstein, Antitrust and Inequality, SSRN Feb. 2022. Abstract below:

In its current form, antitrust law is often said to advance consumer welfare and to disregard economic inequality. But with the right priority-setting and other modest reforms, efforts to increase consumer welfare might simultaneously reduce economic inequality. Because monopoly and monopsony benefit shareholders at the expense of workers and consumers, ideal enforcement of antitrust law should redistribute resources from shareholders to workers and consumers. Antitrust enforcement agencies seeking to reduce inequality might adjust their priorities and target markets that are disproportionately important for low-income people. We also suggest that antitrust law could, with little violence, be turned toward advancing consumer welfare (in the sense of utility) rather than consumer surplus. Agriculture and health care would be good places to start; food and medicine compose a larger share of the budget of low-income people than of others, and these goods are essential to basic well-being. Regulators should also give priority to labor markets, especially labor markets in which lower-income people participate, and especially where pay gaps based on race or gender are large. In some cases, it is also appropriate to consider sacrificing economic efficiency for distributional goals by introducing distributional weights into antitrust analysis; doing so can increase social welfare.

New Article: Recovering the Moral Economy Foundations of the Sherman Act

New Article: Sanjukta Paul, Recovering the Moral Economy Foundations of the Sherman Act, 131 Yale L.J. 175 (2021). Abstract below:

This Feature deepens and seeks to provide a foundation for the current broadening in the anti-trust debate and, ultimately, in adjacent areas relating to market organization. As normative reconstruction, it may help guide current reform efforts as well as the interpretation and implementation of the existing antitrust laws. The Feature traces a thread beginning with the “moral economy” origins of antitrust and the common law of restraint of trade; continues through the American antimonopoly coalition’s distinctive and egalitarian moral economy vision; and culminates in a reinterpretation of the legislative history of the Sherman Act, both as to affirmative purpose and as to judicial role. I propose a core prescription: the command to disperse economic coordination rights. This core prescription in turn implies three key tasks: taking affirmative steps to contain domination, to accommodate and promote democratic coordination, and to set rules of fair competition.

The normative thread traced here, culminating in an argument about legislative purpose, is interwoven with an argument about institutional roles. The widely held conventional wisdom is that the Sherman Act is the paradigmatic “common-law statute,” entailing a delegation of law-making power by Congress to the courts that spans the field of antitrust. The common-law-statute thesis is more than just the proposition that the courts should guide the application of the law as circumstances change. Instead, it has been understood as an effective “blank check” to federal courts to generate the foundational normative criteria according to which the statutory framework will function. But the legislative history of the Sherman Act undermines both the argument for judicial supremacy and the particular prescriptions with which the most pronounced, current episode of judicial lawmaking has been associated. Finally, the Feature briefly sketches the broad outlines of an alternative path for implementing antitrust’s core prescription, emphasizing the potential role of the Federal Trade Commission in administering the moral economy.

New Article: Scaling Commercial Law in Indian Country

New Article: Marc Lane Roark, Scaling Commercial Law in Indian Country, 8 Tex. A&M L. Rev. 89 (2020). Abstract below:

How do you drive economic enterprise in a financial desert? Indian tribes, academics, economists, and policy makers have considered the means and methods for energizing economic growth for forty years. Efforts such as the creation and promotion of the Model Tribal Secured Transactions Act (“MTSTA”) promise much toward creating conditions that would gather financial opportunity to tribal regions that experience poverty at a strikingly higher rate than any other place in the United States. And yet, while the law has been available for more than ten years, tribes have been reticent to adopt it. This Article fills the vacuum in the literature around the promise of uniform laws in Indian Country by describing the inherent tension that exists between downscaling uniform laws into tribal contexts and the localism that seeks to preserve localized values. This Article argues that tribal choices to accept uniformity or reject uniformity in these areas are built around a combination of formal associations and organic relationships designed to create “institutional thickness” in the face of other scarce resources.

New Article: Democratizing Behavioral Economics

New Article: Zachary D. Liscow & Daniel Markovits, Democratizing Behavioral Economics, SSRN 2022. Abstract below:

Behavioral economics—arising from the insight that people make recognizable, systematic mistakes—has revolutionized policymaking. For example, in governments around the world, including the US, teams of experts have recently arisen to harness these insights, promising to do things like increase retirement savings. But there is a problem: Economic experts do not look or think like the rest of the population. They are deeply unrepresentative demographically and have quite different policy views.

This would be less problematic if the experts were merely helping people pursue the behavior that the people themselves would undertake, as was the case in traditional law and economics. However, the whole point of behavioral economics is that such behavior is often not in people’s interest. Rather, in making judgments about the right policy, behavioral law and economics has erected a new, shaky structure, based on ad hoc and often unstated normative assumptions. The result risks merely enacting the policy preferences (or biases) of unrepresentative experts and thereby distorting policymaking.

We propose a new approach—democratic law and economics—in which, rather than dictating what the right policy or action is, behavioral economists instead inform representative samples of ordinary people about the evidence, including specifically about their own behavioral biases, and let them decide for themselves. Those decisions, rather than experts’ opinions alone, then inform policymakers. Our approach harnesses the insights of behavioral economics, but in a way that lets the people themselves, rather than the behavioral expert, be the arbiter of the good life.

New Book: Investing in Rural Prosperity

InvestingRural_300pxNew Book: Investing in Rural Prosperity (Andrew Dumont & Daniel Paul Davis eds., Fed. Res. Bank of St. Louis, 2021). Overview of the book below:

Investing in Rural Prosperity, published by the Federal Reserve Bank of St. Louis in collaboration with the Federal Reserve Board of Governors, seeks to help rural individuals and communities achieve shared economic prosperity. By outlining a framework for how to approach rural development successfully and showcasing stories of progress in different communities—as well as highlighting recommendations for action by policymakers, practitioners, funders and researchers—the editors and authors hope to advance this important goal.

The book includes contributions from 79 authors in the United States and abroad, representing financial institutions, nonprofits, philanthropies, academia and government agencies. The chapters touch on a wide range of topics, including entrepreneurship support, workforce development, energy efficient manufactured housing, and digital inclusion. The book delves into the challenges of our past and the promise of our future. Ultimately, Investing in Rural Prosperity is a call to action, so we can realize that promise—together.

Related podcast and other materials here.

New Symposium: A Taxing War on Poverty: Opportunity Zones and The Promise of Investment and Economic Development

New Symposium: A Taxing War on Poverty: Opportunity Zones and The Promise of Investment and Economic Development, 48 Fordham Urb. L. J. (2021). Contained Articles and Notes listed below:

Articles:

Notes:

New Article: Opportunity Zones, 1031 Exchanges, and Universal Housing Vouchers

New Article: Brandon M. Weiss, Opportunity Zones, 1031 Exchanges, and Universal Housing Vouchers, Forthcoming Calif. L. Rev. Abstract below:

The Tax Cuts and Jobs Act of 2017 contained former President Trump’s signature economic development initiative: the Opportunity Zone program. Allowing a deferral of capital gains tax for certain qualifying investments in low-income areas, the Opportunity Zone program aims to spur economic development by steering capital into economically distressed neighborhoods. The program is the latest iteration of an overly simplistic market-based approach to community development—an approach that transcends political party—based on a flawed yet enduring notion that mere proximity of capital will solve deeply entrenched issues of poverty and racial inequity. In reality, the legacy of Opportunity Zones is likely to be one of accelerated neighborhood gentrification left in the wake of wealthy taxpayer windfalls.

Opportunity Zones are more akin to a classic tax shelter than an effective anti-poverty strategy. They share a fundamental DNA with a much older real estate-related tax break, Section 1031 like-kind exchanges, which allow for the nonrecognition of gains for certain qualifying transactions that involve trading one piece of real estate for another. Section 1031 is one of the largest corporate tax expenditures in the U.S. tax code. Yet, as examined in this Article, the four primary theoretical bases upon which Section 1031 rests—measurement, administrability, liquidity, and economic stimulus—have eroded over time and ultimately are unpersuasive.

Redirecting the value of the Opportunity Zone program and Section 1031 exchanges to the Housing Choice Voucher program could roughly double the number of housing vouchers available to extremely low-income households in the United States. I argue that this sort of intervention would have far greater impact in addressing the ills of poverty and racial inequality in the United States than the Opportunity Zone program. This argument is timely in light of President Biden’s recent support for reforming Opportunity Zones, limiting Section 1031, and expanding the Housing Choice Voucher program.

New Article: One Child Town: The Health Care Exceptionalism Case against Agglomeration Economies

New Article: Elizabeth Weeks, One Child Town: The Health Care Exceptionalism Case against Agglomeration Economies, forthcoming Utah L. Rev. Abstract below:

This Article offers an extended rebuttal to the suggestion to move residents away from dying communities to places with greater economic promise. Rural America, arguably, is one of those dying places. A host of strategies aim to shore up those communities and make them more economically viable. But one might ask, “Why bother?” In similar vein, David Schleicher’s provocative 2017 Yale Law Journal article, Stuck! The Law and Economics of Residential Stagnation urged dismantling a host of state and local government laws operating as barriers to migration by Americans from failing economies to robust agglomeration economies. But Schleicher said little about the fate of the places left behind. Schleicher’s article drew a number of pointed responses, urging the value and preservation of Small Town America. But those arguments failed fully to meet the rational economic thesis, countering instead with more sentimental or humanitarian concerns. This article offers a way to reconcile the two views, refracted through a health care lens. Health care is a particularly apt perspective for considering the question whether America’s rural places are worth saving because it necessarily, under longstanding U.S. policy preferences, walks the line between the economic principles and human rights; individual responsibility and communitarian values; the rational actor and the deserving recipient of aid. The health care exceptionalism case against agglomeration economies urges consideration of the real, quantifiable costs of migration and, correlatively, value of home, as well as the market imperfections inherent in health care and, even more so, in rural health care.

New Article: “Law Distributes I: Ricardo Marx Cls”

New Article: Duncan Kennedy, Law Distributes I: Ricardo Marx Cls, SSRN April 2021. Abstract below:

This article appropriates Ricardo and Marx as progenitors of one of the contemporary CLS approaches to law and political economy. In the first part, I look at Ricardo and Marx through a presentist lens. I ignore their allegiance to the labor theory of value and restate what I think is important for “us” in neo-classical terms. What is left is a model in which a legal regime distributes a surplus helping some at the expense of others, setting in motion a chain of further distributional changes in a particular direction (e.g. stagnation or growth). Then I describe Ricardo’s legal presuppositions and Marx’s explicit understanding of law as seriously mistaken and restate their ideas in the “post-realist” mainstream language of contemporary American legal thought. The great question they help answer, restated, is how to decide when redistributive interventions will or will not, have or have not “hurt the people they are trying to help.” The last part introduces this approach, contrasting it with familiar liberal approaches. The normative orientation is to distribution in favor of subordinated groups rather than to efficiency and to work on transformable background rules of public and private law rather than to politically unattainable reform by tax and spend, large scale re-regulation or decommodification. A companion article applies the “neo-Ricardian” analytic to the dynamics of housing and credit markets in poor black neighborhoods.

I have received valuable feedback on this version of this paper from about a dozen colleagues and friends, and I am working on a new draft that will respond to many telling criticisms and useful suggestions. I am posting the initial version here now in the hope of soliciting even more help in the interval before I can complete the new one.