Category Archives: Economics

New Article: “Is Efficiency Biased?”

New Article: Zachary Liscow, Is Efficiency Biased?, forthcoming U. Chi. L. Rev. (SSRN Mar. 2018). Abstract below:

Efficiency is a watchword in policy circles. If we choose policies that maximize people’s willingness to pay, we are told, we will grow the economic pie and thus benefit the rich and poor alike. Who would oppose efficiency when it is cast in this fashion?

Look more closely. When viewed through a legal lens, the term efficiency encompasses two, starkly different, types of policies: those that systematically distribute equally to the rich and the poor and those that systematically distribute more to the rich.

Our collective failure to grasp this distinction matters enormously no matter what your political commitments. Many “efficient” policies distribute more to the rich, without the rich having to pay for their bigger slice. Because these “rich-biased” policies are ubiquitous, efficient policymaking places a heavy thumb on the scale in favor of the rich. Getting efficiency right should matter to a wide swath of the policymaking spectrum, from committed redistributionists to libertarians. We should support “efficient” policies only when they systematically distribute equally to the rich and the poor neutrally as we grow the size of the economic pie.

The Article points the way forward in ensuring that a foundational tenant of the law does not follow a “rich get richer” principle, with profound consequences for policymaking of every sort.


New Book: “City of Debtors: A Century of Fringe Finance”

CityofDebtorsNew Book: Anne Fleming, City of Debtors: A Century of Fringe Finance (2018). Overview below:

Since the rise of the small-sum lending industry in the 1890s, people on the lowest rungs of the economic ladder in the United States have been asked to pay the greatest price for credit. Again and again, Americans have asked why the most fragile borrowers face the highest costs for access to the smallest loans. To protect low-wage workers in need of credit, reformers have repeatedly turned to law, only to face the vexing question of where to draw the line between necessary protection and overreaching paternalism.

City of Debtors shows how each generation of Americans has tackled the problem of fringe finance, using law to redefine the meaning of justice within capitalism for those on the economic margins. Anne Fleming tells the story of the small-sum lending industry’s growth and regulation from the ground up, following the people who navigated the market for small loans and those who shaped its development at the state and local level. Fleming’s focus on the city and state of New York, which served as incubators for numerous lending reforms that later spread throughout the nation, differentiates her approach from work that has centered on federal regulation. It also reveals the overlooked challenges of governing a modern financial industry within a federalist framework.

Fleming’s detailed work contributes to the broader and ongoing debate about the meaning of justice within capitalistic societies, by exploring the fault line in the landscape of capitalism where poverty, the welfare state, and consumer credit converge.

New Article: “Kaplow and Shavell and the Priority of Income Taxation and Transfer”

New Article: David Blankfein-Tabachnick & Kevin A. Kordana, Kaplow and Shavell and the Priority of Income Taxation and Transfer, 69 Hastings L.J. 1 (2017). Abstract below:

This Article rejects a central claim of taxation and private law theory, namely, Kaplow and Shavell’s prominent thesis that egalitarian social goals are most efficiently achieved through income taxation and transfer, as opposed to egalitarian alterations in private law rules. Kaplow and Shavell compare the efficiency of rules of tort to rules of tax and transfer in meeting egalitarian goals, concluding that taxation and transfer is always more efficient than other private law legal rules. We argue that Kaplow and Shavell reach this conclusion only through inattention to the body of private law that informs the very basis of their discussion: underlying property entitlements. This Article contends that Kaplow and Shavell’s comparison of rules of taxation to rules of tort fails to take proper account of the powerful role that (re)assigning underlying property entitlements plays in achieving egalitarian goals, even at the level of formal theory. We conclude that, contrary to Kaplow and Shavell’s prominent claim, as a matter of efficiency, the rules of income taxation and transfer are not always preferable to alterations in the initial assignment of property entitlements in achieving distributive or egalitarian goals.

News Coverage: “Groundbreaking empirical research shows where innovation really comes from: Breaking down barriers for underrepresented kids could quadruple America’s pool of inventors”

News Coverage: Matthew Yglesias, Groundbreaking empirical research shows where innovation really comes from: Breaking down barriers for underrepresented kids could quadruple America’s pool of inventors,, Dec. 5, 2017.

The same research is also covered here: America’s Lost Einsteins.

Op-ed: “When Affordable Housing Meets Free-Market Fantasy”

Op-ed: Zelda Bronstein, When Affordable Housing Meets Free-Market Fantasy, Dissent Magazine, Nov. 27, 2017. _DSC0316

New Article: “The Next American Revolution”

New Article: Timothy K. Kuhner, The Next American Revolution, 39 Western New England L. Rev. 477 (2017). Abstract below:

On the whole, the scholarly literature does not go far enough in its understanding of money in politics and corporate political power — ultimately, the role of concentrated capital in democracy. The rising economic and political inequalities affecting the United States are not properly diagnosed as the excesses of a generally legitimate capitalist democracy in need, merely, of legal reforms. Rather, they are the symptoms of an overarching flaw in our political system that requires a revolution — a revolution of the non-violent, constitutional kind.

Action follows understanding. If the understanding of a problem is weak and superficial, the reform agenda will also be weak and superficial. It is true, as the call for papers states, that Supreme Court cases on money in politics “shift power to a new economic royalty.” Rather than an embellishment or exaggeration, however, this is actually the essential starting point for putting today’s plutocracy into its proper historical context, that of despotism, tyranny, and oppression.

Highlighting the thoughts of key historical figures, this essay has two purposes: first, to explore how revolutionary understandings can bring modern-day problems of economic and political inequality into sharper focus; and, second, to reveal the essential thrust of an enduring solution, a constitutional amendment to separate business and state.

New Article: “The Food We Eat and the People Who Feed Us”

New Article: Stephen Lee, The Food We Eat and the People Who Feed Us, Wash. U. L. Rev. forthcoming 2017. Abstract below:

Food justice scholars and advocates have made a simple but important point: for all the attention we pay to the food we eat, we pay far too little attention to the people who feed us. But can law play a role in directing consumer attention to labor-related issues? Traditional food law paradigms provide at best incidental benefits to food workers because these types of laws typically rely on transparency and disclosure schemes that serve narrow consumer-centric interests. An increasing number of laws attempt to disseminate information about the working conditions of the people who pick, process, and produce our food so that consumers can also consider the ethical and moral consequences of their food choices. In assessing this attempt to rebrand labor enforcement in consumer protection terms, this Article does two things. First, this Article identifies the conditions under which such schemes are most likely to succeed. Regulators should target food markets characterized by relative consumer wealth, norm consensus regarding which outcomes are desirable, and an established intermediation infrastructure to give disclosure laws the best chances for improving labor conditions along the food chain. Even where these conditions exist, a second point this Article makes is that disclosure laws should supplement, not supplant, traditional labor enforcement strategies that rely on worker-initiated complaints. This is because certain values, like autonomy, equity, and community standing are best vindicated by the workers themselves instead of by others (like consumers) on their behalf. Crowding out workers from the enforcement process creates the risk of exacerbating the structural forms of inequality that define work across the food system.

New Article: “Agency Law and the New Economy”

Loewenstein, Mark, Agency Law and the New Economy (November 1, 2017). 72 Bus. Law. 1009 (2017); U of Colorado Law Legal Studies Research Paper No. 17-18. [Abstract below]

This article considers the status of workers in the “new economy,” defined as the sharing economy (e.g., Uber, Lyft) and the on-demand economy. The latter refers to the extensive and growing use of staffing companies by established businesses in many different industries to provide all or a portion of their workforce. Workers in both the sharing economy and the on-demand economy are, generally speaking, at a disadvantage in comparison to traditional employees. Uber drivers, for example, are typically considered independent contractors, not employees, and therefore are not covered under federal and state laws that protect or provide benefits to employees. Similarly, employees of a staffing company may consider themselves employees of the client company and, therefore, entitled to negotiate collectively with the client company and receive the same benefits as the client company’s employees, yet the client company may take the position that it is not the employer or even a “joint employer” of such workers. Courts considering the claims of these workers typically look to the common-law definition of “employee,” as legislatures have typically neglected to define “employee” when drafting laws to protect employees. The resulting litigation has generated judicial decisions that are difficult to parse and often treat workers unfairly. This article takes a fresh approach to this problem, considering the shortcomings of the common-law definition and suggesting solutions.

New Article: “Taxing Consumption and the Take-up of Public Assistance: The Case of Cigarette Taxes and Food Stamps”

Kyle Rozema, Nicolas R. Ziebarth, Taxing Consumption and the Take-up of Public Assistance: The Case of Cigarette Taxes and Food Stamps, Univ. Chi. L. Rev. (2017). [Abstract below]

We exploit cigarette tax variation across US states from 2001 to 2012 to show
how taxing inelastic consumption goods can induce low-income households to
enroll in public assistance programs. Using a novel household panel of monthly
food stamp enrollment from the Current Population Survey, we enrich standard
cigarette tax difference-in-differences models with an additional control group:
nonsmoking households. Smoking households are treated with higher taxes,
while nonsmoking households are not. Marginal smoking households respond
to increases in cigarette taxes by taking up food stamps at rates higher than
smoking households in other states and nonsmoking households in the same

New Article: “Social Justice and Capitalism: An Assessment of the Teachings of Pope Francis from a Law and Macroeconomics Perspective”

New Article: Steven A. Ramirez, Social Justice and Capitalism: An Assessment of the Teachings of Pope Francis from a Law and Macroeconomics Perspective, 40 SEATTLE U. L. REV. 1229 (2017). Abstract below:

The first part of this Article will synthesize the key teachings of Pope Francis from his most important statements on economic structures and social justice and situate these teachings within contemporary economic realities and traditional social justice teachings. Part II of this Article will demonstrate that the Pope’s teachings on social justice fundamentally reflect the best learning from economists on how to sustain economic growth. Part III of this Article will show that nations that undertake policies to pursue the fundamental tenets of the Pope’s teachings (such as minimizing childhood poverty) also perform the best in achieving high human development outcomes for the mass of their citizens. This Article will therefore conclude that the recent teachings of Pope Francis (and the Catholic Church) on the topics of social justice and the environment are fully consistent with the most robust systems of capitalism in the world today as well as with traditional economic thinking, going as far back as Adam Smith. Therefore, legal policymakers (including all branches and agencies of the government) should work to impound the core elements of these teachings to the maximum extent possible to create the most robust and sustainable capitalism possible.