Category Archives: Economics

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.

New Article: Borrowing Equality

Abbye Atkinson, Borrowing Equality, 120 Colum. L. Rev. 1403 (2021). Abstract Below:

For the last fifty years, Congress has valorized the act of borrowing money as a catalyst for equality, embracing the proposition that equality can be bought with a loan. In a series of bedrock statutes aimed at democ­ratizing access to loans and purchase money for marginalized groups, Congress has evinced a “borrowing-as-equality” policy that has largely focused on the capacity of “credit,” while acoustically separating its treat­ment of “debt” as though one can meaningfully exist without the other. In taking this approach, Congress has proffered credit as a means of equality without expressly accounting for the countervailing force of debt relative to social subordination. Yet, debt has itself functioned as a mechanism of the very subordination that Congress’s invocation of “credit” aspires to address.

This Article argues that because in articulating a borrowing-as-equality policy Congress is implicitly encouraging debt among marginal­ized communities, Congress should develop policies that recognize both the potential upside value of borrowing and the particular vulnerabilities that debt creates for socioeconomically marginalized groups. More broadly, any policy that invokes borrowing as a social good must engage more deeply with how credit and debt work in a social context. In other words, credit cannot meaningfully function as a social good without due attention to and a solution for the work of debt as a social ill.

New Article: Redistribution for Realists

Zachary D. Liscow, Redistribution for Realists (February 24, 2021). Abstract below:

Inequality is a defining issue of our time. Nevertheless, the longstanding economic orthodoxy for addressing inequality is that we should redistribute solely through tax and transfer policies because those are the most efficient means for doing so. 

While the orthodoxy holds in theory, it fails in practice because of the public’s psychology about redistribution. New evidence shows that individuals silo their policy views: many are reluctant to redistribute through taxes and transfers but are willing to do so in other policy domains, like provision of necessities such as transportation, food, and housing. The orthodoxy thus restricts redistribution efforts to a policy domain where the public resists redistribution while neglecting the many policy domains where the public embraces redistributive policies. The current orthodoxy may be more efficient, but it is also a prescription for widespread inequality. 

We need to flip the old economic orthodoxy on its head by spreading our redistribution efforts across many policy domains, but doing so modestly in each domain. This “thousand points of equity” approach has the virtue of redistributing where it can be achieved, by allowing policymakers to seek modest and attainable redistribution in many domains rather than pushing for massive redistribution in a single domain where it is difficult to attain. This approach would allow us to make substantial inroads on inequality while doing the most good at the least cost. The approach does so by retaining the traditional economic goal of efficiency, but combining it with data-driven behavioral insights about what redistribution is politically realistic. The Article illustrates how the approach would apply to areas across the law, including regulatory cost-benefit analysis, labor law, tax law, social insurance, tort law, and housing law. 

New Article: Economic Analysis in Law

Hanoch Dagan & Roy Kreitner, Economic Analysis in Law, 38 Yale J. Reg. 566 (2021). Abstract Below:

This Essay explores the relationship between normative law and economics and legal theory. We claim that legal theory must account for law’s coerciveness, normativity, and institutional structure. Economic analyses that engage these features are an integral part of legal theory, rather than external observations about law from an economic perspective. These analyses, or economic analysis in law, play a crucial role in understanding the law and in developing legal policy arguments. After establishing economic analysis in law’s terminology, this Essay maps out three contributions of economic analysis in law: prescriptive recommendations in areas amenable to preference satisfaction as a normative criterion, analyzing efficiency as one aspect of a broader normative inquiry, and exposing feasibility constraints. Finally, this Essay turns to an exploration of possibilities for extending economic analysis in law beyond its comfort zone. It suggests that economic analysis might expand into areas where values other than preference satisfaction are or ought to be dominant considerations.

New Article: Remixing Resources

Lee Anne Fennell, Remixing Resource, 38 Yale J. Reg. 589 (2021). Abstract below:

This Essay argues for an approach to resource access that connects rather than separates questions of efficiency and distribution. It proceeds from the premise that putting together the most valuable combinations of resources—including human capital—is of central and increasing normative importance. Structuring law to facilitate these combinations should be a primary task for property scholars working in the law and economics tradition. Doing so requires engaging with the processes through which complementary resources produce value in a modern society, recognizing how property doctrines work to put together and keep together complementary resource sets, and confronting the ways in which material inequality and unremediated injustice stand in the way of realizing valuable complementarities. Because a complementarity-based vision of property holds the potential to promote efficiency and distributive goals simultaneously, it illuminates how an integrative approach might offer policy-relevant traction toward both objectives.

New Book: Fulfillment: Winning and Losing in One-Click America

Alec MacGillis, Fulfillment: Winning and Losing in One-Click America (2021). To read an except, click the link above.

Alina Selukh wrote a book review on Fulfillment for NPR. Alina Selyukh, In Amazon’s Shadow, An American Divided in Search of ‘Fulfillment’, NPR (Mar. 16, 2021). According to Selukh, MacGillis uses personal stories to outline various aspects of Amazon and how it economically impacted communities.

The New York Times also published an opinion piece written by MacGillis himself. Alec MacGillis, Amazon and the Breaking of Baltimore, N.Y. Times (Mar. 9, 2021). In this op-ed, MacGillis describes his experience writing the book, some key findings, and the effects on his hometown, Baltimore.

New Article: Opportunism Zones

Edward W. De Barbieri, Opportunism Zones, 39 Yale L. & Pol’y (forthcoming 2021). Abstract below:

In 2017, Congress adopted the Opportunity Zone, an unheralded yet powerful place-based economic development tool, as part of tax re-form. Place-based economic development tools and strategies provide incentives to attract jobs and capital to areas where jobs and capital have fled. Investors in state-designated Opportunity Zone districts are able to (1) defer capital gains on qualified investments, and (2) reduce their tax bills when selling qualifying real estate or business property. Proponents of the bipartisan Opportunity Zone argue that tax incentives are an efficient way to direct investment dollars to poor areas. Critics, however, point out that such government interventions in the economy are stricken by corruption, abuse, and waste.

This Article analyzes and critiques the Opportunity Zone, and argues that compared to other place-based economic development tools implemented through law it is an extreme and potentially frightening approach. I identify three key aspects—use, transparency, and participation—which focus my analysis on the extent to which Opportunity Zones may in fact harm the areas they are supposed to benefit. There are prudent reasons to be skeptical of the benefits of the Opportunity Zone, especially considering their potential to widen and increase wealth and in-come inequality.

I argue that place-based economic development strategies are not necessarily to blame. Rather, it is the Opportunity Zone, a tool to benefit investors and existing landowners, that needs reform, or elimination. I explore proposals to restructure the Opportunity Zone that limit the uses of invested funds, improve transparency to assess meaningful outcomes, and involve stakeholder groups through participation.

Upcoming Symposium: A Taxing War on Poverty: Opportunity Zones and the Promise of Investment and Economic Development

Upcoming Symposium: A Taxing War on Poverty: Opportunity Zones and the Promise of Investment and Economic Development, Fordham Urban Law Journal, Feb. 26, 2021, 10am-2:45pm eastern time. Registration here. [Note I could not find the website with the program, hopefully the above link works. It is a great list of speakers.]

Race and Economic Opportunity in the United States: An Intergenerational Perspective

Raj Chetty, et al., Race and Economic Opportunity in the United States: An Intergenerational Perspective (Nat’l Bureau of Econ. Research, Working Paper No. 24441, 2019). Abstract below:

We study the sources of racial disparities in income using anonymized longitudinal data covering nearly the entire U.S. population from 1989-2015. We document three results. First, black Americans and American Indians have much lower rates of upward mobility and higher rates of downward mobility than whites, leading to persistent disparities across generations. Conditional on parent income, the black-white income gap is driven by differences in wages and employment rates between black and white men; there are no such differences between black and white women. Hispanic Americans have rates of intergenerational mobility more similar to whites than blacks, leading the Hispanic-white income gap to shrink across generations. Second, differences in parental marital status, education, and wealth explain little of the black-white income gap conditional on parent income. Third, the black-white gap persists even among boys who grow up in the same neighborhood. Controlling for parental income, black boys have lower incomes in adulthood than white boys in 99% of Census tracts. The few areas with small black-white gaps tend to be low-poverty neighborhoods with low levels of racial bias among whites and high rates of father presence among blacks. Black males who move to such neighborhoods earlier in childhood have significantly better outcomes. However, fewer than 5% of black children grow up in such areas. Our findings suggest that reducing the black-white income gap will require efforts whose impacts cross neighborhood and class lines and increase upward mobility specifically for black men.

In March 2018, Chetty et al. explained their study and findings in a post on Opportunity Insights. You can access all of the data tables used in the analysis at the following link as well. To read more click here.

New Article: The Last Call for Civil Rights: Toward Economic Equality

New Article: Yong-Shik Lee, The Last Call for Civil Rights: Toward Economic Equality, 37 GA. ST. U. L. REV. (forthcoming Spring 2021). Abstract below:

Over six decades have passed since the civil rights movement began in the mid-50s, but American society has not yet fully realized the promise of the civil rights movement, which at its core embodies the protection and promotion of equity and dignity of all people. Despite the historic improvements that accord the legal protection of equal rights among different races, genders, and ethnic groups, significant economic disparity among racial and regional lines persist. The reverend Martin Luther King, Jr., declared, “Now our struggle is for genuine equality, which means economic equality,” but the pursuit of economic equality has not been successful. Growing racial and regional economic disparities create a number of social, economic, and political problems in American society and pull America away from the ideals of the civil rights movement. Structural economic problems in the United States, such as persistent income and wealth disparities along racial lines and chronic poverty prevailing in many regions, have exacerbated inequality that divides the country. A fundamental paradigm change is required to meet this challenge. Racial and regional economic disparities can no longer be overcome solely by individual efforts and self-reliance. The federal government must address racial and regional economic disparities by facilitating economic development for minorities and economically-depressed areas, in close cooperation and coordination with state and local governments as well as the private sector. Successful economic development that bridges racial and regional economic disparities must be achieved before America can fully meet the objectives of the civil rights movement.