New Article: Lina Khan & Sandeep Vaheesan, Market Power and Inequality: The Antitrust Counterrevolution and its Discontents, Harv. L. & Pol’y Rev. (forthcoming). Abstract below:
One unexplored theme in the debate around economic inequality is the role of monopoly and oligopoly power. Despite the relative lack of attention to this topic, there is sound reason to believe that pervasive market power in the economy has contributed to extreme economic disparity in the United States today. Given the affluence of shareholders and executives compared to consumers in most markets as well as the power dynamics inside large corporations, market power, in general, can be expected to have significant regressive distributional effects. Case studies of anticompetitive practices and uncompetitive market structures in several key industries illustrate how large corporations have come to dominate the U.S. economy. On top of their market power, monopolistic and oligopolistic companies translate their economic power into political influence, often successfully pushing for laws and regulation that further enhance their clout and transfer wealth upwards. Pervasive market power in the economy, which appears to be contributing to economic inequality, is the result of an intellectual and political revolution in the 1980s that dramatically reoriented and narrowed the goals of antitrust law. Importantly, this counterrevolution can be reversed. We present a vision of antitrust that accords with what Congress intended in enacting “this comprehensive charter of economic liberty” and offer specific policy prescriptions.
New Article: Edward J. McCaffery, Taxing Wealth Seriously, SSRN Feb. 2016. Abstract below:
The social and political problems of wealth inequality in America are severe and getting worse. A surprise is that the U.S. tax system, as is, is a significant cause of these problems, not a cure for them. The tax-law doctrines that allow those who already have financial wealth to live, luxuriously and tax-free, or to pass on their wealth tax-free to heirs, are simple. The applicable legal doctrines have been in place for nearly a century under the income tax, the primary social tool for addressing matters of economic inequality. The analytic pathways to reform are easy to see once the law is properly understood. Yet our political systems show no serious interest in taxing wealth seriously. We are letting capital off the hook, and ratcheting up taxes on labor, at precisely a time when deep-seated and long-running economic forces suggest that this is precisely the wrong thing to do. It is time — past time — for a change. This Article canvasses a century of tax policy in the United States to show that we have never been serious about taxing wealth seriously, and to lay out pathways towards reform.
New Book Chapter: Martha T. McCluskey, Personal Responsibility for Systemic Inequality, in RESEARCH HANDBOOK ON POLITICAL ECONOMY AND THE LAW, Ugo Mattei and John D. Haskell, eds., pp. 227-45 (Edward Elgar 2015). Abstract below:
Equality has faded as a guiding ideal for legal theory and policy. An updated message of personal responsibility has helped rationalize economic policies fostering increased inequality and insecurity. In this revised message, economic “losers” should take personal responsibility not only for the harmful effects of their individual economic decisions, but also for the harmful effects of systemic failures beyond their individual control or action. In response to the 2008 financial crisis, this re-tooled message of personal responsibility promoted mass austerity in place of targeted financial industry culpability and penalty. By presenting unequal economic loss as the inevitable result of generally beneficial systems, this flawed logic concludes that the most legitimate response to systemic failure is unequal personal sacrifice, not political mobilization in support of stronger protection from unequal risk and plunder.
This chapter explores how this message weakened the majority report of Financial Crisis Inquiry Commission, despite its voluminous evidence of institutional problems. Further, it shows how this message inverts legal responsibility for devastating corporate wrongdoing, so that sacrifice by innocent victims appears to be more productive and proper than fair and meaningful law enforcement. Finally, I analyze how this troubling message is implicitly advanced in the seemingly progressive intellectual defense of equality by legal scholar Daniel Markovits. Markovits challenges the traditional personal responsibility argument that unequal poverty and insecurity stem from bad individual choices. Yet because he assumes that this inequality generally comes from benign institutions limited by natural scarcity, his reasoning nonetheless tends to suggest that responsible policy requires accepting substantial individual sacrifice by those who lose out. To instead revive the ideal of equality, we must go further to challenge the assumption that political economic structures and institutions regularly producing unequal and severe economic harm deserve submission rather than reform.