Abstract:

This essay, written for the Econ Journal Watch symposium, “Property: A Bundle of Rights?,” addresses a dispute among the critics of the “bundle” conception of property: does defining the core essence of property as the right to exclude avoid the disintegrating effects of the bundle conception? Thomas Merrill and Henry Smith believe so, and they have developed an extensive literature modeling how their “exclusion conception of property” achieves determinacy and information-cost efficiencies in property law. This essay contends that this is a false promise. Merrill and Smith are correct that the bundle conception is wrong, but their model of how the right to exclude functions in practice -- what they call the “exclusion strategy” -- does not account for the majority of property doctrines raised in real-world lawsuits. Despite the emphasis on trespass and conversion doctrines within academic scholarship, most property disputes are not situations in which a property-owner seeks to exclude a stranger from one’s land or chattel; rather, most property disputes arise from sustained and substantial ex ante relationships between individuals concerning the use, possession or disposition of a valued asset or resource. Merrill and Smith claim that these "governance strategies" function only at the "periphery" of property law, but in practice this is simply not true, including even in trespass cases, which supposedly represent the exclusion strategy par excellence.  This essay briefly explores this insight by detailing how the exclusion conception of property fails to account fully for this heterogeneity in real-world property disputes, Although the elegant reductionism of the exclusion conception of property makes it theoretically appealing, lawyers and economists should be wary of its promise of determinacy in saving property from the disintegrative effects of the bundle conception.

Abstract:

The strengths and weaknesses of federalism have been debated for centuries. But one major possible advantage of building decentralization and limited government into a constitution has been largely ignored in the debate so far: its potential for reducing the costs of widespread political ignorance. The argument of this paper is simple, but has potentially important implications: Constitutional federalism enables citizens to “vote with their feet,” and foot voters have much stronger incentives to make well-informed decisions than more conventional ballot box voters. The informational advantage of foot voting over ballot box voting suggests that decentralized federalism can increase citizen welfare and democratic accountability relative to policymaking in a centralized unitary state.

Ballot box voters have strong incentives to be “rationally ignorant” about the candidates and policies they vote on because the chance that any one vote will have a decisive impact on an electoral outcome is vanishingly small. For the same reason, they also have little or no incentive to logically evaluate the information they do know. By contrast, “foot voters” choosing a jurisdiction in which to reside have much stronger incentives to acquire information and use it rationally; the decisions they make are individually decisive.

Political ignorance is far from the only factor that needs to be considered in determining the degree of centralization in political systems. But it deserves greater attention than it has received so far.

Abstract:

This short comment responds to Michael Stokes Paulsen’s “The Uselessness of Constitutional Law”, http://libertylawsite.org/liberty-forum/the-uselessness-of-constitutional-law/, Paulsen makes the provocative suggestion that Constitutional Law be removed from the required curriculum at every law school in the country, and offered only as a Great Books/Great Cases elective. His goal is to foster a general liberal education that does not contribute to the corrupt, result-oriented culture of legal reasoning fostered by the Supreme Court and the legal professoriate.

This response to Paulsen suggests that if his entirely plausible accusations are valid, his proposed correction is simultaneously too bold and too timid. Too bold because it sacrifices an opportunity to help students become better lawyers. Too timid because it does not propose the kind of genuinely liberal education that would equip students to undertake a serious rethinking and reform of the degenerate culture that he condemns.

Abstract:

This toolkit contains the elements needed to understand the problem of medical malpractice in America today, and whether alternative dispute resolution (i.e., arbitration) clauses might be viable among other tort reform options.  The toolkit introduces medical liability as an intrinsic component of tort law, which itself must be understood as a part of private ordering if efforts at reform are to prove productive.  After providing an overview of the nature of tort, the nature of medical liability, and the nature of the alleged “crisis,” the toolkit indicates how reform has been attempted at the state level.  Particular attention is paid to efforts to encourage enhanced private ordering through alternative dispute resolution (“ADR”), both before and after alleged malpractice has occurred.  The toolkit identifies characteristics that make enforcement of such clauses more likely and points to a possible federal role in standardizing and publicizing viable arbitration clause drafting.  The toolkit also includes an up-to-date list of medical liability reforms in the fifty states, the only such list to exist in the country to the knowledge of the author.  Finally, the toolkit contains samples of current ADR efforts, and indicates which efforts are likely to be acceptable to the courts.

Abstract:

The concept of human dignity provides a useful reference point for evaluating American exceptionalism in the context of welfare rights. Since World War II, human dignity has emerged as the preeminent value in many modern constitutions and various human rights documents. Particularly in countries that have extensive welfare states, dignity is often about being part of the community, being protected and provided for by the government.  In America, however, political and legal discourse link dignity with individual rights and freedom from interference by the State. In this short Essay I explain how different concepts of dignity reflect fundamental disagreements about welfare rights and highlight aspects of American exceptionalism. The traditional American conception of human dignity may resist welfare rights, as can be seen in the current debate about whether and how government should expand healthcare coverage.

Abstract:

The U.S. Supreme Court’s “parcel as a whole” doctrine evaluates regulatory takings claims in the context of the landowner’s entire holding. The doctrine is predicated upon a largely arbitrary bifurcation, whereby the jurisprudence of regulatory takings is rooted in substantive due process, although the jurisprudence of physical takings is rooted in property law. Given its lack of a foundation in property law, “parcel as a whole” is both complex and uncabined.

The open-ended nature of “parcel as a whole” is reflected in current attempts to extend it under an asserted “unity of ownership” theory. Under this formulation, separate deeded parcels may be treated as one parcel for takings purposes, even if there is no common or overlapping ownership or common commercial enterprise as traditionally defined by property, partnership, or corporate law.

This Article asserts that the proper foundation for “parcel as a whole” is the common law doctrine of “appropriation to use.” It subsequently analyzes the “unity of ownership theory,” as it relates to coordinated development by separate owners of contiguous parcels. Under the Georgist “unity of ownership” view, value is created by society, which justifies government’s arrogation of the benefits of neighborly cooperation.

The Article concludes that “appropriation to use” clarifies analysis of the relevant parcel, and that “unity of ownership” undermines rules for determination of ownership established in real property, partnership, and business law. It thus is inimical to property rights, and, more broadly, hinders individual flourishing by depriving people of the fruits of social cooperation.

Abstract:

Good eating is the norm at the fictional dining table of Rex Stout’s great and overweight detective Nero Wolfe. It has been that way since Stout’s first Wolfe murder mystery, Fer-de-Lance, was published in 1934. From early on, Stout and his publishers were aware of the appeal of the fine-foods feature of the Wolfe stories — an awareness reflected most obviously in the commercial publication of two popular cookbooks, as well as in the much more limited and obscure publication of another cookbook of a sort. This article will (1) briefly examine the two commercial cookbooks; (2) take a slightly closer look at the other cookbook — really an odd but appealing, and certainly unconventional, recipe box dressed up to look like a book; and (3) present the entire contents of that other cookbook/recipe box in a more conventional bookish form.

Abstract:

The American presidential system, with its separation of powers, plausibly imposes enormous costs on the economy without compensating gains, as seen in the current gridlock over the debt crisis. Modern parliamentary systems of government, such as those in Britain and Canada, seem to handle such problems more efficiently. Regretfully, however, the principle of separationism has been extended in Supreme Court decisions and in the Senate filibuster, in part because of the mistaken idea that this is what the Founders intended. A close examination of the preferences of the delegates to the Philadelphia Convention of 1787 tells a very different story. Had they voted on our present regime of presidential elections, they almost certainly would have rejected it. This conclusion is buttressed by an empirical analysis of delegate voting patterns.

Abstract:

Nobody could have known it at the time, but when Rex Stout’s novella Justice Ends at Home was published in 1915, it foreshadowed not only the rise of two enduringly popular fictional heroes (Nero Wolfe and Archie Goodwin), but also the fall of one enduringly objectionable actual villain (Judge Martin T. Manton of the United States Court of Appeals for the Second Circuit). Leading scholars of the work of Rex Stout agree that the two main heroic characters in Justice Ends at Home — the flabby, phlegmatic, middle-aged Simon Leg and his sharp, energetic, youthful assistant Dan Culp — prefigured the fat Nero Wolfe and svelte Archie Goodwin who made their first appearance in Stout’s 1934 novel, Fer-de-Lance. As Stout biographer John McAleer puts it, “eighteen years before Fer-de-Lance was written, Wolfe and Archie already lived nebulously in the mind of Rex Stout.” Unlike Simon Leg and Dan Culp, Judge Fraser Manton — the main villainous character in Justice Ends at Home — has passed largely unnoticed by scholars of Stout and of the law. But the fictional Judge Manton is in fact a prefiguration of the infamous real-life Judge Martin T. Manton of the U.S. Court of Appeals for the Second Circuit. The similarities go beyond the names. Indeed, the two Mantons have enough in common to support an inference that Stout based his fictional Judge Fraser Manton on the real Martin Manton, although the real Manton would not become a judge until 1916 — the year after Justice Ends at Home was published. In other words, Stout’s selection of a corrupt Judge Manton for the lead bad-guy role in Justice Ends at Home was intriguingly prescient.

Abstract:

Novel legal questions raised by the war on terror and the evolving technology of warfare have highlighted the importance of executive branch legal interpretation, in particular how agencies address difficult questions about the scope and application of international law, often without review by Congress or the courts. This Article presents a public choice analysis of how the executive branch in the United States determines questions of compliance with international law. In contrast to theories that treat the state as a unitary entity, the public choice approach examines the different interests and incentives of the executive branch agencies that advise the President. These agencies frequently disagree about the content and application of international law and the executive branch often fails to coordinate these interests consistently. The unpredictability of the process encourages agencies to compete for control over international legal policy. Analyzing domestic inputs as well as coordinating institutions, the public choice approach considers how the “they” of the executive branch seeks to function as an “it.”

This leads to some distinct conclusions and predictions about international law compliance. First, it demonstrates some of the limitations of unitary state models, but also how public choice can be complementary to rational choice theories. Second, it predicts that competition to control central decision making will encourage agencies to use the indeterminacy of international law strategically. Agency officials benefit by keeping open the widest range of policy options consistent with international law. Finally, if government officials in other countries face similar incentives, this may provide an explanation based on sub-state actors for why international law does not exhibit the clarity and compliance often considered an aspiration for international law.

Abstract:

The labor theory of value is fundamental to John Locke’s justification for property rights, but philosopher Edwin Hettinger argued in an oft-cited article that it fails to justify intellectual property rights. In making this critique, though, Hettinger redefined Locke’s theory into a theory about proportional physical labor creating economic value, just as Robert Nozick, G.A. Cohen and other philosophers have done. In response, this article describes Locke’s labor theory of value and how Locke himself applied it to intellectual property rights. It does so by analyzing the actual text of the Second Treatise, including many oft-neglected sections, and by integrating Locke’s property theory within the context of his natural law ethical theory, as presented in An Essay Concerning Human Understanding and in other works. In its proper context, Locke’s concept of labor refers to production, which for individuals is both an intellectual and physical activity. His concept of value refers to what serves the flourishing life of a rational being, which is a conception of the good that is more robust than merely physical status or economic wealth. Locke’s own text and philosophical arguments answer the absurdities imposed on him by Hettinger, Nozick, Cohen and others. Even more important, understanding his labor theory of value explains why Locke approves of inventions in presenting his labor-based property theory and why he explicitly argues that authors have property rights (copyrights) in their writings, which are arguments that are seemingly lost on his modern critics.

Abstract:

This essay advances three propositions. First, Baker v. Carr and its early one person, one vote progeny were wrongly decided. Second, in light of the case law generated by these cases, Bush v. Gore was correctly decided. Third, even without Baker and its progeny, the decision in Bush v. Gore would still have been legally correct.

Justice Harlan proved the first proposition in his dissenting opinions in the early cases, and the majority never even made an effort to respond to his arguments and evidence. I have established the second proposition in a series of articles that have received a similar form of silent treatment from the legal academy. I believe that the third proposition is novel, and that everyone should agree with it even if they disagree about the first two.

Abstract:

In his first public statement as a political philosopher, Rousseau offered an intriguing aside:

            "Men will always be what is pleasing to women: if then you want them to become great and virtuous, teach women what greatness of soul and virtue is. The reflections this subject provokes, and which Plato made in bygone times, greatly deserve to be better developed by a pen worthy of following such a master and of defending a cause so great."

The reflections to which Rousseau refers are found primarily in Plato’s Laws, and were eventually developed by Rousseau himself in his Letter to D’Alembert on the Theater. This article takes a new look at the education of women in the Laws, and then shows how Rousseau made use of the dialogue in addressing a specific issue of political reform during his own time. The apparent inconsistency between some of Rousseau’s most important recommendations and those found in the Laws actually reflects a deeper agreement about the principles on which such reforms should be based. Those principles have largely been forgotten or implicitly rejected in our political and legal culture. They have not been proved wrong.

Abstract:

The Federal Circuit has famously called the doctrine of inequitable conduct an “absolute plague” that terrorizes patent owners. The penalty for inequitable conduct—rendering the patent unenforceable—is considered a draconian “atomic bomb.” Acting on this view, the court has repeatedly narrowed the doctrine to prevent over-deterrence.

In reality, the problem with inequitable conduct doctrine is not that the unenforceability penalty is overly harsh, but that it is upside down. When patentees conceal from the Patent Office highly damaging information that would have led to denial of the patent if known, a “penalty” of later rendering the same patent unenforceable—once the concealment is exposed—is no penalty at all, because the patent will be invalidated anyway. In this way, the practical penalty varies inversely with the culpability of the patentee: Concealing highly damaging information leads to no punishment, while concealing harmless information leads to the strong punishment of losing an otherwise-valid patent.

As the Article will explore, understanding the upside down nature of inequitable conduct leads to several implications. It explains why the conventional wisdom has come to its current state; why the conventional wisdom is nonetheless wrong; and what should be done to reform the doctrine.

Abstract:

When discussing search in patent law, everyone considers the problem in terms of producers looking for patentees. But search is reciprocal. In designing a patent system, we can have producers look for patentees, or patentees look for producers. Either will result in the ex ante negotiation that is the goal of a property system. The legal rule that produces the most efficient social outcome depends on identifying the party with the lower search cost.

The corollary is that patentees should have the duty of search when they are the lower cost searcher. For example, if there are thousands of patents covering a product, but only one producer in the industry, then it is likely to be more efficient to have patentees find the well-known producer to initiate licensing negotiations, rather than have the producer search for each of thousands of unknown patentees.

Abstract:

It said something about how far the United States had come – or how far it had fallen – in its first century: In April and May 1889, American newspapers exultantly reported that when President Benjamin Harrison traveled from Washington, DC to New York City for a centennial celebration of George Washington’s presidency, he rode in “the most gorgeous and best appointed train ever run in America, or in the world.” (That is the subject of the booklet reproduced below on pages 74-100.) The President’s train was “fitted up with every appliance that luxury could desire,” gushed the Los Angeles Times. The Chicago Railway Age declared, “royalty in Europe has never traveled with such completeness of luxurious appointments in a railway train as were afforded the President of the United States and his party.” The party included members of Harrison’s Cabinet, Chief Justice Melville Fuller and Justices Samuel Blatchford, Stephen J. Field, and William Strong (retired) of the Supreme Court, and several friends and relatives. There was a time – back in the Founding Era, around the turning of the 18th century to the 19th – when comparing the conditions under which American government leaders lived and worked to the decadent luxuriance of European nobility was the among the harshest of journalistic insults. But by the time of the Gilded Age – around the turning of the 19th century to the 20th – it could be high praise. And now, today – in the not-yet-named-Era-or-Age around the turning of the 20th century to the 21st – reporting on the travel luxuries of high government officials is a mixed bag, which might be taken to be a sign of more change, or that the more things change the more they stay the same, or that something ought to change.

Abstract:

Dynamic competitive forces are dramatically altering mobile markets in the U.S. and around the world.  Wireless networks, having sunk considerable capital in the creation of phone systems, must not only compete  among themselves for subscribers, but also need to form strategic alliances with emerging handset application platforms (HAPs) created by such firms as Research in Motion (Blackberry), Apple (iPhone), and Google (Android).  Current developments illustrate two fundamental aspects of innovation.  First, that innovations created by one set of investors may generate returns for complementary suppliers, either via coordinated activity (strategic platforms) or competitive rivalry (appropriation).  Second, that the efficiency of such ecosystems may be enhanced by market structure innovations that either extend vertical control or delimit it.  This runs counter to the prevailing popular and regulatory sentiment that “open” platforms offer categorically superior welfare outcomes than do “closed” systems – aka “walled gardens."

Abstract:

Researchers describing the discovery of something they are not equipped to fully understand run the risk that their reach will exceed their grasp. And so, as mere enthusiastic newcomers to the study of author Rex Stout, we will limit ourselves to: (1) reporting that we have run across an early (1916) detective story written by Stout and (2) sharing a few thoughts that would likely occur on first reading to anyone — and especially a lawyer — familiar with Stout’s later (beginning in 1934) detective stories featuring his Nero Wolfe and Archie Goodwin characters.

Abstract:

Wireless license auctions have successfully replaced “beauty contests” in many countries. Competitive bidding (1) puts spectrum rights in the hands of the most productive firms; (2) reduces rent-seeking costs; and (3) captures license values for the public, potentially reducing costly tax distortions. Economists and policy makers have asymmetrically focused on (3). Yet, the overwhelming consumer welfare gains are produced in output (retail services) markets, not by extracting revenues from the sale of spectrum inputs. This fact leads to powerful policy implications, supporting liberal policies that permit market rivals to (quickly) access abundant bandwidth.

Abstract:

The field of corporate governance has long considered the costs of the separation of ownership from control in publicly traded corporations and the regulatory and market structures designed to limit those costs. The debate over the efficiency of regulations designed to limit agency costs has recently focused on the SEC’s new rule requiring companies to include shareholder nominees on the company financed proxy statement to facilitate insurgent challengers to incumbent board members in board elections. A recent vein of empirical literature has examined the stock price effects of events surrounding the new proxy access rule. We present a study that focuses on small companies who expected an exemption from the rule under the Dodd-Frank legislation that preceded the adoption of the SEC rule. We consider the effect of the August 25, 2010 announcement of the proxy access rule, comparing its effect on the value of firms that expected to be subject to the full rule against its effect on the value of small firms unexpectedly given only a temporary exemption from part of the rule (Rule 14a-11) and no exemption from part of the rule (Rule 14a-8). Supporters of proxy access have long argued that it will enhance shareholder value. Critics of proxy access have argued that it will empower investors with conflicted agendas that will destroy shareholder wealth. The unexpected application of the rule to small-cap companies on August 25 provides a natural experiment for this question and allows us to examine the differential effect of the rule on firms above and below the arbitrary SEC cutoff of $75 million dollars in market capitalization. We find that the unanticipated application of the proxy access rule to small firms, particularly when combined with the presence of investors with a 3% interest able to use the rule, resulted in negative abnormal returns. We present multiple methods to measure that effect and demonstrate losses for our sample of roughly 1,000 small companies of as much as $335 million.