September 20, 2004

The Economists' Voice

Well, The Economists' Voice is now launched, with a small first issue. Now we get to begin the dynamic process of (a) finding a readership, (b) finding people who want to write, and (c) editing so that what appears on the website is *really* *good* and worth reading.

The Economists' Voice:

Editor: JOSEPH E. STIGLITZ, Columbia University

Co-Editors: BRADFORD DeLONG, University of California, Berkeley
AARON EDLIN, University of California, Berkeley

RECENT CONTRIBUTIONS:

Richard A. Posner, (September 18, 2004) Eldred and Fair Use

John Donohue, (September 18, 2004) Clinton and Bush's Report Cards on Crime Reduction: The Data Show Bush Policies Are Undermining Clinton Gains

Joseph Stiglitz, (September 15, 2004) The Parties' Flip-Flops on Deficit Spending: Economics or Politics?

J. Bradford DeLong, (September 15, 2004) Should We Still Support Untrammelled International Capital Mobility? Or are Capital Controls Less Evil than We Once Believed?


The gem of the issue* is a meditation by Judge Richard POSNER of the 7th Circuit Court of Appeals: his meditation on the recent Supreme Court case Eldred v. Ashcroft, on copyright, on the doctrine of "fair use," and on what it all means in the twenty-first century.

If I may be allowed to give a hasty, inaccurate, and incomplete caricature of Richard Posner's jurisprudence, he believes that federal judges should not be formalists but substantivists. Formalists believe that the mission of judges is one of applying the body of ancient common-law precedent and modern legislative enactment to do what the ancient common lawyers and the modern legislators said should be done--whether or not it makes substantive sense. If there is a problem, formalists say, that is up to the legislators to correct. Judges exist to decide cases in a way that one could easily predict from the letter of the modern statute (or of the ancient precedent). Substantivists, by contrast, believe that common-law judges have latitude to pick and choose among doctrines and to evolve the law in order to bring the black letter into accord with the just, fair, proper thing to do. In particular, Posner believes, the proper function of a common-law judge is to establish economic justice, as Posner understands economic justice to be.

When most people say "economic justice" they think of redistributing wealth from the rich to the poor--lowering rents, say, and imposing extra burdens on landlords, or partially compensating those horribly scarred by freak mischance. But Posner believes (rightly) that the judicial bench is the wrong place to do income redistribution--that should be left to the legislature. What the judge on the bench can and should do, Posner believes, is to be the advocate and enabler of commerce by doing whatever she can to reduce transactions costs in order to create the maximum opportunity for trade and its gains. Arrange the rules so as to maximize wealth--that is what Posner believes is the task of a common-law judiciary. Maximizing wealth will, of course, have distributional fallout. But fixing that cannot be done from the bench, and must be done by the legislators.

We have seen this most clearly over the past generation or so as Judge Posner has been one of those leading the charge to redefine antitrust law. In the old days the purposes of antitrust law were manifold: to keep monopolies from exploiting customers, yes, but also to protect small businesses from "destructive" competition, to make sure that customers had more than one supplier (even if that raised prices), and to create a level playing field for companies bidding for business. Posner and his compatriots changed things: now the purpose of antitrust law is to maximize consumer (and sometimes producer) surplus.

Now Posner is applying his long-held jurisprudential proposals to copyright law. The Sonny Bono Copyright Extension Act and its survival of its Supreme Court challenge in Eldred v. Ashcroft has created a situation in which transaction costs are enormous. Works almost never fall out of copyright. Almost all works that are still under copyright are useless to everybody: people who want to use and reprint them cannot easily find out who the copyright holders are, and people who own the copyright cannot easily find the people who would want to use and reprint the works. Posner's view--advanced here, advanced in a series of weblog posts on Larry Lessig's website, and advanced at greater length in a forthcoming article cowritten by Posner and Bill Patry in the California Law Review--is that America's common-law judges should "deem it 'fair use' to copy an old work whose copyright owner hasn’t taken reasonable steps to provide notice of his rights." This would practically eliminate all of what seem at the moment to be an enormous transaction cost hurdle, for in the aftermath of such a line of judicial decisions a registry or registries would spring up where copyright holders could cheaply take reasonable steps to provide notice, and where potential users could do their do diligence before reprinting old works under "fair use."

It is a brilliant and very interesting idea.

But that is only one of the four things we have on the plate.

John DONOHUE from Yale argues that Clinton-era anticrime progams that provided incentives to fund more cops on the beat had remarkably high benefit-cost ratios--and that the Bush administration is shooting itself in the foot by failing to build on and expand the funding of them. Why is the Bush administration doing this? It seems that there is (a) nobody who knows anything about the substance of crime control in a high place in the Bush administration, and (b) the high Bushies are alergic to anything Made by ClintonTM. But according to Donohue Clinton-era programs may be responsible for a six to eight percent decrease in crime.

Joe STIGLITZ from Columbia still remembers the days when Democrats were for deficit spending and Republicans were for balanced budgets, and he tries to understand how the two parties swapped places. Why the flip-flop? Joe says that it is because Democratic politicians have learned some economics, and because Republican economists have lost influence, and have failed to teach their political masters the difference between a good short-run and a bad long-run deficit. This piece leaves me frustrated: I want an explanation of why the Republican High Politicians are so feckless. Joe doesn't have an answer. But nobody else--especially no Republican economist--I have talked to has an answer either.

Least satisfactory in this first issue is this piece by this guy DeLONG from Berkeley, who continues to wrestle with his own conscience on the issues of the desirability of international capital mobility. "Fifteen years ago," he writes, "I found it easy to be in favor of international capital mobility — the free flow of investment financing from one country to another. Then it was easy to preach for an end to all systems of controls on capital that hindered this flow. Now it is harder." DeLong seems badly conflicted: he lays out all the reasons why the costs of international capital mobility have been much higher and the benefits much lower than he predicted fifteen years ago, but then reverses field as he concludes "a card-carrying neoliberal like myself still cannot wish for any but the most minor of controls to curb the most speculative of capital flows."


*I should say that these opinions are my own, and that Joe Stiglitz, Aaron Edlin, and the authors are most definitely *not* associated with them (unless they wish to be).

I should also say that anyone who wants to comment should indicate if they want us to consider the comment as a possible letter to the journal...

Posted by DeLong at September 20, 2004 02:08 PM | TrackBack
Comments

how can I possibly hold down a job with all this good stuff to read?

Posted by: P O'Neill at September 20, 2004 02:17 PM


Can everyone access this Journal, or only those with university access to BEPress journals? (I can't tell from my office computer ...)

Posted by: SteveB at September 20, 2004 02:37 PM

Intelligent as Posner is he has the tendency to go astray sometimes:

But if someone copies my copyrighted book, that doesn’t interfere with anyone else’s use of the book, or prevent my publisher from continuing to sell copies, though it may reduce his and my income.

Which is the whole point of IP - exclusion.

Posted by: a at September 20, 2004 02:42 PM

a writes:

"Which is the whole point of IP - exclusion."

Exclusion is a means, not an end. The end is maximization of total wealth. (My radical simplification of Posner's view.)

To elaborate a bit: Exclusion isn't a good all by itself. But if creators aren't rewarded, they won't create. So they are granted a limited power to exclude which they can trade for reward (i.e., they can sell their books or license their patents). Encouraging creative effort increases total wealth (i.e., we have more books and pharmaceuticals and what not), but granting creators the power to exclude decreases total wealth (i.e., there are lots of books I would read but can't afford to buy). If we strike the balance correctly we maximize total wealth.

Posted by: alkali at September 20, 2004 03:02 PM

Sounds very good but what's with that name?

1. Makes it sound like you run some supplement for The Economist.

2. Many economists (as indicated by the apostrophe), one voice?

Posted by: ogmb at September 20, 2004 03:06 PM

I look especially forward to Stiglitz's contribution as I just read a really awful debate that PBS hosted between Barro and Reich. Gwen Ifill tried to give Reich a few openings to counter what appeared to be Barro spinning - and Reich never picked up on them. Just posted over at Angrybear.

Posted by: pgl at September 20, 2004 03:09 PM

"Posner believes (rightly) that the judicial bench is the wrong place to do income redistribution--that should be left to the legislature."

I guess because poor people have so many lobbyists on K Street to promote their interests.

Posted by: joe at September 20, 2004 03:27 PM

At the risk of being a killjoy:

1. As far as I can tell, Stiglitz never actually answers his own question ("Is it all just politics?"). The statement on your website about what "Republican economists" have failed to do appears nowhere in his paper. I think that the abstract is woefully mismatched to the paper as a result.

2. From your own paper: "...the salary differential between the bureaucratic regulators and those they regulated is five to one." Shouldn't this be "one to five", ie, the regulators are poor and the regulated are rich? I believe that the same backwards ratio is present in the next sentence.

-PT

Posted by: PT at September 20, 2004 03:32 PM

The economic ground under our feet is shifting so swiftly, we are hardly able to grasp how much it is moving, all we know is the idea that something is going to be very different from now on.

This is why we are trying to "secure" Iraq for ourselves, so we have something, anything, to sell to the Chinese.

Economics isn't merely theory. It is the financial expression of political reality. The red ink America is spilling is like a patient hemorraging. A danger sign. Ignore it at your peril.

We can't fix this by trickery, either. This is what we have been doing for three years. Trying to pull levers and twist strings in an attempt to keep things going.

Posted by: Elaine Supkis at September 20, 2004 03:38 PM

http://www.washingtonpost.com/ac2/wp-dyn/A34235-2004Sep19?language=printer

September 20, 0224

As Income Gap Widens, Uncertainty Spreads
More U.S. Families Struggle to Stay on Track
By Griff Witte - Washington Post

Scott Clark knows how to plate a circuit board for a submarine. He knows which chemicals, when mixed, will keep a cell phone ringing and which will explode. He knows how to make his little piece of a factory churn hour after hour, day after day.

But right now, as his van hurtles toward the misty silhouette of the Blue Ridge Mountains, the woods rising darkly on either side and Richmond receding behind him, all he needs to know is how to stay awake and avoid the deer.

So he guides his van along the center of the highway, one set of wheels in the right lane and the other in the left. "Gives me a chance if a deer runs in from either direction," he explains. "And at night, this is my road."

It's his road because, at 3:43 a.m. on a Wednesday, no one else wants it. Clark is nearly two hours into a workday that won't end for another 13, delivering interoffice mail around the state for four companies -- none of which offers him health care, vacation, a pension or even a promise that today's job will be there tomorrow. His meticulously laid plans to retire by his mid-fifties are dead. At 51, he's left with only a vague hope of getting off the road sometime in the next 20 years.

Until three years ago, Clark lived a fairly typical American life -- high school, marriage, house in the suburbs, three kids and steady work at the local circuit-board factory for a quarter-century. Then in 2001 the plant closed, taking his $17-an-hour job with it, and Clark found himself among a segment of workers who have learned the middle of the road is more dangerous than it used to be. If they want to keep their piece of the American dream, they're going to have to improvise.

Figuring out what the future holds for workers in his predicament -- and those who are about to be -- is key to understanding a historic shift in the U.S. workforce, a shift that has been changing the rules for a crucial part of the middle class.

This transformation is no longer just about factory workers, whose ranks have declined by 5 million in the past 25 years as manufacturing moved to countries with cheaper labor. All kinds of jobs that pay in the middle range -- Clark's $17 an hour, or about $35,000 a year, was smack in the center -- are vanishing, including computer-code crunchers, produce managers, call-center operators, travel agents and office clerks.

The jobs have had one thing in common: For people with a high school diploma and perhaps a bit of college, they can be a ticket to a modest home, health insurance, decent retirement and maybe some savings for the kids' tuition. Such jobs were a big reason America's middle class flourished in the second half of the 20th century.

Now what those jobs share is vulnerability. The people who fill them have become replaceable by machines, workers overseas or temporary employees at home who lack benefits. And when they are replaced, many don't know where to turn.

"We don't know what the next big thing will be. When the manufacturing jobs were going away, we could tell people to look for tech jobs. But now the tech jobs are moving away, too," said Lori G. Kletzer, an economics professor at the University of California at Santa Cruz. "What's the comparative advantage that America retains? We don't have the answer to that. It gives us a very insecure feeling."

Posted by: anne at September 20, 2004 03:50 PM

Concerning what you (or Posner) state about copyright, that judges ought to rule in a way that encourages "...a registry or registries [to] spring up where copyright holders could cheaply take reasonable steps to provide notice..."

The Copyright Clearance Center already exists, but everything I ever looked up there was Horribly expensive - far too expensive to even consider paying the price to reproduce even a portion of the content. (www.copyright.com)

For example, suppose one wanted to reproduce some small portion of a 1960s Home Handyman or Woodworking magazine from Delta Communications; like the plans for a bed. A little research will show that the publishers expect $135.00 for one line quotations, even if used in a non-profit, single copy, academic dissertation! And the CCC/publisher is careful to tell you that this does not cover any images, graphs or charts that might accompany the text!

A little further research, looking at a magazine with a circulation of just over 10,000 per issue, shows the publisher wants $800.00 for a single line quotation. Other magazines (Model Railroader and other Kalmbach publications) state that any quote or usage is "a special order, subject to legal negotiations." Right!

So what's my point? Merely encouraging 'a registry where copyright holders could cheaply take reasonable steps to provide notice' is irrelevant, because the copyright holder is in the position to charge such extremely high prices. Who in their right mind would undertake to pay these amounts to reproduce an obscure, 45 year old work? But if one reproduces the work without permission, one is economically harming the publisher to the tune of $800 per line.... absurd!! So, such a registry (which already exists) does NOT 'practically eliminate all of what seem at the moment to be an enormous transaction cost hurdle.' On my view, it is NOT 'a brilliant and very interesting idea.'

(Hope you won't charge me for quoting you here!)

Posted by: tjallen at September 20, 2004 03:51 PM

sorry posted the wrong thread before. Anyway, I hope they approach Steven Roach. He's hit a real stride the last few weeks:

http://www.morganstanley.com/GEFdata/digests/20040920-mon.html#anchor0

Good Counterpoints to Brad on interest rates for what it is worth.

My big question. When has Greg Mankiw last been faced tough questions about the deficit? Does anyone have access to transcripts? I saw him on CSPAN a few months ago. He faced maybe three audience questions, said "What me worry?" and bolted for the door. Is there any theory here? What does the man have to say for himself?

Posted by: Michael Carroll at September 20, 2004 03:55 PM

Having skimmed the articles, which I will read closely this evening, I am well pleased. The Economist's Voice will be quite a fine resource.

Posted by: anne at September 20, 2004 04:33 PM

"Law! What do I care about the law? Ain’t I got the power?"

--Cornelius Vanderbilt

http://www.angelfire.com/wa2/buildingcathedrals/creaturecorporation.html

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justice:

1 a : the maintenance or administration of what is just especially by the impartial adjustment of conflicting claims or the assignment of merited rewards or punishments b : JUDGE c : the administration of law; especially : the establishment or determination of rights according to the rules of law or equity

2 a : the quality of being just, impartial, or fair b (1) : the principle or ideal of just dealing or right action (2) : conformity to this principle or ideal : RIGHTEOUSNESS c : the quality of conforming to law

3 : conformity to truth, fact, or reason : CORRECTNESS

--Merriam-Webster (online)

http://www.m-w.com/
------------------

"...Posner is the high prophet of "law and economics," a school of thought that derives legal principles from economic analysis, typically pointing at some established legal doctrine and declaring it nonsense. No area of the law has been more affected by law and economics than antitrust. Posner believes that "predatory pricing" (the monopolist's act of cutting prices to kill competition, as Microsoft is alleged to have done by giving away its Internet Explorer browser) can almost never exist. He has argued for only the narrowest kinds of antitrust remedies in only the narrowest kinds of antitrust cases. Asking Posner to mediate between Microsoft and the Justice Department is a bit like asking Saddam Hussein to oversee elections in Iraq...

...Some of Posner's greatest intellectual disdain is reserved for the "internationalists, multiculturalists, environmentalists, [and] sometimes vegetarians" on the academic left. He has little time for those who "pity murderers (and penguins, and sea otters, and harp seals) more than fetuses." But Posner's early résumé reads more like that of a vegetarian than a libertarian. He clerked for liberal William Brennan on the U.S. Supreme Court in 1962 at the height of Warren court activism and later worked at the Justice Department under Solicitor General Thurgood Marshall.

Posner's explanation for his change in perspective is disappointingly conventional: He says he was put off by the picketing, sit-ins, and violence he witnessed at Stanford while teaching there in the late '60s. In the spirit of law and economics, we should credit and/or tar him with motives that are more intellectual and/or self-interested than that. Whatever the cause, the transition was complete by 1973, when Posner published his seminal Economic Analysis of Law, shining the light of cost-benefit analysis into every dark corner of the law, from antitrust to racial discrimination to--of course--sex. Reading Posner on any of these subjects makes it difficult to shake off the mental image of the bemused libertarian rooted to the sticky floor of his local Safeway, fiendishly applying his cost-benefit quadratics to the Charmin in one hand and White Cloud in the other--while myriad little Posners hop around at home, praying for his return.

Ronald Reagan appointed Posner to the Seventh Circuit in 1981..."

--Dahlia Lithwick

Slate, Nov. 24, 1999:

http://slate.msn.com/?id=56526


------------------

"The public be damned."

--William Vanderbilt

http://www.stfrancis.edu/ba/ghkickul/stuwebs/bbios/biograph/vanderbi.htm

Posted by: Mike at September 20, 2004 04:35 PM

Go, go Brad, GO!

Posted by: El Gringo at September 20, 2004 04:45 PM

The list of columnists is really impressive.

Any chance the BEPress could get an RSS feed going to know when new columns are posted?

Posted by: zzi at September 20, 2004 04:49 PM

Posted by alkali:
To elaborate a bit: Exclusion isn't a good all by itself. But if creators aren't rewarded, they won't create.

Exclusion is an essence of property - physical or intellectual. My point is that Posners's suggestions (extending the fair use) are a pipe dream since they
conflict with the interests of the IP business.

Posted by: a at September 20, 2004 05:24 PM

Um, wouldn't those copyright holders make a lot more money if they charged a buck ninety-five for use? A hundred uses at a small price is better than none at a large one.

Posted by: Paul at September 20, 2004 05:59 PM

Yet another awesome publication to take up my reading time.

Congratulations on this, Brad. It looks like it's going to be something!

Posted by: Brian at September 20, 2004 06:30 PM

Nice. I would suggest putting up an HTML version of the articles for those of us who find it clunky and awkward to have to look at a pdf.

Posted by: rps at September 20, 2004 07:08 PM

Washington Monthly March, 2000

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The Federalist Society: The Conservative Cabal That's Transforming American Law

By Jerry Landay


One afternoon in November 1999, only a few weeks after leaving the Office of the Independent Counsel, Kenneth Starr relaxes happily in the lobby of Washingtonıs Mayflower Hotel. The hotel is hopping. Eight hundred lawyers have converged from all over the country for a convention--three days of celebrity gazing, brisk intellectual discourse, and hard-headed networking. It is the annual lawyersı meeting of the Federalist Society--a conservative legal fellowship to which Starr belongs--and he is in his element. The former special prosecutor is surrounded by a small group of gray-suited young "Feddies," who introduce themselves, conduct short interviews, whisper words of homage, or simply stare in awe. Starr beams--clearly enjoying this moment of adulation.
On friendly turf now, Starr may also be projecting feelings of gratitude. For as Joe Conason and Gene Lyons demonstrate in The Hunting of the President (see excerpts on pages 17-18), Starr and the OIC benefited enormously from the efforts of a network of well-placed lawyers who, like Starr and other Republican luminaries, are members of, or linked to, the Federalist Society. Most of the self-styled "elves" who helped Linda Trippıs tapes find their way into Kenneth Starrıs hands had links to the Society. And without the elvesı handiwork plus the leaks, coaching, and sheer brainpower contributed by the extended Federalist network, Starrıs investigation might never have gotten out of the blocks.

Tonight at the Mayflower you get a sense of just how powerful and far-reaching the Society is. There are stars from every corner of the Republican establishment in the room. From snippets of conversation, one concludes that they are joined not only at the ideological hip but by a collective hatred for President Clinton--perhaps more for standing in the way of their Revolution than for any moral or legal lapses. Members of Starrıs old team like constitutional law advisor Ronald Rotunda (who counseled Starr that he could indict a sitting president) rub shoulders with old-timers from the Reagan administration--former Attorney General Edwin Meese, Solicitor General Charles Fried, and Civil Rights commissioner Linda Chavez--and with former Bush White House Counsel C. Boyden Gray. The room bulges with partners from among the most powerful law firms in the land: New Yorkıs venerable Sullivan & Cromwell; Chicagoıs Kirkland & Ellis (Starrıs outfit); Washingtonıs own Wilmer, Cutler & Pickering (Grayıs firm); and Los Angeles powerhouse Gibson, Dunn & Crutcher (its Washington office is home to Theodore Olson--whose contributions to Starrıs efforts are colorfully documented in the Conason and Lyons excerpts referred to above).

And then there are the judges. No fewer than eight federal judges, most of whom are still active on the bench, will sit on panels or speak from the podium during this three day affair. Their discussions range from the technical to the deeply ideological. Former federal judge Robert Bork comments on the "inertia" and "weariness" he has observed in American liberalism--themes drawn from his recent book, "Slouching Toward Gomorrah." And Supreme Court Justice Clarence Thomas attacks the American Bar Association for being too socially conscious--advancing a slate of liberal positions "that go beyond representing the interests of lawyers as a profession."

The event has an intensely energetic feel. With the White House again within reach, the Mayflower is wrapped in a bubble of great expectations. And why not? The Societyıs mission is to advance a conservative agenda by moving the countryıs legal establishment to the right, and they are succeeding. Despite eight years of a Democratic administration, the impact of the Reagan Revolution continues to reverberate in the nationıs courts. (See "The Gipperıs Constitution," December 1999.) And now one of the legal theories the Federalists are pushing could make regulation by federal agencies unconstitutional in some cases and--if carried to its logical extreme--be the Federalistsı crowning achievement in their unspoken campaign to change the face of law and politics in America.

Who are they?

With 25,000 members plus scores of close affiliates nationwide--including Supreme Court Justices Thomas and Antonin Scalia, Senate Judiciary Committee Chairman Orrin Hatch, and University of Chicago brain-boxes Richard Epstein and Frank Easterbrook (also a federal appellate judge)--the Federalist Society is quite simply the best-organized, best-funded, and most effective legal network operating in this country. Its rank-and-file include conservative lawyers, law students, law professors, bureaucrats, activists, and judges. They meet at law schools and function rooms across the country to discuss and debate the finer points of legal theory and substance on panels that often include liberals--providing friction, stimulus, and the illusion of balance. What gets less attention, however, is that the Society is accomplishing in the courts what Republicans canıt achieve politically. There is nothing like the Federalist Society on the left.

The Societyıs origins can be traced back to 1979--the year before Ronald Reaganıs victory--when a legal scholar named Michael Horowitz published a tract on the public-interest law movement, exhorting conservatives to overturn a half-century of liberal dominance of the legal establishment. This could be done, he wrote, by indoctrinating or winning over succeeding generations of law students, lawyers, and judges. By definition, the campaign had to be rooted in the fertile ground of law schools. To Horowitzıs good fortune, Reagan was elected in 1980, and his administration set to work filling the sails of the Federalist movement.

Horowitzıs concept was taken up with relish by senior members of the new Administration. They operated on two tracks--designed to insure that the Reagan Revolution would well outlast the Reagan Presidency. The first, to reclaim the Federal courts from liberals, swept an array of conservative scholars and judges from law schools and state courts onto the Federal bench: the likes of Robert Bork, Ralph Winter, Antonin Scalia, Richard Posner...

http://www.washingtonmonthly.com/features/2000/0003.landay.html



Posted by: Mike at September 20, 2004 07:11 PM

Unrestricted capital flows would be an unqualified good in an ideal world, just as they are within the borders of the United States of America. For any given distribution of capital resources, it leads to the greatest happiness of the greatest number, which is the very definition of economic efficiency. However, we live in a world that is far from ideal -- a lopsided world that, for historical reasons, is divided into two groups of countries: one that has gradually, over generations, through means both fair and foul, managed to accumulate great quantities of capital, along with the incomes and living standards such accumulations make possible; and another group that, for a variety of reasons, has managed to accumulate very little. In such circumstances, to suddenly tear down the barriers that have allowed such vast disparities to build, makes about as much sense as dynamiting a damn in order to return a watershed to its natural condition. The remedy will cause as much damage and disorder in the lives of the people living above the damn as those below. Far better to gradually lower the damn, taking care to mitigate the harm that is done in the process, by compensating the losers out of the gains of the winners. This is elementary, my dear Watson. The alternative is war.

Posted by: Luke Lea at September 20, 2004 07:26 PM

This is quite excellent. I have but one request: HTML in addition to pdf? That would be truly wonderful.

thanks

Posted by: efficient frontier at September 20, 2004 07:33 PM

"Our Constitutional and judicial processes will surmount almost anything but dogmatic views developed wholly outside the system."

--Lawrence Walsh

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More from:

The Federalist Society: The Conservative Cabal That's Transforming American Law

By Jerry Landay

Washington Monthly March, 2000

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"...A year after founding the first student chapters in 1982 at Yale and University of Chicago law schools, student leaders received $25,000 for their first national symposium, the seed money coming from the Institute for Educational Affairs, overseen by the influential neoconservatives William Simon and Irving Kristol. By 1998, the annual contribution total had soared a hundredfold to $2,600,000--a third from core conservative underwriters like the John M. Olin Foundation, the Sarah Scaife Foundation, the Lynde and Harry Bradley Foundation, and the Lilly Endowment, whose sustained patronage has nurtured the tightly linked constellation of think tanks and advocacy groups that form the spine of the conservative movement. Under Simonıs leadership, the Olin Foundation is a principal patron of the Federalist speakers bureau. It has also been active at the level of law school faculties: By providing grants to fund visiting professorships in law and economics, it opens doors to academics who are likely to be sympathetic to the Societyıs agenda. In 1999, Microsoft for the first time gave the Federalist Society $75,000. "The Microsoft case: Legal and Political Implications" was a featured panel topic in Federalist meetings.

As its wealth has increased, so have the Societyıs membership rolls. In 1983, there were 17 Federalist chapters based solely at law school campuses. Today, there are lawyersı chapters in some 60 cities, and student chapters on 140 out of 182 accredited law school campuses. Law students constitute more than half the total membership. The Society has opened a drive to recruit more professors. Young recruits are attracted by ideology and ambition--the promise of joining alumni such as Otis, McIntosh, and Abraham in the highest reaches of power politics. In 1997, a full $560,000--one-quarter of the Societyıs budget--underwrote the high-visibility programs organized by the Societyıs well- endowed national speakers bureau, whose outreach reinforces recruiting efforts on campus. Prominent campus ambassadors include Charles Murray, author of The Bell Curve, Abigail Thernstrom, author of America in Black and White, and Dinesh dıSouza of the American Enterprise Institute. Leaders of right-wing activist organizations also travel the campus circuit, the Federalist cover softening their right-fringe reputations (see "Provocation 101").

But the Federalists are not just about recruiting young bodies. They are also active in shaping the law.

Perhaps the networkıs most far-reaching victory in recent years was a 1999 decision by a Federal appellate panel of DC Circuit judges in a case called American Trucking v. EPA , which stunned clean-air advocates by rolling back EPA standards covering smog and soot. The decision was based on the principle of "non-delegation," a rigid and archaic reading of the Constitution, which holds that Congress retains all legislative authority, but not the power to delegate regulatory power to executive agencies. C. Boyden Gray, a member of the Federalist Societyıs Board of Trustees, filed a friend-of-the-court brief in American Trucking. Gray was also good enough to share his insights on non-delegation with the Federalist convention in November when he moderated a panel discussion entitled: "The Non-Delegation Doctrine Lives!"

One extraordinary thing about the American Trucking decision was just how well it served private industry at the expense of the public interest. A commentator writing in a Federalist Society newsletter crowed that American Trucking will save industry "in the neighborhood of $45 billion per year." Perhaps that is true--and perhaps industry would save even more money if the courts decide to eliminate, for example, the Food and Drug Administrationıs jurisdiction over food and drugs. But the social costs would be enormous...

"...A major factor in the Societyıs success has been the composition of the federal bench. (There are still more sitting Republican than Democrat-appointed federal judges.) One reason is that the gatekeeper to the federal judiciary is Republican Sen. Orrin Hatch--who happens to co-chair the Federalist Board of Trustees (with Robert Bork) at the same time as he chairs the Senate Judiciary Committee. As such, he is chief blocking back for delay-oriented Senatorial Republicans on the confirmation of President Clintonıs judicial nominations. With as many as four Supreme Court justices approaching retirement in the relative near term, Hatch has the judicial implications of the 2000 elections very much in mind. In the past, he has made so-called "judicial activism" a litmus test for Democratic appointees. Applying that theme to the upcoming elections, he has warned that placing nominations in the hands of a "far-left" Gore or Bradley would bring about "a sea change in the law to the detriment of every family, every religion, every person of conscience."

Retired federal judge Lawrence Walsh, who screened judicial nominees as deputy attorney-general for the Eisenhower Administration, declares that the Federalist subtext of Hatchıs statements goes over the line: "By his very statements, Hatch supports my concern that the attack on judicial activism is a political attack; and an organization devoted to that [the Federalist Society] is thereby a political organization," says Walsh. "Our Constitutional and judicial processes will surmount almost anythingŠ but dogmatic views developed wholly outside the system."

Walsh is speaking of the federal courts here, but his caution applies equally to developments in certain states. Consider what has happened in Michigan, where Governor John Engler and five of the seven justices of the state Supreme Court are Federalist members--including Steven Markman, a Reagan official and former head of the D.C. Federalist Society chapter. According to a recent survey, in 20 cases before that court pitting private citizens against insurance companies and corporations, the Michigan Supreme Court decided against individual plaintiffs 19 times. During the previous year, when moderates held a 4-3 majority, individuals won 22 of 45 cases.

Law, politics, or both?

Funnily enough, despite all that its members and affiliates have done in the service of the conservative cause, the Federalist Society is decidedly reluctant about claiming credit for its impact out in the political world.

"We do not touch partisan politics in any way shape or form," says the Societyıs executive director Eugene Meyer. "We do not lobby. We are a forum for ideas, discussion, and debate."

Meyer has financial reasons to say this: The Societyıs tax-exempt status requires it to stay away from political activity. But to call the society apolitical is a bit of a stretch, says Alfred Ross, whose Institute for Democracy Studies tracks right-wing organizations and will soon publish a report on the Federalist Society. Ross points out that strategizing and working to change the law is an inherently political act. The Society "pollinates, permeates, and shapes the rhetoric and the debate about the law itself" says Ross. "To the extent that the judicial system is how a democratic society is organized, of course the Federalists are political."

To see that heıs right, one need only review changes that litigators linked to the Federalists have wrought upon the law. They have weakened or rolled back statutes on civil rights and affirmative action; voting rights; womenıs rights and abortion rights; workersı rights; prisonersı rights; and the rights of consumers, the handicapped, and the elderly. Add to that the consequences of non-delegation if further extended. Regulatory oversight by federal agencies would then be kicked back to Congress and the states--like the power to preserve open pipelines in telecommunications, to regulate transportation, the drugs we take, the food we eat. Would we really want elected officials directly responsible for regulating industries that are also major sources of their campaign funds? That is very much a political question--one to which the Federalist Societyıs answer is unfortunately all too clear."


http://www.washingtonmonthly.com/features/2000/0003.landay.html

Posted by: Mike at September 20, 2004 07:51 PM

After reading the DeLong and Stiglitz pieces, I think I learned two things. First, any contemporary macro theorist whose models do not begin with at least two cagetories of people, the wealthy and the not-wealthy, will likely reach erroneous conclusions. Second, if the rich decide that they are not willing to share with the rest of us, things are going to hell in a handbasket.

Did I get that right?

Posted by: Michael Cain at September 20, 2004 09:38 PM

"In particular, Posner believes, the proper function of a common-law judge is to establish economic justice, as Posner understands economic justice to be."
This is at least a bit misleading- it's not at all clear that Posner has anything like a plausible theory of economic justice- It's more likely that he thinks the very idea of "justice" is just someone's emotional outburst, much like Holmes. If he has such an idea at all, it's probably Kaldor-Hicks efficiency, which is no idea of justice in any plausible senes. I think this whole thing underestimates the extent that Posner is really a radical who, again like Holmes, largely believes that might makes right and let the devil take the hind-most. I completely fail to understand some of the left's infatuation w/ Posner- he's neither as original nor as good a think as most thinks, and he's a rabid right-winger on economic policy.

Posted by: Matt at September 20, 2004 09:51 PM

Did all of you pony up the $50 subscription price, or did I miss a place to read some of the articles for free?

And speaking of that subscription price, did Brad stop to think that it's more than twice what The New Republic charges for its online subscription? If memory serves, it's also more than Foreign Affairs, or Foreign Policy, or The National Interest. It's about the same as a reasonably discounted subscription to The Economist. (Just checked Foreign Policy; it's $24.95 for two years.)

I think Brad's publication is priced as if it's part of the academic market but reads as if it's in the policy market. Looks like a mistmatch.

(Personally, based on things such as number of articles and breadth of coverage, I would pay about half as much for TEV as for TNR.)

Nice idea, pity about the price.

Posted by: Doug at September 21, 2004 12:56 AM

If this policy journal is free it will be successful, for the articles will be widely traded. If there is a $50 charge, the journal will not be a success. I hope there will be no charge.

Posted by: lise at September 21, 2004 04:01 AM

But, Matt at September 20, 2004 09:51 PM:

How can Judge Richard Posner simultaneously be a "radical...rabid right-winger on economic policy" AND also "right"--according to self-described "left-leaning economist" Brad DeLong? It just doesn't "compute". You're not deliberately TRYING to make those of us who actually READ this stuff "dyslexic"...

(ARE you :?)

Posted by: Mike at September 21, 2004 04:02 AM

Thanks for setting this up. It's really cool!!

Posted by: umair at September 21, 2004 05:17 AM

The articles are excellent, but I surely think this on-line publication should ask donations from those who can donate and be free to others.

Posted by: anne at September 21, 2004 06:06 AM

How about a cheap per-issue or per-article rate?

Posted by: Matt at September 21, 2004 06:55 AM

One nit to pick: one does due diligence, not "do diligence."

Posted by: Tim Francis-Wright at September 21, 2004 07:00 AM

Posner definitely gets a chapter in the most overrated intellects book, but I have a question:

"But Posner believes (rightly) that the judicial bench is the wrong place to do income redistribution--that should be left to the legislature."

Where does Posner talk about income redistribution in the legislature being something desireable?

Posted by: david at September 21, 2004 09:37 AM

Regarding the "caricature of Richard Posner's jurisprudence, ... that federal judges should not be formalists but substantivists.

Formalists believe that the mission of judges is one of applying the body of ancient common-law precedent and modern legislative enactment to do what the ancient common lawyers and the modern legislators said should be done--whether or not it makes substantive sense. If there is a problem, formalists say, that is up to the legislators to correct.

Substantivists, by contrast, believe that common-law judges have latitude to pick and choose among doctrines and to evolve the law in order to bring the black letter into accord with the just, fair, proper thing to do."

Interesting. That would seem to assume several unstated concepts that I would expect a social democrat to challenge:

1) That a single mind (that of a judge) is better able to resolve a contemporary problem than a consensus of minds (a legislature). Or, at least, the judge's mind is often -- if not always -- better; or often quicker if not better; or often willing or required to resolve such problems while a legisilature is unwilling or unrequired. In any case it assumes that the value of consensus problem solving via legislation is less than the value of unilateral problem-solving via judicial fiat.

2) It seems to assume that black letter law (as a product of legislators) is unnecessary. After all, the historical precedent of rabbinical interpretation and application of the ancient Torah 600 or so "laws" to every conceivable aspect of human behavior proves that a limited number of initial principles is all a judge needs. First determine the just and righteous outcome, THEN pick and choose among the laws, splitting hairs where ever needed, to "justify" the justice.

3) It assumes either that (a) a judge-for-life, unaccountable to either the marketplace or the electorate, is better at satisfying public policy needs than paid arbitrators or elected officials, or (b) that judges are or should be accountable to the public for their decisions via election or hire on some term-limited basis.

4) It seems to assume that disputes between jurisdictions are less likely, or more easily resolved, via judicial appeal procedures than by legislative (see number 1) or "federal". That is, if circuit two interprets policy A as "A+" while circuit nine interprets policy A as "B", then an appeal to a higher court is a better process for reconciliation than letting each stand in parallel, or letting voters and their representatives seek a compromise.

Obviously there is something more elaborate going into the distinction between formalists and substantivists than Our Host presents in his caricature, but that introduction provides a fascinating spark to discussion...

Posted by: pouncer at September 21, 2004 10:07 AM

Another vote for HTML. Here's Jakob Nielsen on PDF ("Unfit for Human Consumption"):
http://www.useit.com/alertbox/20030714.html
"Summary:
Users get lost inside PDF files, which are typically big, linear text blobs that are optimized for print and unpleasant to read and navigate online. PDF is good for printing, but that's it. Don't use it for online presentation."

Posted by: Anna at September 21, 2004 12:40 PM

In you article, you suggest that the relaxation of capital controls has led to a lessening of corruption, as scarce permits to import capital no longer go to those with connections. On the other hand, you point out that the disparity in salary between financial regulators and the industry makes it difficult to regulate the financial system (presumably becuase of corruption).

Could you resolve this apparent contradiction? Also, do you have any empirical evidence that corruption has declined in countries that have relazxed capital controls. Perhaps some sort of panel data study? Or is this claim a sort of "stylized fact".

As the conclusion of your paper rests on the benefits of reduced corruption, I think this is an important point to elucidate.

Posted by: Anon at September 21, 2004 01:24 PM

I read the Posner article about copyright and Fair Use but I don't think I get it. In an age where huge corporations own the copyrights to 99.9% of copyrighted works, he's saying that somehow we're going to be able to use the fair use doctrine to be able to access copyrighted works that have not been registered on some list. Even if a work has 0 value, a corporation is still going to register it on that list because it's probably going to be free for them to do so (or so low cost as to be insignificant) and they can have a computer re-registering all of their copyrights continuously as soon as they expire. Maybe I missed something but that doesn't seem like it leaves very many works out there available for "fair use". It would be interesting to see someone write an article about what is going to happen when copyright becomes unenforcable. What are copyright holders going to do when totally anonymous peer-to-peer file sharing networks evolve (with no possiblity of tracing who is sharing what) and everyone has access to fat-pipe broadband connections. I have a feeling that content creation will flourish even then because the most innovative content producers today are not doing it for the money and they will continue to produce long after incentives are gone and all of the people who can't or don't produce art because of copyright barriers will be able to do so.

Posted by: Shane Wealti at September 21, 2004 01:58 PM

Brad’s article, “Should We Still Support Untrammeled International Capital Mobility?…” starts with the hopeful admission that he and other supporters of such a notion may have been mistaken.

But in the end, Brad takes the Jack Nicholson defense (Maybe this is as good as it gets!), suggesting that all that proves prudent are “the most minor of controls to curb the most speculative of capital flows.”

Perhaps Brad is right. But I wonder if Paul Davidson, Geoff Harcourt, Joseph Stiglitz, Herman Daly, (others?) would agree that such “most minor” controls are what we now need.

Maybe we are asking the wrong question, and instead of minor controls on extant systems we need a new look at and restructuring of the worlds capital systems themselves.

All proves especially intriguing if we are indeed dealing with complex dynamic open systems (tending more often toward disequilibrium than equilibrium), cumulative causation, and more.

See, e.g. G.C. Harcourt, 9/27/2004, “What would Marx and Keynes have made of the happenings of the past 30 years and more,” (Post-Autistic Economics Review: 27):

http://www.btinternet.com/~pae_news/review/issue27.htm

If the foregoing hyperlink fails due to a requirement for a “free subscription,” subscribe to the Post-Autistic Economics Review at:

http://www.paecon.net/

Posted by: Dabbler Dave at September 21, 2004 02:54 PM

Giving a place of honor to Posner actually is encouraging, despite my antipathy for most of his work. He isn't a formalist in the Langdellian sense, but remains a neo-formalist like much of law and economics, replacing the divination of eternal principles from musty law books with the assertion of eternal principles from Lawyers' misreadings of musty economists.

Still, he should be engaged, and his ideas dissected and discussed. What would be really fascinating is a contribution from one of several left practitioners of law and economics, ranging from Calabresi to Duncan Kennedy to Mark Kellman or (occasionally) Gary Peller.

Posted by: Dave M at September 21, 2004 03:53 PM

Aside to Anna: Nielsen is incorrect, especially as Adobe 6.0 has made massive strides in the areas about which he complains. FAR easier to read--remember PORTABLE Document Format--than html.

Letter of Comment:

Congratulations on the first issue; less detail than I expected, but that arguably makes the articles more accessible. Such accessibility is not without a price, though; your contributors occasionally make statements without context.

For example, John Donohue suggests that Timothy McVeigh "killed 168 Americans in Oklahoma City to protest the infringement of his Second Amendment 'rights' when Clinton signed the porous 1994 ban." This will come as a surprise to many, unless one takes at face value McVeigh's citation of "actions by the Bureau of Alcohol, Tobacco, and Firearms to enforce the gun laws in Waco, Texas" (http://www.net-benefits.net/spiders/topic/5114-1.html) without considering the method of ATF enforcement.

Otherwise, one might as easily conclude that McVeigh's love of movies such as "Contact" (cited by the Terre Haute Tribune-Star at http://specials.tribstar.com/mcveigh/june9profile.html) caused his actions. Given McVeigh and John Hinckley, I expect to see a future Donohue article on the deleterious effect of Jodie Foster on crime.

Similarly, Joseph Stiglitz suggests parenthetically of the 1993 deficit reduction that "it may have been the case that the economy was already on an upturn, and deficit reduction only slowed the recovery down." The first part of that statement is clearly true, but one has to wonder what evidence Stiglitz has that "Longest Peacetime Expansion in History" (http://www.clintonpresidentialcenter.org/legacy/030599-fact-sheet-on-longest-peacetime-expansion.htm) was slowed. The subsequent paragraph's suggestion that Fed intervention in the Bond market might have worked is belied by the result of the 2000 buyback, which was an inversion of 10- and 30-year rates and a converted move in the markets and especially by lenders to using the 10-year Treasury as their "benchmark," as well as the Fed's use of Fannie Mae and Freddie Mac bonds by the Fed in its open market operations.

If Stiglitz intends to suggest that the deficit need not have been cut in 1993, he needs to present a more plausible scenario. It would also be appreciated if he could rationalise the suggestion that the deficit need not have been cut with the public statements of several members of the Clinton administration that the deficit was a primary inhibitor to any attempt to, for instance, provide a "Marshall Plan" for the countries of the former Soviet Union that might have mitigated the current situation.

If the Clinton administration taught us anything, it is that an infrastructure of support and solid financial basis are both necessary for effective policy initiatives. (The current administration reinforces this lesson by omission.) Stiglitz's glib parenthetic, and subsequent dismissal of the presumption of a positive correlation ("link") between deficit reduction and "the ability to lower interest rates," neglects both that lesson and the fundamental rule of economics that even an old Sinclair Lewis supporter such as Robert Heinlein could explain: There is no such thing as a free lunch.

I look forward to his future article delineating the econometric model that would have sustained the 1992 deficit (in size or percentage terms), controlled interest rates, and supported economic expansion at least as well as the historic record, but suspect I will have to wait a rather long time.

I have not yet read the rest of the initial issue, but look forward to its other stimulating articles.

Ken Houghton

Posted by: Ken Houghton at September 22, 2004 07:05 AM

Brad, can't you tell whomever is in charge of these things that html-tags shouldn't be included in the title of the webpage - it's a bit distracting to read "<i>Eldred</i> and Fair Use" in the top of the browser.

Posted by: Kristjan Wager at September 22, 2004 01:26 PM

Too bad Stiglitz didn't offer Brad the opportunity to rebut. (You would rebut, wouldn't you?)

"Efforts to link deficits to the ability to lower interest rates are unconvincing." Unconvincing to whom? Surely not to DeLong. If long rates remain high in a high deficit environment even after the Fed eases, would that be convincing? Who cares..."presumably, the Fed could have intervened more directly, by buying up long term government bonds..." That is not evidence that deficits don't bring higher long rates, it is a hypothetical remedy. Would the Fed make use of the remedy? If growth had been 1% lower in the latter half of the 1990s, would the Fed have bought 10-year notes? Seems improbably. Saying they could is a lot like saying free trade winners "could" compensate losers. "Could" doesn't change real world outcomes.

Stiglitz offers a set of conditions under which tax cuts for households with a high marginal propensity to consume leads to higher aggregate demand, then concludes, without qualification that "tax cuts for them stimulate the economy more." That seem just wrong, unless by stimulate, you mean prompt inflation and imports when the supply side is at capacity. Tax cuts for high savers could, conceivably, lead to higher growth when the economy is at capacity. Looks like Stiglitz is really straining the argument to come up with a bald-faced "tax cuts for them (low income families) stimulate the economy more."

If he wants to win the argument, seems to me he either has to be careful not to overstating his case, or he has to turn into a bearded Hannity, barking out "I win" sound bits to the ignorant. Being only a little bit misleading sways neither the well nor the ill imformed.

Posted by: kharris at September 23, 2004 06:53 AM

Faber est suae quisque fortunae - Every man is the artisan of his own fortune. (Appius Claudius Caecus)

Posted by: lesbian at September 23, 2004 07:10 AM

I was very disappointed by the Stiglitz piece, since I have argued in the past that the party deficit flip-flop is all about political opportunism, since both parties are more about acquiring power than about ideology. Stiglitz says that's wrong and that it ignores economic history (like politicians never do that?) -- but then he doesn't say why, instead veering off into criticizing Bush's tax cut.

What's up with that?

Posted by: fling93 at September 23, 2004 11:48 AM

Random thought for which I don't know how to find all the necessary data:

Posner should have someone calculate the value to the economy of the 1974 Sony decision.

Posted by: Ken Houghton at September 23, 2004 02:05 PM