With the winter chill pestering my Old Virginia home, family swimming excursions are enjoyed at the local rec center. Obliged by my aversion for idle conversation with strangers, I look to heavy tomes to deter the other parents (if not as a signal, then as a melee weapon as a matter of final resort). One of the more imposing volumes in my library is a hardcover translation of Tocqueville, so I've been revisiting Democracy in America while my 4 year old practices the ancient art of annoying other adults.
Something struck me in DiA's dissection of American culture. Federalism, separated hierarchical government, seemed to him to be more than a mere political choice, selected from a suite of otherwise-mostly-equal options. In a rather Humean fashion, he claimed that the town-state-nation organization of politics arose from the very sentiments of the typical Yankee ploughman. Think of it as Tiebout-plus. Rather than residents moving to new towns that better suit their peccadilloes, American residents use American little-d democracy to move town policies to suit them. He didn't say so, but there's pretty good English countryside precedent for this predilection. Peasants settled their own disputes in common law courts rather than petitioning the crown or some local lord. The American colonialists were basically just peasants with a little more self-determination.
The point is, the heuristics of the people determined the form of the organizational structures that were later codified in the national, state, and local constitutions, laws, and codes. Sentiments preceded rules. If this is true, I must wonder what sentiments preceded the slow abolition of local self-determination. What moral intuition explains the gradual loss of town and state sovereignty?
I'm in the habit of thinking of politics as being simply another form of exchange (albeit with a bit more coercion). If I am to cling to this habit, perhaps I should consider taking more seriously the sources of political tastes and how malleable they might be. Sometimes, the bargaining set is null, no matter how well you haggle. What happens when a nation develops irreconcilable differences?
Showing posts with label common law. Show all posts
Showing posts with label common law. Show all posts
Friday, January 29, 2016
Saturday, June 13, 2015
Anti-Shoopites The Third: The Revenge of Shake Shake Booty
Is Herbalife a Ponzi scheme? Via @pmarca, Bronte Capital explores the ins and the outs in exhaustive detail. And it appears that there's a great deal to the case, as one might expect with a worldwide operation.
The skinny version: the physical Herbalife product is a nutritional supplement, sort of a meal replacement shake. You drink this once a day in lieu of a meal along with some tea and some aloe water and in a few months, you lose weight. But there's a great deal more to it than the shake mix and the tea. They seem to be in the business of selling local social clubs where like-minded folks gather for a common purpose in a comfortable setting. Participants congregate to share stories, to offer support, and to provide motivation for each other.
Naturally, law enforcement is obliged to intervene. The Federal Trade Commission has some bright-line guidelines for what counts as a Ponzi scheme, including how much of the product is sold for retail purposes and how much is consumed within the distribution network. The stereotypical cases for this are Amway and Koscot. Amway is particularly notable for complying with the letter of the regulations without obeying the spirit (nb, this is an editorial remark: I've known several folks to emerge from the other side of an Amway dalliance severely disillusioned. Still, that's anecdote, useful for filling a parenthetical, nothing more). Herbalife appears to be the converse: it's possible that they've violated the FTC guidelines, but they don't appear to be defrauding anyone. In the terms of the EE conditions, there's no ex post regret.
I think that's the important part from the perspective of the pedestrian moralist. If the shake, the tea, and the aloe water are merely the totems of the enterprise, and what Herbalife is really selling is ersatz ritual, it's silly to launch an inquisition.
Charles Ponzi was a con artist, for sure. But like with many things, so many things, the reaction to his scheming was poorly designed. Madoff was a type II error. Herbalife appears to be a type I error. It can be difficult to know whether or not an investigation is righteous without burning shoe leather. Maybe a centralized bureaucracy like the FTC isn't always the best approach to fraud prevention.
The skinny version: the physical Herbalife product is a nutritional supplement, sort of a meal replacement shake. You drink this once a day in lieu of a meal along with some tea and some aloe water and in a few months, you lose weight. But there's a great deal more to it than the shake mix and the tea. They seem to be in the business of selling local social clubs where like-minded folks gather for a common purpose in a comfortable setting. Participants congregate to share stories, to offer support, and to provide motivation for each other.
Naturally, law enforcement is obliged to intervene. The Federal Trade Commission has some bright-line guidelines for what counts as a Ponzi scheme, including how much of the product is sold for retail purposes and how much is consumed within the distribution network. The stereotypical cases for this are Amway and Koscot. Amway is particularly notable for complying with the letter of the regulations without obeying the spirit (nb, this is an editorial remark: I've known several folks to emerge from the other side of an Amway dalliance severely disillusioned. Still, that's anecdote, useful for filling a parenthetical, nothing more). Herbalife appears to be the converse: it's possible that they've violated the FTC guidelines, but they don't appear to be defrauding anyone. In the terms of the EE conditions, there's no ex post regret.
I think that's the important part from the perspective of the pedestrian moralist. If the shake, the tea, and the aloe water are merely the totems of the enterprise, and what Herbalife is really selling is ersatz ritual, it's silly to launch an inquisition.
Charles Ponzi was a con artist, for sure. But like with many things, so many things, the reaction to his scheming was poorly designed. Madoff was a type II error. Herbalife appears to be a type I error. It can be difficult to know whether or not an investigation is righteous without burning shoe leather. Maybe a centralized bureaucracy like the FTC isn't always the best approach to fraud prevention.
Tuesday, March 31, 2015
If You're Not Into The Whole Brevity Thing
US Constitution: Article 1 §8.3:
In a nation filled with artisan yeomen, it was a pretty good idea. In an industrial nation, it just means that the collusion happens at the national rather than the state level. Hm.
Anyway, some of the squawking over the recently-passed Indiana RFRA includes CT Governor Dan Malloy has "banned" state-funded travel to Indiana. Obviously, it's not a ban in the sense that he's shut down the borders or anything. He's merely directed that tax funds not subsidize travel to Indiana.
Put aside how this will imperil Connecticutters traveling to Indiana who must now drive from Chicago to Indianapolis rather than flying directly. Put aside the hypocrisy of the head of a state with a more robust religious freedom statute on the books trying to scold Democracy in Action™. Consider instead whether or not this sort of interference with another state's dominion will engage the old Commerce Clause jurisprudence. Wouldn't that be a hoot?
The greatest triumph of the oxcart era occurred when ruff-ringed commoner merchants amicably divorced their interests from those of the foppish, dilettante aristocracy. Exeunt politics from trade. The greatest shame of the modern era is to gaze upon this great achievement—the achievement that brought with is the greatest surge in material plenty that humanity has ever known—shrug its shoulders and bleat "meh." Politics mars commerce, tarnishes our ability to work towards mutual, peaceful cooperation. Punish iniquity if it so suits your tastes, but micturate upon the rug of Enlightenment constitutional jurisprudence at your peril. It really ties the country together, man.
[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;Though it's come to mean that the Congress has the requisite jurisdiction to establish agencies to oversee industry, the intent of the Commerce Clause (prior to the asinine, execrable decision in Schecter anyway) was to prevent petty trade wars across state lines. New Jersey's elite commercial interests should not be able to ply favors from the Governor's office that infringe on a New York firm's commerce across the bridge. The commerce clause is the trust-busting power in the constitution: it breaks the natural propensity for wealthy, powerful interests to collude in restraint of trade.
In a nation filled with artisan yeomen, it was a pretty good idea. In an industrial nation, it just means that the collusion happens at the national rather than the state level. Hm.
Anyway, some of the squawking over the recently-passed Indiana RFRA includes CT Governor Dan Malloy has "banned" state-funded travel to Indiana. Obviously, it's not a ban in the sense that he's shut down the borders or anything. He's merely directed that tax funds not subsidize travel to Indiana.
Put aside how this will imperil Connecticutters traveling to Indiana who must now drive from Chicago to Indianapolis rather than flying directly. Put aside the hypocrisy of the head of a state with a more robust religious freedom statute on the books trying to scold Democracy in Action™. Consider instead whether or not this sort of interference with another state's dominion will engage the old Commerce Clause jurisprudence. Wouldn't that be a hoot?
The greatest triumph of the oxcart era occurred when ruff-ringed commoner merchants amicably divorced their interests from those of the foppish, dilettante aristocracy. Exeunt politics from trade. The greatest shame of the modern era is to gaze upon this great achievement—the achievement that brought with is the greatest surge in material plenty that humanity has ever known—shrug its shoulders and bleat "meh." Politics mars commerce, tarnishes our ability to work towards mutual, peaceful cooperation. Punish iniquity if it so suits your tastes, but micturate upon the rug of Enlightenment constitutional jurisprudence at your peril. It really ties the country together, man.
Tuesday, October 21, 2014
Mai Waifu
Great headlines write themselves.
Dragging a dude before the court for the possession of hentai is a perversion of the common law. This is the substitution of matters of personal taste for matters of public interest. There is quite literally no victim, no crime being committed here apart from raising the bile of men with the authority to wield the truncheon of the state. I cannot press myself to identify the EE condition under violation apart from the shadow #7 I suggested some time back: "the transaction is not aesthetically offensive."
No other explanation can warrant this wanton disregard for the great tradition of English common law.
Middlesbrough man creates legal history after being convicted of possessing illegal images of cartoon childrenWe happy few who take residence in Anglophone nations are fortunate enough to be heir to a proud legal tradition ground in common-sense jurisprudence. The common law with its juries and its precedents and its peer system strive for Aristotelean excellence by drawing on the wisdom of crowds at their most placid and reflective. It is true that law-by-tort can still err, but it does possess the distinctive feature of being able to correct errors through deliberation.
Dragging a dude before the court for the possession of hentai is a perversion of the common law. This is the substitution of matters of personal taste for matters of public interest. There is quite literally no victim, no crime being committed here apart from raising the bile of men with the authority to wield the truncheon of the state. I cannot press myself to identify the EE condition under violation apart from the shadow #7 I suggested some time back: "the transaction is not aesthetically offensive."
No other explanation can warrant this wanton disregard for the great tradition of English common law.
Wednesday, August 6, 2014
Wave of Mutilation
Declawing a cat isn't like giving it a manicure. It's an amputation. The human equivalent would be to surgically remove the tip of each of your fingers.
Animals cannot give consent. When humans cannot give consent (due to age, infirmity, or incapacity), the standard approach is to substitute in either a real or imagined agent to plead on their behalf. A useful common-sense heuristic is something like a "reasonable person" test. Would a reasonable person be expected to decline an offer to have his radial phalanges lopped off? What are the costs and benefits of extending this common-law consideration to brute animals?
Going whole hog is probably not practical. Animals, like it or not, are still food. But it's hard to deny the empirical observation that pets, at least on some margin, are a luxury good (that is to say that the wealthier people are, the greater the fraction of income is spent on the welfare of Fluffy and Mr. Bojangles). I have no doubt that compared to the harsh, flea-bitten lives of their ancestors, Paco and Skippy Squirrelbane lead absolutely charmed lives. Empirically, it seems at least plausible that a weakened version of standard human common law jurisprudence for pets is headed down the pike, and that if we are willing to view non-human creatures as having at least some moral agency, then the caretaker-ward relationship between homo sapiens and their companions might well move a step or two towards the euvoluntary end of the spectrum if we lend them a little extra dignity.
Please think twice before declawing your cats. If you're not willing to have your furniture shredded a little bit (or are unwilling to provide alternatives and a little discipline), perhaps a feline isn't the right companion for you. A lagomorph might be more your speed.
Animals cannot give consent. When humans cannot give consent (due to age, infirmity, or incapacity), the standard approach is to substitute in either a real or imagined agent to plead on their behalf. A useful common-sense heuristic is something like a "reasonable person" test. Would a reasonable person be expected to decline an offer to have his radial phalanges lopped off? What are the costs and benefits of extending this common-law consideration to brute animals?
Going whole hog is probably not practical. Animals, like it or not, are still food. But it's hard to deny the empirical observation that pets, at least on some margin, are a luxury good (that is to say that the wealthier people are, the greater the fraction of income is spent on the welfare of Fluffy and Mr. Bojangles). I have no doubt that compared to the harsh, flea-bitten lives of their ancestors, Paco and Skippy Squirrelbane lead absolutely charmed lives. Empirically, it seems at least plausible that a weakened version of standard human common law jurisprudence for pets is headed down the pike, and that if we are willing to view non-human creatures as having at least some moral agency, then the caretaker-ward relationship between homo sapiens and their companions might well move a step or two towards the euvoluntary end of the spectrum if we lend them a little extra dignity.
Please think twice before declawing your cats. If you're not willing to have your furniture shredded a little bit (or are unwilling to provide alternatives and a little discipline), perhaps a feline isn't the right companion for you. A lagomorph might be more your speed.
Tuesday, July 8, 2014
Who's Afraid of the Big Bad Unfunded Liabilities?
What's the right way to think about tax dodging?
It isn't always that easy for me to think about public finance. The combined US budget at local, county, state, and federal levels easily tops a trillion bucks, and that's without any "temporary" spending. That sure seems like a lot, but I'm not sure what to compare it to. I have a similar problem thinking about budget shortfalls. Is the FY 2014 budget deficit of $564B too much? Too little? Just right? Compared to what? Moreover, how can the typical taxpayer know that she's getting her dollar's worth out of the spending done on her behalf?
Making it more complicated is that a lot of the projects (defense spending especially) conducted on behalf of US constituents notionally generate value well into the future. What's the PDV (present discounted value) of a new carrier group? And how about debt service? At very low interest rates, service costs are extremely sensitive to small rate changes, meaning that the cost of debt financing is hostage to the myriad forces that dictate borrowing costs (it ain't just the Federal Reserve, in case anyone's told you otherwise). Heck, debt service problems are for money that's already been borrowed. What about money that the political elite has only promised to borrow?
Since I have trouble thinking about these things as they are, I've made it a habit to disregard the linguistic fluff and use a common word to describe public spending not covered by current taxes. That word is "promise." Debt is a promise, one backed by the weight of the common law. You are contractually obligated to pay your debts. Congress is constitutionally obligated to pay the debts of the nation. Debt takes precedence over all other obligations in bankruptcy (unless politically favored constituents can jump the queue under the aegis of a duly elected government that proves comfortable disregarding the rule of law). But debt is far from the only promise you (or Congress) can make. You can promise to walk the dog, to take the kids out for pizza, to buy your wife a new car after a fallen tree destroyed the old one, or to replace the batteries in your smoke detectors (when was the last time you checked yours?). Congress can promise to pay for your retirement, buy your prescription drugs, care for your wounded veterans, or secure your borders. These are also promises, but they don't have the same common law support that debt enjoys. They're statutory promises; statutes can be overridden or repealed. There's no stare decisis in the legislature.
But that doesn't mean that they're not credible promises. It's bizarrely hard to cut government programs. Unfunded liabilities are, for all practical purposes, as good as actual debt obligations. Maybe more so, since programs like OASDI and Medicare are far more of a political third rail than, say, making Treasury bondholders take a haircut.
But something else occurs to me as well: there are a number of shadow promises that haven't even been made yet that make it yet harder for me to think clearly about public finance. The looming geriatric tsunami will bring with it lots of new clamoring for things that'll make Boomers' retirements more pleasant. Add to that the very real probability of new programs to tackle ballooning student debt issues, and it shouldn't take too much imagination to conclude that the standard metrics of Debt/GDP ratios (which is a dumb metric anyway, what with the comparing stocks to flows) and the like grossly misstate the nature of the problem: an over-extension of promise, explicit or otherwise.
Hedging against a future of Promises Gone Wild is either prudent or paranoid, depending on whom you ask. Either way, the disquiet that tends to accompany broken promises is unpleasant whether or not you've pinched your pennies and stitched in time. In the language of EE, each of the three types of promises (debt, unfunded liabilities, and shadow spending) threatens to impose a fairly substantial negative externality on citizens, particularly way out in the tails of the distribution. It is quite natural to conclude that there exist some people who would prefer not to subject themselves to the hassle.
So here's the bit that's been bothering me. I have the impression that the typical voters considers people who avoid the inevitable costs of zealous promise-making to be cowardly, unpatriotic cheats. FATCA legislation stands next to no chance of being struck down, and for all the noise partisan Americans make about renouncing their citizenship and packing their bindle for Canada should their guy lose the election, if someone actually up and does it (particularly if he's wealthy), scorn inevitably follows.
So the question: is emigration euvoluntary? Do the reasons for emigration matter? Rather, do the reasons for emigration matter more than the consequences? The treasury is still out the same receipt whether or not someone leaves because she married a foreigner or if she left in protest of a Republican in the Oval Office. How important is the cheap fluff talk in determining the moral intuitions? Is tax dodging different than routine emigration? Why or why not? What does this imply for strategic public talk?
It isn't always that easy for me to think about public finance. The combined US budget at local, county, state, and federal levels easily tops a trillion bucks, and that's without any "temporary" spending. That sure seems like a lot, but I'm not sure what to compare it to. I have a similar problem thinking about budget shortfalls. Is the FY 2014 budget deficit of $564B too much? Too little? Just right? Compared to what? Moreover, how can the typical taxpayer know that she's getting her dollar's worth out of the spending done on her behalf?
Making it more complicated is that a lot of the projects (defense spending especially) conducted on behalf of US constituents notionally generate value well into the future. What's the PDV (present discounted value) of a new carrier group? And how about debt service? At very low interest rates, service costs are extremely sensitive to small rate changes, meaning that the cost of debt financing is hostage to the myriad forces that dictate borrowing costs (it ain't just the Federal Reserve, in case anyone's told you otherwise). Heck, debt service problems are for money that's already been borrowed. What about money that the political elite has only promised to borrow?
Since I have trouble thinking about these things as they are, I've made it a habit to disregard the linguistic fluff and use a common word to describe public spending not covered by current taxes. That word is "promise." Debt is a promise, one backed by the weight of the common law. You are contractually obligated to pay your debts. Congress is constitutionally obligated to pay the debts of the nation. Debt takes precedence over all other obligations in bankruptcy (unless politically favored constituents can jump the queue under the aegis of a duly elected government that proves comfortable disregarding the rule of law). But debt is far from the only promise you (or Congress) can make. You can promise to walk the dog, to take the kids out for pizza, to buy your wife a new car after a fallen tree destroyed the old one, or to replace the batteries in your smoke detectors (when was the last time you checked yours?). Congress can promise to pay for your retirement, buy your prescription drugs, care for your wounded veterans, or secure your borders. These are also promises, but they don't have the same common law support that debt enjoys. They're statutory promises; statutes can be overridden or repealed. There's no stare decisis in the legislature.
But that doesn't mean that they're not credible promises. It's bizarrely hard to cut government programs. Unfunded liabilities are, for all practical purposes, as good as actual debt obligations. Maybe more so, since programs like OASDI and Medicare are far more of a political third rail than, say, making Treasury bondholders take a haircut.
But something else occurs to me as well: there are a number of shadow promises that haven't even been made yet that make it yet harder for me to think clearly about public finance. The looming geriatric tsunami will bring with it lots of new clamoring for things that'll make Boomers' retirements more pleasant. Add to that the very real probability of new programs to tackle ballooning student debt issues, and it shouldn't take too much imagination to conclude that the standard metrics of Debt/GDP ratios (which is a dumb metric anyway, what with the comparing stocks to flows) and the like grossly misstate the nature of the problem: an over-extension of promise, explicit or otherwise.
Hedging against a future of Promises Gone Wild is either prudent or paranoid, depending on whom you ask. Either way, the disquiet that tends to accompany broken promises is unpleasant whether or not you've pinched your pennies and stitched in time. In the language of EE, each of the three types of promises (debt, unfunded liabilities, and shadow spending) threatens to impose a fairly substantial negative externality on citizens, particularly way out in the tails of the distribution. It is quite natural to conclude that there exist some people who would prefer not to subject themselves to the hassle.
So here's the bit that's been bothering me. I have the impression that the typical voters considers people who avoid the inevitable costs of zealous promise-making to be cowardly, unpatriotic cheats. FATCA legislation stands next to no chance of being struck down, and for all the noise partisan Americans make about renouncing their citizenship and packing their bindle for Canada should their guy lose the election, if someone actually up and does it (particularly if he's wealthy), scorn inevitably follows.
So the question: is emigration euvoluntary? Do the reasons for emigration matter? Rather, do the reasons for emigration matter more than the consequences? The treasury is still out the same receipt whether or not someone leaves because she married a foreigner or if she left in protest of a Republican in the Oval Office. How important is the cheap fluff talk in determining the moral intuitions? Is tax dodging different than routine emigration? Why or why not? What does this imply for strategic public talk?
Tuesday, June 17, 2014
Insider Trading is More than a Feeling
Insider trading, making stock market exchanges on information that has yet to be made public, violates US statute law (15 U.S.C. § 77a, 15 U.S.C. § 78a, SEC Rule 10b-5, & al), but more importantly, sanctions against jumping the queue, so to speak, have a common law pedigree. Nearly any statute that can be traced to English common law antecedent is likely to appeal to the inherited common sense of the median Anglophone.
Insider trading offends the sensibilities of even folks who otherwise have no direct interest in the goings-on of the finance industry. Poll your (non-economist) friends. Ask them to give one-word summations of insider trading. Don't be too shocked to hear words like "slimy" or "thieving" or "fraudulent" come up pretty regularly. We've got an idea of insider trading that well predates the Oliver Stone version of a greasy Gordon Gekko, and it's in the cigar smoke swirling round the head of the Mr. Moneybags plutocrat popularized by the should-be-banned-by-the-Geneva-Convention board game Monopoly. Insider trading is unfair, it's a breach of trust, it's greedy, profiteering. It's vile.
It's also information. If a firm is in trouble for whatever reason, active insider trading lets the market know ahead of time if the time is right to divest, maybe even convert the physical assets to a higher-valued use. But we block (and I can't stress this enough) through common law moral intuitions this information from being used. The Samuelsonian economist in me is aghast at the inefficiency.
But I'm bathed in the milk of euvoluntary exchange: I believe in the importance of examining morality without romance. Here, as in most instances of financial instrument exchange, folks' far-mode musings lead them to think of one and only one side of the exchange. Consider that for everyone who sells stock, there must also be someone to buy. If you're claiming that in an insider trading situation that the other side of the exchange is taken advantage of, you might consider asking how that happens.
Look, a contract is struck when there's offer and acceptance. If the GTM is offering to sell me his riding lawnmower from last year for five bucks, I might begin to suspect that something's up. If I investigate and find out that making the trade is still in my best interest, in what sense is he exploiting me? It's the same in the stock market. If Chrysler's management knows that production forecasts from last quarter were too optimistic and they attempt to take out a short position, who's being exploited? Production is weak one way or the other, it's got nothing to do with the paper claims against the firm. Nothing at all. the paper just lets management tell the market a little earlier. Prices, or in this case the offer of a price is information. No one says you have to actually buy the dang offer. Right?
My suspicion is that there's a confusion between intentions and incentives. The profit motive is icky, no matter how useful it might otherwise be. (Partially) overcoming this aversion was one of the finer upshots to emerge from the coffeehouses of London. Each time this hardy weed springs up it endeavors to choke the garden of prosperity. Keep your Roundup handy.
Insider trading offends the sensibilities of even folks who otherwise have no direct interest in the goings-on of the finance industry. Poll your (non-economist) friends. Ask them to give one-word summations of insider trading. Don't be too shocked to hear words like "slimy" or "thieving" or "fraudulent" come up pretty regularly. We've got an idea of insider trading that well predates the Oliver Stone version of a greasy Gordon Gekko, and it's in the cigar smoke swirling round the head of the Mr. Moneybags plutocrat popularized by the should-be-banned-by-the-Geneva-Convention board game Monopoly. Insider trading is unfair, it's a breach of trust, it's greedy, profiteering. It's vile.
It's also information. If a firm is in trouble for whatever reason, active insider trading lets the market know ahead of time if the time is right to divest, maybe even convert the physical assets to a higher-valued use. But we block (and I can't stress this enough) through common law moral intuitions this information from being used. The Samuelsonian economist in me is aghast at the inefficiency.
But I'm bathed in the milk of euvoluntary exchange: I believe in the importance of examining morality without romance. Here, as in most instances of financial instrument exchange, folks' far-mode musings lead them to think of one and only one side of the exchange. Consider that for everyone who sells stock, there must also be someone to buy. If you're claiming that in an insider trading situation that the other side of the exchange is taken advantage of, you might consider asking how that happens.
Look, a contract is struck when there's offer and acceptance. If the GTM is offering to sell me his riding lawnmower from last year for five bucks, I might begin to suspect that something's up. If I investigate and find out that making the trade is still in my best interest, in what sense is he exploiting me? It's the same in the stock market. If Chrysler's management knows that production forecasts from last quarter were too optimistic and they attempt to take out a short position, who's being exploited? Production is weak one way or the other, it's got nothing to do with the paper claims against the firm. Nothing at all. the paper just lets management tell the market a little earlier. Prices, or in this case the offer of a price is information. No one says you have to actually buy the dang offer. Right?
My suspicion is that there's a confusion between intentions and incentives. The profit motive is icky, no matter how useful it might otherwise be. (Partially) overcoming this aversion was one of the finer upshots to emerge from the coffeehouses of London. Each time this hardy weed springs up it endeavors to choke the garden of prosperity. Keep your Roundup handy.
Wednesday, March 5, 2014
Shovel THIS!
So, Philadelphia is dealing with a commons problem, in the traditional Lockean sense. Combine your labor with the (undeveloped) resource, and ownership moves from the commons to your private control. At least until the snow melts.
If there is no private ownership of parking spots, no one shovels out the parking spot and it is not available for anyone.
But, if someone combines his/her labor with that spot, shoveling it out, then that person has the sense thta it is "owned," at least until the snow melts. Remember, the spot is useful to no one until it is shoveled.
Should Philadelphia be prosecuting this "#NoSavesies" campaign on twitter? Or should they allow the informal norm to exist, since it encourages the public good of shoveling out parking spaces, though at the price of short-term privatization? Not surprisingly, the "intelligentsia" just assume that the public good will be provided, by magic, and that property is theft. Mayor Nutter, on the other hand (whom NO ONE would accuse of being a member of the intelligentsia!) thought the practice made sense. One suggestion I like from that article: "Shovel the snow back in!" Now that is the Philly way..."If I can't have dis, YOUSE can't have dis!"
So, should we allow people to take "ownership" if they shovel out the space, combining their labor with the (otherwise useless) resource? After all, there is clearly "as much and as good" for the rest of us, if you just get out your shovel. Or should we treat parking spaces as common property of which you take ownership only so long as you combine your CAR with the space?
Or is there a third alternative? What do YOU think, folks?
If there is no private ownership of parking spots, no one shovels out the parking spot and it is not available for anyone.
But, if someone combines his/her labor with that spot, shoveling it out, then that person has the sense thta it is "owned," at least until the snow melts. Remember, the spot is useful to no one until it is shoveled.
Should Philadelphia be prosecuting this "#NoSavesies" campaign on twitter? Or should they allow the informal norm to exist, since it encourages the public good of shoveling out parking spaces, though at the price of short-term privatization? Not surprisingly, the "intelligentsia" just assume that the public good will be provided, by magic, and that property is theft. Mayor Nutter, on the other hand (whom NO ONE would accuse of being a member of the intelligentsia!) thought the practice made sense. One suggestion I like from that article: "Shovel the snow back in!" Now that is the Philly way..."If I can't have dis, YOUSE can't have dis!"
So, should we allow people to take "ownership" if they shovel out the space, combining their labor with the (otherwise useless) resource? After all, there is clearly "as much and as good" for the rest of us, if you just get out your shovel. Or should we treat parking spaces as common property of which you take ownership only so long as you combine your CAR with the space?
Or is there a third alternative? What do YOU think, folks?
Wednesday, February 5, 2014
Treading on Snow
My pal Nate is where I usually go for questions of jurisprudence. I wander into his territory, uninvited, without regret.
Cynthia Nixon on marriage equality:
Seek not dominion, for surely it shall find you first.
Nota bene, friends: this longsword cuts on the backstroke too. If you object to statutes that restrain folks from contracting (or not) based on sexual identity, it's consistent to object to statutes that restrain folks from contracting (or not) based on which side of the counter they stand on. The lunch counter example is particularly noteworthy in Nixon's choice of words. The Civil Rights Act of 1964 did more than just repeal the ass of Jim Crow, it inserted its own ass into every space, both public and private.
Sidebar: in case you weren't aware, the "ass" in "the law is an ass" is "ass" qua donkey. The law is a stubborn, single-minded entity. And like the common ass, is quite useful for certain tasks, though you wouldn't ask ius or lex to pen a sonnet.
Substituting one form of dominion for another invites spiteful retribution under the petticoats of Lady Justice. Equality under the law, a fine principle, demands that any two fit people have access to the marriage contract in the eyes of the state. The principle here is not that gay people are great and deserve special protection, it's that under the US Constitutional order, all constituents are equal before the law. If it seems as if I'm repeating myself, it may be because this fairly obvious little slice of jurisprudence seems utterly lost in these discussions. This is a founding principle carried over from the Enlightenment that appears to be buried in the din of bristly moralizing on both sides.
But people, while severing the tether that forces that ass to discriminate is consistent with good statesmanship, it's an error of the same type that pinions this dumb creature to the task of discriminating along new dimensions. It was an act of justice to lift the statutes that imposed segregation. But consider the cost of yoking business owners to the common will: some people obtain the obligation to enter into contracts they would have not otherwise entertained. This is perverse. The antidote to oppression is liberty, not coercion.
So yes, it's obvious on its face that consenting people should have the right to voluntarily enter into mutually agreeable contracts. That's just as blatantly, obviously true for marriage as it is for cake decoration services and renting out the privately-owned grounds of a bed and breakfast.
Everyone deserves the right to say "no", even if—no, especially if—the answer may be frustrating for others. The alternative is illiberal and unjust.
Cynthia Nixon on marriage equality:
When women got the vote, they did not redefine voting. When African-Americans got the right to sit at a lunch counter alongside white people, they did not redefine eating out. They were simply invited to the table. That is all we want to do; we have no desire to change marriage. We want to be entitled to not only the same privileges but the same responsibilities as straight people.Equality before the law implies a non-discrimination standard under the law. The law is an ass, suited to the mulish task of bulk imposition of clearly understood rules. The inelegant artlessness of parsing complexion, social status, sexuality, or belief is a chore unfit for a legislature distant in cognition and void of meaningful accountability.
Seek not dominion, for surely it shall find you first.
Nota bene, friends: this longsword cuts on the backstroke too. If you object to statutes that restrain folks from contracting (or not) based on sexual identity, it's consistent to object to statutes that restrain folks from contracting (or not) based on which side of the counter they stand on. The lunch counter example is particularly noteworthy in Nixon's choice of words. The Civil Rights Act of 1964 did more than just repeal the ass of Jim Crow, it inserted its own ass into every space, both public and private.
Sidebar: in case you weren't aware, the "ass" in "the law is an ass" is "ass" qua donkey. The law is a stubborn, single-minded entity. And like the common ass, is quite useful for certain tasks, though you wouldn't ask ius or lex to pen a sonnet.
Substituting one form of dominion for another invites spiteful retribution under the petticoats of Lady Justice. Equality under the law, a fine principle, demands that any two fit people have access to the marriage contract in the eyes of the state. The principle here is not that gay people are great and deserve special protection, it's that under the US Constitutional order, all constituents are equal before the law. If it seems as if I'm repeating myself, it may be because this fairly obvious little slice of jurisprudence seems utterly lost in these discussions. This is a founding principle carried over from the Enlightenment that appears to be buried in the din of bristly moralizing on both sides.
But people, while severing the tether that forces that ass to discriminate is consistent with good statesmanship, it's an error of the same type that pinions this dumb creature to the task of discriminating along new dimensions. It was an act of justice to lift the statutes that imposed segregation. But consider the cost of yoking business owners to the common will: some people obtain the obligation to enter into contracts they would have not otherwise entertained. This is perverse. The antidote to oppression is liberty, not coercion.
So yes, it's obvious on its face that consenting people should have the right to voluntarily enter into mutually agreeable contracts. That's just as blatantly, obviously true for marriage as it is for cake decoration services and renting out the privately-owned grounds of a bed and breakfast.
Everyone deserves the right to say "no", even if—no, especially if—the answer may be frustrating for others. The alternative is illiberal and unjust.
Wednesday, March 27, 2013
They Go Together Like a Horse and Carriage
It seems like all voluntary domestic living arrangements should also be euvoluntary. It seems like the only EE condition we might butt up against is ex post regret, and it also seems like the way around regret is to preserve no-fault divorce as the default common law dissolution arrangement. It seems like the role of the state should extend no further than ensuring folks aren't being coerced or defrauded into entering into a marriage contract. It seems like as far as the government is concerned, there isn't ten cents' difference between a nuptial contract and, say, an insurance policy.
It seems like it should be that way, but that way it sure ain't.
I make a big deal out of political kayfabe, but I don't mean by this to claim that there isn't religious and corporate kayfabe as well. The reason I focus so closely on the bloviations of elected officials is that they enjoy an unchecked monopoly not found in either the pulpit or the boardroom. Well, at least in the US. Here though is an interesting example where religious kayfabe may well mask an underlying aesthetic objection to alternative forms of marriage. I think there's pretty good Biblical evidence to allow Christians to support a clear division between the roles of Leviathan and Pontiff (Matthew 22:21, eg.). I see no necessary tension between believing that (a) Leviticus 20:13 has something interesting to say and (b) the state should act as an impersonal arbiter of contract terms. When this division goes unobserved, when folks strive to resurrect collusion between the first and second estates, I find myself puzzled about the moral intuitions underpinning this urge. It seems possible that the moral dimension is Haidt's sanctity/degradation, which always struck me as girded by atavistic aesthetics rather than deliberate moral or ethical calculus.
If there's an issue of fiscal externalities, where a baker or a photographer can be sued in court for refusing to provide wedding services for a ceremony they find offensive, this highlights a flaw in civil law. If the problem is with children being raised in unorthodox households, we've got a reasonable empirical question that must be answered with good empirical analysis (instead of evidence-free appeals to imagination as seems commonplace). If the problem is a weakening of the national moral fiber or something, I think I'd like to see a better explanation of how it is that the boundaries of an optimal moral zone are simultaneously determined with political borders. In what sense did the Louisiana Purchase extend the particular sphere in which the median American voter was granted legitimate authority to impose moral calculus on others?
Look, there are reasons to debate the form and function of the relationship between contract arrangements and state enforcement. But let's not kid ourselves when it comes to the source of our disagreements. De gustibus non est disputandum, sed de gubernum fortitori est*. The scope of government is applied inappropriately when it's granted the authority to determine winners and losers in the game of matrimony just as surely as it's misapplied when determining winners and losers in mineral exploration or agricultural production. I can sort of understand some sort of (extremely cautious) state intervention in non-euvoluntary exchange, but intervention when the arrangement is, but for other existing public policy, entirely euvoluntary seems an untoward usurpation of the common presumption of liberty.
* My Latin is terrible, so that's probably grammatically incorrect. Apologies.
It seems like it should be that way, but that way it sure ain't.
I make a big deal out of political kayfabe, but I don't mean by this to claim that there isn't religious and corporate kayfabe as well. The reason I focus so closely on the bloviations of elected officials is that they enjoy an unchecked monopoly not found in either the pulpit or the boardroom. Well, at least in the US. Here though is an interesting example where religious kayfabe may well mask an underlying aesthetic objection to alternative forms of marriage. I think there's pretty good Biblical evidence to allow Christians to support a clear division between the roles of Leviathan and Pontiff (Matthew 22:21, eg.). I see no necessary tension between believing that (a) Leviticus 20:13 has something interesting to say and (b) the state should act as an impersonal arbiter of contract terms. When this division goes unobserved, when folks strive to resurrect collusion between the first and second estates, I find myself puzzled about the moral intuitions underpinning this urge. It seems possible that the moral dimension is Haidt's sanctity/degradation, which always struck me as girded by atavistic aesthetics rather than deliberate moral or ethical calculus.
If there's an issue of fiscal externalities, where a baker or a photographer can be sued in court for refusing to provide wedding services for a ceremony they find offensive, this highlights a flaw in civil law. If the problem is with children being raised in unorthodox households, we've got a reasonable empirical question that must be answered with good empirical analysis (instead of evidence-free appeals to imagination as seems commonplace). If the problem is a weakening of the national moral fiber or something, I think I'd like to see a better explanation of how it is that the boundaries of an optimal moral zone are simultaneously determined with political borders. In what sense did the Louisiana Purchase extend the particular sphere in which the median American voter was granted legitimate authority to impose moral calculus on others?
Look, there are reasons to debate the form and function of the relationship between contract arrangements and state enforcement. But let's not kid ourselves when it comes to the source of our disagreements. De gustibus non est disputandum, sed de gubernum fortitori est*. The scope of government is applied inappropriately when it's granted the authority to determine winners and losers in the game of matrimony just as surely as it's misapplied when determining winners and losers in mineral exploration or agricultural production. I can sort of understand some sort of (extremely cautious) state intervention in non-euvoluntary exchange, but intervention when the arrangement is, but for other existing public policy, entirely euvoluntary seems an untoward usurpation of the common presumption of liberty.
* My Latin is terrible, so that's probably grammatically incorrect. Apologies.
Wednesday, February 20, 2013
Meta-EE and The Constitution Part 5: Sixth and Seventh Amendments
Amendment VI:
The indefinite detention of terror suspects hither and yon, the emergence of drone assassination, the spectre of drone policing (the Dub-MOE gave me an under-over of a year from now, and I'm in for a buck), the pending menace of omnibus regulatory juggernauts voted on first, parsed by legislators later all speak to the public choice arguments underpinning these two safeguards against a powerful, aggressive prosecutory apparatus.
Mad King George wielded the crown's courts like a cudgel, flogging truculent colonists with kangaroo trials, gaol languishment and star chamber browbeating. Compare that with executive orders, kill lists, and warrantless detention.
At its best, government is a sheepdog that culls be-fleeced wolves from the herd. The scope of euvoluntary exchange suffers when that dog turns vicious. To the extent that the 6th and 7th Amendments tether the cur that squats in the District, they support EE. I think it's worth examining how badly these tethers have been worn in recent years.
In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defense.Amendment VII:
In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.When Higgs talks about regime uncertainty, the threat to the exchange relationship flows from armies of discretion-endowed bureaucrats, from political elites unbound by credible, predictable rules. A deeper reading hints at demand effects: sovereigns blessed by their constituents to meddle saps firms the ability to plan for the long haul.
The indefinite detention of terror suspects hither and yon, the emergence of drone assassination, the spectre of drone policing (the Dub-MOE gave me an under-over of a year from now, and I'm in for a buck), the pending menace of omnibus regulatory juggernauts voted on first, parsed by legislators later all speak to the public choice arguments underpinning these two safeguards against a powerful, aggressive prosecutory apparatus.
Mad King George wielded the crown's courts like a cudgel, flogging truculent colonists with kangaroo trials, gaol languishment and star chamber browbeating. Compare that with executive orders, kill lists, and warrantless detention.
At its best, government is a sheepdog that culls be-fleeced wolves from the herd. The scope of euvoluntary exchange suffers when that dog turns vicious. To the extent that the 6th and 7th Amendments tether the cur that squats in the District, they support EE. I think it's worth examining how badly these tethers have been worn in recent years.
Tuesday, February 21, 2012
Glove Slap, Baby
Article 114 of the Uniform Code of Military Justice:
“Any person subject to this chapter who fights or promotes, or is concerned in or connives at fighting a duel, or who, having knowledge of a challenge sent or about to be sent, fails to report the fact promptly to the proper authority, shall be punished as a court-martial may direct.”
Whatever else one might believe about the US military, force leadership is not especially well known for retaining systematically dysfunctional rules. Tales of intractable ego on the battlefield or career-aggrandizing myopia at headquarters can only be appropriately interpreted in context: the military is well-staffed with multiple claimants over constituencies perched atop beds of quicksilver. Strategic and (especially) tactical decisions made in the fog of war are subject to the same sorts of calculus constraints present in routine economic decisions, though often fraught with more dire opportunity costs than the decision whether or not to open a new distribution center in Sheboygan. Higher-level meta rules such as those found in the UCMJ tend to hew closer to Hayek's vision of law as the set of rules, norms and behavioral constraints that allow for smooth and efficient operation of an organization or society. Very little of the language in the UCMJ strikes me as top-down meddling with military order to suit the peccadilloes of a social tinker.
Thursday, February 2, 2012
Tune in, Turn on, Drop out
By my reckoning, I'm a little late to the party of criticizing the latest State of the Union address. Among the other... let's call them "bold"... policy suggestions forwarded by the President, the one that caught my attention concerned mandatory schooling.
To paraphrase, the POTUS suggested it might be wise for states to raise the minimum dropout age to 18, thereby increasing education rates. Much of the discussion on this point (at least on those blogs I follow) concern classroom externalities, the nature of the assumed linear relationship to formal education and earnings, or to this or that signaling model. These and points like them are very interesting and contain valid criticism, but when I see popular policy nostrums, I fancy that I've trained myself well enough to ask which euvoluntary principles are being violated by the status quo. I confess that I have yet to rest on any particular answer.
To paraphrase, the POTUS suggested it might be wise for states to raise the minimum dropout age to 18, thereby increasing education rates. Much of the discussion on this point (at least on those blogs I follow) concern classroom externalities, the nature of the assumed linear relationship to formal education and earnings, or to this or that signaling model. These and points like them are very interesting and contain valid criticism, but when I see popular policy nostrums, I fancy that I've trained myself well enough to ask which euvoluntary principles are being violated by the status quo. I confess that I have yet to rest on any particular answer.
Friday, November 18, 2011
On the Common Law Conditions for Contract
I consciously tried to model the conditions for "euvoluntary exchange" after the conditions for a binding, enforceable contract in common law.
Frequent reader (and ex student) Alex Konik writes:
Hi professor munger, I am not sure how much you have looked to contract law for insight on limits to euvolunatry exchange. I am going through my first contracts class here and thought that some common law elements would be interesting, if you have not seen them already. There are fraud and misrepresentation concerns which are clearly not euvoluntary or voluntary. Same with duress, pretty self-evident.
Unconscionability - this is the big fuzzy one and probably most relevant to euvoluntary exchange. The link is good, unfortunately missing a few of the comments, but the main points are there. It can be procedurally void, or the terms themselves can be so one-sided as to make the contract void. This is also relatively new in the common law and pretty uncertain compared to most doctrines. So, (1) the terms were hidden in a maze of language and he probably didnt read/understand them, or (2) he did understand them, but they are just unconscionable.
There are some other interesting ways to avoid enforcement of contracts:
duress by threat
undue influence ("unfair persuasion of a party who [...] by virtue of relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare") - so contracting with someone you have have reason to trust (177)
various public policy concerns, like if enforcement of terms would violate legislation (no contracts to kill) (178-182)
restraints on trade competition, especially non-compete agreements, unless they are "needed to protect a legitimate interest" (186-188)
I couldnt find a better free version of the restatement online. Anyway, I thought this may be of interest to you. cheers, alex
Frequent reader (and ex student) Alex Konik writes:
Hi professor munger, I am not sure how much you have looked to contract law for insight on limits to euvolunatry exchange. I am going through my first contracts class here and thought that some common law elements would be interesting, if you have not seen them already. There are fraud and misrepresentation concerns which are clearly not euvoluntary or voluntary. Same with duress, pretty self-evident.
Unconscionability - this is the big fuzzy one and probably most relevant to euvoluntary exchange. The link is good, unfortunately missing a few of the comments, but the main points are there. It can be procedurally void, or the terms themselves can be so one-sided as to make the contract void. This is also relatively new in the common law and pretty uncertain compared to most doctrines. So, (1) the terms were hidden in a maze of language and he probably didnt read/understand them, or (2) he did understand them, but they are just unconscionable.
There are some other interesting ways to avoid enforcement of contracts:
duress by threat
undue influence ("unfair persuasion of a party who [...] by virtue of relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare") - so contracting with someone you have have reason to trust (177)
various public policy concerns, like if enforcement of terms would violate legislation (no contracts to kill) (178-182)
restraints on trade competition, especially non-compete agreements, unless they are "needed to protect a legitimate interest" (186-188)
I couldnt find a better free version of the restatement online. Anyway, I thought this may be of interest to you. cheers, alex
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