“The Justice Department plans to try and force four major banks to plead guilty to criminal antitrust charges for alleged collusion by traders in foreign-currency markets, people familiar with the discussions said.” [WSJ]
- Grand jury said to recommend charges against Pennsylvania Attorney General Kathleen Kane [Philadelphia Inquirer, more, earlier here and here]
- Orin Kerr analyzes Obama admininstration proposals to expand law on computer crime [Volokh Conspiracy and more]
- “Religious Liberty Isn’t a ‘Dog Whistle’ – It’s a Necessary Practice of a Free Society” [Scott Shackford, Reason vs. Frank Bruni, New York Times]
- Scalia, Epstein, many others: videos now online from the Federalist Society’s recently concluded 2014 National Lawyers Convention;
- List of firms with non-disparagement clauses (of highly dubious enforceability) purporting to forbid negative comments from customers [Tim Cushing, TechDirt]
- “Red Tape Is Strangling Good Samaritans” [Philip K. Howard, The Daily Beast]
- I’ve written on this irony: antitrust lawyers collude among themselves to boost their fee take [Daniel Fisher]
- Texas jury awards $27 million against McDonald’s in negligent security case [Bloomberg]
- NYC cop sues after being acquitted on rape charges, and from the difference in coverage between the NY Daily News and Slate, you might not realize it was the same case;
- “Obamacare was no inartful compromise; it was a brutal cramdown.” [Michael Greve, Law and Liberty, on Halbig]
- American Tort Reform Foundation nominations of “judicial hellholes” this year include Louisiana, South Florida and NYC [Abnormal Use]
- Antitrust’s awful academics [Tom Bowden, Ayn Rand Institute]
- New York Assembly Speaker Silver “earned up to $750,000 in 2013 working a few hours per week” at prominent tort firm [NY Daily News]
- Europe: Gardeners with sit-on lawnmowers face buying motor insurance [Telegraph]
Last month federal district judge Claude Hilton dismissed an antitrust suit filed against rival makers of table saws by SawStop, a company that has patented a table saw with innovative safety features. “Hilton’s ruling, while a blow to SawStop, has no legal bearing on the company’s efforts to get the Consumer Product Safety Commission to require the use of their technology on most table saws sold in the U.S.” Trial lawyers at Boies Schiller and elsewhere have also filed numerous product liability suits against makers of conventional saws; many saw users prefer to go on buying conventional saws, which are much less expensive, in preference to using the SawStop system [David Frane, Tools of the Trade, background; earlier]
Alexander Cohen on the e-books/Amazon antitrust settlement [Atlas Society]
I was a guest Friday on Fox Business Network’s The Willis Report, with guest host Dennis Kneale, to discuss two antitrust cases in the news: Apple’s vigorous efforts to fight back against a monitor appointed as part of its e-books antitrust case [Roger Parloff/Fortune, Alison Frankel/Reuters], and the FTC’s enforcement action against music teachers for anti-competitive practices. You can watch here.
I’ll save the (highly significant) Apple-vs.-monitor case for another post. The Federal Trade Commission’s enforcement action against music teachers, skillfully told by Kim Strassel in the WSJ, demonstrates what officialdom is willing to do with the legal sledgehammer that it claims to need to take on giant corporations like Apple: it uses that weaponry against the mild-mannered piano teacher next door and her little trade association. In a sane world, when the association said its hortatory statement had never been enforced and it would delete it from now on, the FTC’s enforcers would declare victory and move on to some more important case. That they did not do so here speaks volumes about the zeal, careerism and lack of proportion that add up to runaway government. More: George Leef, Forbes.
- Falling tree limb injures woman, jury orders city of Savannah to pay $12 million [Insurance Journal]
- Dept. of Interior mulls lowering threshold for federal recognition of Indian tribes [AP]
- Section 230: “The Law that Gave Us the Modern Internet, and the Campaign to Kill It” [Derek Khanna, The Atlantic]
- Interview with false-memory expert Elizabeth Loftus [Slate]
- “No meaningful costs or downsides” to the Microsoft antitrust case? Really? [Tom Bowden]
- NSA covertly intervened in standards making process to weaken encryption standards [Mike Masnick, TechDirt] After being rebuffed by public opinion in quest for dragnet surveillance programs, NSA quietly put programs in place through other channels [Jack Shafer; related, Ken at Popehat]
- Given the limitations of litigation, better not to lament the shortcomings of the NFL concussion settlement [Howard Wasserman]
The immensely influential scholar and winner of the 1991 Nobel Prize for Economics was 102 years of age and a productive scholar to the end. An excellent short introduction to Coase’s work is found in the Concise Encyclopedia of Economics, edited by David Henderson.
Coase’s famous, seminal article The Problem of Social Cost, while the most widely cited in the law and economics canon, is also persistently misunderstood and misrepresented by both friends and foes, as Robert Ellickson shows devastatingly in this essay (h/t Jonathan Adler). Many, even most popular attempts to formulate the “Coase Theorem” veer far from what Coase intended and sometimes into the reverse, above all when they idealize the power of negotiation to overcome the problems of externalities in a highly fictional world that assumes away transactions costs.
As Coase himself pointed out: “The world of zero transactions costs has often been described as a Coasian world. Nothing could be further from the truth. It is the world of modern economic theory, one which I was hoping to persuade economists to leave.” Precisely because across a wide range of circumstances the transactions costs of negotiation are too high to permit reallocations of rights between parties, some initial assignments of liability or property rights do impair real output compared with others.
The University of Chicago’s well-meaning notice, I fear, is among those that misstate the Coase Theorem. “Coase believed the incentives of private parties to resolve disputes in their own best interests, even if there needs to be adjudication by courts, should result in an efficient, mutually beneficial solution that is always preferable to government intervention.” (No, that’s not at all what he wrote, even if one succeeds in disentangling the court adjudication from the “government intervention.”) Likewise Bloomberg: “Holding the [polluting] company liable and ordering it to pay money to an affected property holder is less likely to yield an optimal result than having the parties negotiate, he wrote.” (No, that’s not it at all either. At most, his theory implies that the optimal liability rule is fact-contingent and should not invariably be assumed to be the one that makes the smokestack owner pay)
I also have a notion that Coase’s other greatest paper, “The Nature of the Firm” made a huge difference in the real business world in ways that have not been fully reckoned. In that era and on until some time after World War Two, it was widely imagined that the telos of a firm was just to grow and grow without limit, which meant one saw elaborate attempts at vertical integration such as Henry Ford trying to grow rubber trees for tire supply, and antitrust authorities could imagine themselves the only obstacle to the eventual agglomeration of the whole economy into a small number of firms. By the time Coase’s insights had been absorbed, executives had come to see the logic of outsourcing, no one expected the hundred largest firms to account for a higher share of employment or sales or profits each year than last, and antitrust mania went into remission, at least temporarily.
More from Stephen Bainbridge, Lynne Kiesling, Don Boudreaux, David Henderson (a Coase contra Friedman anecdote), Kevin Bryan, David Friedman, Coase interview with Tom Hazlett excerpt via Geoffrey Manne, and Jonathan Adler with much more on what Coase actually thought about the correction of putative externalities. Don’t miss Richard Epstein’s reminiscences, either. [and cross-posted with some additional links at Cato at Liberty]