The University of Chicago Law School Faculty Blog

Eric Posner on the Bailout

Chicago's own Eric Posner recently joined the team of bloggers at the Volokh Conspiracy, and has posted several pieces there in recent days about the attempts to solve the current financial crisis.

• 9/22: The Bailout Bill: What Should Congress Do?
• 9/23: Does Congress think that Paulson asked for not enough power?
• 9/24: The Dodd Plan: A Contract Clause Problem?
• 9/24: The Bailout and Oversight
• 9/25: Paulson v. Dodd: distributional considerations

Madhavi Sunder Interviewed on BBC World Service

Last week, Visiting Professor of Law Madhavi Sunder appeared on the BBC World Service program, "The Forum," which each week invites three prominent international figures to debate "big ideas" with each other. On the Sept. 14 show, Madhavi was joined by sociologist Manuel Castells and mathematician and cosmologist John Barrow. The group discussed, among other the things, where power should lie in relation to the ownership of ideas. Professor Sunder also delivered the program's "60 Second Idea to Change the World."

Bailouts and Phantom Bankruptcies

I have found it hard to read the newspapers each morning without throwing up. Everyone is lining up to dump off their bad investments on Uncle Sam, meaning, of course, you and me. The University of Texas Medical Branch in Galveston wants $609 million, because they only bought $100 million in hurricane insurance, and the rest of Galveston wants $1.5 billion more. (We should only give them money if they promise to spend it somewhere other than Galveston; this should be about exit, not replacement.) And that seems like seat-cushion change compared to the $700 billion figure in the Sunday version of the Paulsen bailout legislation.

To the greatest extent possible, any bailout should decouple—separate—bailing out the credit system from bailing out individual participants in that system. We need to separate out controlling systemic externalities from insulating individuals from the consequences of their actions. That is abstract, so try this.

Peculiar Discrepancies in the Political Markets

At the moment of this writing, traders on Intrade—probably the most prominent and active information market in the world—have Barack Obama at about 53.5% to win the 2008 election. Meanwhile, over at the Iowa Electronic Markets—maybe the second-most prominent information market in the United States—traders have Senator Obama at approximately 63% to win the election. This type of broad schism is not supposed to occur in information markets (or any other type of market, for that matter). It raises a number of interesting questions about why the divergence has developed, why it has been allowed to persist, and which of the two figures is to be believed.

Obama's Justice

On Sunday, September 21, the New York Times published an editorial (“The Candidates and the Court”) predicting that, if elected president, Barack Obama will appoint “moderate” or “centrist” justices, like Stephen Breyer, rather than “all-out liberals, like William Brennan or Thurgood Marshall.” The Times argued this is a good reason to elect Obama rather than John McCain, who would appoint “archconservatives” and would “complete President Bush’s campaign” to make the Supreme Court “an aggressive right-wing force.”

The Times is right to predict that President Obama would appoint less conservative justices than President McCain. It is also right to argue that this is a good reason to elect Obama. It may even be right to predict that President Obama will appoint “moderate” or “centrist” justices, rather than justices like Brennan or Marshall. But if this prediction comes to pass, it will be bad for the law, bad for the Court, and bad for the nation.

 

Audio/Video: Anderson and Posner on "Torture, Law, and War"

This week's Faculty Podcast episode features a panel from the "Torture, Law, and War" conference held at the Law School earlier this year; the panel includes 2007-8 Law and Philosophy Fellow (and current Visiting Scholar) Scott Anderson, Kirkland and Ellis Professor of Law Eric Posner, and Rutgers University's Jeff McMahan. They discussed the questions:   Should the law absolutely ban coercive interrogation?  And can and should it really mean it?

Video of the panel is embedded below, and you may also download an .mp3 or a .mov file.

Political Lies and Democracy

How does a democracy deal with lies? In the last several national elections, political operatives, exemplified by the Swift Boaters in 2004, have employed a deeply cynical and highly effective strategy to distort and manipulate public discourse. This strategy poses a serious threat to the very foundations of democratic self-governance.

The core of the strategy is simple: Consultants, political spokespersons and even the candidates themselves systematically repeat a false statement about their opponent’s positions, statements, or actions. The very assertion of the falsehood puts the target on the defensive. If he ignores the false accusation, it gains traction; if he disputes the lie, he dignifies it, gives it greater publicity, and sounds suspicious; if he calls the lie a lie, he comes across as accusatory and mean-spirited.

An essential element of this strategy is that the perpetrators of the lie will insist, no matter what, that the lie is true. Confronted with the facts, the perpetrators will reiterate the falsehood. The key to this strategy is the willingness to lie, and to lie repeatedly.

Richard Epstein's "Libertarian Manifesto"

This week, Forbes.com launched a new weekly column called "The Libertarian," authored by our own Richard Epstein, James Parker Hall Distinguished Service Professor of Law and Director of the John M. Olin Law and Economics Program. Below is an excerpt from his first column, "The Libertarian Manifesto," and you may read the whole column on Forbes.com.

Online columnists, it is said, should not suffer from an abundance of caution or subtlety. Our job is to shake things up in a short compass. As the choice of title for my new weekly column indicates, I intend to do just that--push hard for a consistent small-government view that is, regrettably, as unfashionable on the Republican side of the aisle as it is on the Democratic. So here are some clues as to my game plan.

In principle, just what does my restless agenda entail? A bit of a contradiction, I fear. Elsewhere, I would describe myself in measured tones as a classical liberal who prizes balance and moderation on all matters governmental. In so doing, I would place myself squarely in the tradition that runs from John Locke, by way of David Hume and Adam Smith, to the Founding Fathers of our Constitution.

Kabul Report

I had not been to Kabul in five years, and the city looks more or less unchanged. There seem to be fewer women in burqas, and a few more cars. There are quite a few more private shops on the streets, especially beauty parlors and barber shops. But things appear basically the same. 

The mood, on the other hand, is not. When I was here in early 2003, there was a halting sense of hope, but little has materialized from the Karzai government and people are overwhelmingly pessimistic. Streets are still potholed. Jobs are scarce. Prices are rising. Things are moving backward steadily, and the Taliban have attacked places as close as 30 miles away. Literally no one has a good thing to say about Karzai (the "mayor of Kabul") and the government.  Movement is restricted and armed guards protect any place frequented by foreigners or Afghans who can afford the protection.

Upcoming Conference: Fault in Contract Law

On September 26 and 27, the Law School will host a conference dedicated to reevaluating the role of fault in contract doctrine. As the conference website asks,

Is it immoral to breach a contract? Should the intent ("mens rea") of the breaching party matter? Should the courts, in general, view more harshly parties’ faulty behavior? Does the idea of "efficient breach" require a no-fault regime? What is the proper role of victims’ contributory fault?

In exploring these and related issues, the symposium intends to bring together a variety of perspectives. While many of the contributions to the symposium are from experts in the study of law-and-markets, prominently utilizing the "law and economics" perspective, other views—some of which are strongly opposed to the economic approach—will also be included.

The conference, which was organized by Frank and Bernice Greenberg Professor of Law Omri Ben-Shahar and Fischel-Neil Visiting Professor of Law Ariel Porat, is sponsored by the University of Chicago Law School and the John M. Olin Center for Law and Economics at the University of Michigan. Recordings of many of the talks will be made available on the Law School website, and the papers will be published in the June 2009 issue of the Michigan Law Review. An expanded volume collection will be published later by Cambridge University Press.