The University of Chicago Law School Faculty Blog

StickK Launches!

StickK, a business that allows you to enter self-commitment contracts, is now open for business. If you would like to lose weight (for example), you make a contract with StickK, under which you are required to pay money to a worthy charity if a referee determines that you failed to meet your weight-loss commitment.  You can also choose an unworthy charity:

During the contract creation process, you have the option of selecting an Anti-charity as the Recipient of Stakes. The purpose of Anti-charity is to give you an added incentive to achieve your goal by designating your stakes, upon failure, to go to an organization that you strongly oppose. You should select an organization which promotes values that are the most contrary to your own. We currently have a selection of Anti-charities which fall on either side of the following highly contentious issues: Abortion, Gay Marriage, Gun Control, and the Environment.

The Strange Case of One Laptop per Child

Charles Dickens invented the term “telescopic philanthropy” for people, like his Mrs. Jellyby, who are preoccupied with the lives of people in faraway places and ignore their own children and others at home. There is another type of telescopic philanthropy, where the telescope is aimed not far away but firmly at one’s own navel. Consider Nicholas Negroponte, a computer scientist at MIT, who has established a charitable organization to help poor children in the developing world. What would a computer scientist think that poor children need that they currently lack? Food, medicine, clean water? Or maybe a laptop computer?

Video: Eric Posner and Jack Balkin on Liberty vs. Security

Over at Bloggingheads.tv, you can watch Eric Posner and Jack Balkin of Yale Law School discuss civil liberties, security, and the National Surveillance State.

Are Federal Judges Overpaid?

Chief Justice Roberts has just issued his year-end report on the federal judiciary. As in past years, he urges Congress to raise the salaries of federal judges. The accompanying data can be found here. The latter web page might seem to make up in beautiful graphics for what it lacks in statistical rigor, but let’s hope that lower-court judges do not use it as a guide for evaluating expert testimony. Roberts’ argument boils down to two points: that the real wages of federal judges have declined since 1969 because of inflation; and that today first-year associates in some law firms, law school deans, and many senior law professors make more than judges do.

(Last year Roberts also noted that federal judges make less than counterparts in the UK; however, it turns out that in most developed countries with sophisticated legal systems, judges make less than American judges do.  The judiciaries in those countries are also less prestigious, yet they seem to perform just as well as ours does.)

Is a Climate Treaty Possible?

The Bali conference disappointed many people who hoped that delegates would agree to concrete steps for addressing climate change.  Instead, delegates agreed to “consider” this and “address” that and to “consider addressing” this and that.  It is certainly possible that eventually nations will enter a climate treaty.  But in light of Bali, it is worth addressing a taboo subject—that an effective climate treaty is simply not possible.

There are several reasons for doubting that states will be able to agree to a climate treaty that mandates significant limitations on greenhouse gas emissions.

Climate Change: “If you are not willing to lead, then get out of the way”

So said a delegate from Papua New Guinea to the American delegation during the conference on climate change in Bali. America’s failure to provide leadership with respect to climate change has become a recurrent complaint. But is this criticism just?

Why Not Allocate Carbon Rights on a Per Capita Basis?

So asks Minderbender. China makes just this argument, arguing that because it has four times the population of the United States, it should be able to emit four times the amount of greenhouse gases. Think of the atmosphere as a sponge that can absorb a limited amount of the world’s carbon. China wants the largest piece of the sponge because it has the largest number of people.

What is wrong with this argument? Initially, consider how this idea, if generalized as a principle of international law, would apply in other contexts. The sea contains various fish stocks. Currently, fish stocks that are located near a country’s coasts are “owned” entirely by that country. The rest of the world has no rights to it. Other fisheries are in the high seas. These stocks are for the most part not regulated: any country can authorize citizens to take them. Also consider mineral deposits in the sea bed under the high seas: these mineral deposits have traditionally been available to any country, though recent efforts have been made to regulate them under the Law of the Sea convention (to which the United States is not yet a party).

If China should have a per capita share of the atmosphere, then presumably it should have a per capita share of the fish stocks and mineral deposits beneath the high seas. We could go farther and ask, Why should any country have exclusive rights to resources in its territorial seas or, for that matter, on its own territory? Oil is oil: it is the same substance whether it exists under the oceans or under land. If China has a per-capita claim to oil under the ocean, why not to oil under the sands of sparsely populated Saudi Arabia? Or, to put this differently, why should China get carbon rights on a per capita basis if it is not willing to share (say) land rights on a per capita basis with (say) the Vietnamese?

The logic leads to a picture of the world as a basket of resources that should be distributed to countries on a per capita basis. Where the countries are actually located—how close they are to particular resources—is morally irrelevant.  Landlocked Lesotho should have a share of fisheries, whaleries, mineral deposits in Norway, and the atmospheric carbon sponge.  What matters is individuals, not countries, and individuals should have access to global resources on a per-capita basis. Who could object to this?

There are a few problems.

First, the per-capita principle would give governments incentives to expand (or not limit) their population. The bigger the population, the more of the world’s resources the government may claim. It would be better if governments were given incentives to limit their populations rather than expand them.

Second, do we really want the world’s resources divided up so that the biggest countries get the most? Is it relevant that some of the biggest countries have corrupt (Bangladesh), authoritarian (China, Russia), or otherwise less-than-efficient governments (India, Indonesia, Nigeria, Pakistan, Philippines), and therefore are unlikely to get most or even much or even any of the wealth to their people?

Third, the per-capita principle, whatever its attractiveness in the abstract, is in tension with the way that the world is organized and governments actually operate. Governments consider themselves responsible to their populations (or subsets thereof), and not to people living in other countries. Governments sometimes extend aid and resources to people in other countries who are suffering from a natural disaster or entrenched poverty, but never to people in other countries simply by virtue of their number. This leads to the final point.

Fourth, there is nothing ethically attractive about the per-capita principle. To see why, compare the United States (which has a population of 300 million) and Malawi (which has a population of 13 million). The United States has a per capita GDP of $40,000; Malawi’s is about $600. According to the per-capita principle, the United States (and, of course, China) should have greater carbon rights than Malawi, yet the United States (and China) are much richer than Malawi. If we are allocating the costs of greenhouse-gas abatement on an ethical basis, why give preference to states that happen to be big rather than states that are poor?

The Bali Puzzle

The Bali negotiations have laid bare the central issue for climate treaty negotiations: who should pay for climate change. There were two major points of dispute:

1. Should developing countries be bound by an obligation to reduce or limit greenhouse gas emissions, or should rich countries alone make such a commitment?

2. How should abatement costs be allocated among rich and poor countries? In particular, how much aid should rich countries give to poor countries?

The United States (and Canada and Japan) took the reasonable position that the rich countries should commit to reducing greenhouse gas emissions and to helping the poor countries do so, only as long as the poor countries agree to limit their greenhouse gas emissions. The developing countries (and Europe) argued that the rich countries must help the poor countries but the poor countries need not make commitments.

The final agreement is ambiguous and open-ended, not really committing anyone to anything except further discussions, research, etc. But the gist of the agreement is that the rich countries must proceed to a discussion of their greenhouse-gas abatement commitments, and must agree to provide aid to the poor countries, while the poor countries need only consider “actions” to reduce or not to increase greenhouse gas emissions, in return for money and technological assistance from the rich. That is to say, the poor countries agree only to act in their national self-interest.

One needs to remember that China and India are considered poor countries. They certainly are, on a per capita basis, but not in the aggregate. China is apparently the world’s biggest greenhouse gas emitter, and India, as it develops, will be an increasingly major contributor. We can expect that other developing countries with enormous populations (Brazil, Indonesia, Bangladesh) will eventually join this group. A climate treaty that omits binding commitments from these countries will do little to ameliorate the effects of climate change. As the New York Times put it today, even if the rich countries shut down all industry immediately, the rate of global warming would be delayed only by a few decades, as the developing nations would quickly take up the slack. And if the rich countries have bound themselves before China and India are expected to, then the latter countries will have enormous bargaining power in any further negotiations, and indeed may simply refuse to enter any agreement.

In a much-noted turn in the negotiations, American diplomats withdrew their opposition to an agreement that omitted poor-nation commitments. This seems like a big mistake, and the White House is already backtracking.

One might reasonably ask, Why shouldn't rich nations incur the costs of climate abatement?  They are mostly responsible for causing global warming, and can most afford to fix the problem.  The answer is here.  In brief, there are better ways to help the poor than to agree to an ineffective climate treaty.

So what’s so great about Bali? And, even more of a puzzle, what’s in it for the Europeans? Why don’t the Europeans join the U.S. and insist that there can be no deal without China?

StickK Business

Suppose you want to lose weight, and you have been unable to stick to a diet. Your aspiration is sincere but your will is weak. Fortunately, a solution is around the corner: you enter a contract with StickK, a new company founded by Ian Ayres, a Yale law professor, and some of his colleagues. Under this contract, you must pay StickK $1000 if you fail to lose (say) 10 pounds by the end of the year; the $1000 sum is handed over to a charity. If you lose the pounds, you pay nothing. (StickK will make money through advertising and in other ways.) A third party is retained to verify that you have lost weight. Ayres and his colleagues argue that this system will be more effective than alternatives at helping people lose weight, go to the gym, stop smoking, and achieve other personal objectives that require self-control.

Some nice legal questions arise. The system can work only if the contracts are legally enforceable. If they are not, the customer pays no penalty for failure except embarrassment, and one does not need StickK to expose oneself to embarrassment for failing to keep a public commitment to lose weight. But courts are unlikely to enforce such contracts. There is no consideration for your promise to pay money to StickK if you fail to lose weight—no quid pro quo, which is legally required for an enforceable contract. StickK does not give you anything in return for your promise to lose weight; nor do you give anything to StickK in return for its promise to pay the charity if you fail to lose weight. A rare zero-sided contract, there is no quid and no quo.

But there is a more serious difficulty. As StickK itself recognizes, it is important that the charity not be too attractive. If it is, then you will not feel bad if you fail to lose pounds—the money goes to a deserving group like the homeless—in which case you will not have a strong incentive to keep your commitment. To solve this problem, StickK will not permit its customers to choose the charity. But the problem remains. The money has to go to some charity, and at least some customers will turn out to favor that charity. For those customers, StickK can’t supply the needed incentive to keep their commitments.

What StickK needs to do is donate your money to an anti-charity, a group that almost no one approves of: the government of Sudan, say, or the tobacco industry. Perhaps if you know that breaking your diet makes you complicit in genocide, you will resist that slice of chocolate covered cheesecake. Let’s hope that the Sudanese government does not realize that it can cut out the middleman, and make money from obese Americans directly, by agreeing to take their money if they fall off their diets. Indeed, if Ayres’ business model is sound, we can imagine a future emporium of self-control entrepreneurs, with Sudan, North Korea, the tobacco industry, baby seal hunters, and pedophiles all vying for the business of the overweight, the underdeveloped, and other sufferers from weakness of will.

Redistributing Wealth Through Greenhouse Gas Abatement Efforts

In his invaluable blog, Larry Solum makes the following criticism of a paper recently posted with SSRN by me and Cass Sunstein.  His focus is our claim that unilateral or multilateral greenhouse gas abatement is not a sensible way of redistributing wealth from rich nations to poor nations.  He begins by quoting us:

It is possible that the more direct methods [of redistributing wealth from rich countries to poor countries] are inferior, for example because it is not feasible to provide that direct aid; but this argument has not been made out.

Then he makes the following argument:

It seems to me that the "feasibility" issue is, in some sense, the core of the dispute.  The salience of distributive justice to the distribution of the costs of ameliorating climate change arises because direct aid to the poor is perceived as outside the feasible choice set, whereas concentrating the burden of greenhouse gas reduction on wealthier nations is sometimes perceived as inside the feasible choice set.  Sunstein and Posner are surely right when they suggest that we really need evidence on this question, but I don't really see why their burden-shifting move is adequate.  It is their argument: shouldn't they at least attempt to provide evidence that their proffered alternative (direct aid to the poor) is inside the feasible choice set?

I think the answer is no.  Suppose, first, that that direct aid is within the feasible choice set.  (It probably is: the United States and other wealthy states already give direct aid to poor countries.  As has been frequently pointed out, the amount of aid is not great, and much but not all of it is tied to strategic interests.  Nonetheless, at least some of it appears to be purely altruistic.)  Let's call the amount of aid that is purely altruistic, and not tied to anything else, X.  If (say) the United States already gives X to poor states, and then finds itself providing additional implicit aid, Y, in the form of greenhouse gas abatement efforts, should we expect X to remain the same or go down?  If the United States has a budget, then either X will go down, offsetting Y, or there will be less spending on Americans--more likely the former.  Unless Americans either spontaneously become more generous or stop paying attention to the budget, direct aid will go down even though it is (as we explain in the paper) superior to indirect aid.

Second, consider the possibility that the United States does not give any "real" aid to other countries: it is all tied to strategic interests.  That is, direct aid is outside the feasible choice set.  If this is the case, then there is no reason to believe that such a selfish country would start giving aid in the form of disproportionate climate treaty obligations.  Why would climate change treaty negotiations convert the U.S. from a selfish state into a generous state? It is hard to see why Americans would become more altruistic than they have been in the past, in the course of determining greenhouse gas policy.  So if direct aid is outside the feasible choice state, indirect aid is as well.

The bottom line is that we assume merely that states treat different types of aid flows consistently, that is, they treat direct and indirect aid the same.  This seems like a plausible enough assumption to throw the burden of proof on those who think that, in this context, governments would systematically misunderstand the costs of their activities.