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October 03, 2005


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Scott Scheule

I'm going to like this blog.

saul levmore

Yes, I agree with Professor Henderson, crises stimulate federal law. Or at least I recently argued something like this for corporate law (2005 Illinois Law Review 195). In theory the force can move a state in either direction. Knowing that a crisis like Enron is apt to generate federal law, Delaware might "preempt" the feds by enacting protective legislation in advance. If a crisis is 5% likely, so to speak, Delaware might find it worthwhile to lower this probability to 3% (at least for "its" corporations), even if this requires legislation that is on average inefficient or otherwise undesirable. On the other hand, if Delaware is worried more about competition with other states than with the federal government, then it might welcome federal intrusions because federal law might occupy the terrain that would otherwise prove fertile for other states as competitors. In that article, I suggested that one way or the other, and for better or worse, we ought to expect more federal law over time.


Riffing off of the Dean's comment, would Delaware really fear other states' innovations? Michael Abramowicz (visting here at Chicago this term) has argued that given the ease by which Delaware could mimic any innovation by another state -- say, Nevada -- the threat is simply not credible. A possible solution is some property right -- call it intellectual property for laws -- in corporate law innovations by states. Of course this raises a host of big hairy questions, but it might help foster the federalist dream of the states as laboratories of democracy. On the corporate side of the ledger, there just doesn't seem to be much innovating at the state level. It may be, as Richard Epstein argued to me today, that the innovation is largely done, but the question is likely an open one in need of more data/analysis. Certainly the feds (Congress, SEC, SROs) are innovating, and the states, namely Delaware, are sitting on the sidelines. Even the recent Delaware decision in the Disney-Ovitz compensation case was fairly mushy about Delaware standards for these cases going forward. Just as Fukuyama was wrong that history was not over, I think the view that corporate law cannot be improved at a fundamental level is misplaced. What should be the locus of innovation and how should it be encouraged, if at all, are tough questions.

Bob Griffin

Forgive my ignorance, but where in the U.S. Constitution does it allow the Federal Government to intrude in any way into the jurisdictions of any one of the States for any other reasons than those listed in Article I, Section 8? Are not all rights not explicitly given to the Federal Government to remain with the soverign states? If a state stands by when an ecomomic disater occurs, does it automatically surrender it's jurisdiction to the Feds? I think not.

And don't quote anything from the first sentence of the Constitution, because that was only an introduction to the document. That sentence did NOT allocate any powers to the Federal Government. Please! No general welfare garbage. Any layman can read and understand that that was not the intent. Only lawyers can distort something that simple into the rediculous belief that the Federal Government is all-powerful and can do anything it likes in the name of the "general welfare".

Ditto for the whole "Declaration of Independence", as this document isn't even a legal document. It is merely a statement.

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