Black Metropolis Research Consortium
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China’s Anticorruption Campaign and Civil Servant Fever
No full textWhat is the impact of anticorruption efforts on entry into bureaucratic jobs? This paper approaches the question theoretically and empirically through the lens of China’s anticorruption campaign instituted in 2013. We leverage a novel data set of national civil service exams. Exploiting assignment and timing variations in anticorruption inspections of government departments, our difference-in-differences estimate shows that a department had significantly fewer applicants following an inspection. We provide evidence that the decline in bureaucratic entry has occurred since the campaign lowered the (expected) returns from bureaucratic jobs by improving the detection of corruption and constraining power that is likely to be abused. In contrast, we do not find evidence that the campaign affected legal income. Furthermore, simulation exercises suggest that after the anticorruption campaign, incoming bureaucrats may have lower ability but higher prosociality than before
The Impact of Anti-Corruption Legislation on the Evolution of Corporate Law in Uzbekistan
No full textPolitical Connections and the Effectiveness of US State Government Resource Allocation
No full textWe find that US state governments allocate economic incentive awards disproportionally to firms that are politically connected to state politicians and that these political connections distort the effectiveness of resource allocation. A connected firm is more than three times more likely than an unconnected firm to receive an incentive award, and the award amount is 51 percent larger. This relation is robust to unexpected gubernatorial departures and close gubernatorial elections for which endogeneity is less of a concern. Importantly, unconnected firms that receive awards generate 1.5–2.0 times greater future job growth, and only awards to unconnected firms are associated with job spillover to other industries and long-run aggregate local economic growth. Connected awards are more likely and larger when politicians’ motives appear self-serving. Collectively these findings suggest that awarding economic incentives to politically connected firms is not an effective use of state taxpayers’ funds. The state—the machinery and power of the state—is a potential resource or threat to every industry in the society. With its power to prohibit or compel, to take or give money, the state can and does selectively help or hurt a vast number of industries. (Stigler 1971, p. 3
Political Freedom and Economic Constraints: The Political Setting for the Problem of Twelve
Full text linkThis essay outlines foundations of the current moment facing corporations and politics, which I have characterized as a new “problem of twelve”—that is, the concentration of power in the hands of a small number of index and private equity fund sponsors.1 Through the middle of the twentieth century, public companies dominated the U.S. economy and government. They owed their dominance to having been socially legitimated coming out of the Great Depression, a legitimation built on their affirmative war efforts and on the negative constraints of securities law, progressive taxation, labor unions, and operational regulation. From 1970 on, however, they changed and were dramatically changed by politics and economics. American corporate leaders used politics to liquidate most of their New Deal constraints, simplifying governance of public companies, only to face a new political constraint in the form of the institutional investors, and new economic constraints in the form of globalization, automation and the “technology” of hostile takeovers and private equity.
How did corporations shake off their New Deal political constraints? Corporate leaders invested in their own political capital and applied the resulting power to roll back antitrust law, taxation and regulation. Most importantly, they laid low their most powerful political rival—private sector labor unions. As they achieved political victories, however, public companies’ autonomy in fact dramatically shrank. Indeed, they faced an existential crisis – in the form of globalization, inflation, automation, hostile takeovers, and LBOs (i.e., private equity). Since 1990, they have also faced an ongoing challenge in the form of a “shareholder rights movement,” in which institutional investors organized politically, first by public pension funds and hedge funds, and lately increasingly by index funds. Meanwhile, private equity, which seemed to diminish in the recession of 1989–91, has more than recovered and has been growing much faster than public equity markets, displacing public companies in both the economy and the political system.
This combination of “liberated” corporate power re-constrained by markets and shareholders sets the stage for the current politics of the “problem of twelve” created by the ongoing growth and concentration of index and private equity funds. If corporations had not been politically “liberated” from 1970 on, the influence of index and private equity funds would be less important to the political system and to the economy. If companies had not faced the whirlwind of global capitalism and the technology shocks it ushered in, choices in how they were governed would not have had such dramatic implications for the economy and polity. If institutional shareholders had not developed the standard suite of powers they use to influence companies—policy formation and coordination, lobbying, shareholder resolutions, and more inthe-weeds but crucial governance tools such as majority vote bylaws—the ability of index funds to influence companies would be significantly weaker. If labor had not been decapitated as a political force, the ability of private equity fund lobbying to eliminate the remaining New Deal constraints on their growth would likely not have been successful. If companies had not become the core not only of the U.S. economy but of its political economy, the stakes for how investment funds are governed would be lower.
With this context, it can be better understood why index and private equity funds are increasingly perceived as – and indeed often are – politically active and influential. It also becomes more understandable why other political actors – civil society organizations, social activists, political parties and politicians – have responded and are continuing to respond to these funds’ growing economic clout and political power. Without the backstory, it would be hard to understand how an application of one essence aspect of capitalism—finance—has increasingly attracted political focus on topics such as diversity, treatment of workers, and climate change. Asset managers now draw charges of “socialism” from the right, and charges of antitrust harm and of foot-dragging on other salient issues, such as corporate political disclosure, from the left
Law without Hierarchy
No full textegal systems are often assumed to require a single authoritative agency, such as a high court. Yet in some arbitration systems with no central authority, rules develop that are clear, adaptable, and judicable—and hence fulfill common criteria for law. This paper argues that institutional procedures of certain arbitration systems produce incentives to develop such rules. Using a formal model, I show that when arbitrators can be vetoed by disputants, arbitrators have an incentive to conceal biases that, if revealed, result in future rejection. An arbitrator maintains a neutral reputation through reasoned explanations that rely on precedent in most cases and develop new rules in cases without clear precedent. Disputants, in turn, benefit from published explanations because of the effect on their individual probabilities of winning. This argument provides a theoretical mechanism for why some arbitration systems produce legal rules even without a central authority. There are endless diversities in the opinions of men. We often see not only different courts but the arbitrators of the same court differing from each other. To avoid the confusion which would unavoidably result from the contradictory decisions of a number of independent judicatories, all nations have found it necessary to establish one court paramount to the rest, possessing a general superintendence and authorized to settle and declare in the last resort a uniform rule of civil justice. (Hamilton [1787] 2003, p. 146
Dividing the Body Politic
Full text linkIt has long been assumed in large, modern, democratic states that the successful practice of democratic politics requires some kind of internal division of the polity into subunits. In the United States, the appropriate methods and justifications for doing so have long been deeply and inconclusively contested. One reason for the intractability of these disputes is that American practices of political self-division are rooted in, and have been largely carried forward from, premodern practices that rested originally on overtly illiberal assumptions and justifications that are difficult or impossible to square with contemporary commitments to philosophical liberalism.
The possibility of sorting things out in a rational way—long the object of legal and political science scholarship in the field—has recently been greatly complicated by an unexpected resurgence of various forms of illiberalism, especially populist authoritarianism, a conception of popular self-governance that rejects liberal understandings of democratic processes and politics. This new political alignment is especially complicating because liberals and illiberals disagree profoundly about the nature of the body politic, its susceptibility to division, and the significance and proper goals of such division.
This Article traces the evolution of American practices of political selfdivision from premodernity through the present, explores how present political trends affect longstanding disputes over practices of legislative districting, and concludes with a brief examination of some possible ways of establishing a workable modus vivendi
The Border’s Migration
Full text linkThe border has never played a larger role in the American psyche than it does today, and yet it has never been less legally significant. Today, a noncitizen’s place of residence tells you less about what rights and privileges they enjoy than it ever has in the past. The border has migrated inward, affecting many aspects of non-citizens’ lives in the United States. The divergence between the physical and legal border is no accident. Instead, it is a policy response to the perceived loss of control over the physical border. But the physical border remains porous despite these legal changes. People keep migrating even as we continue to draw boundaries within communities, homes, and workplaces far away from the border. This paper explores how U.S. law has evolved to render the border superfluous, even as its symbolic importance has grown, and how it might further evolve in the future
The Past, Present, and Future of Humanitarian Parole
Full text linkThe humanitarian parole provision of the Immigration and Nationality Act grants the Attorney General discretion to allow people to enter the United States without an immigrant or non-immigrant visa. Despite the sparse language of the provision establishing parole, it has been used in a wide variety of contexts, ranging from one-time grants of entry into the United States for medical care to the establishment of large-scale programs for entire groups of people. The creation and administration of large-scale parole programs have been the focus of recent lawsuits, placing critical questions on the meaning and scope of the provision before judges. This Comment aims to provide a historical overview of humanitarian parole and evaluate controversies and lawsuits challenging large-scale parole programs. Ultimately, it argues that large-scale parole programs play a crucial role in our immigration system, and their creation is a legitimate, legal use of the provision. It ends by making a recommendation on how to amend the parole statute to formally authorize large-scale programs
“Killer Acquisitions” Reexamined: Economic Hyperbole in the Age of Populist Antitrust
Full text linkMajor competition regulators, and substantial portions of the scholarly community, have rapidly adopted the view that “killer acquisitions” and “kill zones” constitute significant sources of competitive risk arising from incumbent acquisitions of emerging firms in digital markets. Based on this view, policymakers in the United States, European Union, and other jurisdictions have advocated for, and in some cases have taken, substantial changes to merger review policies that would erect significant obstacles to incumbent/startup acquisitions. A review of the relevant body of evidence finds that these widely-held views concerning incumbent/startup acquisitions rest on meager support, confined to ambiguous evidence drawn from a small portion of the total universe of acquisitions in the pharmaceutical market and theoretical models of acquisition transactions in information technology markets. Moreover, the emergent regulatory and scholarly consensus fails to take into account the rich body of evidence showing the critical function played by incumbent/startup acquisitions in supplying a monetization mechanism that induces venture-capital investment and promotes startup entry in technology markets. The prospect of an acquisition transaction in the case of technical and commercial success generally promotes innovation and competition by providing a transactional device that expands startups’ access to the capital inputs required to undertake R&D and the commercialization services required to convert R&D outputs into commercially viable products. At the same time, these acquisitions enable incumbents to access the specialized innovation capacities of smaller firms. Proposed changes to merger review standards would disrupt these efficient transactional mechanisms and are likely to have counterproductive effects on competitive conditions in innovation markets
Nudging Improvements to the Family Regulation System
Full text linkThe Restatement of Children and the Law features a strong endorsement of parents’ rights to the care, custody, and control of their children because parents’ rights are generally good for children. Building on that foundation, the Restatement’s sections on child neglect and abuse law would resolve several jurisdictional splits in favor of greater protections for family integrity, thus protecting more families against the harms that come from state intervention, especially state separation of parents from children.
But a close read of the Restatement shows that it only goes so far. It is not likely to significantly reduce the wide variation in practice by jurisdiction, nor will it satisfy calls for a more fundamental transformation of the legal system. For instance, the Restatement requires consideration of the harm of removing children from their parents, without explaining how to weigh that against possible harms of remaining at home. It provides that poverty alone does not amount to neglect, without providing much guidance on the difficult question of how to implement that principle. The Restatement creates a clear preference for placement with relatives over strangers, without clarifying what suffices to overcome those preferences. It recognizes a right of parents and children separated by the state to visit with “frequency,” without defining that term.
This analysis is not a criticism of the Restatement—by codifying existing law, it does what the Restatement should do. Rather, this analysis highlights how this Restatement can contribute to child neglect and abuse law in the present context. It can help nudge the law in a modestly improved direction and highlight areas that require more transformative legal changes