Black Metropolis Research Consortium
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Antitrust Reform in the Digital Era: A Skeptical Perspective
Full text linkThe rise of large digital platforms, accompanied by claims of increasing industrial concentration, has prompted calls for antitrust policy reform. Yet, the observed market trends are consistent with improvements in welfare, as economies of scale often decentralize effective choices and disintermediate previously dominant structures, unleashing entrepreneurship. Evidence of deleterious impacts from the rise of the leading platforms—via mergers, predation, vertical foreclosure, and tying practices— is scant. The difficulty in amassing such evidence is implied in the argument that antitrust enforcement should no longer be focused on estimating consumer welfare impacts using traditional price theory. Recommendations for the creation of an independent Digital Regulator ironically buttress this view. This approach invokes an unwarranted rejection of the advantages of the evidentiary standards imposed by antitrust courts and risks the rent-seeking outcomes experienced with industry-specific regulators
Declining Unionization and the Despair of the Working Class
Full text linkWhile the effects of labor unions on objective conditions have been extensively studied, little is known about their role in individuals’ perceptions of economic circumstances. We investigate whether union density affects the subjective well-being of area residents by exploiting the staggered adoption of right-to-work laws in the United States through a border-county design. We find that unionization promotes happiness for those of low socioeconomic status, including non-college-educated residents and current or former blue-collar job holders, but has no discernible impact on their high-status counterparts. Of affected residents, workers stand to reap the most benefit. We also find that the favorable effect of unionization is transmitted through the assessment of improved financial situation, personal health, and workplace quality. This finding highlights the role of pecuniary and nonpecuniary benefits (for example, on-the-job safety, work-life balance, interpersonal trust, and workers’ autonomy) that unions afford to protect society’s most marginalized groups
Clean Up Your Act: The U.S. Government’s CERCLA Liability for Uranium Mines on the Navajo Nation
Full text linkThis Comment delves into the Cold War legacy of uranium mining on the Navajo Nation. Today, unremediated hazardous waste from more than five hundred deserted mines has continued to poison the health and lands of the Navajo. This Comment argues that the federal government is ultimately liable for the remediation of these mines under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Specifically, because the federal government held legal title to the mining lands and tightly managed the mining operations, the federal government satisfies CERCLA’s liability regime for “owners” and “operators.” The U.S. government’s liability under CERCLA warrants fuller attention by the U.S. Environmental Protection Agency (EPA), Congress, and states in order to achieve the complete, long-overdue remediation of these uranium mines
Privacy and/or Trade
Full text linkInternational privacy and trade law developed together but are now engaged in significant conflict. Current efforts to reconcile the two are likely to fail, and the result for globalization favors the largest international companies able to navigate the regulatory thicket. In a landmark finding, this Article shows that more than sixty countries outside the European Union are now evaluating whether foreign countries have privacy laws that are adequate to receive personal data. This core test for deciding on the permissibility of global data exchanges is currently applied in a nonuniform fashion with ominous results for the data flows that power trade today.
The promise of a global internet, with access for all, including companies from the Global South, is increasingly remote. This Article uncovers the forgotten and fateful history of the international regulation of privacy and trade that led to our current crisis and evaluates possible solutions to the current conflict. It proposes a Global Agreement on Privacy that would be enforced within the trade order, but with external data-privacy experts developing the treaty’s substantive norms
Banking on the Edge
Full text linkWhat’s old is new again. The risks of international banking have returned to prominence in the wake of the Russian invasion of Ukraine. Global banks are playing a central role in the economic sanctions regime imposed upon Russia in response to its acts of military aggression. Foreign banks have retrenched from serving the Russian economy. International markets for debt, equity, and commodities are experiencing significant disruptions. The solvency measures and quarterly earnings of global banks have been impacted. These risks are new versions of an old story. International banking has been a fraught endeavor dating back more than a century. Despite their significance, the international operations of U.S. banks are often overlooked by legal scholarship.
This Article fills in some of this picture by examining the evolution of U.S. banks’ global presence through the lens of an underappreciated, but significant, law: the Edge Act of 1919. The Edge Act began as a framework for privatizing the post-World War I rebuilding effort. Its drafters argued that promoting the competitiveness of U.S. banks abroad would expand U.S. commerce, manufacturing, and exports. Instead, through a series of legislative amendments and misadventures with overseas expansion, the Edge Act became a vehicle for global banking conglomerates to operate lightly regulated overseas “nonbank-banks.” International banking policy came to prioritize the U.S. financial sector as its primary beneficiary, with deregulation as the predominant vehicle for achieving this goal.
The Edge Act is a case study for evaluating the longstanding desire to ensure that U.S. banks remain globally dominant. The results of eroding geographic and activity limitations include exposure to evolving risks—including sovereign debt crises, commodity price shocks, currency market risks, money laundering, derivatives dealing, and the growing use of financial sanctions—as well as increasing financialization, and an historic global financial crisis. As the experience of the Edge Act demonstrates, claims about the value of financial deregulation and its connection to international competitiveness should be treated with skepticism.
The appropriate role of global financial institutions is likely to be an issue of continued relevance as the emergence of nascent digital asset markets and digital banking models challenge the spatial and conceptual borders of financial markets. Without a thorough reexamination of the purposes and functions of international banking as we know it, beginning with the Edge Act, global banks may continue to exploit legal structural complexity in the name of international competition. As the case of the Edge Act demonstrates, such opportunistic use of regulatory arbitrage exposes the public to significant financial risk
The Corporate Governance of Public Utilities
Full text linkRate-regulated public utilities own and operate one-third of U.S generators and nearly all the transmission and distribution system. These firms receive special regulatory treatment because they are protected from competition and subject to rate caps. In the past decade, they also have been at the center of high- profile corporate scandals. They have bribed regulators to secure subsidies for coal-fired generators and nuclear reactors. They have caused wildfires and coal- ash spills that resulted in hundreds of deaths and billions of dollars in liability. Their failure to maintain reliable electric service has contributed to catastrophic blackouts. Perhaps most consequentially, they have emerged as powerful opponents of state and federal climate action.
This Article describes the unique corporate governance challenges public utilities face and argues that these governance challenges contribute to the pervasive inefficiencies and the frequency of corporate misconduct that characterize utility industries. American corporate law provides special protections to shareholders, such as the right to elect corporate boards and the requirement that directors and managers owe fiduciary duties to shareholders. The economic justification for these protections is that shareholders are the residual claimants of corporations: because they receive any value a corporation generates beyond what it owes to its fixed claimants, they have the appropriate incentives to pursue value-enhancing investments.
But the theoretical premise that underlies the American system of corporate governance does not apply to public utilities. Rate regulation limits the value shareholders receive when a firm innovates or reduces costs. It therefore converts shareholders into fixed claimants with the same incentives creditors have in non-utility industries. Because ratepayers, not shareholders, receive the residual value the firm generates beyond what it owes to its fixed claimants, standard corporate law theory suggests that public utilities should be run to advance ratepayer and not shareholder interests. The implication is that managers and directors of public utilities should owe fiduciary duties to their ratepayers, that ratepayers should be represented on the corporate boards of public utilities, and that managers of public utilities should receive less deference on business decisions than they do in other industries. As we discuss, however, these reforms are difficult, and perhaps impossible, to implement effectively. That, in turn, highlights the need for strong regulatory oversight and offers additional reasons to be skeptical of the utility model
Fractured Majorities and Their Reasons
Full text linkThe wisdom of crowds correctly exalts majority decision-making on appellate courts as well as on many other settings, including hospitals and committees with multiple doctors or board members. But the same confidence in majorities should be applied to the reasons that are attached to a vote, or opinion, and then to a majority’s rejection of a member’s reasoning. This Article introduces the problems confronted when examining the reasons for opinions, and then the reasons beneath those reasons. It shows that majority decision-making is not as reliable as it first seems and, indeed, that a single decision-maker may at times be more reliable than a 2-1 or even a supermajority vote. One lesson or escape from this paradox is that judges and other decision-makers should reveal their disagreements, if any exist, with other voters’ reasoning, to reveal whether there is such serious disagreement about their reasoning as to question the presence of a true majority
Grid Reliability in the Electric Era
Full text linkThe United States has delegated the weighty responsibility of keeping the lights on to a self-regulatory organization called the North American Electric Reliability Corporation (NERC). Despite the fact that NERC is one of the largest and most important examples of industry-led governance—and regulates in an area that is central to our economy and basic human survival— this unusual institution has received scant attention from policymakers and scholars. Such attention is overdue. To achieve deep decarbonization, the United States must enter a new “electric era,” transitioning many sectors to run on electricity while also transforming the electricity system itself to run largely on clean but intermittent renewable resources. These new resources demand new approaches to electric grid reliability—approaches that the NERC model of reliability governance may inadequately deliver.
This Article traces NERC’s history, situates NERC in ongoing debates about climate change and grid reliability, and assesses the viability of reliability selfregulation in the coming electric era. It may have made sense to delegate the task of maintaining U.S. electric grid reliability to a self-regulatory organization in prior decades, when regulated monopolies managed nearly every segment of electricity production. But many of the criteria that NERC used to justify selfregulation earlier in its history—electric utilities’ expertise, widespread agreement about the organization’s goals, and an industry structure in which regulated parties’ interests align with the public’s—no longer hold. The climate crisis creates a need for expertise beyond NERC’s domain, while the introduction of competition to large parts of the electricity sector blurs lines of accountability for reliability failures. NERC’s structure also perpetuates an incumbency bias at odds with public goals for the energy transition.
These shifting conditions have caused NERC to fail to keep pace with the reliability challenges of the electric era. Worse still, outdated NERC standards often help entrench fossil fuel interests by justifying electricity market rules poorly suited to accommodate renewable resources. We therefore suggest a suite of reforms that would increase direct government oversight and accountability in electricity reliability regulation
