Black Metropolis Research Consortium
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Development Derailed: Policy Uncertainty and Coordinated Investment
No full textWe quantify the sensitivity of investments to policy uncertainty by drawing on the Northern Pacific’s massive land grant and the ensuing political battle that generated significant uncertainty to title from 1879 to 1894. Focusing on irrigation because of its high asset specificity, our analysis exploits the spatially exogenous extent of the grant to identify causal effects on investment, inclusive of spillovers to secure land because coordinated investment is generally necessary to capture the scale economies of irrigation. We find that the uncertainty significantly deterred and delayed irrigation investment in Montana, which lowered the state’s economic activity by up to 5 percent.
Large numbers of settlers are occupying such [railroad grant] lands, and it is important to them to know whether they can receive their titles from the United States, or whether they will be required to purchase from the railroad companies. The prevailing uncertainty necessarily retards improvements and impairs values. (Noah C. McFarland, General Land Office Commissioner, US Department of the Interior 1882, p. 11
Learning by Regulating: The Evolution of Wind Energy Zoning Laws
No full textI study the determinants of regulation in an emerging industry by analyzing the uptake and evolution of local wind energy zoning laws. I do so by assembling a novel database of county wind energy conversion system ordinances. Using a duration analysis, I find that counties adopt regulations when potential benefits from doing so are high and regulatory costs are low. Although counties mimic the standards of their neighbors, regulations eventually become spatially heterogeneous, presumably as governments better align policies with local preferences. The findings highlight the dynamic nature of regulation in a formal environment, building on the seminal study of property rights by Harold Demsetz. I also contribute to an ongoing policy debate about which levels of government can effectively regulate wind power. I find that current state proposals to reclaim centralized control will likely stunt the local adaptation observed unless the counties have insufficient regulatory capacity to create regulations
Kids Are Not So Different: The Path from Juvenile Exceptionalism to Prison Abolition
Get PDFInspired by the Supreme Court’s embrace of developmental science in a series of Eighth Amendment cases, “kids are different” has become the rallying cry, leading to dramatic reforms in our response to juvenile crime designed to eliminate the incarceration of children and support their successful transition to adulthood. The success of these reforms represents a promising start, but the “kids are different” approach is built upon two flaws in the Court’s developmental analysis that constrain the reach of its decisions and hide the true implications of a developmental approach. Both the text of the Court’s opinions and the developmental and neuroscientific research on which the opinions rely reveal that the developmental approach is not coherently defined by the legal line between childhood and adulthood. This lack of alignment has led to calls to extend the age of juvenile exceptionalism to young adulthood. But extending the exceptionalist frame obscures the central role that immaturity plays in most offenders’ full criminal careers and preserves a destructive fiction that youthful offenders are a distinctive, more sympathetic, and less corrupt subset of the millions of people charged with committing crimes. This Article argues that the developmental approach, followed to its logical conclusion, calls not for an age extension for juvenile exceptionalism but rather for a wholesale remaking of the entire criminal justice system in line with an abolitionist vision
Captive Labor: Exploitation of Incarcerated Workers
Get PDFOur nation incarcerates over 1.2 million people in state and federal prisons, and two out of three of these incarcerated people are also workers. In most instances, the jobs these people in prison have look similar to those of millions of people working on the outside: They work as cooks, dishwashers, janitors, groundskeepers, barbers, painters, or plumbers; in laundries, kitchens, factories, and hospitals. They provide vital public services such as repairing roads, fighting wildfires, or clearing debris after hurricanes. They washed hospital laundry and worked in mortuary services at the height of the pandemic. They manufacture products like office furniture, mattresses, license plates, dentures, glasses, traffic signs, athletic equipment, and uniforms. They cultivate and harvest crops, work as welders and carpenters, and work in meat and poultry processing plants. But there are two crucial differences: Incarcerated workers are under the complete control of their employers, and they have been stripped of even the most minimal protections against labor exploitation and abuse
The Improvised Implementation of Executive Agreements
Get PDFImplementation is at the core of lawmaking in our divided government. A rich literature covers the waterfront with respect to agencies’ implementation of legislative mandates, and another equally robust line of scholarship considers Congress’s implementation of treaties. Missing from those discussions, however, is another area of implementation central to U.S. foreign relations: the implementation of transnational regulatory agreements.
This Article examines how federal agencies have harnessed far-reaching discretion from Congress on whether and how to implement thousands of international agreements. Agencies regularly implement agreements by relying on a self-developed menu of options, much like they do in the domestic regulatory context—only without the checks and balances that those processes provide. This analysis of the operation of agreements presents a set of extemporized means through which the executive maintains control of these agreements and their regulation of the rights of private actors without legislative intervention or administrative law constraints. These revelations stand in contrast with conventional understandings of implementation as well as to prior accounts of how “international law [is] part of our law.
Not-for-Profits, ESGs, and The Economic Structure of Corporate Law
Get PDFA compelling point in The Economic Structure of Corporate Law is that the single goal of maximizing shareholder value is efficient and generally desirable because it gives the managers one aim—while leaving room for law and private contracts to impose constraints on the firm in order to control negative externalities and other social concerns. Easterbrook and Fischel say that: “A manager told to serve two masters (a little for the equity holder, a little for the community) has been freed of both and is answerable to neither.” The point is an especially good one when the manager has more of an interest in one master’s success than another’s, and this is the point that Easterbrook-Fischel emphasize. But it is also the case that the single goal of value maximization, encapsulated in share price in an efficient market, allows investors to monitor managers, not so much to look for misbehavior and the prospect of a lawsuit, but to decide whether to invest in one enterprise or another. In this Article, I ask what this brilliant insight tells us about not-for-profit (NFP) entities which do not offer “investors” (donors) or the law a single metric in order to evaluate their performance. Should investors, and the “market,” prefer an NFP with a single goal or cause, like the environment, however hard it is to measure progress towards this goal, or should we expect the market—as we might think of the competition for donor dollars—to evaluate performance through some alternative mechanism, spread perhaps across a diversified portfolio inside the “firm,” including a university or foundation? Falling in between these two types of opportunities for investment are self-proclaimed ESG (Environment, Social, and Governance) sensitive corporations. These firms attract investors not only by earning profits and increasing shareholder wealth but also by adding to shareholder welfare with a promise to undertake causes, like environmental sensitivity, that appeal to shareholders who invest in these ESG-sensitive enterprises. Easterbrook-Fischel might be expected to disparage the development of ESGs, because they intentionally depart from the single-goal advantage of conventional corporations. On the other hand, if some shareholders want not only to profit but also to pursue various social goals, a corporation can appeal to these shareholders, even if their actual behavior is difficult to assess. Not-for-profits are at the other end of the spectrum. They suffer from many of the same problems. Investors have difficulty knowing whether an NFP is doing a good job. One strategy, developed in this Article, is to follow the advice of donors who have some incentive to evaluate the NFP and compare it with other organizations that would be happy to take their gifts. This explains the ability of an NFP like Harvard (the best endowed university) to receive support from private donors, foundations, and the government. It might seem like a successful NFP does not “need” the money as much as other, less well-endowed NFPs but, on the other hand, its ability to attract large gifts might inform new donors that it is a good investment, just as the share price of a conventional corporate firm, or a takeover offer from a sophisticated company, offers useful information. It also explains the tendency of NFPs to attract large gifts directed at specific goals. If donor Y sees that donor X gave $100 million to an NFP to investigate a particular disease, donor Y might give that NFP a gift because Y shares an interest in that cause, and now wants the recipient to do yet more. Another potential donor, with a different goal in mind, might also learn from X’s gift, and reason that the favored NFP is well-managed and reliable. Just as Easterbrook-Fischel explained the advantage of a corporation’s obligation to follow a single goal, an NFP can be understood as aiming to show that it follows the single goal of reliability, and especially its ability to keep a promise about a single goal as expressed by the investor, or donor. ESGs are unlikely to offer a comparable message because it will not be clear to Y, or another investor, what to learn from a large investment in an ESG corporation
Rereading the “One Share, One Vote” Principle: Is It Also a Matter of Competition?
Get PDFDespite being a cumbersome principle of corporate governance, the “one share, one vote” principle à la Easterbrook and Fischel is constantly challenged by several attempts to circumvent the original structure of capitalism democracy, based on the provision (often a default provision) that no more and no less than one vote is attributed to each share.
The possibility of adopting categories of shares with multiple voting rights and that of resorting to mechanisms that multiply voting rights upon the occurrence of specific conditions (oftentimes linked to a loyalty bonus for long-term shareholders), depends on the articles of association’s autonomy granted to joint-stock companies. Rigidly adopting the one share one vote principle de facto entails limiting such autonomy, and where not arising from the applicable regulations, such a limitation can be required by the listing market rules.
And it is precisely the advisability of such exceptions—which Easterbrook and Fischel would have strongly refuted—that is the subject of the current debate in both Europe and the United States.
Our paper attempts to examine the arguments put forward by those who do not condemn the tool of shares with multiple voting rights, either by issuing class shares or by awarding bonus mechanisms that enhance votes per share. On a closer look, the current debate highlights, even for listed companies, the benefits deriving from stable control and from strengthening those shareholders who are interested in long-term results. Nevertheless, as Easterbrook and Fischel would have stated, the need to protect the minority shareholders lingers in the background, as does the issue of when and to what extent these shareholders can express their views on the choice of the company in which they have invested to derogate from the “one share, one vote” principle.
This is the reason for the interest in the Italian case, which is noteworthy both for the risks and the peculiarities of its shareholding corporate structure (and its effect on the increase of the voting right) and for the interesting and singular report that the Antitrust Authority sent to the Prime Minister last year, advising on the use of multiple voting shares as a tool even for (already) listed companies
Tyson and Leviathan: USDA Rulemaking and the PSA Harm to Competition Requirement
Get PDFFacing concentration in meatpacking, farmers and ranchers are making increasingly urgent calls for protection from practices they claim make it difficult for them to earn a living. Among the statutes they have turned to for recourse is the Packers and Stockyards Act, a 1921 law that prohibits meatpackers from engaging in unfair, deceptive, or unjustly discriminatory practices. Courts, however, have made PSA cases more difficult to win by requiring that plaintiffs prove “harm to competition” to bring a successful case. Recently, the USDA has intervened in this debate, alternately supporting each side of the harm to competition question in controversial rulemakings, and it is now planning to once again propose a rule saying the PSA does not require harm to competition. This Comment surveys the USDA fight over the harm to competition requirement, and assesses the consequences of rulemaking for the harm to competition requirement under Chevron and the administrative deference regime that may succeed it. It argues that the USDA’s view of the harm to competition requirement, if the agency successfully embodies it in a rule, should receive deference