prior probability

In a previous post, I mentioned that I would elaborate on my Coasean approach to the current pandemic. So, here it goes. To begin with, when my fellow legal scholars hear the words “Coase” or “Coasean”, most of them immediately conjure up something called the “Coase Theorem.” This so-called theorem has been formulated in many different ways, and I myself have written several scholarly papers about it, but guess what? We don’t need to go into the details of Coase’s influential theorem for this post. Instead, I am going to refer to another aspect of Coasean thinking, one that is often neglected but that is far more important. Specifically, I am going to focus on Ronald Coase’s revolutionary insight that most moral conflicts or legal disputes are “reciprocal problems.”

Full disclosure: along with Robert Nozick, Ronald Coase is one of my intellectual heroes, and years ago, I explained the theoretical significance of Coase’s counter-intuitive idea in the inaugural issue of the Indian Journal of Law & Economics, which is available here. For now, we can illustrate this idea with COVID-19. Simply put, how is COVID-19 a “reciprocal problem”? To see why COVID-19 is a reciprocal problem, let’s take a look at this essay by Graham Mooney, a historian of public health at John Hopkins University. (FYI: Professor Mooney’s excellent essay was published in The Atlantic and featured on Jason Kottke’s blog earlier this week.) Among other things, Professor Mooney makes two observations:

Observation #1:

Many of the people pushing to reopen see the issue in terms of freedom. They argue that quarantine and government-mandated closures infringe on their individual rights to do as they please, to make their own choices about health risks. The United States was founded on the idea that individual liberty … is inviolable, and for many of its residents this argument resonates deeply.

Observation #2:

In response to these vehement appeals to individual freedom, public-health leaders in [19th Century England] and elsewhere developed a powerful counterargument. They too framed their argument in terms of freedom—freedom from disease. To protect citizens’ right to be free from disease, in their view, governments and officials needed the authority to isolate those who were sick, vaccinate people, and take other steps to reduce the risk of infectious disease.

These two observations show us why COVID-19 is a reciprocal problem. Professor Mooney’s mistake is to assume that Observation #2 somehow trumps Observation #1, while “Red State Republicans” commit the opposite fallacy. In reality, both of Mooney’s observations are equally true, or to put it in Coasean or economic terms: allowing people the freedom to congregate in close quarters during a pandemic generates a harmful effect or social cost. The disease is more likely to spread and infect many more people in the absence of quarantines, business closures, and other aggressive public health measures. But at the same time (paging Dr Mooney), these aggressive health measures also generate a harmful effect, since such measures reduce our liberties and, in many cases, our livelihoods as well!

So, what is to be done? Coase’s solution has two steps. The First Step is to realize that most, if not all, harms are reciprocal problems. But that is only the first step. The Second Step is to figure out which of these two competing harms is the lesser evil. Of course, the Coasean rub is that it is not always obvious what the lesser harm is. COVID-19, for example, is a case in point. With all due respect, however, Mooney’s mistake is to assume away or ignore the costs to liberty. The Coasean approach, by contrast, invites us to measure and weigh the harms on both sides. Change my mind!

https://twitter.com/naahrun/status/1263247361633124354

Following up on my previous post, the moderator of our panel, the excellent Robert H. Thomas, formulated four thought-provoking questions for the members of our May 15 property rights panel. Here are his questions (edited by yours truly for clarity):

1. Are there degrees of “police power,” and can or should a court be *more* deferential to the government’s claim that it is acting in response to an emergency, than the already-high degree of deference courts already pay to assertions of health, safety, and welfare measures during normal times under the rational or conceivable basis test?

2. I am intrigued by Professor Guerra-Pujol’s assertion that Kelo–the Supreme Court’s controversial ruling that exercises of eminent domain power need only pass a very low bar under the Public Use Clause–actually is a decision supporting a “strong argument for takings clause lockdown compensation.” In one of the citrus canker cases, the Florida Supreme Court agrees with this approach–where it held “that if a regulation creates a public benefit it is more likely that there is a taking.” Are emergency measures done as a public benefit, or as harm prevention? Is there any difference?

3. What is the role of the “wartime” cases such as U.S. v. Caltex Philippines or U.S. v. Pacific Railroad (no compensation for destruction of property to keep it from falling into enemy hands in wartime), and Mitchell v. Harmony, where the Court held that the military may take or commandeer property to prevent it from falling into enemy hands, but compensation can only be avoided if the danger is “immediate and impending and not remote or contingent”? Does this approach get courts into the business of evaluating the need and actual necessity for the emergency measures?

4. Is the takings question–should compensation be provided?; is this property owner bearing more than their fair share of public benefits?–solved by the type of governmental power being asserted (as many courts have concluded)–in other words, the police power versus the eminent domain power?

These are excellent questions. For my part, my tentative global reply is a “Coasean” one: people have rights, but these rights are going to be in reciprocal conflict (e.g. the right to put others at risk versus the right to be free from risk), so if the government is going to use the pretext of an emergency to curtail one set of these rights, then it must provide compensation in exchange for our cooperation. I will elaborate on my Coasean approach to the pandemic in a future blog post.

Revised and corrected (11:00 AM): Last Friday (May 15, 2020), Professor Ilya Somin and I debated whether coronavirus lockdown orders are “takings” under the Constitution. We are still waiting on the Federalist Society to post an audio recording of our virtual panel; in the meantime, I will share some of my thoughts about our exchange. First off, I have to confess at the outset that I was very nervous, terrified even, in the days leading up to the panel. Professor Somin literally wrote the book on the takings clause. Furthermore, he is not only a leading expert on takings law; he is also an accomplished and eloquent speaker. As a result, in the face of such a formidable scholarly opponent, I decided to return to first principles and make a “natural law” argument, or to paraphrase the late great Robert Nozick (pictured below, bottom right), one of my intellectual heroes: individuals–even non-essential ones–have rights!

Here is a brief recap. After dedicating my talk to Shelley Luther (pictured below, bottom left) of Dallas, Texas, who was thrown in jail for opening her small business in defiance of a court order, I immediately took the position that this issue is too important to leave to the courts. That is, instead of waiting for the courts to decide the legal ramifications of coronavirus lockdown orders under the Takings Clause, government officials should just “do the right thing” by unilaterally declaring these orders to be takings and by agreeing, in principle, to pay just compensation to affected business firms. Lastly, I also argued that these lockdown orders are the equivalent of a physical invasion or ouster of property rights under the takings framework established in Lingle v. Chevron, since many State and local governments are using their coercive powers, including the imposition of severe fines and even jail time, in order to enforce these orders. (Cf. the case of Shelley Luther.)

Without the benefit of the recording, I would sum up Professor Somin’s position in four words: “police power” and “Penn Central.” Although not all police power measures are automatically exempt from takings liability, those measures where the activity or property targeted is itself a threat to public health (as opposed to seized or destroyed in order to counter some external danger) are usually exempt from such liability. Furthermore, even if a potential takings plaintiff could get around the police power issue, the multi-factored Penn Central framework would most likely sink most coronavirus shutdown claims (a framework that applies to all temporary takings even if the police power exemption does not).

In addition to Somin’s police power and Penn Central points, he also posed an important practical objection, which I suspect is the real reason he thinks courts will not apply the takings clause to coronavirus lockdown orders. Simply put, applying the takings clause to such orders would be an administrative and logistical nightmare. In other words, my natural rights approach would open the “floodgates” of takings litigation–there would be too many claims for the courts to handle, and it would be extremely difficult for the courts to assign a monetary value to each of these claims.

For my part, I responded to Somin’s powerful police power argument by going back to the Federalist Papers and to our constitutional first principles. Under the timeless natural rights logic of our Constitution, all public laws, even emergency ones enacted under the police power, are subject to limits, and one of these limits is the Takings Clause. What about Somin’s logistical or practical point? I had to concede that applying the takings clause to lockdown orders would entail enormous administrative costs, but nevertheless, citing the BP Claims Facility and 9/11 Victims Compensation Fund, I also emphasized that these costs are not insurmountable. To sum up, then: my position is that our State Governors should “man up” for once and do what they were elected to do–uphold the Constitution by unilaterally declaring their lockdown orders to be takings. Yes, this approach could open the floodgates of litigation, but I am confident in the ability of lawmakers in different States to figure out the logistical details later.

Lastly, I should also mention the moderator of our virtual panel, the excellent Robert Thomas, and several members of the audience posed a number of excellent questions regarding the legal and constitutional status of these coronavirus lockdown orders. If I can find my notes, I will restate these questions, as well as my tentative replies, in my next post.

What would Nozick say?

Note: This is the last of five blog posts covering Module 2 of my summer “Tiger Law” course.

Thus far, we have described law as a “seamless web” and have explored three major areas of this massive tangled cobweb: State law, federal law, and international law. But Maitland’s memorable and poignant metaphor has one big blind spot: who are the adroit and cunning little spiders weaving such a large and intricate legal cobweb?

Part E of Module 2 is devoted to this creative aspect of the seamless web: the courts or what I like to call “the problem of legal interpretation.” If you have been paying close attention to my previous blog posts on State, federal, and international law, you will have noticed that in addition to existing treaties like the International Whaling Convention or actual laws like Florida’s animal cruelty law or the federal Endangered Species Act, I have also talked about legal disputes and courts, cases like Wilkerson v. Florida (the State case in which Florida’s animal cruelty law was challenged under the vagueness doctrine) and Lujan v. Defenders of Wildlife (the federal case that tells us when a private party can sue the government to enforce its own laws).

In short, legislatures, autocrats, and customs are not the only sources of law; we also need courts and judges to help us interpret inevitable ambiguities in the law and to help fit each individual part of the law into the seamless whole. As a result, our courts are also, for all practical purposes, a major source of law. Accordingly, to further illustrate the indispensable role that courts play in our legal system, Part E of Module 2 introduces students to one of my favorite fish cases of all time–Yates v. United States, a case involving the Sarbanes-Oxley Act of 2002, a federal business fraud law often referred to as the “SOX Act” or just “SOX” for short–as well as two videos on the problem of legal interpretation, one in which I lay out the facts of Yates v. U.S. and another in which I explain how this fish case was decided by the Supreme Court of the United States.

Although this case does not involve big cats or other exotic animals, the Yates in Yates v. U.S. was a commercial fisherman who, like Joe Exotic, was charged with committing a federal crime. In brief, Captain Yates and his crew were fishing in the Gulf of Mexico when a federal Fish & Wildlife agent conducted an offshore inspection of their catch and found that it contained undersized red grouper in violation of federal wildlife regulations. The federal agent instructed Captain Yates to keep the undersized fish segregated; Yates, however, decided to get rid of the evidence and instructed his crew to throw the undersized fish overboard.

When they returned to shore, Yates was charged under the SOX Act, a law designed to punish financial fraud on Wall Street. This law states that a person may be fined or imprisoned for up to 20 years if he “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence” a federal investigation. At trial, Yates’s lawyer sought an acquittal, arguing that fish were not tangible objects related to record-keeping or financial fraud.

If you want to see how this fish case played out, I am posting my second video below. FYI: Looking ahead to Module 3, the next module of this course will be devoted to something called “the common law.” For now, it suffices to say that the common law includes such areas of private law as property, torts, and contracts and is so important that it deserves its own separate module. Hasta pronto.

Happy Cuban Independence Day! I am still dreaming of a Cuba Libre; in the meantime, I am interrupting (once again) my extended review of Week 2 of my “tiger law” course in order to share some delightful pictures I took on my smart phone during my daily walk in the College Park neighborhood of Orlando, Florida, my home until Cuba becomes free again.

Note: This is the fourth of five blog posts covering Module 2 of my business law summer course (Tiger King edition).

Part D of Module 2 is devoted to the third major source of law: the Law of Nations or “public international law”, a broad and important domain that encompasses such disparate things as treaties, customs, and human rights. In keeping with the Tiger King theme of this course, this part contains a proposed wildlife treaty (The International Convention for the Protection of Animals or “ICPA”), a student law review article by Adrienne Ruffle on the International Whaling Commission, and a short video on international law by yours truly.

Among other things, my video emphasizes what I consider to be one of the most peculiar aspects of public international law. Unlike the domestic laws of a nation-state, which are in theory obligatory on all persons and firms inside that nation’s territory, the government of each country generally gets to decide which treaties to ratify and which norms or customs to comply with. Why? Because these rules are not enacted by an international legislature; nor are they enforced by an international police force. Instead, treaties are generally negotiated by the member states of the international community. Moreover, even widespread international customs and human rights norms are often up for grabs, since it is up to each government of each country to decide how, if at all, to enforce these customs and norms. (My video also contains an embarrassing blooper; I accidentally knocked my camera down. I decided to keep this brief blooper in to give everyone a laugh.)

So, returning to our metaphor, if law is seamless web, to quote the great English legal historian F. W. Maitland, where does “International Law” fit it? I could be wrong, but I would place such disparate things as treaties, custom, and human rights norms at the outer edges or fringes of our massive legal web. Some of these international rules might be enforced by domestic courts or otherwise seep into domestic law; most, however, are probably just symbolic or aspirational parchment barriers.

Note: This is the third of five blog posts devoted to Module 2 of my business law summer course (Tiger King edition).

Previously, we introduced F. W. Maitland’s beautiful metaphor of law as a seamless web, and we briefly examined the center of this organic and interconnected network: State and local law. Now, let’s turn our attention to Part C of Module 2, which is devoted to the dominant bulk of our vast and complex legal system, the ever-expanding domain of federal law.

The problem is, federal law has grown into an ugly monster, an unruly beast. The actual number of federal laws, let alone federal regulations, is so large that no one knows for certain the total number of extant federal crimes! By way of example, when the corpus of federal laws was first codified in 1927, all the laws that the Congress had enacted could fit into a single volume. By the 1980s, however, the United States Code had expanded to 50 separate volumes containing over 3000 separate federal crimes. And today? According to @CrimeADay (a popular legal Twitter account devoted to keeping this tally), no one knows for sure. So, how could I possibly tame this massive federal legal beast?

Here is where the Tiger King theme comes in handy! Tiger King allowed me to focus on just one small corner of this ever-expanding federal legal universe–namely, those laws specifically dealing with the animal kingdom. As a result, Part C contains excerpts from the Endangered Species Act of 1973; including a presidential executive order implementing this landmark law; excerpts from Lujan v. Defenders of Wildlife, a controversial Supreme Court case deciding whether private parties could sue to enforce the Endangered Species Act; and a Cornell Law School link for the entry to the “Standing Doctrine.” In addition, Part C contains four homemade videos on various aspects of federal law as well as two timely items: (1) a link to a Twitter account called “A Crime a Day” (@CrimeADay), and (2) a copy of a recent newspaper report of President Trump signing the Preventing Animal Cruelty and Torture Act into law.

My first of four videos on federal law explains the fundamental constitutional principle of federalism, the idea that government power is divided between two levels of government in the United States: the States and the Feds. In theory, at least, the powers of the federal government are supposed to be, in the words of James Madison, “few and well-defined”, while the States retain a general “police power” to protect the health, safety, and welfare of their residents.

My second video on federal law poses a timely and controversial legal question, is the Preventing Animal Cruelty and Torture Act constitutional? Although this law was recently enacted with broad bipartisan support and signed by President Trump into law, does the Congress really have the power to make animal cruelty a federal crime? I then discuss the power of Congress to regulate interstate, tribal, and foreign commerce under the Commerce Clause of the Constitution, probably the single-most important power that Congress possesses under the Constitution.

My third video on federal law introduces the Endangered Species Act of 1973, one of several historic federal laws that are supposed to protect wildlife. I then pose another important question: can you sue the government when it fails to comply with its own laws? And I introduce the case of Lujan v. Defenders of Wildlife, a landmark case that involves this very question. My fourth and last video on federal law explains how the Lujan case played out–how SCOTUS used the so-called “standing doctrine” to give the federal government immunity from its own laws.

Briefly, in order to sue the government to enforce its own laws, the plaintiff (the party who is bringing the lawsuit) must first have “standing to sue”, and to have standing, the plaintiff will have to show that he or she suffered or is about to suffer a concrete injury and that the injury is “redressable” by the courts. I then introduce my students to the two most common types of legal remedies that courts are authorized to provide: (1) the award of money damages (compensation), or (2) the issuance of an injunction (a court order prohibiting a party from doing something).

Time to take a deep breath. To sum up Parts A, B, & C of Module 2, the law is a seamless web, and State and federal law make up the bulk of this enormous, interconnected web. I will proceed to Part D, the outer edges of this vast and complex system (International law), in my next post …

Source: @CrimeADay (via Twitter)

Note: This is the second of several blog posts devoted to Module 2 of my business law summer course (Tiger King edition).

Let’s jump into Module 2, shall we? In summary, this module is devoted to the main “Sources of Law” in our U.S. legal system. Although I have tried my best to reduce the amount of reading materials in Module 2, this module is a relatively massive one by any measure. It contains eleven short videos, including two on State law, four on federal law, one on international law, and two additional videos on what I like to call “the problem of legal interpretation.” In this post, I will describe the first two parts of Module 2 (Parts A & B).

Part A, which consists of an introductory video, two textbook chapters, and two theme songs, is designed to introduce students to the main sources of law in the United States, providing them the big picture, so to speak. (The animal-related theme songs are just for fun.) But what is “law”? The great English legal historian F. W. Maitland once famously described the law as “a seamless web.” (My friend and colleague Larry Solum explains the meaning of this metaphor here.) To me, Maitland’s web metaphor is one of the most beautiful metaphors for describing the interconnectedness of the law. Think of a spider’s web, for example; every part of the web is connected to every other part, and the sum is greater than its individual parts. (Also, if you are prey, you do not want to get ensnared in the web!)

But because our laws are so interconnected, it turns out there are many different ways of defining and classifying the law. For my part, I prefer to keep things as simple as possible by breaking U.S. law down into three major geographic or spatial components, with State and local law at the center of the web, federal or national law occupying the middle of the web, and international law on its outer edges. Given this State/Federal/International breakdown of law, Part B of Module 2 begins with the center of the legal spider web: State or local law.

This part, in turn, contains two videos, a Florida case (Wilkerson v. Florida), a link to Florida’s animal cruelty law (Chapter 828 of the Florida Statutes), and a Cornell Law School link to the entry for “Vagueness Doctrine.” In one sentence, the main takeaway of this part of the module is this: Although State governments have a general “police power” to protect the health, safety, and welfare of its residents, courts will refuse to enforce criminal laws that are too vague for the average person to understand.

To illustrate the vagueness doctrine, I introduce my students to the case of Wilkerson v. Florida, a case in which the constitutionality of a State animal cruelty statute was called into question on vagueness grounds. Before I discuss the case, I ask my students, What would you do if you were caught breaking a law, caught red-handed? Why not challenge the legality or constitutionality of the law you were accused of breaking, which is exactly what happened in the Wilkerson case! In that case, the defendant was charged under Florida’s animal cruelty law. Apparently, the defendant could not dispute the facts of the case, so his lawyer decided to challenge the legality of Florida’s animal cruelty law on vagueness grounds instead.

Why was Florida’s animal law vague? Because according to Wilkerson’s lawyer, the word “animal” was not strictly defined in the statute, so how could a potential defendant know whether the law in question would apply to the killing of a wild raccoon, the type of animal the defendant was accused of harming? Although the Florida Supreme Court rejected this argument, a strong case could be made that the defendant should have won. Florida’s animal cruelty law defines the term “animal” to include “every living dumb creature,” but is a crafty nocturnal mammal like a raccoon really a “dumb creature”? What about domestic pets like cats or dogs? Ask any ethologist (ethology is the science of animal behavior), and they will tell you most, if not all, non-human animals are, in fact, very intelligent creatures indeed!

I will proceed to Part C of Module 2 (Federal law) in my next post …

I am interrupting my review of Week 2 of Tiger Law to share one of the most timely and creative chess sets I have ever seen. Crazy, right! Hat tip: the Amazing and Incomparable Tyler Cowen, via Marginal Revolution.