More Epstein on Income Inequality

NYU's own Richard Epstein writes on income inequality.

The article, titled "Three Cheers for Income Inequality," argues that taxing the one percent more means less wealth and fewer jobs for the rest of us. 

You can find his article at the Hoover Institute:

Three Cheers for Income Inequality

Event Thursday: IJ's Bob McNamara on Judicial Engagement

This Thursday, we will be joined by Institute for Justice Staff Attorney and NYU Law alumnus Bob McNamara.  Mr. McNamara graduated from NYU in 2006 after serving as Editor-in-Chief of the NYU Journal of Law & Liberty.  After graduation, he joined the Institute for Justice (IJ) where he litigates cutting-edge constitutional cases protecting First Amendment, property rights, economic liberty and other individual liberties in both federal and state courts.

Mr. McNamara's speech is part of a series of lectures on judicial engagement being sponsored by IJ and promoted by the Federalist Society this year.   He will make the case that judges have a responsibility to actively enforce the Constitution instead of deferring to legislatures and administrative agencies.  More information on IJ's Center for Judicial Engagement can be found at the following links:

• The Institute for Justice's Center for Judicial Engagement
• Wall Street Journal Article by IJ's Clark Neily
• Volokh Conspiracy Post by Mr. Neily

As always, plenty of food will be provided and there will be ample time for questions and comments.

What: IJ's Bob McNamara on Judicial Engagement
When: Thursday 11/10 @ 4pm
Where: VH 214

Event: The Seventh Annual Friedrich A. von Hayek Lecture with The Honorable Robert S. Smith

The Journal of Law and LIberty will be hosting Judge Robert S. Smith as this year's Friedrich A. von Hayek Lecturer.

Judge Smith will be introduced by Professor Richard A. Epstein, Laurence A. Tisch Professor of Law. The event will be held at the New York University School of Law, Vanderbilt Hall on Thursday, November 3, 2011 at 6:00 p.m.

More details can be found here:

https://its.law.nyu.edu/eventcalendar/index.cfm?fuseaction=main.detail&id=17906

Professor Epstein on Economic Inequality

Our own Professor Epstein went on PBS NewsHour to defend the positive aspects of economic inequality. Epstein eloquently argues that wealth inequality is a motivating force behind innovation and wealth creation.

Skip the first 54 seconds to go straight to the interview.

Watch Does U.S. Economic Inequality Have a Good Side? on PBS. See more from PBS NewsHour.

ReasonTV presents Peter Schiff Speaking for the 1%

Thursday Links

Room for agreement?

• Prof. Epstein on California's horribly inefficient rent control laws
  Defining Ideas: California's Kafkaesque Rent Control Laws
  

  
  

  New York is not the only economically failing state that treats rent control as the road to salvation for its financially pressed citizens. California matches it stride for stride. Under California’s rent control regime, the right to any and all increases in the value of the underlying property is shifted, without compensation, from the owner to the tenant. This is an unjust “taking” of property from the owner. The consequences of policy are plain to see in the implosion of the California real estate market.

• Howie Carr reports that the 99% movement has been inflitrated by 1% posers
  Boston Herald: Cantabrigians Arrested - Ain't That Rich?
• Lucy Steigerwald explores the libertarian potential of the Occupy Wall Street! movement
  Reason: The Possibility of a Tea Party-Occupy Wall Street Alliance
• Two looks at the latest Nobel laureate in economics, NYU's own Thomas Sargent
  WSJ: A Nobel for Non-Keynesians
  Reason: A Nobel for Thomas Sargent
• Interesting NY Times article (even a blind squirrel...) on NYU's John Sexton's mission to recruit America's top economists
  NYTimes: Ivy Envy
• And, apparently this guy just really doesn't want to be reelected
  NYPost: Obama's Hiroshima Apology Gambit

Event TODAY! Bob Inglis on Conservatives Against Climate Change

Today, at 4pm, we will be privileged to host Mr. Bob Inglis.  Mr Inglis served in the U.S. House of Representatives where he represented South Carolina's 4th District from 1993-99 and from 2005-11.  He has not been afraid to differ with the GOPs on issues where he thinks the party is off base, and on Thursday he will be speaking on one of those areas: climate change.  Mr. Inglis is launching a conservative effort to address climate change, and he has written extensively on the subject in the past.  While many may decry the Republican party as "anti-science," Mr. Inglis shows that there is much less uniformity of opinion within the GOP than one might expect.

You can read Mr. Inglis' writing on this topic here: Conservative Means Standing with Science on Climate 

New York Times article on Mr. Inglis: Former Rep. Inglis to Launch Conservative Coalition to Address Climate Change

What: Bob Inglis on Conservatives Against Climate Change?
Where: VH 214
When: Wednesday 10/12 @ 4pm

As always, there will be plenty of time for questions and free food will be provided.

What Separates the Tea Party from the Occupiers?

Monday Links

• Discussion of the DOJ memo used to justify the targeted killing of al-Awlaki (NYT)
  Secret US Memo Made Legal Case to Kill Citizen
• Blog post on Steve Jobs's contributions to the economy (Cato)
  Steve Jobs, Prosperity Creator
  
• Will recapitalization of Europe's banks solve the crisis? Probably not (FT)
  Eurozone Quick-Fix Will Create Political Monster
• As the Occupy Wall Street protests gain momentum, some contrary thoughts (Daily Telegraph)
  If capitalism does fail, the alternative is far, far worse

New Anthem for Occupy Wall Street!

Full lyrics, courtesy of Reason:

Come gather round people
come and join your hands
we're taking Wall Street
and we're making demands
and we're heeding the call
and we're crying for help
only 1% of us have wealth

but first we need posters
we need to make signs
but to do so it seems
that we need some supplies

We need poster board
I can't make it myself
but it's 10 cents a sheet
at the store it's on sale
an example of economies of scale
it's so evil

They're saying that freedom
has done little to stop
Corporations from keeping
the wealth at the top
But at what point in history
would a kid and a king
both have clean water to drink?

George Washington was
the richest man of his age
But he lost all his teeth
at a very young age
Because they didn't have Scope
and they all crapped in trays
we're not wealthy?

now there's fountains on streets
from which clean water pours
Four dollar generics
at all big box stores
a sultan and student
both have iPhone 4s
it's not fair

Come gather young people
come on everyone
and I'll tell you a tale
of a fortunate son

He's born in a country
and given vaccine
and rendered immune
to all kinds of disease
the Kardashians are on
all his TVs
it's not perfect

Banks don't need bailouts
on that we agree
so let's start up a group
and let's take to the streets
because if we do that then
you know what that means
we're racist.

The Holdout Myth Underlying Current Takings Doctrine

By Brandon Kressin

In 2005, the Supreme Court decided Kelo v. City of New London, a landmark Fifth Amendment case that effectively grants the government license to seize private property for whatever purpose it deems in the public interest.[i]  Kelo involved a local redevelopment project in the city of New London, Connecticut.  The city wished to bulldoze a small neighborhood and hand the property over to private developers for commercial use.  The Court ruled that the economic growth that the city anticipated resulting from this conversion qualified as a “public use” within the meaning of the Fifth Amendment’s takings clause.  Therefore, existing property owners such as Susette Kelo would be forced to give up their homes and accept court-determined compensation.

Susette Kelo's House

The scope of this eminent domain power has been highly controversial and the majority of states passed laws strengthening protections for private property rights in the wake of the decision.  But economic growth takings such as that which formed the basis for the Kelo dispute continue unabated.  Local governments in major states such as California and New York enjoy practically unfettered power to force private landowners to sell their homes to powerful developers at prices determined by courts.  These prices routinely undercompensate the small landowners, who receive nothing for their destroyed business goodwill or the subjective values they gain from living or working in the neighborhood from which they are uprooted.

Much of the debate over current takings doctrine revolves around the meaning of the term “public use.”  Opponents of the Kelo decision argue that the original public meaning of the term requires a stricter test for permissible takings.  In her dissent in Kelo, Justice O’Connor argued that only economic takings that are necessary to abate a public nuisance such as blight should be permissible.  Justice Thomas’ dissent proposes an even stricter test that would overturn past precedent and require that the taken property be put under government ownership. 

Proponents of the Court’s decision, on the other hand, argue that the Fifth Amendment’s use of the term “public use” requires application of a far more deferential standard by courts review legislative decisions.  William Treanor, for instance, surveys colonial and post-revolutionary governments’ use of takings in the eighteenth century and argues that the takings clause places few if any restrictions on the state’s ability to seize private property so long as compensation is paid.[ii]  While his account of the original understanding of the Fifth Amendment is disputed[iii], proponents of economic takings argue that the phrasing of the Amendment is at the very least ambiguous.  After all, the Amendment never even explicitly outlaws non-public use takings.  It merely requires that public use takings be compensated.  One could even go so far as to argue that by implication non-public use takings require no compensation (though no one has made that absurd argument as far as I can tell).  In the face of a vague constitutional standard, the argument goes, we should err on the side of allowing legislatures to act in the public’s interest.  Proponents of economic takings then point to the “holdout problem” boogeyman to argue that such takings are necessary from an efficiency perspective.

The holdout justification for economic takings is based on the idea that it is very expensive to assemble small properties for conversion into large redevelopment projects.  The problem is compounded when existing property owners act strategically and “holdout” for higher prices than what they would normally accept to sell their property.  The holdouts behave in this way when they recognize that the developer has already sunk a great deal of cost into the project, meaning that they are loath to walk away.  Holdouts thus believe that they are in a strong position to extract the majority of the consumer surplus from any sale to the developer, so they hold out for high prices.  This narrows the bargaining window for voluntary transactions between the property owner and the developer and may result in many otherwise efficient transfers not taking place.  Eminent domain claims to solve for this holdout problem by forcing the property owner to transfer title to the developer in return for a court-determined price.

Most legal discussions of eminent domain seem to assume the validity of the holdout justification without examining whether it is actually a problem in the first place.   But this ignores the fact that various free-market mechanisms exist and have been frequently used to avoid such holdout problems without state interference.  Land aggregation has been accomplished throughout our history, and continues to be accomplished today, without the intrusive and coercive use of eminent domain.  If such aggregation is possible, then perhaps we should err on the side of protecting the subjective values that private property owners put in their homes that are not reflected by market prices.

The Citigroup Building

One popular method of aggregating small parcels of land is secret purchases.  Large developers frequently employ agents and dummy companies to discretely purchase small parcels of land that will later be aggregated into one plot.  The property owners are thus not tempted to behave strategically and dramatically misrepresent their subjective valuation of their properties.  The land on which Disney World sits in Orlando was largely aggregated in this way, and a 1974 article by Peter Hellman in New York Magazine describes in detail how the land currently occupied by the Citigroup Center was put together.[iv]  The article describes the process as onerously long and expensive, but we must take note of the fact that the aggregation ultimately succeeded and Citibank built its tower.

Another method of free-market land aggregation might be referred to as combinatorial auctions.  Bruce Benson describes this method in an article in the Independent Review.[v]  He introduces the subject by referencing a clever solution to the holdout problem suggested by Steven Landsburg.[vi]  Landsburg frames his solution in the context of Joseph Conrad’s novel Typhoon.  As Benson summarizes:

A number of sailors stored their gold coins in personal boxes in the ship’s safe, but a sever storm caused the boxes to break open and mixed all of the coins together.  Everyone knows how many coins he had placed in the safe, but no one knew how many the others had placed there.  Therefore, everyone had an incentive to claim that he had put more coins in the safe than he actually had, and the captain’s problem was to determine how to divide the coins to give each sailor his actual savings.  Landsburg’s proposed solution: “Have each sailor write down the number of coins he is entitled to.  Collect the papers and distribute the coins.  [But] [a]nnounce in advance that if the numbers on the papers don’t add up to the correct total, you will throw all the coins overboard.”  This scheme clearly reduces and perhaps eliminates the incentive to hold out for more coins than the men had actually contributed.[vii]

How would a developer apply this solution in the context of land aggregation?  The developer would inform the owners of the parcels of land that she is attempted to aggregate that she is interested in purchasing their land.  But, she must make it clear that she is only interested in either buying all of their parcels or none at all.  She would then ask the landowners to individually submit the minimum amount that they would be willing to accept to sell their land.  The landowners no longer have incentives to misrepresent their subjective valuations of their land, because if they do so then their combined offers might well exceed the amount that the developer is willing to pay.  Instead, the landowners are in the same position as they would be if they were engaged with a smaller purchaser.  They will offer to sell for a price that they believe makes them better off, but not one so high that it will scare the purchaser away.

So, if combinatorial auctions are such a great solution to the holdout problem, then why don’t developers use them?  As Benson points out, they do.  He reports that several large firms that routinely engage in such land aggregations (such as Sears, Wal-Mart, Kmart, and Ford) successfully use combinatorial auctions to mitigate the holdout problem.  But, if you are a developer in a state like New York or California and you know that you can get the land through eminent domain at a bargain price, why bother?  The use of economic takings to redistribute private property to developers thus opens the door to inefficient and unfair property transfers.  It does so to solve for a holdout problem that turns out to be largely mythological.  Perhaps, in light of the vagueness of the “public use” phrasing in the Fifth Amendment, we should therefore err on the side of protecting property owners and leave land aggregation for the market to figure out.

---

[i] Kelo v. City of New London, 545 U.S. 469 (2005).

[ii] William Michael Treanor, The Original Understanding of the Takings Clause and the Political Process, 95 Colum. L. Rev. 782 (1995).

[iii] See, e.g., Nicole Stelle Garnett, “No Taking With A Touching?” Questions From an Armchair Originalist, 45 San Diego L. Rev. 761 (2008); Eric R. Claeys, Takings Regulations, and Natural Property Rights, 88 Cornell L. Rev. 1549 (2003); Andrew Gold, Regulatory Takings and Original Intent: The Direct, Physical Takings Thesis “Goes Too Far”, 49 Am. U. L. Rev. 181 (1999); Kris W. Kobach, The Origins of Regulatory Takings: Setting the Record Straight, 1996 Utah L. Rev. 1211 (1996); David A. Thomas, Finding More Pieces for the Takings Puzzle: How Correcting History Can Clarify Doctrine, 75 U. Colo. L. Rev. 497 (2004).

[iv] Peter Hellman, How They Assembled the Most Expensive Block in New York’s History, N.Y. Mag., Feb. 25, 1974, at 30.

[v] Bruce L. Benson, The Mythology of Holdout as a Justification for Eminent Domain and Public Provision of Roads, 10 Independent Rev. 165 (2005).

[vi] Steven E. Landsburg, The Armchair Economist: Economics and Everyday Life (1993).

[vii] 10 Independent Rev. at 171.

Occupy Wall Street! Update

Union thugs beating pro-union hippies.  Ironic?

NYU Law’s Most Adorable Act of Civil Disobedience

Which to choose?

This afternoon (evening?), the law school community was rocked by a mass act of civil disobedience so bold and daring that the spirit of Henry David Thoreau briefly manifested itself in the Vanderbilt courtyard. As students stormed out of their classrooms to join the Wall Street Occupation!, professors shook their fists in rage and denounced the excesses of capitalism that had made such audacious disruptions necessary.

Or at least, I imagine that they did. You see, I didn’t have class at 4:00 this afternoon when the walkout was scheduled. In fact, I don’t know anybody who did. To be fair, the 4:00 hour is scheduled as an S4 Block on Wednesdays. S4 Blocks are reserved for “Faculty Meetings & Adjuncts Only.” Still, I’m sure students could have defiantly walked out the library. If they made enough of a huff about it, somebody might have even noticed.

Anyways, after walking out, the brave Occupiers! were summoned to the fountain at Washington Square Park. Now, as a radical anarcho-capitalist, I simply refuse to kowtow to the Man’s tyrannical enforcement of Daylight Savings Time. As such, I was about an hour late to the pre-march pow wow in the park, and by the time I had arrived the hippy brigade had been replaced by some grim looking sound and camera people filming a scene for C.S.I. New York (Fridays on CBS). Admittedly, I probably could have caught up with the Occupiers! down at City Hall, but I am deathly afraid of bedbugs, and rubbing shoulders with New York’s grungiest, unemployed-iest hippies seemed like a recipe for disaster.

Pictured: A risk I'm not willing to take.

So instead of reporting on the Wall Street Occupation! firsthand, I am unfortunately reduced to drawing from hearsay, blog posts, and my own impressive capacity for stereotyping and generalization. But that has never stopped me from loudly sharing my opinions in the past, and I’ll be damned if it’s going to stop me now!

The Occupiers! (so I imagine) were drawn together by their shared outrage at the radical rightwing establishment currently occupying the White House (D), the Governor’s mansion (D), and the New York State Assembly (D) and Senate (R, actually. Who knew?). The Occupiers! blame America’s dire position on rampant capitalism. Of course, protesting capitalism in America is akin to protesting designated hitters in the NFL, but nevermind. The system, it would seem, has been bought and paid for by cigar-smoking, rotund, and probably bald Wall Street fat-cats. The only cure is a movement towards socialism. Because nothing does more to end cronyism and corruption in our political system than centralizing all economic decision making to a small caste of political elite.

Quiz: Which curve represents the
demand for labor?  Hint: Paul
Krugman says "B".  It's not "B".

The Occupy Wall Street! movement is a response to America’s continued economic malaise. The SEIU, Transit Workers Union, and United Federation of Teachers have joined the Occupiers! and proposed their own unique solutions to persistent unemployment. As is customary, these solutions undoubtedly involve the unions’ members being paid more to work less. After all, only a heartless social Darwinist would deny that increasing costs and slackening production are the keys to turning this economy around. Being empathetic and public-minded organizations, multiple NYU Law student groups have come forward to express their solidarity with the unions. This, of course, is because law students generally have a poor understanding of economics (see figure). After all, if we were good at making economic decisions we wouldn’t be paying $70k a year for law school.

Pictured: The undeniable success of increased education
expenditures.

But the student groups hold a special place in their hearts for teachers’ unions. A special focus of the email calling for the walkout was the draconian statewide cuts to education spending. This was a nice touch. Who’s gonna come out against the chilluns? And nothing has proven to have as big an impact on bettering education as increasing teachers’ salaries. Perhaps I should rephrase: doing nothing has proven to have as big an impact on bettering education as increasing teachers’ salaries. But graphs and statistics are just tools of the bourgeois elite. They must be ignored. Throwing more money down the education hole just kinda sounds right, and it makes us feel good. That’s all that should matter.

Finally, if there is anything that we can all agree on, it’s that the only surefire way to put the kibosh on Wall Street’s greed is to reelect Barack Obama (the recipient of record amounts of Wall Street contributions in the 2008 presidential election). Given the aims of the Wall Street Occupation! movement, Obama clearly deserves reelection given his administration’s remarkable immunity to the cronyism that has plagued America in the past (Solyndra, General Motors, labor unions, and countless other well-connected businesses aside).

Event Tomorrow! Ilya Somin & Rick Hills

Prof. Ilya Somin

Late tomorrow morning we will be having a very exciting event with Prof. Ilya Somin of GMU and our own Prof. Rick Hills.  You may be familiar with Prof. Somin's work on the popular Volokh Conspiracy blog.  His focus includes constitutional law, property law, and the study of popular political participation.  Prof. Somin will be discussing the Tea Party movement and its role as a popular constitutional movement.  He recently published an article on the subject in the Northwestern University Law Review Colloquy that you can access here.

Prof. Rick Hills

After the speech, NYU's Prof. Hills will provide commentary and critique.  Questions and debate will be welcomed, and we will have a wide assortment of breakfast foods available to get your day started.

Whether you think of the Tea Party as a bunch of know-nothings or as the last best hope of our constitutional republic, this should be an exciting and informative event.  We look forward to seeing you there!

What: Ilya Somin & Rick Hills discuss the Tea Party & popular constitutionalism
When: Wednesday Oct. 5 @ 11am
Where: Vanderbilt Hall 204

Donuts, danishes, bagels, coffee etc. provided!!!!!!

UPDATE: AND SANDWICHES!

Friday Links

• David Henderson comments on some UCLA econ. professors' debate over what ended the Great Depression
  EconLog: What Got Us Out of the Great Depression?
• Zach Weiner on why economists are no longer welcome in the field of philosophy
  Saturday Morning Breakfast Cereal
• Madeline Janis sees Solyndra as proof of the need for more big govt.  Tim Cavanaugh laughs
  Reason: Redevelopment Thug Madeline Janis Has Dumbest Solyndra Gotcha Yet
• Berkeley College Republicans have Affirmative Action Bake Sale; Students, Administration totally miss point, flip lids
  City Journal: Half Baked

Event Tomorrow: Patrick Garry on Federalism, the Tea Party, & the New Deal

Tomorrow, we are lucky to be hosting Prof. Patrick Garry who will be speaking about federalism, limited government, and the Tea Party's revolt against the New Deal legacy.  Prof. Garry has written numerous books on politics and constitutional law including:

• An Entrenched Legacy: How the New Deal Constitutional Revolution Continues to Shape the Role of the Supreme Court
• Conservatism Redefined: A Creed for the Poor and Disadvantaged
• Limited Government and the Bill of Rights (forthcoming)

Prof. Garry will be speaking for about 40 minutes which will leave plenty of time for questions (and debate).  The event is open to everyone, and cupcakes from Magnolia Bakery will be provided courtesy of the Federalist Society.  We will be in Vanderbilt Hall room 202 (right at the top of the stairs).  We look forward to seeing you there!

What: Patrick Garry on Federalism, Limited Govt., and the Tea Party
When: Tomorrow, 9/30 @ 11:00am
Where: VH 202

FREE CUPCAKES!

Wednesday Links

• Prof. Epstein discusses Obama's jobs bill
  Defining Ideas: Obama's Jobs Bill: Read It and Weep
• Peter Suderman discusses the impact of Obamacare thus far
  Reason: A Year And a Half After ObamaCare, Employee Health Insurance Premiums Spike
• Jonathan Adler queries why the govt. declined to seek en banc review at 11th Cir.
  Volokh: 3 Reasons DoJ Passed on En Banc Review of the Mandate Decision
• SCOTUS likely to take up Obamacare litigation
  The Hill: Supreme Court Asked to Review Challenge to Health Reform Law 
• IJ's Clark Neilly discusses the surprising lack of judicial activism in courts today
  WSJ: The Myth of Judicial Activism
  Excerpts at Volokh
  [NOTE: Mr. Neilly will be visiting us to discuss this topic in November!]

Monday Links

• A. Barton Hinkle on animal rights: "It's complicated."
  Reason: Do Animals Have Rights?
• Michael Barone is not sold on any of the GOP candidates so far
  Still Looking for a Candidate to Replace Obama
• Chris Christie still not running
  WSJ: Christie Courted, Still Says No
• Or maybe he is...
  HuffPo: Bloomberg Praises Chris Christie
  WaPo: Is Chris Christie Right to Leave Voters Guessing?
• Megan McArdle on how Solyndra managed to fail so epically
  Atlantic: How Did Solyndra Spend All That Money?
• Gary Becker looks at the efficacy of government workers
  Becker-Posner Blog: Government Workers and Fiscal Problems

Prof. Epstein: Playing the Deathcard in the Healthcare Debate

A Response to Jacob Weisberg
By Richard Epstein

In his recent post on Slate, the intrepid Jacob Weisberg eagerly plays the death card in order to excoriate Republican presidential nominees for their incoherent and cowardly opposition to ObamaCare in the latest primary debate. The hypothetical that we have to address is this:  what should be done with a person without insurance who suffers catastrophic illness, which requires six months of intensive care? Should that person be allowed to die or should that person be supplied that care at public expense under, of course, ObamaCare?

One telling illustration about this example is that Weisberg does not tell us whether the individual who receives this care lives or dies when the treatment is over.  If we assume the latter, the initial question is whether intensive care at, say, $10,000 to $20,000 per day represents the best use of social resources.  A bit of simple arithmetic says that society has spent $1.83 million to $3.66 million on a venture that may well have kept this person alive in a comatose state or have subjected him to repeated invasive treatments when hospice care may well have been preferable. Alternatively, that person could have lived, but we do not know in what kind of state or how much money it will take to sustain him.  In this instance, we might derive somewhat greater benefits, but only at a far greater cost.

The only alternative that is not covered by Weisberg's hypothetical is a case in which intervention is really cost effective: the use of a single day in the intensive care unit that results in keeping a person who suffers from a sudden injury alive so that he or she can return to a normal life thereafter.  The hard question therefore is why is it so apparent to Weisberg or anyone else, that letting a grievously ill person die is the wrong alternative for a society that is determined to make its health care dollars go as far as they want.  Weisberg never addresses this question in a coherent fashion because he is innocent of the notion that high levels of health care expenditures on one individual could exhaust resources that could have enabled many other individuals to survive.  It is just irresponsible to ignore the hard question of scarcity in asking how to set social priorities.

The point has to be put in larger perspective.  The question here is not whether people who lack money should receive health care free of charge.  Of course they should.  But the issue is which people should receive that care, and why?  All of those hard issues are swept under the rug by acting as though nothing else will change if huge levels of resources are devoted to the first person that is carted into the emergency room.  So what kind of institutional arrangements can deal with this issue?

One system that has already shown its defects is the 1986 EMTALA, or the Emergency Medical Treatment and Labor Act, signed by President Reagan. That legislation requires hospitals at their own expense to take in patients that need emergency care or are in active labor, and treat them until stabilized.  Weisberg thinks that this statute is flawed, because these costs are not absorbed by hospitals but are passed on to consumers, employers and the government.

In fact, the economics of EMTALA are far more complex.  In some instances, these costs cannot be passed on, so the hospitals that used to run emergency rooms shut them down, which put more people in peril.  Nor is the issue of whom absorbs the costs the only one that has to be faced.  There is the greater defect that EMTALA requires huge expenditures to be made for the wrong people, so that comatose individuals with little hope or revival, or chronic abusers get first call on social resources, which in turn are no longer available to others.  The simple point about EMTALA is that in its effort to solve the access problem, it aggravates the moral hazard issue, by encouraging reckless or dangerous behavior in individuals who know that they can have care as of right.  The result has not been pretty.  Many ERs have shut down because their hospitals cannot meet the costs.

The provisions under ObamaCare will do nothing to address these difficulties.  The premiums that are paid under the mandate may prove to be insufficient to cover the whole cost of these operations.  The treatments in question may well be given to the wrong people for the wrong reason.  The socialization process that does not work under EMTALA will not work under ObamaCare.

So what then is the solution?  Here it is worth while taking a bit of historical perspective.  The problem of taking care of very sick people did not arise in 1986.  It was with us as a nation throughout our history.  In the early days, there were very few people who were just left callously to die on streets.  Charitable hospitals did open up their doors to supply extensive care even in the days before government reimbursement and tax deductions.

The key to their success was that they had the right to exclude people. That right was important not because they wanted certain patients to die, but because it allowed them to prioritize their care in the manner that they saw fit.  It allowed them, in a word, to decide that hopeless cases and chronic abusers do not receive the same amount of care as others, and perhaps no care at all.  Once they knew that they could use their resources as they saw fit, they could more effectively raise funds from private individuals who did not have to fear government appropriation of moneys through unwise programs.  No one says that this alternative is perfect.  But the greater the number of independent charities, the less likely it is that the failure of mission or purpose of any one of them will bring down the system.

Jacob Weisberg writes as though he, a compassionate person, can put these silly Republicans to shame.  I have no desire to defend their statements, for they don’t seem any more sophisticated than he is.  But it is worth noting that his systematic ignorance of how to deal with scarce resources in end of life situations could have tragic consequences. Put his preferred regime into place and there will be more needless deaths than in a voluntary regime that relies on private compassion and good sense to achieve a result that no set of government mandated programs could hope to match.

- Reproduced with permission from Ricochet

TODAY: FREE WINGS & BEER!!!!!!

Yes, yes, this is another student group happy hour. Are they all blurring together? Well did any of those other ones have WINGS? Ya. That's what we thought.

On Bleecker b/w McDougal & Sullivan

Come have some beer and wings, and find out what the ultra-mysterious-sounding Federalist Society is about (besides writing on the chalkboards and giving away free pizza and cupcakes all the time)!

What: Federalist Society Beginning of the Year Happy Hour
When: Wednesday (today), 9/21 @ 6 pm
Where: 1849 (Bleecker between Sullivan and MacDougal)

Wednesday Links

It's been awhile, I know.  But here are some links!

• Megan McArdle doesn't see a jobs plan, she sees a campaign document
  Atlantic: Obama's Deficit Reduction: A Campaign Document Not a Policy Plan
• Arnold Kling and Robert Russell not terribly optimistic about spending cuts
  EconLog: Political Cynicism
• Orin Kerr and Jonathan Adler debate whether constitutional opposition to mandates is actually a good libertarian strategy
  Kerr: Is the Individual Mandate “Unprecedented” Because It Is More Statist Than Previous Laws, or Because It Is More Market-Oriented?
  Adler: Is the Mandate More “Market-Oriented” than Available Alternatives (and Does It Matter?) — A Response to Orin
• David Harsanyi on Obama's class war
  Reason: Let's Eat the Rich
• Becker and Posner discuss market failures and government failures
• New article from our own Prof. Richard Epstein on Obama and Buffett's call to soak the rich
  Defining Ideas: The Obama-Buffett Siren Call
  

Friday Links

At yesterday's "What is the Federalist Society?" event, Prof. Epstein recalled the long-running debate within the Society between those advocating "judicial restraint" and those calling for a more active judiciary.  Today's link is to a famous 1984 debate between Prof. Epstein and then Prof. Antonin Scalia on this very subject at the CATO Institute.

Scalia v. Epstein: Two Views on Judicial Activism

EVENT TODAY! Epstein: What is the Federalist Society?

Everything you wanted to know, but were too afraid to ask...

What: What is the Federalist Society?
When: Today, 9/15 @ 4PM
Where: Vand. Hall 216
Bonus: Subway Sandwich platters! Come early to pick your fave!

Extra Bonus Epstein Footage:

 

Thursday Links

• Damon Root reviews and discusses David Bernstein's Rehabilitating Lochner
  Reason: Lochner Isn't a Dirty Word
• Jay Cost is skeptical that Obama's jobs plan will help him keep his
  Weekly Standard: The Jobs Bill Won't Save Obama's Job
• Becker and Posner review Obama's jobs speech
• Nate Silver sees a 2010 redux
  538: For Democrats, It's 2010 All Over Again
• The Economist charts the world's biggest employers
• Ronald Bailey on the Solyndra scandal and crony capitalism
  Reason: Solyndra Scandal Gets Even Worse for Obama Administration
• Dan Foster and Sean Matro lay down some SCIENCE on solar energy
  National Review: Solyndra and the Party of Science 
 

Upcoming Event: Richard Epstein - What is the Federalist Society?

After a very successful first event of the year with Prof. Brian Fitzpatrick, we will be having another event this Thursday to introduce students to the Federalist Society.  Our own Prof. Richard Epstein will be giving his talk "What is the Federalist Society?"  Prof. Epstein will talk about the goals of the Society, its history and role in the law community, and share some of his own opinions about current events.  This is always one of the most exciting events of the year, and you are encouraged to bring anyone who has ever been even slightly interested in attending a Fed-Soc event.

This is a great opportunity to interact with one of NYU's most prominent scholars, and, as always, free food will be provided (make suggestions in the comments).

What: What is the Federalist Society?
When: Thursday 9/15 @ 4PM
Where: Vand. Hall 216

Prof. Epstein's latest articles:

• A Decade of Legal Blunders
• The Perils of Price Controls
• The Road to Economic Perdition
• How is Warren Buffet Like the Pope
• Dispatches from the Labor Wars

Wednesday Links

• Matthew Dowd says that Perry's attacks on Social Security may not be as damaging as many assume
  The Atlantic: Why Rick Perry Could Win on Social Security
• Democrats are worried after embarrassing losses in Nevada and New York
  Politico: Twin Defeats Spark Democratic Fears
• Bryan Caplan charts some surprising political externalities of immigration
  EconLog: The Political Externalities of Immigration
• Steve Sexton argues that a liquidity trap does not necessarily make economic rules "topsy-turvy"
  Freakonomics: Examining the EPA Cave-In: Does the Broken Window Fallacy Apply?

Tuesday Links

Drug warrior

• Prof. Epstein surveys the decade of legal blunders made following 9/11
  Defining Ideas: A Decade of Legal Blunders
• Michael Barone doesn't have much nice to say about Obama's "jobs" speech
  Washington Examiner: Obama Buys the Drinks Other Guys' Pay For
• Fred barnes says Mitt won last night's GOP debate
  Weekly Standard: Romney's Win
• Jacob Sollum chronicles Obama's crusade against drugs
  Reason: Bummer
• Shikha Dalmia responds to Kevin Drum's response to her response to Rick Perry's quote on social security (got it?)
  Reason: The Truth and Lies About Social Security

Upcoming Event: Preview of Sup. Ct's 2011-12 Term

Prof. Brian Fitzpatrick

On Tuesday September 13, we will be holding our first event of the Fall semester!  Join us and Prof. Brian Fitzpatrick of Vanderbilt who will be previewing the upcoming Supreme Court term.  There will be many important cases decided in the 2011-12 term.  Prof. Fitzpatrick clerked for Justice Scalia and is will also share his insights on the Justice as he enters his twenty-fifth year on the Court.

As always, free food will be provided!

What: Preview of Supreme Court's 2011-12 Term
When: Tuesday September 13 @ 4:00pm
Where: Vanderbilt Hall 216

Friday Links

Sorry for the late post, but that's what happens when you have an SBA Party and Packers victory on the same night (Go Pack!).  Anyway, here goes...

Amb. John Bolton

• The Dept. of Justice has declared war on Rock-and-Roll
  Reason: The Era of Big Government Is Not Over
• Megan McArdle looks at Obama's "new" jobs plan, says "meh"
  Atlantic: Obama's Job Plan: Mostly More of the Same
• Superbly mustachioed former U.N. Ambassador John Bolton remembers 9/11
  AEI: The Pentagon's on Fire, Amb. Bolton Remembers 9/11
• Former spook Reuel Marc Gerecht on the state of War on Terror
  Weekly Standard: America v. Jihadists

Thursday Links

• George Will reviews David Bernstein's Rehabilitating Lochner
  WaPo: Why Liberals Fear the "Lochner" Decision
• David Bernstein comments on the review
  Volokh: George Will on Rehabilitating Lochner
• The Journal is less than ecstatic about Romney's jobs plan
  WSJ: Mitt Romney's 59 Economic Flavors
• Shikha Dalmia tries to convince Rick Perry that social security is not a Ponzi scheme... it's worse
  Reason: Social Security Is Not a Ponzi Scheme, Mr. Perry
• NYU's own Mario Rizzo discusses the current state of economics
  ThinkMarkets: What Is Economics Today?
• Nate Silver says electability may be a liability for Perry in the GOP primaries
  538: Electability a Primary Liability for Perry
  

Wednesday Links

• Richard Epstein assails the Democrats' job-killing policies
  Defining Ideas: The Road to Economic Perdition
• Steven Landsburg recaps his debate with Paul Krugman on Hurricane Irene disaster relief
  Big Questions: Recap
• Yale's George Priest lambasts the DOJ's decision to challenge A&T-Mobil (clever, right?)
  WSJ: Washington's Antitrust Timewarp (Google the title to get around pay-wall)
• David Friedman is skeptical that global warming's effects will be net negative
  Ideas: What Is Wrong with Global Warming Anyway?
  

Tuesday Links

• Brilliant! Michigan bar owners ban lawmakers for banning smoking [above]
• David Koppel explores the GOP presidential candidates' approach to the abortion issue
  Volokh: Who wants to provoke a constitutional crisis over abortion?
• Byron York remarks on Obama's awful poll numbers
  Washington Examiner: Poll: 81% Say Obama's Economic Policies Not Working
• Becker and Posner discuss what to do about the failing United States Postal Office
• Fed-Soc favorite Judge Douglas Ginsburg coming to NYU!
  Reuters: Appeals Court Judge Ginsburg to Take Post at NYU
• Michael Barone on Congress' rebuke of President Obama's speech
  Washington Examiner: Speech Fiasco and Audacity of Weakness
• Alex Tabarrok continues the debate with Krugman over the broken window fallacy
  Marginal Revolution: The Breaking Windows Fallacy

Friday Links

• Net ZERO jobs created in August
• David Henderson points to evidence that the DOJ has it wrong on the AT&T/T-Mobil merger
  EconLog: AT&T/T-Mobile Merger is Pro-Consumer
• Gary Becker reminds us that market failures do not necessarily call for government intervention
  WSJ: The Great Recession and Government Failure (HT: Volokh Conspiracy)
• Also, Becker and Posner take on Warren Buffett's call for greater taxes on the rich
• Nick Gillespie takes a look at Obama's economic agenda
  Reason: Obama's Jobs Program: If the Choice is Between "Go Big or Go Home," Start Packing Now

Thursday Links

• Megan MaCardle draws parallels between Obama's reelection campaign and Hoover's
  Atlantic: How Do Obama's Re-election Chances Stand Up to Hoover's?
• Peter Suderman discusses the DOJ's war on AT&T
  Reason: The Department of Justice v. AT&T
• Michael Barone predicts how Clarence Thomas might react to the Obamacare litigation
  RCP: Obamacare and the Jurisprudence of Clarence Thomas
• Arnold Kling responds to Megan MaCardle's discussion of journalistic bias
  EconLog: Media Bias and Asymmetric Insight
• 
  

Wednesday Links: Rebooted for the new semester!

Good luck to everyone on their first day of class!  Here are some links to get you through some of the more boring lectures:

• First off, NYU's own Professor Richard Epstein has a number of newly published articles:
• The Perils of Price Controls
• Collective Bargaining = Collective Suicide
• How Is Warren Buffett Like the Pope?
• Alex Epstein (no relation?) on the folly of using Standard Oil as a justification for antitrust laws
  MasterResource: Vindicating Capitalism: The Real History of the Standard Oil Company
• Robert Smith on Dept. of Education's decision to lower the standard to prove sexual harassment on college campuses
  RCP: On Sexual Harassment and Title IX
• Apparently, now you can't bring dogs into NYC bars
  Volokh: New York City Bars Dogs from Bars
• Russ Roberts on Keynesianism and the broken window fallacy
  Cafe Hayek: The Microeconomics of the Broken Window Fallacy

Thursday Reading: 2012, 10th Amendment, & more

• Steve Chapman argues that Republicans are not serious about the 10th Amendment
  Reason: Phony Federalism
• Eugene Volokh on the hyperbolic attacks on Republican holdouts in the debt ceiling debate
  Volokh Conspiracy:  Debt Limits, Union Strike Threats, and Talk of “Extortion” and “Hostage-Taking”
• Kay Hymowitz says the gender gap in pay is not going away any time soon, and that it's ok
  City Journal: Why the Gender Gap Won’t Go Away. Ever.
• Jay Cost thinks that Obama is unlikely to face a primary contender
  Weekly Standard: No Serious Democrat Will Challenge Obama
• Jim VanDehei and Mike Allen see problems ahead for Obama's re-election
  Politico: Obama's Big Drags
• Karl Rove says that the GOP came out of the debt ceiling debate well-positioned for 2012
  WSJ: The Debt-Ceiling Debate & 2012
• Quote of the day
  

  The State is the great fiction through which everyone endeavours to live at the expense of everyone else.
  

  - Frédéric Bastiat

Wednesday Reading: Teacher salaries, debt ceiling aftermath, & more

• Nick Gillespie challenges policy-wonk Matt Damon's claim that teachers are underpaid
  Reason: Is Matt Damon Right That Teachers Make a "Shitty" Salary?
  
• Paul Ryan wants to see the president's budget
  WSJ: Where's Your Budget, Mr. President?
• Becker and Posner on the aftermath of the debt ceiling compromise
  Becker: Immediate and Medium Term Debt and Deficit Problems
  Posner: The Depression, the Deficit Debacle, and the Debt-Ceiling Crisis
• Becker & Posner again on those stubborn unemployment numbers
  Becker: The Abysmal Recovery in Employment
  Posner: What to Do about Unemployment in the Short Term?
• Ilya Somin makes a case for divided government
  Volokh Conspiracy: The Debt Deal & Divided Government

Tuesday Reading

• Richard Epstein calls on the government to cut back on tax expenditures
  Defining Ideas: The Tax Expenditures Muddle
  

  Tax expenditures—such as ethanol subsidies—allow the government to spend money in disguise. There are trillions of dollars of such tax expenditures which are waiting to be canceled out—enough, in fact, to ease our deficit woes. 

• NY Magazine profiles rivals Mitt Romney and Jon Huntsman
  NY Mag: Running for Grown-Up

Monday Reading: Apocalypse averted(?) & more

• Tyler Cowen & Brad Delong discuss the effect of the debt ceiling debacle on the balance of power in Washington
  Marginal Revolution: Has there been a shift in the political balance of power?
  Grasping Reality: Are We Shifting Toward a Parliamentary System?
• George Condon says the debt debate hurt the president's 2012 prospects
  National Journal: Obama Hurt By Debt Debate
  
  
• For next time: Megan MaCardle has some charts that anyone thinking about the debt ceiling should consider
  The Atlantic: A Few More Charts That Should Accompany All Debt Ceiling Discussions
• In other news: Jonathan Adler on overfishing
  Volokh Conspiracy: Learning How to Fish
• Robert Barnes on two potential candidates for the Supreme Court's next affirmative action case
  WaPo: College Affirmative Action Back On Supreme Court's Horizon

Friday Reading: Raising the roof, economy in the gutter, & more

Friday Funnies at Reason

• Megan MaCardle gives a run-down on what will happen if the ceiling is not raised
  The Atlantic: What Happens If We Don't Raising the Debt Ceiling?
• Charles Krauthammer on the Boehner Plan
  National Review: The Debt Ceiling Divide
  

  Consider the Boehner plan for debt reduction. The Heritage Foundation’s advocacy arm calls it “regrettably insufficient.” Of course it is. That’s what happens when you control only half a branch. But the plan’s achievements are significant. It is all cuts, no taxes. It establishes the precedent that debt-ceiling increases must be accompanied by equal spending cuts. And it provides half a year to both negotiate more fundamental reform (tax and entitlement) and keep the issue of debt reduction constantly in the public eye.

• Thomas Sowell says it's time to deal
  RCP: Ideals vs. Realities
• Eugene Volokh on using an executive order to raise the debt ceiling
  Volokh Conspiracy: From Rep. James Clyburn on Executive Power
• Peggy Noonan says America has fallen out of love with Obama
  WSJ: They've Lost That Loving Feeling
• Pew charts independents' flee from the president
  Pew Research: Obama Loses Ground in 2012 Reelection Bid
• Economy grew only 1.3% in Q2
  Economy in U.S. Grows Less Than Forecast After Almost Stalling

Tuesday Reading: Epstein, the debt crisis, & more

• Obama hits approval rating low
• Prof. Epstein advocates the flat tax to solve the financial crisis
  Defining Ideas: Raise Taxes on the Poor
  

  Rather than increasing taxes on the rich, as the president wants, we need to increase taxes on the poor.  Our progressive system of taxation is a mistake—it is part of the reason why we are experiencing this fiscal crisis. Under a flat tax system, all income earners will have to foot their part of the bill for each new government program.

• Rick Perry's refusal to condemn New York's gay marriage legalization is raising eyebrows
  RCP: Perry, Conservatives, and Gay Marriage: An Evolving View?
• George Will contrasts Obama and Boehner's styles
  WaPo: Congress Stands Its Ground
• WSJ on last night's speeches
  WSJ: A Leadership Default
• Megan MaCardle is also unimpressed
  The Atlantic: The Subliminal Message of Tonight's Speech: We're Doomed