The Cost of Litigation
posted by Daniel J. Solove
The NY Times has an interesting article about defamation law involving a lawsuit by a judge against a newspaper for libel. The article noted some interesting facts about the nature and cost of defamation litigation:
The [Medial Law Resource Center] said judges win at trial at about the same rate — 60 percent — as anyone else who takes a news organization to court. But of those that are appealed involving public officials, the media win about 68 percent of the time.
The reason, experts said, is that appellate courts tend to be less susceptible to emotional arguments than juries and more attuned to the legal standard of malice as it applies to public officials, including judges.
Still, during the last several years, the center said, the media have appealed a smaller percentage of cases. In the 1980s, news organizations appealed about 87 percent of the verdicts against them; since 2000, they have appealed 76 percent.
“The media tend to win, but it can be expensive to litigate because you aren’t vindicated until appeal,” Mr. Dodell said. He said that 60 percent to 80 percent of the dollars his company paid out went to defense expenses, not awards.
I am one who believes that the media should be responsible when it defames people or invades their privacy, but the last paragraph in the excerpt above is quite alarming. One of the primary problems with our legal system is its extravagent cost, and the problem is only getting worse. The problem is caused in large part by lawyers, who command extremely high hourly rates. Litigating a case is increasingly a big production, almost like producing a small movie.
One possible solution is eliminating the so-called "American rule" for litigation costs, which holds generally that each side bears its own costs. In other countries, the loser pays. Proponents of a loser pays rule argue that it will weed out frivolous lawsuits brought solely to intimidate defendants to settle rather than expend massive litigation costs. Critics of shifting to loser pays argue that such a rule would seriously deter many legitimate tort cases, as large organizations can run up litigation costs and make the risk-to-reward likelihood in a case too unfavorable for anybody to litigate. In other words, a loser pays rule might result in too few worthy cases being brought. In contrast, the American rule doesn't overly discourage litigation, and it forces the parties to try to resolve the case themselves. But the incentive is to settle quickly regardless of who's in the right because of the enormous potential litigation costs. Changing the American rule to loser pays still will not address the problem that we have an extremely overpriced dispute resolution system.
The great value of our legal system is that it allows people the opportunity to present their side of the story and to be heard. But that takes time and often a lot of attorney labor, which is why it is so expensive. I believe that at some point, our legal system must evolve to address the problem of cost, as the litigation process itself is becoming worse than losing the case. Is there a viable solution?
Posted by Daniel J. Solove at November 20, 2006 12:23 PM
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"One of the primary problems with our legal system is its extravagent cost, and the problem is only getting worse. The problem is caused in large part by lawyers, who command extremely high hourly rates."
I agree entirely with the first sentence, but not the second sentence. How is the problem caused by lawyers? If anything, the problem is that there are too *few* qualified lawyers; if there were more, the price would come down.
Posted by: Bruce Boyden at November 20, 2006 03:44 PM
I wonder how anti-SLAPP laws change the discussion? Perhaps now there are enough of them that some empirical comparisons between anti-SLAPP states and others could be made. In any case, anti-SLAPP offers a nice compromise--some loser-pays aspects without changing the attorneys fee rule across-the-board. Eric.
Posted by: Eric Goldman at November 20, 2006 06:06 PM
I would be curious if there is a difference between trial-court success in state court (where the large majority of cases are brought) and federal court (where cases are brought should diversity exist). Are federal juries less susceptible to emotion and more attuned to the concept of malice than state juries? Do defendants prevail more in federal than in state court?
If so, one of the culprits in the high cost borne by media defendants is the "Well-Pleaded Complaint Rule," under which state-law libel cases remain in state court, even though the media has a strong First Amendment defense.
Posted by: Howard Wasserman at November 20, 2006 07:47 PM
If we wish to reduce the costs of seeking justice in the courts, could I suggest that we examine the current system of legal training? I'm not a lawyer, but my impression speaking to lawyers is that for most, the process of becoming a lawyer has little to do with acquiring the practical skills of lawyering.
I am told that the LSAT has little to do with practice. The law classes themselves are mostly focused on the academic aspects of the law, and often not so applicable to the day-in and day-out of being a lawyer.
I am told that the bar exam is similar to practicing a whole week of law with multiple clients across multiple issues, without ever cracking open a book to make sure that you understanding of the law is correct (something that most attorneys wouldn't do until they are much more experienced - if at all).
Finally, I have heard some lawyers complain thatthe real education of the young lawyer comes during their first few years on the job - and guess what? It is their clients that foot the bill and subsidize the hands-on training that the lawyers receive.
I'm all for affordable justice, however, it seems to me that lawyers' high hourly fees are the symptom of a greater problem, which is a training process that does not encourage people who wish to master the practical skills of being a lawyer.
Posted by: conrad erb at November 21, 2006 01:24 AM
Anti-SLAPP statutes, especially in the California courts, are horribly abused by large corporate defendants to protect themselves from tortious misconduct. In the name of protecting the corporation's right to petition for redress of grievances, the intent of the statute to protect the little guy is turned upside down to totally deprive him of any right to petition for redress of grievances via lawsuit. Before discovery can even be commenced, without benefit of any trial, the lawsuit is thrown out for infringing upon the constitutional rights of corporate wrongdoers. Insult is added to injury by awarding costs and attorney fees to miscreant corporations, whose litigation expenses are funded by their insurance companies (and who employ expensive big law firm counsel). Everyone should be entitled to his day in court. Anti-SLAPP statutes are abused in California courts shamefully, and strategically.
Posted by: ray fuller at November 21, 2006 08:11 AM
So what exactly was the problem with settling affairs of honor by personal duels?
Or is it just that ink-stained newspaper-scribbling wretches are not gentlemen?
Posted by: Ned Ulbricht at November 21, 2006 10:17 AM
星期三, 十一月 22, 2006
The Practice of Law as an Obstacle to Justice: Chinese Lawyers at Work
The Practice of Law as an Obstacle to Justice: Chinese Lawyers at Work
ETHAN MICHELSON Indiana University Bloomington - Department of Sociology & Department of East Asian Languages and Cultures
Law & Society Review, Vol. 40, No. 1, pp. 1-38, 2006
Abstract: This article helps strengthen our comparative and theoretical understanding of lawyers as gatekeepers to justice by analyzing the screening practices of lawyers in a non-Western context. The explanation for Chinese lawyers' aversion to representing workers with labor grievances focuses on their own working conditions, on the organization of their legal labor, and on their evaluations of the moral character of prospective clients. By linking the screening practices of Chinese lawyers to their socioeconomic insecurity and to popular stereotypes informing and legitimating their screening decisions, this article identifies institutional and cultural obstacles not only to the official justice system but also to cause lawyering. After establishing motives for screening clients, this article then demonstrates lawyers' screening methods: by defining legal reality in strategic and often misleading ways, lawyers use the law as a weapon against the interests of the individuals who seek their help.
Keywords: lawyers, legal profession, china, access to justice
ETHAN MICHELSON Indiana University Bloomington - Department of Sociology & Department of East Asian Languages and Cultures
Law & Society Review, Vol. 40, No. 1, pp. 1-38, 2006
Abstract: This article helps strengthen our comparative and theoretical understanding of lawyers as gatekeepers to justice by analyzing the screening practices of lawyers in a non-Western context. The explanation for Chinese lawyers' aversion to representing workers with labor grievances focuses on their own working conditions, on the organization of their legal labor, and on their evaluations of the moral character of prospective clients. By linking the screening practices of Chinese lawyers to their socioeconomic insecurity and to popular stereotypes informing and legitimating their screening decisions, this article identifies institutional and cultural obstacles not only to the official justice system but also to cause lawyering. After establishing motives for screening clients, this article then demonstrates lawyers' screening methods: by defining legal reality in strategic and often misleading ways, lawyers use the law as a weapon against the interests of the individuals who seek their help.
Keywords: lawyers, legal profession, china, access to justice
Ooh, Foxy Lawsuit
November 21, 2006, 8:18 am
Ooh, Foxy Lawsuit
Posted by Peter Lattman
When the Law Blog attended an intellectual property auction in Lower Manhattan last month, we witnessed an anonymous bidder pay $15 million for the rights to rock legend Jimi Hendrix’s songs. After the sale, we talked to some music industry types in attendance, who expressed shock over the $15 million price tag given a huge legal cloud they said hung over the rights to his music. Said one guy: “Someone just bought the rights to a lawsuit.”
He was right. The New York Law Journal reports that on Nov. 6, a federal judge in Manhattan granted the Hendrix estate’s request for a preliminary injunction and attachment in its attempt to block the sale. Judge Lewis Kaplan found the estate was likely to prevail on the merits of its claim that it owns the songs.
Judge Kaplan put it nicely: With his untimely death in 1970 at the age of 27, Hendrix “left a body of musical works and world of controversy.” Hendrix’s catalog was put up for sale by the estate of the rocker’s former manager, Michael Frank Jeffery, even though they had long been embroiled in a bitter legal dispute with Hendrix family.
Steve Szczepanski, an IP partner at Foley & Lardner not involved, told the NYLJ that if the bidder asserts his ownership of the songs, the parties will have to review all of the contracts that Hendrix made during his career. “The buyer obviously knows this and thinks [it] has a chance of being successful after doing this.”
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Isn’t it great that lawyers have now found yet another way to bill the bejesus out of this estate, now after 36 years of appreciation of these unique music assets?What have been the costs of the “long” and “bitter legal dispute with the Hendrix family”?Now we can have another wave of litigation.Where is my barf bag? Will someone please get me a new one.Mr. Lattman, don’t you think the law blog should send a reasonable supply of barf bags to all WSJ subscribers who actively read this blog?Or at least a warning?
Comment by Isn't it Great that Lawyers can Now Loot this Estate After 36 Years of Appreciation - November 21, 2006 at 2:19 pm
What do you think should happen without the lawyers? Throw the suit out? Tell both parties to go away? One paid $15 million and the other thinks they already own it. I don’t see how a lawsuit can be avoided, unless you are suggesting that they both lose by sharing the rights to the music?
Comment by Not as dumb as the previous guy - November 21, 2006 at 6:55 pm
Perhaps my point wasn’t clear enough. It would appear that a long term, estate depleting litigation worty of the wrath of Charles Dickens himself (read: Bleak House) has been going on for some time with respect to this complex mix of music assets of a man now disceased for 36 years.That “Lawyer”-intensive process has apparently not resulting in “finality” for anyone and certainly has not resulted in the clear establishment of title for anyone to the items in question.As I see it, the lack of finality having been achieved can be blamed on a legal system which promotes protracted disputes for the primary purpose of feeding lawyers over extended periods of time.Your system is broken because it can’t reconcile its obligations to society with its desire to feed bloated lawyers under the guise of legitimate disputes.Got it now?Or do you think that the assets of all members of the human race exist to pay for legal fees relating to any absurd claim that any lawyer can cook up?Americans are tired of having their estates in death — and their estates in life (divorce) — eaten by you guys.Americans are looking for a better way. One which doesn’t put the interests of 1.1 million fee-mongering and often “dumb” lawyers ahead of 299 million non-lawyer citizens.Is that clear enough?
Comment by I am the previous guy - November 21, 2006 at 7:54 pm
Lawyers don’t sue people. People sue people.
Comment by AMK - November 22, 2006 at 12:57 am
Ooh, Foxy Lawsuit
Posted by Peter Lattman
When the Law Blog attended an intellectual property auction in Lower Manhattan last month, we witnessed an anonymous bidder pay $15 million for the rights to rock legend Jimi Hendrix’s songs. After the sale, we talked to some music industry types in attendance, who expressed shock over the $15 million price tag given a huge legal cloud they said hung over the rights to his music. Said one guy: “Someone just bought the rights to a lawsuit.”
He was right. The New York Law Journal reports that on Nov. 6, a federal judge in Manhattan granted the Hendrix estate’s request for a preliminary injunction and attachment in its attempt to block the sale. Judge Lewis Kaplan found the estate was likely to prevail on the merits of its claim that it owns the songs.
Judge Kaplan put it nicely: With his untimely death in 1970 at the age of 27, Hendrix “left a body of musical works and world of controversy.” Hendrix’s catalog was put up for sale by the estate of the rocker’s former manager, Michael Frank Jeffery, even though they had long been embroiled in a bitter legal dispute with Hendrix family.
Steve Szczepanski, an IP partner at Foley & Lardner not involved, told the NYLJ that if the bidder asserts his ownership of the songs, the parties will have to review all of the contracts that Hendrix made during his career. “The buyer obviously knows this and thinks [it] has a chance of being successful after doing this.”
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Isn’t it great that lawyers have now found yet another way to bill the bejesus out of this estate, now after 36 years of appreciation of these unique music assets?What have been the costs of the “long” and “bitter legal dispute with the Hendrix family”?Now we can have another wave of litigation.Where is my barf bag? Will someone please get me a new one.Mr. Lattman, don’t you think the law blog should send a reasonable supply of barf bags to all WSJ subscribers who actively read this blog?Or at least a warning?
Comment by Isn't it Great that Lawyers can Now Loot this Estate After 36 Years of Appreciation - November 21, 2006 at 2:19 pm
What do you think should happen without the lawyers? Throw the suit out? Tell both parties to go away? One paid $15 million and the other thinks they already own it. I don’t see how a lawsuit can be avoided, unless you are suggesting that they both lose by sharing the rights to the music?
Comment by Not as dumb as the previous guy - November 21, 2006 at 6:55 pm
Perhaps my point wasn’t clear enough. It would appear that a long term, estate depleting litigation worty of the wrath of Charles Dickens himself (read: Bleak House) has been going on for some time with respect to this complex mix of music assets of a man now disceased for 36 years.That “Lawyer”-intensive process has apparently not resulting in “finality” for anyone and certainly has not resulted in the clear establishment of title for anyone to the items in question.As I see it, the lack of finality having been achieved can be blamed on a legal system which promotes protracted disputes for the primary purpose of feeding lawyers over extended periods of time.Your system is broken because it can’t reconcile its obligations to society with its desire to feed bloated lawyers under the guise of legitimate disputes.Got it now?Or do you think that the assets of all members of the human race exist to pay for legal fees relating to any absurd claim that any lawyer can cook up?Americans are tired of having their estates in death — and their estates in life (divorce) — eaten by you guys.Americans are looking for a better way. One which doesn’t put the interests of 1.1 million fee-mongering and often “dumb” lawyers ahead of 299 million non-lawyer citizens.Is that clear enough?
Comment by I am the previous guy - November 21, 2006 at 7:54 pm
Lawyers don’t sue people. People sue people.
Comment by AMK - November 22, 2006 at 12:57 am
Investment Bankers Vs. Corporate Lawyers: Join the Debate
November 21, 2006, 11:30 am
Investment Bankers Vs. Corporate Lawyers: Join the Debate
Posted by Peter Lattman
An age-old rivalry reared its head yesterday on the Law Blog: Investment bankers versus corporate lawyers. If lawyers are scribes, wrote one reader, investment bankers are the equivalent of real estate brokers. “Bankers sell ice to eskimos” while “M&A Lawyers make sure the ice is neither a liquid, or a gas,” said another.
Corporate lawyers have long leapt to Wall Street. Ex-Treasury Secretary Robert Rubin left Cleary Gottlieb in the 1960s for Goldman Sachs. In the 1970s Bruce Wasserstein billed by the hour at Cravath before becoming a master of the universe. In 2000, Robert Kindler left a Cravath partnership for a senior banking post at Chase Manhattan (now J.P. Morgan).
After Davis Polk M&A chief Dennis Hersch joined Kindler at J.P. Morgan Chase last October, he and Kindler gave an interview to the Deal telling the world how much richer and happier they were as investment bankers. “I’ve read my last merger agreement!” exclaimed Hersch. Kindler, who earlier this year left J.P. Morgan for Morgan Stanley, discussed why he prefers banking and why it’s not for everybody:
The law firm practice can sometimes become too document-focused and too cerebral and removed from the real business of operating a company. . . .
I think that bankers are more free-thinking, are more generally creative, and they generally get rewarded for coming up with good ideas for clients. Lawyers don’t get rewarded for coming up with ideas; they get rewarded for protecting clients and for drafting the document to give them the best protection, but not for coming up with good ideas.
I think you have to do some soul-searching as to whether you have the personality to be constantly driven, constantly on the road and constantly marketing. Most lawyers — most people — don’t have that. But if you are an outgoing person with great business instincts, I actually think long term it’s good to make a career change. You’d be happier as a banker than as a lawyer.
Law Blog readers, those are some pretty provocative words. What should we make of them?
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Corporate lawyers […]
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Neither.
Comment by Litigator - November 21, 2006 at 11:51 am
Wasn’t Rubin a trader at Goldman?
Comment by MDNY - November 21, 2006 at 12:05 pm
He’s right, but most bankers are whores. (Actually, at least whores have some principles.)
Comment by realist - November 21, 2006 at 12:13 pm
The argument that investment bankers are whores is, in the end, untenable. Every whore knows that it’s time to quit when you start coming with the customers. Such quaint scruples are irrelevant, if not completely unknown, to investment bankers.
Comment by Thirdman47 - November 21, 2006 at 12:29 pm
So the question really is, would you rather be a lawyer, or a whore?
Comment by MDNY - November 21, 2006 at 12:35 pm
Q. What do you call a 50-year old investment banker?
A. A failure.
Q. What do you call a 50-year old scrivener?
A. M&A “lawyer”.
Q. What do you call a 50-year litigator?
A. Tired.
(Q. What do you call someone who graduate last in her medical school class?
A. Doctor.)
Comment by What debate - November 21, 2006 at 12:36 pm
lawyers wish they were bankers…bankers wish they were running a hedge fund…
Comment by anon - November 21, 2006 at 12:43 pm
For guys at the top of the pyramid to make a jump is one thing, but do any associates actually transition into banking?
Comment by Fernand - November 21, 2006 at 1:19 pm
In the words of Campbell’s mother in Bonfire of the Vanities. Both the IB’s and the M&A lawyers are running around trying to collect the crumbs falling off of other peoples’ cakes when being sliced.What would be great is if more IBs and Lawyers would figure out how to make their own cake. Didn’t Jeff Bezos do this (not sure what he did on Wall Street, but he left and only returned as a client).
Comment by Lots of tiny little crumbs - November 21, 2006 at 1:20 pm
Let me see, investment banker or M&A lawyer?? It’s hard to say which would bore me to death first.
Further, I don’t think a banker could cut it without a good lawyer. While clients may pay bankers to come up with “ideas,” bankers frequently come up with bad, rather than good, ideas. Indeed, I’ve seen plently of litigation which was directly rooted in a banker’s arrogant dismissal of the need to pay attention to legal intricacies. It reminds of that old saying, there are bold young pilots, cautious old pilots, but there are no bold, old pilots.
Comment by trial attorney - November 21, 2006 at 1:44 pm
Without question, every corporate lawyer I encountered in a decade practicing in large firms in NY wanted to be an investment banker. I now place attorneys — in both legal and banking jobs. Now young lawyers want to work for hedge funds. Inevitably, the most talented corporate lawyers want to “move over to the business side”. Most of them don’t know that they’ll be operating under different assumptions and with a different skill set. What it comes down to is the sense that only the business side has control over the deal (and the time schedule) and only the business side makes important decisions.
PS — why do people leave comments disparaging one or the other profession. I could only assume that a tremendously frustrated person would waste his time with such a silly response.
Comment by Ex-Big Firm Associate - November 21, 2006 at 2:00 pm
There are some of us out there who as Kindler suggests believe that transitioning to the business side would allow us to use a different set of skills and think about issues in a different way that would be a lot more fun and creative than practicing law
Comment by esq. wanting to be a banker - November 21, 2006 at 2:21 pm
Most of the comments assume you can easily transition from being a lawyer to a banker, and treat the “business side” as some sort of paradise where money flows easily and hours are easier. Wrong. I’ve known lawyers who became bankers who said 1) the they did not have the skill set to do their new job, 2) their new job was much more stressful, and sometimes just as time consumming and 3) there was much more job insecurity than with the law. I’m not saying I haven’t thought of making the leep, but there is a lot of wishful thinking out there about the business side. And lawyers going to hedge funds? Only as lawyers! Legal training has nothing to do with analysis of financial assets or trading.
Comment by Big Firm Associate Whose Seen The World - November 21, 2006 at 2:21 pm
M&A lawyers and bankers are both just whores. The bankers are just the richer ones.
Comment by Lawyer - November 21, 2006 at 2:37 pm
Yes, the M&A bankers are the richer whores — because they get a percentage of the assets that transact.But lawyers have their bigger whores too!What about the great contingency fee litigators.Now those whores whore more than any banking whore has ever whored before!That’s whorin’ my friends!
Comment by Yes, because they get a percentage... - November 21, 2006 at 2:58 pm
It is incorrect to characterize M&A lawyers as being too document oriented. I think they are confusing the associates with the lead partners in their deals.
The M&A lawyers I have worked with have contributed great value to their deals in terms of structure, process, and helping very different constituencies with very different objectives find common ground. It is a real pleasure to see a master M&A lawyer and investment banker bring the intangibles in a deal together like that.
This being said, I love a good lawyer joke as much as the next guy.
Comment by Alan in Denver (Oil & Gas Lawyer) - November 21, 2006 at 3:06 pm
Isn’t the first requisite for following a fightg being able to cheer for at least one side?..M & A lawyers vs. Investment Bankers…Hmm, isn’t that kind of like the Iran/Iraq war, where you wished there was a way for both sides to lose…Let any one of them try to convince an 85 year old guy that his calculations of his CD interest payments are wrong, and the bank’s are right, even though the bank’s are $2.47 lower than his! Now that’s skill!
Comment by KDM--Just a little Jimmy Stewart Small Town Banker - November 21, 2006 at 3:19 pm
Bankers are clients. Therefore by definition corporate lawyers are servants who always need to be perfect and treated as such. Whatever comfort they can take in their relatively more secure and occasionally more cerebral atmosphere cannot change this fact.
Comment by Former Deal lawyer - November 21, 2006 at 3:36 pm
Which career will cause me fewer heart attacks?
Comment by Anonymous - November 21, 2006 at 3:54 pm
Easy question. How many lawyers do you know were able to retire at age 45?
Comment by MA (Middle Aged) Lawyer - November 21, 2006 at 4:32 pm
Lawyers make less money, but can insult bankers, avoid work on the margins, and generally maintain the hope that at some point work-life balance will be achieved. Bankers make more money but are constantly being insulted, on the verge of being fired, and actively staving off self-hatred. Pick your poison.
Each profession misses the point - they are both servants who provide an essentially irrelevant service and, therefore, need to establish in their master’s mind a sense of their value. Lawyers have the benefit of knowing a detailed, precise environment; bankers have the benefit of a broad perspective and the ability to see other masters’ plates. Any decent client of either should be able to do without the services of either one. Clients don’t have it easy either - they usually are on the verge of bankruptcy, in which case they’ll need a different type of both lawyer and banker.
At the end of the day, if we’re capitalists, we’re all essentially savages who will sacrifice our kin for another dollar or another hour of sleep. Get used to it and the whole pill will go down easier.
Comment by Done it from all sides - November 21, 2006 at 4:45 pm
How many lawyers does it take to unscrew an M&A deal?Well, all the ones who have unbillable hours this month, of course!
Comment by How many lawyers does it take to unscrew an M&A deal? - November 21, 2006 at 8:56 pm
After having a good time litigating against the usual suspect defense firms, I had a good time papering private equity deals for a good client using forms just like the usual suspects use. At some point I got to be the client’s stand-in for a couple deals, bossing around lawyers, accountants, bankers . . . The last gig was the most fun.
Comment by Dark Side - November 21, 2006 at 9:35 pm
Investment Bankers Vs. Corporate Lawyers: Join the Debate
Posted by Peter Lattman
An age-old rivalry reared its head yesterday on the Law Blog: Investment bankers versus corporate lawyers. If lawyers are scribes, wrote one reader, investment bankers are the equivalent of real estate brokers. “Bankers sell ice to eskimos” while “M&A Lawyers make sure the ice is neither a liquid, or a gas,” said another.
Corporate lawyers have long leapt to Wall Street. Ex-Treasury Secretary Robert Rubin left Cleary Gottlieb in the 1960s for Goldman Sachs. In the 1970s Bruce Wasserstein billed by the hour at Cravath before becoming a master of the universe. In 2000, Robert Kindler left a Cravath partnership for a senior banking post at Chase Manhattan (now J.P. Morgan).
After Davis Polk M&A chief Dennis Hersch joined Kindler at J.P. Morgan Chase last October, he and Kindler gave an interview to the Deal telling the world how much richer and happier they were as investment bankers. “I’ve read my last merger agreement!” exclaimed Hersch. Kindler, who earlier this year left J.P. Morgan for Morgan Stanley, discussed why he prefers banking and why it’s not for everybody:
The law firm practice can sometimes become too document-focused and too cerebral and removed from the real business of operating a company. . . .
I think that bankers are more free-thinking, are more generally creative, and they generally get rewarded for coming up with good ideas for clients. Lawyers don’t get rewarded for coming up with ideas; they get rewarded for protecting clients and for drafting the document to give them the best protection, but not for coming up with good ideas.
I think you have to do some soul-searching as to whether you have the personality to be constantly driven, constantly on the road and constantly marketing. Most lawyers — most people — don’t have that. But if you are an outgoing person with great business instincts, I actually think long term it’s good to make a career change. You’d be happier as a banker than as a lawyer.
Law Blog readers, those are some pretty provocative words. What should we make of them?
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Corporate lawyers […]
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Neither.
Comment by Litigator - November 21, 2006 at 11:51 am
Wasn’t Rubin a trader at Goldman?
Comment by MDNY - November 21, 2006 at 12:05 pm
He’s right, but most bankers are whores. (Actually, at least whores have some principles.)
Comment by realist - November 21, 2006 at 12:13 pm
The argument that investment bankers are whores is, in the end, untenable. Every whore knows that it’s time to quit when you start coming with the customers. Such quaint scruples are irrelevant, if not completely unknown, to investment bankers.
Comment by Thirdman47 - November 21, 2006 at 12:29 pm
So the question really is, would you rather be a lawyer, or a whore?
Comment by MDNY - November 21, 2006 at 12:35 pm
Q. What do you call a 50-year old investment banker?
A. A failure.
Q. What do you call a 50-year old scrivener?
A. M&A “lawyer”.
Q. What do you call a 50-year litigator?
A. Tired.
(Q. What do you call someone who graduate last in her medical school class?
A. Doctor.)
Comment by What debate - November 21, 2006 at 12:36 pm
lawyers wish they were bankers…bankers wish they were running a hedge fund…
Comment by anon - November 21, 2006 at 12:43 pm
For guys at the top of the pyramid to make a jump is one thing, but do any associates actually transition into banking?
Comment by Fernand - November 21, 2006 at 1:19 pm
In the words of Campbell’s mother in Bonfire of the Vanities. Both the IB’s and the M&A lawyers are running around trying to collect the crumbs falling off of other peoples’ cakes when being sliced.What would be great is if more IBs and Lawyers would figure out how to make their own cake. Didn’t Jeff Bezos do this (not sure what he did on Wall Street, but he left and only returned as a client).
Comment by Lots of tiny little crumbs - November 21, 2006 at 1:20 pm
Let me see, investment banker or M&A lawyer?? It’s hard to say which would bore me to death first.
Further, I don’t think a banker could cut it without a good lawyer. While clients may pay bankers to come up with “ideas,” bankers frequently come up with bad, rather than good, ideas. Indeed, I’ve seen plently of litigation which was directly rooted in a banker’s arrogant dismissal of the need to pay attention to legal intricacies. It reminds of that old saying, there are bold young pilots, cautious old pilots, but there are no bold, old pilots.
Comment by trial attorney - November 21, 2006 at 1:44 pm
Without question, every corporate lawyer I encountered in a decade practicing in large firms in NY wanted to be an investment banker. I now place attorneys — in both legal and banking jobs. Now young lawyers want to work for hedge funds. Inevitably, the most talented corporate lawyers want to “move over to the business side”. Most of them don’t know that they’ll be operating under different assumptions and with a different skill set. What it comes down to is the sense that only the business side has control over the deal (and the time schedule) and only the business side makes important decisions.
PS — why do people leave comments disparaging one or the other profession. I could only assume that a tremendously frustrated person would waste his time with such a silly response.
Comment by Ex-Big Firm Associate - November 21, 2006 at 2:00 pm
There are some of us out there who as Kindler suggests believe that transitioning to the business side would allow us to use a different set of skills and think about issues in a different way that would be a lot more fun and creative than practicing law
Comment by esq. wanting to be a banker - November 21, 2006 at 2:21 pm
Most of the comments assume you can easily transition from being a lawyer to a banker, and treat the “business side” as some sort of paradise where money flows easily and hours are easier. Wrong. I’ve known lawyers who became bankers who said 1) the they did not have the skill set to do their new job, 2) their new job was much more stressful, and sometimes just as time consumming and 3) there was much more job insecurity than with the law. I’m not saying I haven’t thought of making the leep, but there is a lot of wishful thinking out there about the business side. And lawyers going to hedge funds? Only as lawyers! Legal training has nothing to do with analysis of financial assets or trading.
Comment by Big Firm Associate Whose Seen The World - November 21, 2006 at 2:21 pm
M&A lawyers and bankers are both just whores. The bankers are just the richer ones.
Comment by Lawyer - November 21, 2006 at 2:37 pm
Yes, the M&A bankers are the richer whores — because they get a percentage of the assets that transact.But lawyers have their bigger whores too!What about the great contingency fee litigators.Now those whores whore more than any banking whore has ever whored before!That’s whorin’ my friends!
Comment by Yes, because they get a percentage... - November 21, 2006 at 2:58 pm
It is incorrect to characterize M&A lawyers as being too document oriented. I think they are confusing the associates with the lead partners in their deals.
The M&A lawyers I have worked with have contributed great value to their deals in terms of structure, process, and helping very different constituencies with very different objectives find common ground. It is a real pleasure to see a master M&A lawyer and investment banker bring the intangibles in a deal together like that.
This being said, I love a good lawyer joke as much as the next guy.
Comment by Alan in Denver (Oil & Gas Lawyer) - November 21, 2006 at 3:06 pm
Isn’t the first requisite for following a fightg being able to cheer for at least one side?..M & A lawyers vs. Investment Bankers…Hmm, isn’t that kind of like the Iran/Iraq war, where you wished there was a way for both sides to lose…Let any one of them try to convince an 85 year old guy that his calculations of his CD interest payments are wrong, and the bank’s are right, even though the bank’s are $2.47 lower than his! Now that’s skill!
Comment by KDM--Just a little Jimmy Stewart Small Town Banker - November 21, 2006 at 3:19 pm
Bankers are clients. Therefore by definition corporate lawyers are servants who always need to be perfect and treated as such. Whatever comfort they can take in their relatively more secure and occasionally more cerebral atmosphere cannot change this fact.
Comment by Former Deal lawyer - November 21, 2006 at 3:36 pm
Which career will cause me fewer heart attacks?
Comment by Anonymous - November 21, 2006 at 3:54 pm
Easy question. How many lawyers do you know were able to retire at age 45?
Comment by MA (Middle Aged) Lawyer - November 21, 2006 at 4:32 pm
Lawyers make less money, but can insult bankers, avoid work on the margins, and generally maintain the hope that at some point work-life balance will be achieved. Bankers make more money but are constantly being insulted, on the verge of being fired, and actively staving off self-hatred. Pick your poison.
Each profession misses the point - they are both servants who provide an essentially irrelevant service and, therefore, need to establish in their master’s mind a sense of their value. Lawyers have the benefit of knowing a detailed, precise environment; bankers have the benefit of a broad perspective and the ability to see other masters’ plates. Any decent client of either should be able to do without the services of either one. Clients don’t have it easy either - they usually are on the verge of bankruptcy, in which case they’ll need a different type of both lawyer and banker.
At the end of the day, if we’re capitalists, we’re all essentially savages who will sacrifice our kin for another dollar or another hour of sleep. Get used to it and the whole pill will go down easier.
Comment by Done it from all sides - November 21, 2006 at 4:45 pm
How many lawyers does it take to unscrew an M&A deal?Well, all the ones who have unbillable hours this month, of course!
Comment by How many lawyers does it take to unscrew an M&A deal? - November 21, 2006 at 8:56 pm
After having a good time litigating against the usual suspect defense firms, I had a good time papering private equity deals for a good client using forms just like the usual suspects use. At some point I got to be the client’s stand-in for a couple deals, bossing around lawyers, accountants, bankers . . . The last gig was the most fun.
Comment by Dark Side - November 21, 2006 at 9:35 pm
星期二, 十一月 21, 2006
The Seen and the Unseen:The Costly Mistake of Ignoring Opportunity Cost
The Seen and the Unseen:The Costly Mistake of Ignoring Opportunity Cost Anthony de Jasay*
January 10, 2005
rojects involving major expenditure and intended to produce future benefit are usually assessed in terms of expected payback. Comparing expected yield to the interest rate, or discounted cash flow to the capital cost of the project, are the standard ways of judging whether it is worth while. In an accounting sense, the cost is straightforward. It is seen as and when it is incurred. "What is the cost of a million-dollar project?" is a silly question. The answer is in the question: it is a million dollars.
This is a fair enough way of looking at cost as it appears in a competitive market. Raising a million dollars from the market for a given project will not noticeably hinder further millions being raised for other projects. If we said billions in place of millions, the relation would probably still hold, though perhaps only just. With ever more general "globalisation", the supply of resources is getting so elastic that even pre-empting a significant chunk of them for one purpose may not seriously jeopardise the fulfilment of other purposes. Resource scarcity is correctly measured by the cost of capital. The capacity to cover that cost is the sole test of a project. No concern arises about one project "crowding out" another.
Yet "crowding out" is inevitable, for the same million cannot be spent on two alternative projects, each of which costs a million. The crowded-out alternative is not seen. It is quietly ruled out by the market because it is not judged capable of meeting the test of at least paying for itself. The project that is carried out meets the test, or is believed to do so. Its opportunity cost is the forgone alternative that does not get carried out. It does not meet the test, or is not believed to do so, hence it is worth less than the project that has crowded it out. In the competitive market, the visible accounting cost and the invisible opportunity cost perform the same work of selection.
This happy coincidence abruptly ceases to hold in a non-market environment, where the cost may be raised from the taxpayer, where the expected benefit is most often un-priced, non-traded and intangible, and where resources move from one use to another not in response to profitability, but to legislative and regulatory commands. It is in this environment of public policies that Bastiat's pioneer teachings about opportunity cost1 become strikingly timely again, just as they were during the 1848-49 socialist episode when he wrote them down.
Public expenditure is seldom totally useless; its usefulness, however modest, is "what is seen" and this is one reason why even such expenditure can be so popular. The public tends implicitly to believe that "what is not seen" does not even exist—that when a new opera house or stadium is built, it is all a net gain of national wealth, for nothing else would have been built in their place. In the limiting case, even useless outlay can be "useful" if it provides employment. Bastiat has a tale about the broken window that gives the glazier a job of work: "what would become of the glaziers if nobody ever broke a window?" He also relates that when Napoleon had ditches dug and filled in again, he was convinced of doing good, by causing "wealth spread among the labouring classes." ["What Is Seen And What Is Not Seen", par. 1.6 and par. 1.88.]
The belief that even useless activity is good if it provides work and income for the glazier and the ditch-digger, instead of leaving them idle, and thus by a ripple effect stimulates demand and employment throughout the economy, has been lent intellectual respectability by the good old Keynesian doctrine that the cause of unemployment is lack of effective demand. After the experience of recent decades, this belief is no longer widely held. Bastiat, of course, never held any such belief. Indeed, he seems to have been quite unaware of the possibility that if resources are idle, their opportunity cost may in fact be zero. However, the bitter and stubborn failure of make-work schemes in Western social democracies to lure idle resources out of unemployment into work shows that in practice zero opportunity cost, like Milton Friedman's free lunch, just cannot be had.
Perhaps the most important area where public policy tends to overlook opportunity cost is in the defence of "what is seen". Bastiat takes issue with the poet and revolutionary deputy Lamartine over subsidies to the arts and the theatre. Maintaining these activities by state aid serves a worthy aim, including employment for artists, actors and artisans, but Lamartine sees only what is thus preserved. He does not see the opportunity cost, namely that the resources devoted to the arts would have served other aims that corresponded to what people actually chose rather than to what the state induced them to choose by subsidizing a particular branch of activity. Bastiat does not deal with the idea of "merit goods" that ought to be produced whether the public wants them or not. But he stresses that promoting the fine arts can only be done at the cost of cutting back other things—a loss we do not see. It is, he notes, impossible to promote everything at the expense of everything else. This echoes his famous definition of the state, "the great fictitious entity by which everyone seeks to live at the expense of everyone else" (op. cit., p.144 [online, pars. 1.69-1.73.]).
There is great anxiety today about the migration of jobs from high wage to low wage areas. Western Europe and North America are supposed to lose in this process, and there is great agitation to stop it and preserve the employment "we see". A massive regulatory apparatus, notably in Germany and France, makes it difficult and expensive to dismiss employees. The obvious effect is to frighten employers, for who wants to hire if he may be unable to fire? However, while the opportunity cost of thus defending existing employment is to suppress new job creation, the latter is "not seen".
Migration of work across geographic frontiers obeys the same economic logic as its migration across technological ones. The basic case of the latter is when work is taken from men and given to machines. This classic symptom of rising wealth has long been accepted as such by modern man, whose concern today is with other symptoms of progress in productivity, such as "outsourcing" and "delocalisation" to low-cost areas. However, in the middle of the 19TH century, the machine was regarded as the chief enemy of the working man and of all traditional activity.
In the same tongue-in cheek manner that he adopts when speaking of the broken window, the candlemakers who must be protected from the unfair competition of the sun, and the "negative railway" that, by not being laid, will keep all the carters and their horses in business, Bastiat finds that only "stupid nations" can enjoy wealth and happiness, for only they are incapable of inventing the machines that destroy prosperity.
Much regulation has been inspired by the same kind of reasoning. "Outsourcing", "delocalisation" and other ways in which firms respond to the high cost (aggravated by high social charges) of low-skill labor, are rendered difficult by and sometimes impossible by government action. This is tantamount to suppressing the opportunities for the improved, more profitable use of all resources—including the labor that is released from poor jobs and is induced to move to more skilled, more productive ones. There are clearly industries and occupations that highly industrialized countries should simply not engage in. Defending them by passing legislation in favor of what we have and against what we could have, is not unlike the long forgotten attempts to legislate against machines.
"Good Lord," Bastiat sighs, "what a lot of trouble to prove in political economy that two and two make four; and if you succeed in doing so, people cry: 'It is so clear that it is boring'. Then they vote as if you had never proved anything at all".
Notes:
1 Austrian school of economics, Friedrich von Wieser, in 1876. A generation earlier Bastiat made it clear to the ordinary reader in his brilliant essay "What Is Seen And What Is Not Seen" (Frederic Bastiat, Selected Essays on Political Economy, ed. By George B. de Huszar, 1964/1995, Irvington-on-Hudson). [For more on Wieser, see these selections and bibliographical items from James M. Buchanan, Frank H. Knight, and John N. Gray."—Econlib Ed.]
* Anthony de Jasay is an Anglo-Hungarian economist living in France. He is the author, a.o., of The State (Oxford, 1985), Social Contract, Free Ride (Oxford 1989) and Against Politics (London,1997). His latest book, Justice and Its Surroundings, was published by Liberty Fund in the summer of 2002.
January 10, 2005
rojects involving major expenditure and intended to produce future benefit are usually assessed in terms of expected payback. Comparing expected yield to the interest rate, or discounted cash flow to the capital cost of the project, are the standard ways of judging whether it is worth while. In an accounting sense, the cost is straightforward. It is seen as and when it is incurred. "What is the cost of a million-dollar project?" is a silly question. The answer is in the question: it is a million dollars.
This is a fair enough way of looking at cost as it appears in a competitive market. Raising a million dollars from the market for a given project will not noticeably hinder further millions being raised for other projects. If we said billions in place of millions, the relation would probably still hold, though perhaps only just. With ever more general "globalisation", the supply of resources is getting so elastic that even pre-empting a significant chunk of them for one purpose may not seriously jeopardise the fulfilment of other purposes. Resource scarcity is correctly measured by the cost of capital. The capacity to cover that cost is the sole test of a project. No concern arises about one project "crowding out" another.
Yet "crowding out" is inevitable, for the same million cannot be spent on two alternative projects, each of which costs a million. The crowded-out alternative is not seen. It is quietly ruled out by the market because it is not judged capable of meeting the test of at least paying for itself. The project that is carried out meets the test, or is believed to do so. Its opportunity cost is the forgone alternative that does not get carried out. It does not meet the test, or is not believed to do so, hence it is worth less than the project that has crowded it out. In the competitive market, the visible accounting cost and the invisible opportunity cost perform the same work of selection.
This happy coincidence abruptly ceases to hold in a non-market environment, where the cost may be raised from the taxpayer, where the expected benefit is most often un-priced, non-traded and intangible, and where resources move from one use to another not in response to profitability, but to legislative and regulatory commands. It is in this environment of public policies that Bastiat's pioneer teachings about opportunity cost1 become strikingly timely again, just as they were during the 1848-49 socialist episode when he wrote them down.
Public expenditure is seldom totally useless; its usefulness, however modest, is "what is seen" and this is one reason why even such expenditure can be so popular. The public tends implicitly to believe that "what is not seen" does not even exist—that when a new opera house or stadium is built, it is all a net gain of national wealth, for nothing else would have been built in their place. In the limiting case, even useless outlay can be "useful" if it provides employment. Bastiat has a tale about the broken window that gives the glazier a job of work: "what would become of the glaziers if nobody ever broke a window?" He also relates that when Napoleon had ditches dug and filled in again, he was convinced of doing good, by causing "wealth spread among the labouring classes." ["What Is Seen And What Is Not Seen", par. 1.6 and par. 1.88.]
The belief that even useless activity is good if it provides work and income for the glazier and the ditch-digger, instead of leaving them idle, and thus by a ripple effect stimulates demand and employment throughout the economy, has been lent intellectual respectability by the good old Keynesian doctrine that the cause of unemployment is lack of effective demand. After the experience of recent decades, this belief is no longer widely held. Bastiat, of course, never held any such belief. Indeed, he seems to have been quite unaware of the possibility that if resources are idle, their opportunity cost may in fact be zero. However, the bitter and stubborn failure of make-work schemes in Western social democracies to lure idle resources out of unemployment into work shows that in practice zero opportunity cost, like Milton Friedman's free lunch, just cannot be had.
Perhaps the most important area where public policy tends to overlook opportunity cost is in the defence of "what is seen". Bastiat takes issue with the poet and revolutionary deputy Lamartine over subsidies to the arts and the theatre. Maintaining these activities by state aid serves a worthy aim, including employment for artists, actors and artisans, but Lamartine sees only what is thus preserved. He does not see the opportunity cost, namely that the resources devoted to the arts would have served other aims that corresponded to what people actually chose rather than to what the state induced them to choose by subsidizing a particular branch of activity. Bastiat does not deal with the idea of "merit goods" that ought to be produced whether the public wants them or not. But he stresses that promoting the fine arts can only be done at the cost of cutting back other things—a loss we do not see. It is, he notes, impossible to promote everything at the expense of everything else. This echoes his famous definition of the state, "the great fictitious entity by which everyone seeks to live at the expense of everyone else" (op. cit., p.144 [online, pars. 1.69-1.73.]).
There is great anxiety today about the migration of jobs from high wage to low wage areas. Western Europe and North America are supposed to lose in this process, and there is great agitation to stop it and preserve the employment "we see". A massive regulatory apparatus, notably in Germany and France, makes it difficult and expensive to dismiss employees. The obvious effect is to frighten employers, for who wants to hire if he may be unable to fire? However, while the opportunity cost of thus defending existing employment is to suppress new job creation, the latter is "not seen".
Migration of work across geographic frontiers obeys the same economic logic as its migration across technological ones. The basic case of the latter is when work is taken from men and given to machines. This classic symptom of rising wealth has long been accepted as such by modern man, whose concern today is with other symptoms of progress in productivity, such as "outsourcing" and "delocalisation" to low-cost areas. However, in the middle of the 19TH century, the machine was regarded as the chief enemy of the working man and of all traditional activity.
In the same tongue-in cheek manner that he adopts when speaking of the broken window, the candlemakers who must be protected from the unfair competition of the sun, and the "negative railway" that, by not being laid, will keep all the carters and their horses in business, Bastiat finds that only "stupid nations" can enjoy wealth and happiness, for only they are incapable of inventing the machines that destroy prosperity.
Much regulation has been inspired by the same kind of reasoning. "Outsourcing", "delocalisation" and other ways in which firms respond to the high cost (aggravated by high social charges) of low-skill labor, are rendered difficult by and sometimes impossible by government action. This is tantamount to suppressing the opportunities for the improved, more profitable use of all resources—including the labor that is released from poor jobs and is induced to move to more skilled, more productive ones. There are clearly industries and occupations that highly industrialized countries should simply not engage in. Defending them by passing legislation in favor of what we have and against what we could have, is not unlike the long forgotten attempts to legislate against machines.
"Good Lord," Bastiat sighs, "what a lot of trouble to prove in political economy that two and two make four; and if you succeed in doing so, people cry: 'It is so clear that it is boring'. Then they vote as if you had never proved anything at all".
Notes:
1 Austrian school of economics, Friedrich von Wieser, in 1876. A generation earlier Bastiat made it clear to the ordinary reader in his brilliant essay "What Is Seen And What Is Not Seen" (Frederic Bastiat, Selected Essays on Political Economy, ed. By George B. de Huszar, 1964/1995, Irvington-on-Hudson). [For more on Wieser, see these selections and bibliographical items from James M. Buchanan, Frank H. Knight, and John N. Gray."—Econlib Ed.]
* Anthony de Jasay is an Anglo-Hungarian economist living in France. He is the author, a.o., of The State (Oxford, 1985), Social Contract, Free Ride (Oxford 1989) and Against Politics (London,1997). His latest book, Justice and Its Surroundings, was published by Liberty Fund in the summer of 2002.
Friedman's Sampler
Friedman's Sampler A selection of writings from The Wall Street Journal.
BY MILTON FRIEDMAN Saturday, November 18, 2006 12:01 a.m. EST
(Editor's note: Emily Parker and Joseph Rago compiled this collection of Milton Friedman's writings from The Wall Street Journal. Friedman died Thursday at 94.)
On Freedom
It is important to emphasize that economic arrangements play a dual role in the promotion of a free society. On the one hand, "freedom" in economic arrangements itself a component of freedom broadly understood, so "economic freedom" is an end in itself to a believer in freedom.
In the second place, economic freedom is also an indispensable means toward the achievement of political freedom. . . .
A citizen of the United States who under the laws of various states is not free to follow the occupation of his own choosing, unless he can get a license for it, is likewise being deprived of an essential part of his freedom. So economic freedom, in and of itself, is an extremely important part of total freedom.
The reason it is important to emphasize this point is because intellectuals in particular have a strong bias against regarding this aspect of freedom as important. They tend to express contempt for what they regard as material aspects of life and to regard their own pursuit of allegedly higher values as on a different plane of significance and as deserving special attention. But for the ordinary citizen of the country, for the great masses of the people, the direct importance of economic freedom is in many cases of at least comparable importance to the indirect importance of economic freedom as a means of political freedom.
Viewed as a means to the end of political freedom, economic arrangements are essential because of the effect which they have on the concentration of power. A major thesis of the new liberal is that the kind of economic organization that provides economic freedom directly, namely, organization of economic activities through a largely free market and private enterprises, in short, through competitive capitalism, is also a necessary though not a sufficient condition for political freedom.
The central reason why this is true is because such a form of economic organization separates economic power from political power and in this way enables the one to be an offset to the other. I cannot think of a single example at any time or any place where there was a large measure of political freedom without there also being something comparable to a private enterprise market form of economic organization for the bulk of economic activity.
--from "Capitalism and Freedom: Why and How the Two Ideas Are Mutually Dependent," May 17, 1961
On the Free Market
What most people really object to when they object to a free market is that it is so hard for them to shape it to their own will. The market gives people what the people want instead of what other people think they ought to want. At the bottom of many criticisms of the market economy is really lack of belief in freedom itself.
The essence of political freedom is the absence of coercion of one man by his fellow men. The fundamental danger to political freedom is the concentration of power. The existence of a large measure of power in the hands of a relatively few individuals enables them to use it to coerce their fellow men. Preservation of freedom requires either the elimination of power where that is possible, or its dispersal where it cannot be eliminated.
It essentially requires a system of checks and balances, like that explicitly incorporated in our Constitution. . . .
The person who buys bread doesn't know whether the wheat from which it was made was grown by a pleader of the Fifth Amendment or a McCarthyite, by person whose skin is black or whose skin is white. The market is an impersonal mechanism that separates economic activities of individual from their personal characteristics. It enables people to cooperate in the economic realm regardless of any differences of opinion or views or attitudes they may have in other areas.
--from "The New Liberal's Creed: Individual Freedom, Preserving Dissent Are Ultimate Goals," May 18, 1961
On Free Trade
What we ought to do is practice what we preach. We have been going around preaching the virtues of free enterprise, of free competition in a free market. What have we been doing? We've been practicing the opposite, not only through our foreign aid program, but also at home. We tell other countries, use the market: we tell our farmers, look to Washington. We tell other countries, don't try to be self-sustained; try to develop valuable industries that can compete on the international market, and then what do we do? We impose import quotas on oil, we impose tariffs on goods that come in, we dump agricultural products abroad, and impose quota on their import at home. The rest of the world listens to what we say and they think, "now there is a fine bunch of hypocrites," and they are right.
--from "An Alternative to Aid: An Economist Urges U.S. to Free Trade, End Grants of Money," April 30, 1962
On Inflation
If the Fed does not explain to the public the nature of our problem and the costs involved in ending inflation, if it does not take the lead in imposing the temporarily unpopular measure required, who will?
--From "Why Curbing Inflation Is the Fed's Job, March 6, 1974
On Taxes
To summarize, deficits are bad--but not because they necessarily raise interest rates. They are bad because they encourage political irresponsibility. They enable our representatives in Washington to buy votes at our expense without having to vote explicitly for taxes to finance the largesse. The result is a bigger government and a poorer nation. That is why I favor a constitutional amendment requiring Congress to balance the budget and limit taxation.
--from "The Taxes Called Deficits," April 24, 1984
On the Economy
The Wall Street Journal has been a firm and dedicated supporter of free markets at home and free trade abroad. It has repeatedly stressed its view that the invisible hand of Adam Smith is a far more effective and equitable means of organizing economic activity than the visible hand of government. Yet when it comes to foreign economic policy, a recent editorial, "Beyond Venice" (June 8), relies upon a wholly different and thoroughly incompatible set of ideas.
According to that editorial, "The economic summits of leading free-market nations are a sound recognition that the world economy defies sovereign borders, and can be run only through international cooperation."
Would the Journal describe the American economy as being "run," whether through international cooperation or by the powers that be in Washington or through cooperation among the individual states? Or would it rather, in accordance with its general philosophy, describe it as a system that is coordinated by the voluntary activities of millions of individuals, a system that runs but is not run?
--from "Please Reread Your Adam Smith," June 24, 1987
On Social Security
I have long been a critic of Social Security, basically because I believe that it is not the business of government to tell people what fraction of their incomes they should devote to providing for their own or someone else's old age. On a more pragmatic level, Social Security is another example of the generalization that government programs typically have effects that are the opposite of those intended by their well-meaning sponsors (what Rep. Richard Armey calls the "invisible foot of government").
The well-meaning sponsors intended Social Security to ensure a minimum income to the poor in their old age. It has largely done that, but at the cost of what they would have regarded as a perverse redistribution of income from the young to the old, from black to white, from the relatively poor to the relatively well-to-do.
From its inception, Social Security has been an unholy combination of two items: a flat-rate tax on earnings up to a maximum with no exemption and a benefit program that awards subsidies that have essentially no relation to need but are based on such criteria as marital status, longevity and recent earnings. As I wrote many years ago, "hardly anyone approves of either part separately. Yet the two combined have become a sacred cow. What a triumph of imaginative packaging and Madison Avenue advertising!"
--from "Social Security: The General And the Personal," March 15, 1988
On the Future
Let us put aside the scarecrows of the twin deficits and face up to the real problems that threaten U.S. growth and prosperity: excessive and wasteful government spending and taxing, including in particular the real time bomb in Social Security, Medicare and Medicaid programs; concealed taxes in the form of mandated expenditures on private business; excessive and misguided regulation of individuals as well as businesses; the changes in tort legislation that are discouraging innovation; and not least, the recent increase in protectionism and the threat of a further major increase. We should and can do something about these problems, not allow ourselves to be diverted by politically convenient scarecrows.
--from "Why the Twin Deficits are a Blessing," Dec. 14, 1988
On Health Care Prices
Toward the end of World War II, I served as an instructor in a quality-control course for Navy procurement officers. It was held in Hershey, Pa. As I recall, we stayed at the Hershey Hotel, on the corner of Cocoa Avenue and Chocolate Boulevard, across the street from the Hershey Junior College, where the actual instruction took place, a block or so from the Hershey Department Store, and so on. You get the idea. The stench--or perfume--of paternalism was heavy in the air.
Early in the century such company towns, most far less benevolently paternalistic than Hershey, were common. Workers who were employed at mines or factories located far from large cities, in towns that typically had only a single major employer, were often required, or induced, to live in company housing and buy their food and other supplies at company stores. In effect, they were paid in kind rather than in cash--the so-called truck system. . . .
The company town has been revived in one major area: medical care. It is taken for granted that workers should receive their pay partly in kind, in the form of medical care provided by the employer. How come? Why single out medical care? Surely food is no less essential to life than medical care. Why is it not at least as logical for workers to be required to buy their food at the company store as to be required to buy their medical care at the company store?
--from "Pricing Health Care: The Folly of Buying Health Care at the Company Store," Feb. 13, 1993
On Jobs
Proposed economic policies tend to be judged in terms of jobs "created." That is the wrong criterion. The economic problem is not creating jobs. That is easy: Hire people at minimum wages (or lower) to dig holes and fill them. True, raising taxes to finance that project would destroy jobs, but the jobs destroyed would be high-wage jobs, the jobs created low-wage jobs, so for each job destroyed more than one job would be created--a net gain of jobs.
The real problem is to establish an economic environment in which there is a demand for workers at wages that those workers not only regard as satisfactory, but are qualified to earn: Better qualified workers and better wages--not simply more jobs--is the real problem.
--from "Better Workers, Better Wages: The Real Issue," June 1, 1993
On the Federal Reserve
My favorite "moderate" proposal for the Fed (my "extreme" proposal is to abolish it) is that (1) at the beginning of each quarter, have it estimate how much it will have to add net to its holdings during that quarter to achieve its target monetary growth; (2) divide that number by 12; and (3) announce that every Monday morning at 11 a.m. it will buy that amount of securities from the lowest bidder, and then close up shop until the next Monday, except for replacing maturing securities.
What harm would that do? It would mean day-to-day and week-to-week fluctuation in the federal-funds rate. However, the sophisticated financial markets have surely demonstrated their capacity to handle wide daily fluctuations in all kinds of securities prices. Dealing with the fluctuations in the federal-funds rate would be child's play.
--from "End the Fed's Fine-Tuning," Sept. 15, 1993
On the Flat Tax
The only way we are ever likely to get it is if there is a drive for a constitutional convention to repeal the 16th Amendment (which gives Congress the power to tax income) and replace it with one mandating a flat-rate tax.
However, I regret that that is not an immediate prospect.
--from "Why a Flat Tax Is Not Politically Feasible," March 30, 1995
On Government Spending
The typical rhetoric, Republican as well as Democratic, about the current battle to balance the budget is that cutting government spending imposes short-term pain more than compensated by long-term gain. That is utter nonsense. Cutting government spending and government intrusion in the economy will almost surely involve immediate gain for the many, short-term pain for the few, and long-term gain for all.
--from "Budget Cutting: A Lot of Gain, Little Pain," June 15, 1995
On Hong Kong
By some accident of officialdom, the colonial office assigned John Cowperthwaite, a Scotsman and a disciple of Adam Smith, to serve as financial secretary of Hong Kong. Cowperthwaite's free market policies are widely credited with producing the subsequent economic miracle that led to a phenomenal rise in the average level of living despite a nearly 10-fold rise in population.
It is hard to conceive of a more severe test of free market policies. Hong Kong is an island devoid of any significant natural resources other than a great harbor. When the Communists took over China, refugees came streaming over the borders with only the possessions they could carry. They and their successors produced a rapid rise in population. Hong Kong received negligible if any foreign aid to assist the assimilation of the refugees.
Under these adverse circumstances, the salvation of Hong Kong has been its complete free trade and free market policy. No tariffs on imports, no subsidies or other privileges to exports. (The only restrictions are those that Hong Kong has been forced to impose by pressure from other countries, including the U.S., as under the multifiber agreement.) There is no fixing of prices or wages; few if any restrictions on entry into business or trade; and government spending and taxes have been kept low. The top tax rate on personal income is 25%, with a maximum average rate of 15%. . . .
What a contrast to the experience of most of the colonies to which Britain gave their freedom after the war. And what a striking demonstration of how much better free trade and free markets are for the ordinary citizen than the protectionism of Mr. Buchanan and the "fair trade" of President Clinton. "Fair" is in the eye of the beholder; free is the verdict of the market. (The word "free" is used three times in the Declaration of Independence and once in the First Amendment to the Constitution, along with "freedom." The word "fair" is not used in either of our founding documents.)
--From "Hong Kong vs. Buchanan," March 7, 1996
On Health Care
The best way to restore freedom of choice to both patient and physician and to control costs would be to eliminate the tax exemption of employer-provided medical care. However, that is clearly not feasible politically. The best alternative available is to extend the tax exemption to all expenditures on medical care, whether made by the patient directly or by employers, to establish a level playing field, in terms of the currently popular cliche.
Many individuals would then find it attractive to negotiate with their employer for a higher cash wage in place of employer-financed medical care. With part or all of the higher cash wage, they could purchase an insurance policy with a very high deductible, i.e., a policy for medical catastrophes, which would be decidedly cheaper than the low-deductible policy their employer had been providing to them, and deposit all or part of the difference in a special "medical savings account" that could be drawn on only for medical purposes. Any amounts unused in a particular year could be allowed to accumulate without being subject to tax, or could be withdrawn with a tax penalty or for special purposes, as with current Individual Retirement Accounts--in effect, a medical IRA. Many employers would find it attractive to offer such an arrangement to their employees as an option.
--from "A Way Out of Soviet-Style Health Care," April 17, 1996
On 'Reform'
The present crisis is not the result of market failure. Rather, it is the result of governments intervening in or seeking to supersede the market, both internally via loans, subsidies, or taxes and other handicaps, and externally via the IMF, the World Bank and other international agencies. We do not need more powerful government agencies spending still more of the taxpayers' money, with limited or nonexistent accountability. That would simply be throwing good money after bad. We need government, both within the nations and internationally, to get out of the way and let the market work. The more that people spend or lend their own money, and the less they spend or lend taxpayer money, the better.
--from "Markets to the Rescue," Oct. 13, 1998
On Ronald Reagan
To Mr. Reagan, of course, holding down government spending was a means to an end, not an end in itself. That end was freedom, human freedom, the right of every individual to pursue his own objectives and values so long as he does not interfere with the corresponding right of others. That was his end in every phase of his remarkable career.
We still have a long way to go to achieve the optimum degree of freedom. But few people in human history have contributed more to the achievement of human freedom than Ronald Wilson Reagan.
--from "Freedom's Friend," June 11, 2004
On Communism
In the almost six decades since the end of World War II, intellectual opinion in the United States about the desirable role of government has undergone a major shift. At the end of the war, opinion was predominantly collectivist. Socialism--defined as government ownership and operation of the means of production--was seen as both feasible and desirable. Those few of us who favored free markets and limited government were a beleaguered minority.
In subsequent decades opinion moved away from collectivism and toward a belief in free markets and limited government. By 1980 opinion had moved enough to enable Ronald Reagan to win the presidency on a quasi-libertarian agenda.
The collapse of the Soviet Union in 1989 delivered the final blow to the belief in socialism. Hardly anyone today, from the far left to the far right, regards socialism in the traditional sense of government ownership and operation of the means of production as either feasible or desirable. Those who profess socialism today mean by it a welfare state.
--from "The Battle's Half Won," Dec. 9, 2004
On School Choice
One result has been experimentation with such alternatives as vouchers, tax credits, and charter schools. Government voucher programs are in effect in a few places (Wisconsin, Ohio, Florida, the District of Columbia); private voucher programs are widespread; tax credits for educational expenses have been adopted in at least three states and tax credit vouchers (tax credits for gifts to scholarship-granting organizations) in three states. In addition, a major legal obstacle to the adoption of vouchers was removed when the Supreme Court affirmed the legality of the Cleveland voucher in 2002. However, all of these programs are limited; taken together they cover only a small fraction of all children in the country.
Throughout this long period, we have been repeatedly frustrated by the gulf between the clear and present need, the burning desire of parents to have more control over the schooling of their children, on the one hand, and the adamant and effective opposition of trade union leaders and educational administrators to any change that would in any way reduce their control of the educational system.
--from "Free to Choose," June 9, 2005
BY MILTON FRIEDMAN Saturday, November 18, 2006 12:01 a.m. EST
(Editor's note: Emily Parker and Joseph Rago compiled this collection of Milton Friedman's writings from The Wall Street Journal. Friedman died Thursday at 94.)
On Freedom
It is important to emphasize that economic arrangements play a dual role in the promotion of a free society. On the one hand, "freedom" in economic arrangements itself a component of freedom broadly understood, so "economic freedom" is an end in itself to a believer in freedom.
In the second place, economic freedom is also an indispensable means toward the achievement of political freedom. . . .
A citizen of the United States who under the laws of various states is not free to follow the occupation of his own choosing, unless he can get a license for it, is likewise being deprived of an essential part of his freedom. So economic freedom, in and of itself, is an extremely important part of total freedom.
The reason it is important to emphasize this point is because intellectuals in particular have a strong bias against regarding this aspect of freedom as important. They tend to express contempt for what they regard as material aspects of life and to regard their own pursuit of allegedly higher values as on a different plane of significance and as deserving special attention. But for the ordinary citizen of the country, for the great masses of the people, the direct importance of economic freedom is in many cases of at least comparable importance to the indirect importance of economic freedom as a means of political freedom.
Viewed as a means to the end of political freedom, economic arrangements are essential because of the effect which they have on the concentration of power. A major thesis of the new liberal is that the kind of economic organization that provides economic freedom directly, namely, organization of economic activities through a largely free market and private enterprises, in short, through competitive capitalism, is also a necessary though not a sufficient condition for political freedom.
The central reason why this is true is because such a form of economic organization separates economic power from political power and in this way enables the one to be an offset to the other. I cannot think of a single example at any time or any place where there was a large measure of political freedom without there also being something comparable to a private enterprise market form of economic organization for the bulk of economic activity.
--from "Capitalism and Freedom: Why and How the Two Ideas Are Mutually Dependent," May 17, 1961
On the Free Market
What most people really object to when they object to a free market is that it is so hard for them to shape it to their own will. The market gives people what the people want instead of what other people think they ought to want. At the bottom of many criticisms of the market economy is really lack of belief in freedom itself.
The essence of political freedom is the absence of coercion of one man by his fellow men. The fundamental danger to political freedom is the concentration of power. The existence of a large measure of power in the hands of a relatively few individuals enables them to use it to coerce their fellow men. Preservation of freedom requires either the elimination of power where that is possible, or its dispersal where it cannot be eliminated.
It essentially requires a system of checks and balances, like that explicitly incorporated in our Constitution. . . .
The person who buys bread doesn't know whether the wheat from which it was made was grown by a pleader of the Fifth Amendment or a McCarthyite, by person whose skin is black or whose skin is white. The market is an impersonal mechanism that separates economic activities of individual from their personal characteristics. It enables people to cooperate in the economic realm regardless of any differences of opinion or views or attitudes they may have in other areas.
--from "The New Liberal's Creed: Individual Freedom, Preserving Dissent Are Ultimate Goals," May 18, 1961
On Free Trade
What we ought to do is practice what we preach. We have been going around preaching the virtues of free enterprise, of free competition in a free market. What have we been doing? We've been practicing the opposite, not only through our foreign aid program, but also at home. We tell other countries, use the market: we tell our farmers, look to Washington. We tell other countries, don't try to be self-sustained; try to develop valuable industries that can compete on the international market, and then what do we do? We impose import quotas on oil, we impose tariffs on goods that come in, we dump agricultural products abroad, and impose quota on their import at home. The rest of the world listens to what we say and they think, "now there is a fine bunch of hypocrites," and they are right.
--from "An Alternative to Aid: An Economist Urges U.S. to Free Trade, End Grants of Money," April 30, 1962
On Inflation
If the Fed does not explain to the public the nature of our problem and the costs involved in ending inflation, if it does not take the lead in imposing the temporarily unpopular measure required, who will?
--From "Why Curbing Inflation Is the Fed's Job, March 6, 1974
On Taxes
To summarize, deficits are bad--but not because they necessarily raise interest rates. They are bad because they encourage political irresponsibility. They enable our representatives in Washington to buy votes at our expense without having to vote explicitly for taxes to finance the largesse. The result is a bigger government and a poorer nation. That is why I favor a constitutional amendment requiring Congress to balance the budget and limit taxation.
--from "The Taxes Called Deficits," April 24, 1984
On the Economy
The Wall Street Journal has been a firm and dedicated supporter of free markets at home and free trade abroad. It has repeatedly stressed its view that the invisible hand of Adam Smith is a far more effective and equitable means of organizing economic activity than the visible hand of government. Yet when it comes to foreign economic policy, a recent editorial, "Beyond Venice" (June 8), relies upon a wholly different and thoroughly incompatible set of ideas.
According to that editorial, "The economic summits of leading free-market nations are a sound recognition that the world economy defies sovereign borders, and can be run only through international cooperation."
Would the Journal describe the American economy as being "run," whether through international cooperation or by the powers that be in Washington or through cooperation among the individual states? Or would it rather, in accordance with its general philosophy, describe it as a system that is coordinated by the voluntary activities of millions of individuals, a system that runs but is not run?
--from "Please Reread Your Adam Smith," June 24, 1987
On Social Security
I have long been a critic of Social Security, basically because I believe that it is not the business of government to tell people what fraction of their incomes they should devote to providing for their own or someone else's old age. On a more pragmatic level, Social Security is another example of the generalization that government programs typically have effects that are the opposite of those intended by their well-meaning sponsors (what Rep. Richard Armey calls the "invisible foot of government").
The well-meaning sponsors intended Social Security to ensure a minimum income to the poor in their old age. It has largely done that, but at the cost of what they would have regarded as a perverse redistribution of income from the young to the old, from black to white, from the relatively poor to the relatively well-to-do.
From its inception, Social Security has been an unholy combination of two items: a flat-rate tax on earnings up to a maximum with no exemption and a benefit program that awards subsidies that have essentially no relation to need but are based on such criteria as marital status, longevity and recent earnings. As I wrote many years ago, "hardly anyone approves of either part separately. Yet the two combined have become a sacred cow. What a triumph of imaginative packaging and Madison Avenue advertising!"
--from "Social Security: The General And the Personal," March 15, 1988
On the Future
Let us put aside the scarecrows of the twin deficits and face up to the real problems that threaten U.S. growth and prosperity: excessive and wasteful government spending and taxing, including in particular the real time bomb in Social Security, Medicare and Medicaid programs; concealed taxes in the form of mandated expenditures on private business; excessive and misguided regulation of individuals as well as businesses; the changes in tort legislation that are discouraging innovation; and not least, the recent increase in protectionism and the threat of a further major increase. We should and can do something about these problems, not allow ourselves to be diverted by politically convenient scarecrows.
--from "Why the Twin Deficits are a Blessing," Dec. 14, 1988
On Health Care Prices
Toward the end of World War II, I served as an instructor in a quality-control course for Navy procurement officers. It was held in Hershey, Pa. As I recall, we stayed at the Hershey Hotel, on the corner of Cocoa Avenue and Chocolate Boulevard, across the street from the Hershey Junior College, where the actual instruction took place, a block or so from the Hershey Department Store, and so on. You get the idea. The stench--or perfume--of paternalism was heavy in the air.
Early in the century such company towns, most far less benevolently paternalistic than Hershey, were common. Workers who were employed at mines or factories located far from large cities, in towns that typically had only a single major employer, were often required, or induced, to live in company housing and buy their food and other supplies at company stores. In effect, they were paid in kind rather than in cash--the so-called truck system. . . .
The company town has been revived in one major area: medical care. It is taken for granted that workers should receive their pay partly in kind, in the form of medical care provided by the employer. How come? Why single out medical care? Surely food is no less essential to life than medical care. Why is it not at least as logical for workers to be required to buy their food at the company store as to be required to buy their medical care at the company store?
--from "Pricing Health Care: The Folly of Buying Health Care at the Company Store," Feb. 13, 1993
On Jobs
Proposed economic policies tend to be judged in terms of jobs "created." That is the wrong criterion. The economic problem is not creating jobs. That is easy: Hire people at minimum wages (or lower) to dig holes and fill them. True, raising taxes to finance that project would destroy jobs, but the jobs destroyed would be high-wage jobs, the jobs created low-wage jobs, so for each job destroyed more than one job would be created--a net gain of jobs.
The real problem is to establish an economic environment in which there is a demand for workers at wages that those workers not only regard as satisfactory, but are qualified to earn: Better qualified workers and better wages--not simply more jobs--is the real problem.
--from "Better Workers, Better Wages: The Real Issue," June 1, 1993
On the Federal Reserve
My favorite "moderate" proposal for the Fed (my "extreme" proposal is to abolish it) is that (1) at the beginning of each quarter, have it estimate how much it will have to add net to its holdings during that quarter to achieve its target monetary growth; (2) divide that number by 12; and (3) announce that every Monday morning at 11 a.m. it will buy that amount of securities from the lowest bidder, and then close up shop until the next Monday, except for replacing maturing securities.
What harm would that do? It would mean day-to-day and week-to-week fluctuation in the federal-funds rate. However, the sophisticated financial markets have surely demonstrated their capacity to handle wide daily fluctuations in all kinds of securities prices. Dealing with the fluctuations in the federal-funds rate would be child's play.
--from "End the Fed's Fine-Tuning," Sept. 15, 1993
On the Flat Tax
The only way we are ever likely to get it is if there is a drive for a constitutional convention to repeal the 16th Amendment (which gives Congress the power to tax income) and replace it with one mandating a flat-rate tax.
However, I regret that that is not an immediate prospect.
--from "Why a Flat Tax Is Not Politically Feasible," March 30, 1995
On Government Spending
The typical rhetoric, Republican as well as Democratic, about the current battle to balance the budget is that cutting government spending imposes short-term pain more than compensated by long-term gain. That is utter nonsense. Cutting government spending and government intrusion in the economy will almost surely involve immediate gain for the many, short-term pain for the few, and long-term gain for all.
--from "Budget Cutting: A Lot of Gain, Little Pain," June 15, 1995
On Hong Kong
By some accident of officialdom, the colonial office assigned John Cowperthwaite, a Scotsman and a disciple of Adam Smith, to serve as financial secretary of Hong Kong. Cowperthwaite's free market policies are widely credited with producing the subsequent economic miracle that led to a phenomenal rise in the average level of living despite a nearly 10-fold rise in population.
It is hard to conceive of a more severe test of free market policies. Hong Kong is an island devoid of any significant natural resources other than a great harbor. When the Communists took over China, refugees came streaming over the borders with only the possessions they could carry. They and their successors produced a rapid rise in population. Hong Kong received negligible if any foreign aid to assist the assimilation of the refugees.
Under these adverse circumstances, the salvation of Hong Kong has been its complete free trade and free market policy. No tariffs on imports, no subsidies or other privileges to exports. (The only restrictions are those that Hong Kong has been forced to impose by pressure from other countries, including the U.S., as under the multifiber agreement.) There is no fixing of prices or wages; few if any restrictions on entry into business or trade; and government spending and taxes have been kept low. The top tax rate on personal income is 25%, with a maximum average rate of 15%. . . .
What a contrast to the experience of most of the colonies to which Britain gave their freedom after the war. And what a striking demonstration of how much better free trade and free markets are for the ordinary citizen than the protectionism of Mr. Buchanan and the "fair trade" of President Clinton. "Fair" is in the eye of the beholder; free is the verdict of the market. (The word "free" is used three times in the Declaration of Independence and once in the First Amendment to the Constitution, along with "freedom." The word "fair" is not used in either of our founding documents.)
--From "Hong Kong vs. Buchanan," March 7, 1996
On Health Care
The best way to restore freedom of choice to both patient and physician and to control costs would be to eliminate the tax exemption of employer-provided medical care. However, that is clearly not feasible politically. The best alternative available is to extend the tax exemption to all expenditures on medical care, whether made by the patient directly or by employers, to establish a level playing field, in terms of the currently popular cliche.
Many individuals would then find it attractive to negotiate with their employer for a higher cash wage in place of employer-financed medical care. With part or all of the higher cash wage, they could purchase an insurance policy with a very high deductible, i.e., a policy for medical catastrophes, which would be decidedly cheaper than the low-deductible policy their employer had been providing to them, and deposit all or part of the difference in a special "medical savings account" that could be drawn on only for medical purposes. Any amounts unused in a particular year could be allowed to accumulate without being subject to tax, or could be withdrawn with a tax penalty or for special purposes, as with current Individual Retirement Accounts--in effect, a medical IRA. Many employers would find it attractive to offer such an arrangement to their employees as an option.
--from "A Way Out of Soviet-Style Health Care," April 17, 1996
On 'Reform'
The present crisis is not the result of market failure. Rather, it is the result of governments intervening in or seeking to supersede the market, both internally via loans, subsidies, or taxes and other handicaps, and externally via the IMF, the World Bank and other international agencies. We do not need more powerful government agencies spending still more of the taxpayers' money, with limited or nonexistent accountability. That would simply be throwing good money after bad. We need government, both within the nations and internationally, to get out of the way and let the market work. The more that people spend or lend their own money, and the less they spend or lend taxpayer money, the better.
--from "Markets to the Rescue," Oct. 13, 1998
On Ronald Reagan
To Mr. Reagan, of course, holding down government spending was a means to an end, not an end in itself. That end was freedom, human freedom, the right of every individual to pursue his own objectives and values so long as he does not interfere with the corresponding right of others. That was his end in every phase of his remarkable career.
We still have a long way to go to achieve the optimum degree of freedom. But few people in human history have contributed more to the achievement of human freedom than Ronald Wilson Reagan.
--from "Freedom's Friend," June 11, 2004
On Communism
In the almost six decades since the end of World War II, intellectual opinion in the United States about the desirable role of government has undergone a major shift. At the end of the war, opinion was predominantly collectivist. Socialism--defined as government ownership and operation of the means of production--was seen as both feasible and desirable. Those few of us who favored free markets and limited government were a beleaguered minority.
In subsequent decades opinion moved away from collectivism and toward a belief in free markets and limited government. By 1980 opinion had moved enough to enable Ronald Reagan to win the presidency on a quasi-libertarian agenda.
The collapse of the Soviet Union in 1989 delivered the final blow to the belief in socialism. Hardly anyone today, from the far left to the far right, regards socialism in the traditional sense of government ownership and operation of the means of production as either feasible or desirable. Those who profess socialism today mean by it a welfare state.
--from "The Battle's Half Won," Dec. 9, 2004
On School Choice
One result has been experimentation with such alternatives as vouchers, tax credits, and charter schools. Government voucher programs are in effect in a few places (Wisconsin, Ohio, Florida, the District of Columbia); private voucher programs are widespread; tax credits for educational expenses have been adopted in at least three states and tax credit vouchers (tax credits for gifts to scholarship-granting organizations) in three states. In addition, a major legal obstacle to the adoption of vouchers was removed when the Supreme Court affirmed the legality of the Cleveland voucher in 2002. However, all of these programs are limited; taken together they cover only a small fraction of all children in the country.
Throughout this long period, we have been repeatedly frustrated by the gulf between the clear and present need, the burning desire of parents to have more control over the schooling of their children, on the one hand, and the adamant and effective opposition of trade union leaders and educational administrators to any change that would in any way reduce their control of the educational system.
--from "Free to Choose," June 9, 2005
Markets in Everything, Not
Markets in Everything, Not
2006年11月19日, 1:56:55 Greg Mankiw
My Harvard colleague Al Roth (free link) has a new essay that examines people's reluctance to buy and sell some things. The abstract:
This essay examines how repugnance sometimes constrains what transactions and markets we see. When my colleagues and I have helped design markets and allocation procedures, we have often found that distaste for certain kinds of transactions is a real constraint, every bit as real as the constraints imposed by technology or by the requirements of incentives and efficiency. I'll first consider a range of examples, from slavery and indentured servitude (which once were not as repugnant as they now are) to lending money for interest (which used to be widely repugnant and is now not), and from bans on eating horse meat in California to bans on dwarf tossing in France. An example of special interest will be the widespread laws against the buying and selling of organs for transplantation. The historical record suggests that while repugnance can change over time, change can be quite slow.Economists tend to be more open to market mechanisms than non-economists. But even we set limits. For example, we do not sell grades to students, and we do not buy and sell research papers among ourselves.The absence of the latter market, however, may be due to lack of incentive rather than repugnance. I recall a conversation a few years back in which someone was wondering whether professors faced diminishing marginal rewards to publishing scholarly articles. One of my more prolific colleagues said, "Of course not. Otherwise, I'd be selling my articles to others."
2006年11月19日, 1:56:55 Greg Mankiw
My Harvard colleague Al Roth (free link) has a new essay that examines people's reluctance to buy and sell some things. The abstract:
This essay examines how repugnance sometimes constrains what transactions and markets we see. When my colleagues and I have helped design markets and allocation procedures, we have often found that distaste for certain kinds of transactions is a real constraint, every bit as real as the constraints imposed by technology or by the requirements of incentives and efficiency. I'll first consider a range of examples, from slavery and indentured servitude (which once were not as repugnant as they now are) to lending money for interest (which used to be widely repugnant and is now not), and from bans on eating horse meat in California to bans on dwarf tossing in France. An example of special interest will be the widespread laws against the buying and selling of organs for transplantation. The historical record suggests that while repugnance can change over time, change can be quite slow.Economists tend to be more open to market mechanisms than non-economists. But even we set limits. For example, we do not sell grades to students, and we do not buy and sell research papers among ourselves.The absence of the latter market, however, may be due to lack of incentive rather than repugnance. I recall a conversation a few years back in which someone was wondering whether professors faced diminishing marginal rewards to publishing scholarly articles. One of my more prolific colleagues said, "Of course not. Otherwise, I'd be selling my articles to others."
commemoration of Milton Friedman
Milton Friedman
2006年11月18日, 1:17:40 Greg Mankiw
We lost a great human being today. Here is what I wrote about him in 1998.The Economist of the CenturyBy N. Gregory MankiwAnyone who thinks that ideas matter (and who doesn't?) naturally takes an interest in people who generate more than their share. Milton Friedman is one of them. As he approaches his 86th birthday, Friedman remains one of the world's most influential living economists.Fans of this great intellect are in for a treat: Friedman and his wife, Rose, have just published their memoirs, Two Lucky People (University of Chicago Press, $35). The Friedmans take turns telling their story as they trace their lives from humble childhoods in Rahway, N.J. (Milton), and Portland, Ore. (Rose), through a lifetime of teaching, research, and policy controversies.The Friedmans are best known for their articulate and unwavering defense of the free market. Their policy objective is, simply, "the promotion of human freedom." This goal, they tell us, "underlies our opposition to rent control and general wage and price controls, our support for educational choice, privatizing radio and television channels, an all-volunteer army, limitation of government spending, legalization of drugs, privatizing Social Security, free trade, and the deregulation of industry and private life to the fullest extent possible." Milton and Rose were libertarians--aggressively vocal libertarians--before libertarians were cool.Their campaign for a freer society led them into the confidence of some of the great political figures of our times, including Barry Goldwater, Richard Nixon, Ronald Reagan, and Margaret Thatcher. The authors don't shy from judging these leaders: we are told, for instance, that Reagan's choice of George Bush as his Vice President was "the worst decision not only of his campaign but of his presidency."The Friedmans' political involvement came with its share of controversy. Most notably, in 1975 Milton spent six days giving lectures on public policy in Chile and had one brief meeting with right-wing dictator Augusto Pinochet. The result was a firestorm of protest. When Friedman won a Nobel Prize the next year, public objections came from all directions, including previous prize-winners David Baltimore and Linus Pauling.Friedman was--and is--unrepentant. Of course, he did not endorse the dictatorship. But, he wrote, "I do not regard it evil for an economist to render technical economic advice to the Chilean government to help end the plague of inflation, any more than I would regard it as evil for a physician to give technical medical advice to the Chilean government to end a medical plague." He also notes that years later, when he offered similar economic advice to China, there were no similar protests, even though the left-wing Chinese dictators were no less oppressive than Pinochet.Friedman's politics may have generated public controversy, but his scientific contributions yielded a consensus of admiration among his professional colleagues. When students today are taught about the determinants of consumer spending, the history of monetary policy, or the relationship between inflation and unemployment, they owe much to the intellectual legacy of Milton Friedman. Legend has it that economist George Stigler once called Friedman "the best economist in a bad century." Stigler may well have been right that Friedman doesn't quite measure up to the 18th century's Adam Smith or the 19th century's David Ricardo--economists, like many of the things that they study, are subject to the law of diminishing returns. But Friedman runs a good race against such 20th-century luminaries as Paul Samuelson and John Maynard Keynes, and that is no mean feat.The book does drag at times, especially when it lingers over the minutiae of the Friedmans' home life. (How much detail do we really need to know about Friedman family vacations, for example?) But overall, it's charming. It's almost like a letter from a couple of old friends--a couple of old friends who had a long, compelling intellectual journey, came to know some of the great world leaders of this century, and had 60 years of happy, supportive marriage. After reading Two Lucky People, you really can't help but agree with the title.Update: Here is the NY Times obituary.
2006年11月18日, 1:17:40 Greg Mankiw
We lost a great human being today. Here is what I wrote about him in 1998.The Economist of the CenturyBy N. Gregory MankiwAnyone who thinks that ideas matter (and who doesn't?) naturally takes an interest in people who generate more than their share. Milton Friedman is one of them. As he approaches his 86th birthday, Friedman remains one of the world's most influential living economists.Fans of this great intellect are in for a treat: Friedman and his wife, Rose, have just published their memoirs, Two Lucky People (University of Chicago Press, $35). The Friedmans take turns telling their story as they trace their lives from humble childhoods in Rahway, N.J. (Milton), and Portland, Ore. (Rose), through a lifetime of teaching, research, and policy controversies.The Friedmans are best known for their articulate and unwavering defense of the free market. Their policy objective is, simply, "the promotion of human freedom." This goal, they tell us, "underlies our opposition to rent control and general wage and price controls, our support for educational choice, privatizing radio and television channels, an all-volunteer army, limitation of government spending, legalization of drugs, privatizing Social Security, free trade, and the deregulation of industry and private life to the fullest extent possible." Milton and Rose were libertarians--aggressively vocal libertarians--before libertarians were cool.Their campaign for a freer society led them into the confidence of some of the great political figures of our times, including Barry Goldwater, Richard Nixon, Ronald Reagan, and Margaret Thatcher. The authors don't shy from judging these leaders: we are told, for instance, that Reagan's choice of George Bush as his Vice President was "the worst decision not only of his campaign but of his presidency."The Friedmans' political involvement came with its share of controversy. Most notably, in 1975 Milton spent six days giving lectures on public policy in Chile and had one brief meeting with right-wing dictator Augusto Pinochet. The result was a firestorm of protest. When Friedman won a Nobel Prize the next year, public objections came from all directions, including previous prize-winners David Baltimore and Linus Pauling.Friedman was--and is--unrepentant. Of course, he did not endorse the dictatorship. But, he wrote, "I do not regard it evil for an economist to render technical economic advice to the Chilean government to help end the plague of inflation, any more than I would regard it as evil for a physician to give technical medical advice to the Chilean government to end a medical plague." He also notes that years later, when he offered similar economic advice to China, there were no similar protests, even though the left-wing Chinese dictators were no less oppressive than Pinochet.Friedman's politics may have generated public controversy, but his scientific contributions yielded a consensus of admiration among his professional colleagues. When students today are taught about the determinants of consumer spending, the history of monetary policy, or the relationship between inflation and unemployment, they owe much to the intellectual legacy of Milton Friedman. Legend has it that economist George Stigler once called Friedman "the best economist in a bad century." Stigler may well have been right that Friedman doesn't quite measure up to the 18th century's Adam Smith or the 19th century's David Ricardo--economists, like many of the things that they study, are subject to the law of diminishing returns. But Friedman runs a good race against such 20th-century luminaries as Paul Samuelson and John Maynard Keynes, and that is no mean feat.The book does drag at times, especially when it lingers over the minutiae of the Friedmans' home life. (How much detail do we really need to know about Friedman family vacations, for example?) But overall, it's charming. It's almost like a letter from a couple of old friends--a couple of old friends who had a long, compelling intellectual journey, came to know some of the great world leaders of this century, and had 60 years of happy, supportive marriage. After reading Two Lucky People, you really can't help but agree with the title.Update: Here is the NY Times obituary.
Beyond Insurance: Weighing the Benefits of Driving vs. the Total Costs of Driving
Beyond Insurance: Weighing the Benefits of Driving vs. the Total Costs of Driving
By HAL R. VARIAN
Published: November 16, 2006
Suppose that Adam runs a stop sign and hits Eve, who happened to be driving through the same intersection. Who caused the accident?
If Adam were not there, the accident would have not happened. So it seems natural to say that he was the cause. But it is equally true that if Eve were not there, the accident could not have happened either. So, in a sense, Eve caused the accident as well. Adam might have been negligent, but if either party were absent, there would have been no accident.
More generally, the more people on the road, the more accidents will occur, at least up to the point of total gridlock. Even adding an obsessively safe driver to the road could increase total accident costs, since reckless drivers like Adam would now have one more car to run into.
When Eve decided whether to buy a car, she was forced to consider the average costs of accidents in which she could be involved since she had to pay for automobile insurance, and insurance rates by necessity reflect the average costs of accidents. But her insurance premiums did not include the costs that other drivers might incur by running into her.
If the number of accidents increases as the number of cars per mile of road increases, then adding a new car to the road will increase the expected accident costs for existing drivers. The new driver has to pay for the expected accident costs she may incur (via her insurance premium) but not for the increase in accident costs that her presence creates for other drivers on the road.
Economists say that the new driver imposes an “external cost” on the other drivers. Since drivers only face their own cost of accidents in their insurance premiums, they don’t face the full cost of their driving, which should include the costs they impose on others.
How big is this external cost? This is the question investigated by Aaron S. Edlin, an economist at the University of California, Berkeley, and Pinar Karaca-Mandic, an economist at the RAND Corporation, in a recent paper, “The Accident Cost From Driving,” published in the Journal of Political Economy and also available at http://works.bepress.com/aaron_edlin/21/.
The critical factor affecting accident costs turns out to be traffic density. In states where there are few cars per mile of road, the external accident costs are much less than in states with more congested roads. The authors estimate that an additional driver increases statewide insurance costs in California by $1,725 to $3,239, depending on the method used for the estimate. The comparable number for North Dakota is about $10.
In an economist’s ideal world, the benefits of driving should be compared with the total costs of driving, which include both the costs borne by the driver and the external costs that the driver imposes on others. In economics jargon, the external cost should be “internalized.”
Mr. Edlin and Ms. Karaca-Mandic estimate that internalizing those external costs nationwide would require a substantial tax on driving, on the order of $220 billion a year. In California alone, such a tax would raise around $66 billion. By comparison, the state income and sales tax revenues for California in 2004 were about $72 billion.
On the other hand, drivers in states like North Dakota with low traffic density would have negligible driving tax rates since the presence of an additional car in such places has almost no effect on the accident rates.
Internalizing the accident cost of driving would require a tax that varies with both traffic density and the amount of driving a person does. The obvious candidate would be a local gasoline tax.
But a gas tax is not ideal since good and bad drivers would be charged the same rate per gallon. One could also consider a tax on insurance premiums, which generally take driving records into account. Of course, a combination of taxes would be possible as well.
Unfortunately, the political support for such measures is virtually nil. This is understandable. People have made decisions on where to live and how far they are willing to commute based on the current costs of operating vehicles, and a dramatic change in the cost of operation would be extremely unpopular.
Still, one might consider taking some modest steps toward making drivers face the full costs of their decisions. A moderate increase in the gasoline tax whose proceeds were plowed back into mass transit might be politically palatable. Driving during commuting hours in New Jersey and California isn’t very pleasant, and many drivers may prefer fast and convenient public transit.
Many commentators have called for a higher gasoline tax to discourage the use of oil. Some are motivated by environmental concerns and some by international politics. The proposal has gained little traction since the payoffs for reducing gasoline consumption seem distant and uncertain. Accident costs of driving give yet another reason to try to reduce our oil dependence. But unlike the other reasons, the payoff for driving less should have an immediate and concrete effect: fewer accidents.
Hal R. Varian is a professor of business, economics and information management at the University of California, Berkeley.
By HAL R. VARIAN
Published: November 16, 2006
Suppose that Adam runs a stop sign and hits Eve, who happened to be driving through the same intersection. Who caused the accident?
If Adam were not there, the accident would have not happened. So it seems natural to say that he was the cause. But it is equally true that if Eve were not there, the accident could not have happened either. So, in a sense, Eve caused the accident as well. Adam might have been negligent, but if either party were absent, there would have been no accident.
More generally, the more people on the road, the more accidents will occur, at least up to the point of total gridlock. Even adding an obsessively safe driver to the road could increase total accident costs, since reckless drivers like Adam would now have one more car to run into.
When Eve decided whether to buy a car, she was forced to consider the average costs of accidents in which she could be involved since she had to pay for automobile insurance, and insurance rates by necessity reflect the average costs of accidents. But her insurance premiums did not include the costs that other drivers might incur by running into her.
If the number of accidents increases as the number of cars per mile of road increases, then adding a new car to the road will increase the expected accident costs for existing drivers. The new driver has to pay for the expected accident costs she may incur (via her insurance premium) but not for the increase in accident costs that her presence creates for other drivers on the road.
Economists say that the new driver imposes an “external cost” on the other drivers. Since drivers only face their own cost of accidents in their insurance premiums, they don’t face the full cost of their driving, which should include the costs they impose on others.
How big is this external cost? This is the question investigated by Aaron S. Edlin, an economist at the University of California, Berkeley, and Pinar Karaca-Mandic, an economist at the RAND Corporation, in a recent paper, “The Accident Cost From Driving,” published in the Journal of Political Economy and also available at http://works.bepress.com/aaron_edlin/21/.
The critical factor affecting accident costs turns out to be traffic density. In states where there are few cars per mile of road, the external accident costs are much less than in states with more congested roads. The authors estimate that an additional driver increases statewide insurance costs in California by $1,725 to $3,239, depending on the method used for the estimate. The comparable number for North Dakota is about $10.
In an economist’s ideal world, the benefits of driving should be compared with the total costs of driving, which include both the costs borne by the driver and the external costs that the driver imposes on others. In economics jargon, the external cost should be “internalized.”
Mr. Edlin and Ms. Karaca-Mandic estimate that internalizing those external costs nationwide would require a substantial tax on driving, on the order of $220 billion a year. In California alone, such a tax would raise around $66 billion. By comparison, the state income and sales tax revenues for California in 2004 were about $72 billion.
On the other hand, drivers in states like North Dakota with low traffic density would have negligible driving tax rates since the presence of an additional car in such places has almost no effect on the accident rates.
Internalizing the accident cost of driving would require a tax that varies with both traffic density and the amount of driving a person does. The obvious candidate would be a local gasoline tax.
But a gas tax is not ideal since good and bad drivers would be charged the same rate per gallon. One could also consider a tax on insurance premiums, which generally take driving records into account. Of course, a combination of taxes would be possible as well.
Unfortunately, the political support for such measures is virtually nil. This is understandable. People have made decisions on where to live and how far they are willing to commute based on the current costs of operating vehicles, and a dramatic change in the cost of operation would be extremely unpopular.
Still, one might consider taking some modest steps toward making drivers face the full costs of their decisions. A moderate increase in the gasoline tax whose proceeds were plowed back into mass transit might be politically palatable. Driving during commuting hours in New Jersey and California isn’t very pleasant, and many drivers may prefer fast and convenient public transit.
Many commentators have called for a higher gasoline tax to discourage the use of oil. Some are motivated by environmental concerns and some by international politics. The proposal has gained little traction since the payoffs for reducing gasoline consumption seem distant and uncertain. Accident costs of driving give yet another reason to try to reduce our oil dependence. But unlike the other reasons, the payoff for driving less should have an immediate and concrete effect: fewer accidents.
Hal R. Varian is a professor of business, economics and information management at the University of California, Berkeley.
星期三, 十月 25, 2006
第二周特留作业
第二周特留作业
事实：任贤齐（12岁）的父母为其在足球学校报名，并交学费100元。任在训练中与刘德华（9岁）相撞，致小腿骨折。花费医疗费3000元，交通费200元，护理误工费1000元。任的父母托你老爸打电话给你，向你咨询这个案件。
问题：你将建议他们如何解决这一纠纷？请从法律的内部和外部两个视角进行分析，并比较不同视角的差异。
鸣谢：许德峰老师：）
一些说明：这个案件来自许老师在A班的随堂测验中出的一道题目。许老师和我讨论答案时，我们从多个角度提出了不少有意思的问题。我觉得也可以训练学生进行同样的思考，而且相信你们能够提出你们自己漂亮的论辩——像今天的课堂讨论一样。特别是，鉴于许老师近期会给出他从内部视角出发得出的“标准答案”，你们可以有机会将自己的结论与之加以比较，努力发现其间的差异，进一步对民法和法理学的学习加深认识。事实上，我在今后的法理学教学中特别是期末考试时，也会不断强化这一训练。
我的希望，是通过双手互搏，最终双剑合璧。
事实：任贤齐（12岁）的父母为其在足球学校报名，并交学费100元。任在训练中与刘德华（9岁）相撞，致小腿骨折。花费医疗费3000元，交通费200元，护理误工费1000元。任的父母托你老爸打电话给你，向你咨询这个案件。
问题：你将建议他们如何解决这一纠纷？请从法律的内部和外部两个视角进行分析，并比较不同视角的差异。
鸣谢：许德峰老师：）
一些说明：这个案件来自许老师在A班的随堂测验中出的一道题目。许老师和我讨论答案时，我们从多个角度提出了不少有意思的问题。我觉得也可以训练学生进行同样的思考，而且相信你们能够提出你们自己漂亮的论辩——像今天的课堂讨论一样。特别是，鉴于许老师近期会给出他从内部视角出发得出的“标准答案”，你们可以有机会将自己的结论与之加以比较，努力发现其间的差异，进一步对民法和法理学的学习加深认识。事实上，我在今后的法理学教学中特别是期末考试时，也会不断强化这一训练。
我的希望，是通过双手互搏，最终双剑合璧。
星期二, 十月 24, 2006
关于这个星期的案例讨论
这个星期的课程要讨论“二奶继承案”。如果方便，我建议你们打电话给你们的父母或者爱人、“朋友”，问问他们——这些法律外行——怎么看待这个案件、倾向于何种判决结果。进而，如果他们的答案和你们不同，想一想，为什么会不同；如果相同，想一想，你们是否基于相同的理由——如果不是，想一想，差别意味着什么；如果是，想一想，你这一个多月的法律是怎么学的：）
烦劳你们相互转告。多谢了。
加油！
烦劳你们相互转告。多谢了。
加油！
星期日, 十月 22, 2006
星期五, 十月 20, 2006
星期四, 十月 19, 2006
下周预习资料
下周课程的预习资料已经上载到课程FTP的“课程02”里了，请大家下载。
包括如下内容：
（1）两个案例：本周课遗留下来的，下周补讲。如下：
包括如下内容：
（1）两个案例：本周课遗留下来的，下周补讲。如下：
- 今日说法：《遗嘱算不算》；
- 社会经纬：《多事的遗嘱》。
（2）一部电影：是我们今后几节课、甚至全部课程都要提及和思考的“经典案例”，希望大家能够看熟——最好能像看《大话西游》一样，背下每段台词（题外话：我也希望能给你们讲《大话西游》啊！）。如下：
- 张艺谋作品：《秋菊打官司》
（3）八篇论文：最头痛的部分；还好，这回都是中国人自己写的鬼话。如下：
- 苏力：《秋菊的困惑和山杠爷的悲剧》；
- 冯象：秋菊的困惑；
- 苏力：为什么送法下乡；
- 冯象：送法下乡与教鱼游泳；
- 苏力：再论法律规避；
- 苏力：制度是如何形成的；
- 苏力：现代化视野中的中国法治；
- 梁治平：法治——社会转型时期的制度建构。
骂我几句，就开始学习吧：）记住，笨功夫是真聪明。
加油！
星期三, 十月 18, 2006
星期一, 十月 16, 2006
自我介绍
课堂时间宝贵，就不自我介绍了。贴在这里一个简历，就算是自我介绍过了。没找到中文的，大伙凑合着看英文的吧。其中的一些形式，对你们将来作简历也许会有些帮助。
LING Bin
Peking University Law School (100871).
EDUCATION
·Yale Law School, LL.M., May, 2006
·Peking University Law School, Ph.D., July 2005
·Peking University Law School, LL.B., July 2000
ACADEMIC EXPERIENCE
Academic Journals
·Journal of Legal and Economic Studies, editor, 2004-Present
·Working Paper of Peking University Law School, executive editor, 2001-2003
·Peking University Law Review, editor, 1998-2001
Research Programs
·Rule of Law and Legal State: Theory and Practice of Law in the Social Change of Modern China, sponsored by the National Social Science Foundation of China and presided by Professor Zhu Suli, major researcher, 2002-Present
·Legal Control on Rural-Urban Migrants in Beijing, sponsored by Hong Kong City University, co-director and interviewer, 2002
·Basic Level Judicial System of Chinese Countryside, sponsored by US Ford Foundation and presided by Professor Zhu Suli, interviewer, Sep.-Oct. 2000
·Social Change of Nanjie Village, sponsored by Peking University, co-director, coauthor of research report, questionnaire designer and in-depth interviewer, Sep. 1999-Apr. 2000
TEACHING EXPERIENCE
·Advanced Jurisprudence, lectured in Peking University Law School, for Legal Masters (LL.M.), focused on the theory of rule of law, fall 2003
·Jurisprudence, lectured in Peking University Law School, for Juris Masters (J.M.), focused on the theory of rule of law and interdisciplinary legal studies, spring 2002
·Jurisprudence, lectured in Law Department of Peking University College of Applied Arts and Sciences, for undergraduates (LL.B.), focused on the jurisprudence and interdisciplinary legal studies, fall 2002 and fall 2001
HONORS
·“May 4th” Medal, the highest honor from Peking University, biennially to 10 students, May 2004
·Straight-A Student Honor, to top 1% students, Oct. 1999, 2001-2004
·Microsoft Scholarship, Oct. 2004
·Second Prize in “Challenge Cup” Extracurricular Academic Competition, Jun. 2003
·Winner in “Credit in China” Academic Paper Competition, Dec. 2001
·Fajiabishi Scholarship, Oct. 2001
·Promising Scholar, annually to 10 Peking University students, Apr. 2000
·Academic Innovation Award, annually to 10 Peking University students, Sep. 1999
LEADERSHIP
·Adviser of Peking University Law School Undergraduate Class of 2005, 2001-2004
·President of Peking University Law School Student Union, 1998-1999
·Chairman of Peking University Legal Aid Association, 1997-1998
PUBLICATIONS
Papers
·“Statistical Analysis of Citations in China's Dominant Legal Scholarship: An Exploratory Research Based on CSSCI,” Social Sciences in China No.3, 2004, pp. 97-107.
·“Popularization of Law, Ignorance of Law, and Rule of Law,” Law and Social Development No.2, 2004, pp. 126-140.
·“Legislation and Rule of Law: A Perspective of Professionalism,” Peking University Law Review Vol.6 No.1, 2004.
·“Mr. Democracy, Mr. Science and Ms. Law: Comment on Sun Zhigang's Case and Professor He's Appeal,” Law Book Review No.2, 2004, pp. 21-46.
·“Revolution, Tradition and Freedom: Review on Tocqueville's The Old Regime and French Revolution,” Graduate Students' Journal of Peking University No.1, 2004, pp. 106-118.
·“Pathological Approach to the Critique of Legal Translation,” Tsinghua Law Journal No.4, 2003, pp. 311-329.
·“Review on Modes of Delivery of Justice,” China Scholarship, Vol.4 No.4, 2003, pp. 313-318.
·“Glimmer in the Cave: Review on Richard Posner's Sex and Reason,” Tsinghua Law Journal No.2, 2003, pp. 404-423.
·“The Multidimensional Perspectives to Penetrate Law: Review on Richard Posner's Frontiers of Legal Theory,” Law Book Review No.1, 2003, pp. 85-98.
·“Review on Richard Posner's Overcoming Law,” China Scholarship Vol.3 No.1, 2002, pp. 315-319.
·“Nanjie Village: A Changing Rural Society,” Chinese Social Science Quarterly autumn 2000.
Translations
·Guido Calabresi and A. Douglas Melamed, “Property Rights, Liability Rules, and Inalienability: One View of the Cathedral,” Ling Bin [trans.], in Economic Analysis of the Law: Selected Readings, China Legal System Publishing House, 2006.
·Richard A. Posner, Law, Pragmatism, and Democracy, Ling Bin, Li Guoqing [trans.], forthcoming China University of Political Science and Law Press, 2005.
·Richard A. Posner, Frontiers of Legal Theory, Wu Xin, Ling Bin [trans.], China University of Political Science and Law Press 2003.
·Demireref and Kemunaf, “Judicial Power in Separation System and Rights Protection,” Ling Bin [trans.], Journal of Comparative Law No 3&4, 1999, pp. 392-398.
LANGUAGES
·Mandarin: native
·English: fluent
·Russian: reading and translating
LING Bin
Peking University Law School (100871).
EDUCATION
·Yale Law School, LL.M., May, 2006
·Peking University Law School, Ph.D., July 2005
·Peking University Law School, LL.B., July 2000
ACADEMIC EXPERIENCE
Academic Journals
·Journal of Legal and Economic Studies, editor, 2004-Present
·Working Paper of Peking University Law School, executive editor, 2001-2003
·Peking University Law Review, editor, 1998-2001
Research Programs
·Rule of Law and Legal State: Theory and Practice of Law in the Social Change of Modern China, sponsored by the National Social Science Foundation of China and presided by Professor Zhu Suli, major researcher, 2002-Present
·Legal Control on Rural-Urban Migrants in Beijing, sponsored by Hong Kong City University, co-director and interviewer, 2002
·Basic Level Judicial System of Chinese Countryside, sponsored by US Ford Foundation and presided by Professor Zhu Suli, interviewer, Sep.-Oct. 2000
·Social Change of Nanjie Village, sponsored by Peking University, co-director, coauthor of research report, questionnaire designer and in-depth interviewer, Sep. 1999-Apr. 2000
TEACHING EXPERIENCE
·Advanced Jurisprudence, lectured in Peking University Law School, for Legal Masters (LL.M.), focused on the theory of rule of law, fall 2003
·Jurisprudence, lectured in Peking University Law School, for Juris Masters (J.M.), focused on the theory of rule of law and interdisciplinary legal studies, spring 2002
·Jurisprudence, lectured in Law Department of Peking University College of Applied Arts and Sciences, for undergraduates (LL.B.), focused on the jurisprudence and interdisciplinary legal studies, fall 2002 and fall 2001
HONORS
·“May 4th” Medal, the highest honor from Peking University, biennially to 10 students, May 2004
·Straight-A Student Honor, to top 1% students, Oct. 1999, 2001-2004
·Microsoft Scholarship, Oct. 2004
·Second Prize in “Challenge Cup” Extracurricular Academic Competition, Jun. 2003
·Winner in “Credit in China” Academic Paper Competition, Dec. 2001
·Fajiabishi Scholarship, Oct. 2001
·Promising Scholar, annually to 10 Peking University students, Apr. 2000
·Academic Innovation Award, annually to 10 Peking University students, Sep. 1999
LEADERSHIP
·Adviser of Peking University Law School Undergraduate Class of 2005, 2001-2004
·President of Peking University Law School Student Union, 1998-1999
·Chairman of Peking University Legal Aid Association, 1997-1998
PUBLICATIONS
Papers
·“Statistical Analysis of Citations in China's Dominant Legal Scholarship: An Exploratory Research Based on CSSCI,” Social Sciences in China No.3, 2004, pp. 97-107.
·“Popularization of Law, Ignorance of Law, and Rule of Law,” Law and Social Development No.2, 2004, pp. 126-140.
·“Legislation and Rule of Law: A Perspective of Professionalism,” Peking University Law Review Vol.6 No.1, 2004.
·“Mr. Democracy, Mr. Science and Ms. Law: Comment on Sun Zhigang's Case and Professor He's Appeal,” Law Book Review No.2, 2004, pp. 21-46.
·“Revolution, Tradition and Freedom: Review on Tocqueville's The Old Regime and French Revolution,” Graduate Students' Journal of Peking University No.1, 2004, pp. 106-118.
·“Pathological Approach to the Critique of Legal Translation,” Tsinghua Law Journal No.4, 2003, pp. 311-329.
·“Review on Modes of Delivery of Justice,” China Scholarship, Vol.4 No.4, 2003, pp. 313-318.
·“Glimmer in the Cave: Review on Richard Posner's Sex and Reason,” Tsinghua Law Journal No.2, 2003, pp. 404-423.
·“The Multidimensional Perspectives to Penetrate Law: Review on Richard Posner's Frontiers of Legal Theory,” Law Book Review No.1, 2003, pp. 85-98.
·“Review on Richard Posner's Overcoming Law,” China Scholarship Vol.3 No.1, 2002, pp. 315-319.
·“Nanjie Village: A Changing Rural Society,” Chinese Social Science Quarterly autumn 2000.
Translations
·Guido Calabresi and A. Douglas Melamed, “Property Rights, Liability Rules, and Inalienability: One View of the Cathedral,” Ling Bin [trans.], in Economic Analysis of the Law: Selected Readings, China Legal System Publishing House, 2006.
·Richard A. Posner, Law, Pragmatism, and Democracy, Ling Bin, Li Guoqing [trans.], forthcoming China University of Political Science and Law Press, 2005.
·Richard A. Posner, Frontiers of Legal Theory, Wu Xin, Ling Bin [trans.], China University of Political Science and Law Press 2003.
·Demireref and Kemunaf, “Judicial Power in Separation System and Rights Protection,” Ling Bin [trans.], Journal of Comparative Law No 3&4, 1999, pp. 392-398.
LANGUAGES
·Mandarin: native
·English: fluent
·Russian: reading and translating
星期日, 十月 15, 2006
本周预习材料
各位同学：
本课的FTP（地址和登陆用户见本Blog的10月10日发帖）已经上载了本周《法理学》课的预习材料。如下：
本课的FTP（地址和登陆用户见本Blog的10月10日发帖）已经上载了本周《法理学》课的预习材料。如下：
- 波斯纳：《法理学问题》，苏力译，中国政法大学出版社，2002年，绪论；
- 波斯纳：《法律理论的前言》，武欣、凌斌译，中国政法大学出版社，2003年，导论；
- 波斯纳：《法理学问题》，苏力译，中国政法大学出版社，2002年，第七章；
- 菲尔德曼：《从前现代主义到后现代主义的美国法律思想》，李国庆译，中国政法大学出版社，2005年，第二章；
- 今日说法：《遗嘱算不算》；
- 社会经纬：《多事的遗嘱》。
本课教学将默认你们已经了解了上述文献中的基本内容，并以此为基础展开进一步的分析和讨论。因此，课前的充分预习和独立思考，将有助于你们的课堂学习——我希望那将是我们师生共同的“欢乐时光”。
我期待着你们的第一堂课。
星期二, 十月 10, 2006
参考阅读
同学们：
有时候，并不总是，可以在如下网址发现一些有趣的信息：
http://www.google.com/reader/shared/02123980288770577430
合口味的话，不妨偶尔尝尝：）
有时候，并不总是，可以在如下网址发现一些有趣的信息：
http://www.google.com/reader/shared/02123980288770577430
合口味的话，不妨偶尔尝尝：）
《法理学》课程预习资料下载
北京大学深圳研究生院法学院06'《法理学》课的各位同学：
请登陆如下FTP下载预习资料：
FTP://law:pku@ftp.law.szpku.edu.cn/法理学/
全部预习材料仅用于本课的预习和教学，请勿他用，并依照《中华人民共和国著作权法》有关规定合理使用。谢谢！
请登陆如下FTP下载预习资料：
FTP://law:pku@ftp.law.szpku.edu.cn/法理学/
全部预习材料仅用于本课的预习和教学，请勿他用，并依照《中华人民共和国著作权法》有关规定合理使用。谢谢！
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