Segal Targets ABA

A new screed by the bete noir of legal academia, David Segal, in today's New York Times (here), takes on the American Bar Association (ABA) as overseer of American legal education. I never thought I say this about a David Segal article, but I actually agree with him about this: to a large extent, the increasing expense of a law school degree is driven by over- and outdated-regulation by the ABA. In fact, I deplore the monopolistic role of the ABA in legal education, and agree wholeheartedly with the sentiments expressed by Andy Morriss in the article.

A couple of other points worth noting about Segal's article: He refers positively to a couple of law review articles, a genre he previously has suggested is comprised of worthless, theoretical drivel. And he quotes approvingly several law professors throughout his article, which suggests that he managed to find some members of the new "leisure class," who are hard-working, self-critical, and not resistant to change. I wonder if he's compiling a list of the few good ones.

Workshop Mini-conference (and Book Parties)

On of the wonderful and unique traditions at Lin and Vincent Ostrom's Workshop in Political Theory and Policy Analysis here at IU is the "mini-conference," which is held at the end of each semester. The idea is to provide an opportunity for grad students (working toward their PhDs in various social-science departments) and visiting scholars (a dozen or more each semester from all over the world) to gain valuable experience in writing and presenting conference papers in a true workshop format. At the mini-conference, authors do not present their own papers; rather, they are presented and then critiqued by other scholars. The authors then have a short time for response prior to further comments, questions, and suggestions from the larger group.

This semester's mini-conference started yesterday and run's through this afternoon. This morning, I'm presenting an interesting paper by a grad student on how the Institutional Analysis and Design (IAD) framework (on which see, e.g., here) could improve Mancur Olson's analysis (in The Logic of Collective Action) of impediments to large-scale collective action.

While I'm on the subject of excellent traditions at the Workshop, I should mention "book parties," which are occasional events designed to provide feedback to Workshop-affiliated authors on manuscripts in progress. Workshop faculty, grad students, and even outside scholars from other institutions are each assigned a chapter of the draft book to review and critique at a day-long workshop (you can see why the Workshop is called the "the Workshop") We've had three book parties this semester, which may be one too many (time being a scarce commodity), but they're a great way for book authors to improve their manuscripts prior to publication.

I'm biased, of course, but if I were a grad student in any social scientific discipline, I would be attracted to do my dissertation at IU, first and foremost, because of the existence of the Workshop. It provides opportunities for collaborative learning, along with motivation and support, that are hard to find elsewhere.

Federal Courts of Appeal Cite Law Review Articles More than They Used To

That's according to a new empirical study David L. Schwartz and Lee Petherbridge recently published in the Cornell Law Review (Vol. 96, pp. 1345-74, 2011). Here's the take away from their article:

The study reported here adds a substantially more comprehensive data set to this important body of work than previous studies: an assessment of citation to legal scholarship in 296,098 reported decisions of the federal courts of appeals  between 1950 and 2008. Using clearly described and easily reproducible methods it further adds to the existing body of knowledge by empirically exploring the stridently pressed conventional wisdom that legal scholarship has drifted so far from the interests of the bench and bar that courts have little use for it.

The study produces two important results. First, the data collected support the interpretation that the use of legal scholarship by the federal circuit courts of appeals has not declined. Rather, the use of legal scholarship by such courts has increased. Taken together, the data gathered in this study call into serious question the conventional wisdom that courts have little use for legal scholarship.Second, the study provides evidence that a relatively small cohort of judges is responsible for the overwhelming majority of citations. Using empirical and theoretical methods, the study also considers explanations for the empirical results.

I wonder whether David Segal of the New York Times will retract the blanket claim he made in an article he wrote a couple weeks ago about the uselessness of legal scholarship (see here).

From Global to Polycentric Climate Governance

My recent article of that title, published in the journal Climate Law (Vol. 2, pp. 395-413, 2011) is now freely available online here (from the IU repository).

Lawrence Friedman on the Aridity of Constitutional Law Scholarship

I'm proud to say that Lawrence Friedman, America's foremost legal historian, was my mentor during (and after) my  graduate legal studies at Stanford Law School. He remains among the most professionally impressive and personally influential scholars I have ever known, never wavering from his commitment to avoid writing anything dry and uninteresting.

Lawrence's most recent publication, "Law and Economics in Society," published in the Hofstra Law Review (Vol. 39, page 487), and presumably based on a lecture he gave there, is, as usual, full of wit and wisdom. In it, he criticizes some (but not all) practitioners of Law and Economics for ignoring both the limitations of economics and the advantages of  other social-scientific approaches to understanding the operation of  law in society. My favorite part of his new paper, however, is towards the end, where he laments that neither Law and Economics nor any of the other social scientific approaches to law have appreciably influenced certain "citadels" of legal scholarship, most notably constitutional law:

Most legal scholarship is sadly lacking in rigor and objectivity. Every year, law reviews publish thousands of pages of old-fashioned legal writing - blind to the realities of society, incurably solipsistic, and inbred. To be frank, constitutional law is a particularly arid field. It seems incurably devoid of interest in empirical data. Its very success, its very relevance to public issues, breeds scholarship that is either pure ideology and punditry, or the elaborate exposition of doctrines that make little or no difference to outcomes, to life in society, or reality. Most writing in the field is bloated, dismal, and biased. Many of the scholars seem eager only to spin out their own pet theories which rest on their own particular prejudices, and pass these off as some sort of eternal truth. As a legal historian, I find the pseudo-history of some constitutional lawyers, the habit of passing off their normative arguments as history, particularly irksome.... As an amateur legal sociologist, it bothers me that legal scholars seem so uninterested in whether doctrines and decisions make any difference in the real world. Maybe they assume that anything the Supreme Court says has some magic effect in society. Almost all of the "impact studies" come from political scientists. Nobody else seems to see any use for actual data. (495). 

I agree entirely with Lawrence's argument, but even if you don't, you must admit it's not dull!

Another Attack on Law Schools from the New York Times

In recent months, the New York Times has been attacking law schools and, more generally, the structure of legal education in a series of articles (see, e.g., here, here, and here). In today's edition (here), David Segal writes about the deplorable fact that law school graduates have no idea how to close a merger deal by drafting a certificate of merger and filing it with the Secretary of State's office. That's right, after spending $100,000 or more on a legal education, most law grads don't have that nugget of professional wisdom, and must learn it (presumably from a legal secretary or another practicing attorney, in a one minute conversation). The message is clear, law school curricula need to change to make sure that our grads not only know what a certificate of merger is but also where to find the Secretary of State's office. Such practical knowledge is far more important than actually thinking about and understanding complex legal rules and the various contexts in which they apply (or not).

Segal also, inevitably, takes a run at the hundreds of practically useless law review articles that are authored each year. No doubt, the various titles he quotes constitute a representative sample, so no need to worry about bias. He's certainly correct that law reviews publish a lot of drivel, a pile to which I have contributed my fair share (or more). But that too many articles are theoretical rather than practical is a common refrain for which I have yet to see any empirical evidence. Each week, when I receive the list of newly published articles,  I see a lot of abstract theoretical-looking articles and also a lot of very practical stuff, including many articles on recent court decisions and how they fit into or alter the preexisting body of law. What should be the proper percentage of practical to theoretical scholarship (assuming we can always tell the difference between the two)? I have no idea. I'm never quite as sure as jurists and journalists seem to be about which scholarly offerings, from which scholars (at which schools), contribute most to society's stock of useful knowledge.

The sum and substance of Segal's screed against legal education is that it is way too theoretical and insufficiently practical, leaving poor law firms to engage in remedial practical training. He ignores, conveniently, the fact that during the past 30 years law schools already have become far more practical in response to pressures from law firms. A relative of mine graduated from the Columbia Law School in the 1970s without having written a single paper. That would not be possible at any accredited law school in the country today thanks to  mandatory legal research and writing courses (whose teachers are, as Segal correctly notes, deplorably reduced to second-class status on most law faculties).

Unfortunately, Segal and the several wonderful lawyers and jurists he quotes in his article (all of whom somehow survived all of the theoretical nonsense, and lack of practical instruction, in law school), neglect two basic functions of academic legal training that, to my mind, are (a) far more socially valuable than knowing such discrete factoids as how to file a certificate of merger with the Secretary of State (something a beginning associate's secretary could probably do) and (b) could never be taught by law firms. First, law students learn about the legal system as a whole, beyond the specific areas in which they end of practicing (assuming they do end up practicing, rather than running businesses or doing the myriad other things in life for which legal education is relevant and valuable). This broad education empowers them to be active citizens and even leaders in their communities. Second, law schools teach the deep analytical skills needed not just to practice law but to judge, make, and even change the law. Third, law students learn how to decipher court decisions, legislation, regulatory rules and communicate about them in clear, sensible and critical writing. Without these skills learned in law school, it simply wouldn't matter that graduates knew what a certificate of merger was or where to file it.

Law schools certainly are far from perfect; they should and will change (however begrudgingly) as the market and broader society require. But the problem is not that they are hiring too many PhDs and too few practicing lawyers (many of whom apply to law schools seeking a cozy retirement from practice). Whatever changes are needed, the notion that law schools should change merely to serve the interests of the existing cadre of lawyers and jurists is far from clear. Law schools are and will remain professional and academic institutions that combine theoretical and practical training (in some combination that will never please everyone). The proper mix of the theoretical and practical (assuming we can always disentangle which is which - I've always thought of Legal History as a practical course) inevitably remains contestable. Law schools are not and never will be non-professional graduate schools. Neither should they become white-collar, vocational training schools for practicing lawyers.

"Property in Land and Other Resources" Is Now Available for Pre-Order

My new book, co-edited with Elinor Ostrom, Property in Land and Other Resources (Lincoln Institute 2011), is now available for pre-order at Amazon.com (here) for just $28.63. That's $6.37 (18%) off the cover price. According to the Amazon listing, the book will be published on November 28.

You can also purchase the book directly from the Lincoln Institute of Land Policy (here).

You can see the full Table of Contents, read Doug North's forward, and read Lin and my Introduction to the book here.

Who (or What) Killed the Obama Ozone Rule?

In today's New York Times (here), John Broder takes us inside the White House to explore the political machinations that resulted in the demise of the EPA's proposed ozone standards under the Clean Air Act. I have my doubts about certain aspects of the story, including the insinuation that OIRA chief Cass Sunstein was somehow out to "make his mark" by stomping down the EPA rule. However, Broder's overall story does strongly support an argument I make in my new paper on the political uses and abuses of cost-benefit analysis (CBA) (here), that the Obama Administration's CBA for its ozone rule played a significant political role in its demise. The Obama standard would have generated fewer net social benefits (on median estimates) than the Bush standard it would have replaced. It was, relatively speaking, less efficient. Thus, it would have been politically difficult to justify, especially heading into an election year. No doubt other, purely political considerations also played a part in the President's decision, but the fact that the CBA played any significant role is noteworthy, especially considering the Clean Air Act's express prohibition on cost-considerations in setting  air quality standards. Simply put, as I argue in my new paper, cost considerations matter even when the law says they cannot.

"Toward a Political-Economy of Cost-Benefit Analysis"

My new working paper of that title is available for download here. Actually, it's not a brand new paper, but a substantially revised and refocused version of a working paper I first posted a couple of years ago, and recently pulled out of mothballs. Here is the abstract:

This is a substantially revised, refocused, and updated version of an earlier draft paper, exploring the significant role Cost-Benefit Analysis (CBA) plays in  facilitating or impeding legislative and regulatory policy decisions. The paper centers around three case studies of CBAs EPA prepared for: (1) Clinton Administration changes to Clean Air Act air quality standards for ozone and particulate matter; (2) President Obama's recent decision to suspend EPA's reconsideration of the Bush Administration's air quality standard for ozone; and (3) the George W. Bush Administration's "Clear Skies" legislative initiative. The first two case studies demonstrate, between them, how well-constructed CBAs can facilitate social welfare-enhancing and impede welfare-reducing rules, even in cases where explicit consideration of costs is legally prohibited. The third case study tells a more complex story of how CBAs can be manipulated either to promote welfare-reducing regulations or impede welfare-enhancing regulations. When that happens, however, the virtuous transparency of CBAs renders those efforts liable to discovery and disclosure, as in the case of the Bush Administration's failed "Clear Skies" initiative. The paper concludes with an assessment of implications of the case studies for our understanding of the role of RCBA in political (both legislative and regulatory) processes, and with a call for more qualitative and quantitative empirical research on the use and abuse of RCBA as a political tool. 

Fat Tails and Climate Change

The new issue of the Review of Environmental Economics and Policy arrived today. It's chocked full of interesting and useful articles, prominently including a symposium on "Fat Tails and the Economics of Climate Change," with contributions from Marty Weitzman, William Nordhaus, and Robert Pindyck. The title refers to the "fat tails" of probability density functions of climate sensitivity models, in which low-probability, high-magnitude temperature changes reside. Because the probabilities are not trivially low, and the magnitude of harm, should they occur, would be potentially catastrophic, Marty has been advocating that society purchase "climate insurance" to protect against high-harm scenarios. In this piece, Marty ably defends his important insight that the uncertainties lingering in the fat tails should be driving current climate policy.

While still somewhat conservative in his approach to the incorporation of low-probability, high-magnitude catastrophes into  integrated assessment models of climate change, Professor Nordhaus seems to have come around (relative to earlier writings) to recognizing the significance of lingering and potentially dangerous uncertainties in our economic models. Pindyck, likewise, stresses the importance of extreme climate changes to climate policy design, while also pointing to the consequences of taking into account budget constraints and the potential for catastrophic social harms from sources other than climate change.

In addition to those three fine articles, the volume includes an interesting piece on long-run trends in energy prices, a cross-country comparison of water markets (with Gary Libecap among the co-authors), and a well done primer for economists and policy analysts on greenhouse gas regulation under the Clean Air Act.

Studying Climate Change Impacts on Snowmelt-dependent Agricultural Systems in the Western US and Kenya

The NSF recently approved $1.2 million in funding for the project, on which I am a co-principal investigator, along with IU colleagues Elinor Ostrom and Tom Evans, plus Krister Andersson from Colorado and Kelly Caylor from Princeton. The IU News release on the award is here. I hope to learn a lot working with this terrific group of  natural and social scientists, and expect that our study will be valuable for thinking ahead about (re)structuring water allocation institutions in the face of changing environmental circumstances.

Summer Labors

My summers are always devoted to research, writing, and cycling (not necessarily in that order). This summer, my work plans are unusually banal, which may be just as well considering that I'm in the process of moving jobs and possibly homes. Aside from the working paper I posted the other day (here), which I wrote for a conference last month, my summer writing consists mainly in preparing new editions of existing works.

Peter Grossman and I are currently working on a teachers manual to accompany the new edition of our Principles of Law and Economics, which will be published next month by Wolters Kluwer Aspen. I don't use teachers manuals myself, but Peter and I realize the importance of writing one for marketing purposes. So, we're working hard to make ours useful. It is not, however, the most edifying of projects. I also just finished up the copyright clearances for works we excerpt in the textbook. That was also a less than fascinating chore.

Once Peter and I finish up with  teachers manual and the page proofs (hopefully next week) my attention will turn to the new edition of Natural Resources Law, which I'm co-authoring with Jan Laitos, Sandi Zellmer, and Mary Wood. I've already completed first drafts of updates and revisions of two chapters. I just have the chapter on mining and mineral leasing law to go. My main goal for that chapter (aside from the usual updating of new cases, regulations, etc.), is to cut some fat from the last edition, and add in a new section on the Deepwater Horizon oil spill and its aftermath. That new section will be the one fun part of yet another uninspiring project.

If I'm lucky, I'll finish most of the work on new editions of existing books by mid-July, which would leave me a month before classes begin to get some work done on my long-suffering climate policy monograph. I don't have high hopes however, especially if we wind up moving lock, stock, and barrel to Bloomington. I have to be out of my office in Indy by the end of this month, and I'm about halfway moved out already; I've been moving boxes to Bloomington in drips and drabs each time I go down there. 

From Global to Polycentric Climate Governance

My new working paper of that title, written for a conference at the European University Institute, can be downloaded here. Here is the abstract:

Global governance institutions for climate change, such as those established by the United Nations Framework Convention on Climate Change and the Kyoto Protocol, have so far failed to make a significant impact on greenhouse gas emissions. Following the lead of Elinor Ostrom, this paper offers an alternative theoretical framework for reconstructing global climate policy in accordance with the polycentric approach to governance pioneered in the early 1960s by Vincent Ostrom, Charles Tiebout, and Robert Warren. Instead of a thoroughly top-down global regime, in which lower levels of government simply carry out the mandates of international negotiators, the polycentric approach provides for greater experimentation, learning, and cross-influence among different levels and units of government, which are both independent and interdependent. After exploring several of the design flaws of the existing set of global institutions and organizations for greenhouse gas mitigation, the paper explores how those global institutions and organizations might be improved by learning from various innovative policies instituted by local, state, and regional governments. The paper argues that any successful governance system for stabilizing the global climate must function as part of a larger, polycentric set of nested institutions and organizations at various governmental levels.

I Don't Particularly Care Whether Judges and Lawyers Read My Scholarship

Over at Concurring Opinions (here), my colleague and friend Gerard Magliocca has just posted on the perennially controversial issue of the relevance of legal scholarship for the legal profession. Having butchered the comment I posted in the string following Gerard's post, I thought I would rephrase and expand on my remarks here.

Plenty of legal scholarship has been, and continues to be, written primarily for the benefit of practicing attorneys and judges. Personally, I find most such scholarship to be uninteresting, perhaps for the same reasons that legal practitioners find it useful. In any case, the subset of legal scholarship devoted to the practical affairs of judges and lawyers seems to have been shrinking, as a percentage of the entire corpus of legal scholarship. An increasing percentage of the literature is not written primarily to educate and/or influence lawyers and judges. Unsurprisingly, then, that they find the literature less relevant to their day-to-day work. It's not supposed to be relevant (at least not directly).

My sense is that Justice Roberts understands that point, but Judge Harry Edwards does not. The former considers much of legal scholarship to be irrelevant to his work on the Court, but does not denigrate it as the later has. I find bemusing the presumptuousness of judges and practitioners who believe that they comprise the only legitimate audience for legal scholarship.

I confess that some of my scholarship (for instance, my work on the Takings Clause) is intended to influence or educate (however ineffectually) lawyers and judges. But they are not the intended audience for much of my work. Much of what I publish is intended to influence or educate law-makers and regulators; and sometimes I am just working through problems and puzzles with my colleagues in academia. Even if some judges and lawyers cannot understand why I might want to do that, such scholarship has significant social value, contributing to the stock of useful knowledge in the world.

A Few Interesting Papers I Read Today

It was a hectic first week back from Spring Break, but I had time to read a few of the several interesting articles that have been stacking up on my desk as of late.

R.E. Kenward et al., "Identifying governance strategies that effectively support ecosystem services, resources sustainability, and biodiversity," PNAS Early Edition (2011).

Conservation scientists, national governments, and international conservation groups seek to devise, and implement, governance strategies that mitigate human impact on the environment. However, few studies to date have systematically investigated the performance of different systems of governance in achieving successful conservation outcomes. Here, we use a newly-developed analytic framework to conduct analyses of a suite of case studies, linking different governance strategies to standardized scores for delivering ecosystem services, achieving sustainable use of natural resources, and conserving biodiversity, at both local and international levels. Our results: (i) confirm the benefits of adaptive management; and (ii) reveal strong associations for the role of leadership. Our work provides a critical step toward implementing empirically justified governance strategies that are capable of improving the management of human-altered environments, with benefits for both biodiversity and people.

Most interestingly, neither private ownership nor state ownership showed significant associations in any of the models.

Scott E. Masten and Jens Prufer, "On the Evolution of Collective Enforcement Institutions: Communities and Courts," TILEC Discussion Paper, DP 2011-017 (March 2011).

Impersonal exchange has been a major driver of economic development. But transactors with no stake in maintaining an ongoing relationship have little incentive to honor deals. Therefore, all economies have developed institutions to support honest trade and realize the gains of impersonal exchange. We analyze the relative capacities of communities (or social networks) and courts to secure cooperation among heterogeneous, impersonal transactors. Our main finding is that communities and courts are complements: They support cooperation in different types of transactions. We apply our results to the rise and fall of a medieval enforcement institution, the Law Merchant, concluding that progressive reductions in the risks and costs of transportation over long distances, driven in part by improvements in shipbuilding methods, increased first the value and then the composition of long-distance trade in ways that initially favored and later undermined this institution.

Among other interesting tidbits I learned from this paper was that states, including England, initially were reluctant to take over the task of contract enforcement as trading expanded beyond the market towns where the  (highly variable) Law Merchant applied.

John E. Parsons and Luca Taschini, "Stocks and Shocks: A Clarification in the Debate Over Price vs. Quantity Controls for Greenhouse Gases," CEEPR, 11-002 (Mar. 2011).

We construct two simple examples that help to clarify the role of a key assumption in the analysis of price or quantity controls of greenhouse gases in the presence of uncertain costs. Traditionally much has been made of the fact that greenhouse gases are a stock pollutant, and that therefore the marginal benefit curve must be relatively flat. This fact is said to establish the preference of a price control over a quantity control. The stock pollutant argument is considered dispositive, so that the preference for price controls is categorical. We show that this argument can only be true if the uncertainty about cost is a special form: all shocks are transitory. We show that in the case of permanent shocks, the traditional comparison of marginal benefits vs. marginal costs is mis-measured. The choice between quantity and price controls becomes ambiguous again and depends upon a more difficult measurement of marginal costs and benefits. The simplicity of the examples and the solutions is a major element of the contribution here. The examples are readily accessible and the comparison of results under the alternative assumptions of transitory and permanent shocks is stark.

Simply put, those who prefer carbon taxes over cap-and-trade simply based on the fact the climate change is a "stock" problem are jumping the gun.

More on Merrill and Smith's Attempted Resurrection of the In Rem/In Personam Distinction

In yesterday's post on Thomas Merrill and Henry Smith's new article on Coase's conception of property (see here), I noted my strong disagreement with their efforts to resurrect the in rem/in personam distinction the common law inherited from Roman law, but which fell into obsolescence during the first part of the twentieth century. However, I did not present many of my reasons for opposing a return to the in rem/in personam distinction because I wanted to keep the focus of that post on Merrill and Smith's analysis of Coase.

So, just in case anyone's interested, I am embedding below a brief essay I drafted a few years ago, but never completed or published, in response to a few earlier articles by Merrill and Smith complaining about how property is treated in Law & Economics (prominently including Coase's theories) and advocating a return to the old in rem/in personam distinction.

In Rem In Personam Distinction

Merrill and Smith on "Making Coasean Property More Coasean"

See the full paper here. The abstract:

In his pioneering work on transaction costs, Ronald Coase presupposed a picture of property as a bundle of government-prescribed use rights. This picture is not only not essential to what Coase was trying to do, but its limitations emerge when we apply Coase’s central insights to analyze the structure of property itself. This leads to what we term the Coase Corollary: in a world of zero transaction costs the nature of property does not matter to allocative efficiency. But as with the Coase Theorem itself, the real point is the implication for a positive transaction cost world: we need to subject the notion of property to a comparative institutional analysis. Because transaction costs are positive, it is no accident that property is defined in terms of things as a starting point, that uses are grouped under exclusion rights, and that in rem rights are widely employed: these features of property receive a transaction cost explanation. Simple lumpy packages of property rights motivated by transaction costs form an important baseline that furnishes presumptive answers to bilateral use conflicts. A more thoroughly Coasean approach points back to a picture of property more like the traditional one furnished by the law.

The gist of their argument is almost certainly correct: standardization of recognized property forms may well serve to economize of transaction costs (especially those relating to enforcement of title). It's easy to imagine Coase concurring with the "Coase Corollary;" it's already implicit in the "Coase theorem." If it doesn't matter which party has the property rights (in a counterfactual world of zero transaction costs), then the "nature," scope, or extent of those rights is hardly likely to matter either.

I continue to believe, however, that Merrill and Smith are (as they have been in previous articles) less than generous in attributing to Coase the claim that property rights are nothing more than "ad hoc bundles of government-prescribed use rights." It's certainly true that Coase does not share Merrill and Smith's deep (almost obsessive) appreciation of the in rem nature of property rights (that is, that property rights are good against "the entire world" -  a legal conceit if ever there was one); and perhaps he does not share their belief that the right to exclude  is the most important property right (I do not claim to know whether he does or not). There is, however, no particular reason to attribute to Coase the belief that property rights are anything other than what common-law courts say they are. Indeed, at one point in their article Merrill and Smith "seriously doubt that Coase entertained the notion that property rights are purely ad hoc assemblages of rights and privileges, like ingredients at a Mongolian barbecue restaurant." If so, then why do they keep attributing to him precisely the attitude they doubt he entertains? And if they don't believe he entertains it, then what attitude do they believe he actually holds about property? As it is, they seem to be attacking a straw man and calling him "Coase."

As in earlier articles, Merrill and Smith suggest that Coase was somehow infected by the Legal Realists' notion of property as a "bundle of rights," although once again they fail to identify the vector of contagion. Nor do they make a convincing argument that the "bundle of rights" view of property is either incorrect or pernicious. They complain that it "obscures," in various ways (all of which are debatable), the in rem nature of property, but then they concede that the "bundle of rights" conception of property is "not logically incompatible with the understanding that property rights are in rem." I believe that last statement is correct. Moreover, the main, positive contribution of their article - the argument that legal limitations of property ownership to a relatively few standardized forms may be efficient on a comparative transaction cost analysis - does not seem to depend on a conclusion that the "bundle or rights" view of property is erroneous or pernicious.

For many reasons (too many to go into here), I strongly disagree with Merrill and Smith's efforts to resurrect (from what is, in my opinion, a deserved obsolescence) the in rem/in personam distinction, and with their desire to elevate exclusion as the sine qua non of property (I just don't see why the right to exclude is necessarily more important or valuable to every owner than rights to alienate, possess, or use). But I will restrict myself here to just two objections that bear directly on their reception of Coase's work:

(1) Whether or not property rights are in rem has little or no bearing on the resolution of boundary disputes (among other types of property conflicts).

(2) Contrary to Merrill and Smith's assertion, recognizing the in rem nature of property does not render "utterly implausible" Coase's notion that land use conflicts invariably involve reciprocal harm (i.e., social costs).

Consider both objections in light of the famous case of Ampitheaters, Inc. v. Portland Meadows, 184 Or. 336 (1948). In that case, lights from a racetrack (used for evening racing) interfered with the operation of the neighboring drive-in movie theater. The racetrack had taken some steps to reduce the light emissions; the neighboring theater had done nothing to protect itself. The court ruled in favor of the racetrack, finding that it was not liable for a nuisance because the drive-in theater constituted an "abnormally sensitive" activity.

Both parties in that dispute were fee simple absolute owners of their respective lands. Even if we were to assume for the sake of argument that property rights were in rem, I don't see how that fact helps us. Does it avoid the problem before it arises, resolve the conflict (out of court) after it arises, or predetermine the outcome in court? Perhaps Merrill and Smith would argue that in rem would have resolved Portland Meadows (and similar cases), assuming that in rem rights entail the ad coelum maxim, which they mention in passing in their new paper. According to that maxim, property boundaries extend upwards to the heavens and down to the center of the earth. If that maxim were treated as a rule of property, stemming (however obscurely) from the in rem nature of property rights, the court in Portland Meadows might have been compelled to rule in favor of the drive-in theater because the light from the racetrack crossed the boundary between the two properties.

That solution would problematic in several respects. In the first place, no one to my knowledge, including Merrill and Smith, has argued that the ad coelum maxim is a necessary concomitant of in rem rights. Moreover, while often touted in dicta by common-law courts (far more in the US than the UK), the ad coelum maxim has never been consistently applied as a legal rule, let alone as a necessary concomitant of in rem rights. Finally, and most important for present purposes, the Supreme Court expressly disavowed the ad coelum rule in US v. Causby, 328 US 256 (1946) on grounds of - wait for it -  transaction costs (although the Court did not refer to them as such). The Court concluded that the ad coelum rule had "no place in the modern world" because it would have created insufferable (cost) barriers to civilian aviation. (On the problematic history of the ad coelem maxim, see my new paper on "Property Creation by Regulation" and Stuart Banner's marvelous 2008 book, Who Owns the Sky?).

Finally, returning to my second objection to Merrill and Smith's claims about the supposed in rem nature of property, in light of the outcome of Ampitheaters, Inc. v. Portland Meadows, it is clear that the owner of the drive-in theater was harmed by the court's decision. It had to either invest in high fences to block the light, pay the race track not to use its lights, move, or close down. Presumably, it chose the least expensive of those options, but every one of them entailed substantial costs. Now, consider if the court had come out the other way. In that case, the race track owner surely would have been harmed. It would have had to invest in better fencing to keep the light from crossing over the boundary, paid the drive-in theater to become an enclosed theater (or something like that), moved, or shut down. Simply put, the harm truly was reciprocal, and it's difficult to see how recognizing the in rem nature of property could possibly have changed that. Either way, one party or another is being prevented from doing what they want to do, and that is always costly, in the strict economic sense of that term, regardless of the ethics or legality of their wants.

We are left with the none-too-surprising conclusion that Coase was right! And just to end on the same positive note with which I began this post, Merrill and Smith are almost certainly right that the standardization of property rights, possibly even including the legal fiction of property rights good against the entire world, may serve to reduce transaction costs and maximize the social product across the run of foreseeable conflicts. I'm not sure that conclusion is "more Coasean," but it certainly is Coasean.

A Few Interesting New Papers

The vertical stacks of papers on my desk reflects the fact that my appetite for interesting new papers to read, on a wide variety of subjects, exceeds my ability to actually read them. Each day, I receive announcements (through various mechanisms) of dozens of new papers. Some days, none will interest me enough to look beyond the abstract. Many days, however, I will find one or two articles that pique my interest enough for me to download, and sometimes print out, the entire article. Rarely, I'll have a day like one earlier this week, when I found a half dozen or more new papers to read.

In an effort to keep my vertical stacks of papers from approach the ceiling of my office, I've tried this week to make at least a little headway by reading papers (mostly newer ones) that have attracted my attention. Several of these I find worth recommending to others. (Warning: NBER papers require a subscription for download, but not for reading abstracts):

Lee J. Alston and Krister Andersson, "Reducing Greenhouse Gas Emissions by Forest Protection: The Transaction Costs of REDD," Working Paper 16756, NBER Working Paper Series (Feb. 2011).

Samuel Bowles, "Is liberal society a parasite on tradition?"


Pablo T. Spiller, "Transaction Cost Regulation," Working Paper 16735, NBER Working Paper Series (Jan. 2011).


Daniel A. Farber, "The BP Blowout and the Social and Environmental Erosion of the Louisiana Coast,UC Berkeley Public Law Research Paper No. 1740844 (Jan. 2011).


Monica Eppinger, "Unravelling the Illiberal Commons: On Property, Personhood, and the New Objectivity" (July 2010).

Judge Posner Slams the Harvard "Blue Book"

Here. I doubt Judge Posner's common sense will ever prevail among the pointy-headed purveyors of legal citation form. I learned basic "Blue Book" style back in law school, and continue to use it when necessary, although I have not bothered to keep up with the cancerous growth (as Judge Posner describes it) of "Blue Book" rules. I don't think I've actually looked at a "Blue Book" in more than 20 years. I only rarely publish in law reviews anymore anyway, but I vastly prefer social science approaches to citations and references, and nearly always use them in my books.

Hat tip: The Browser.

Revised Working Papers on SSRN

I have revised and updated versions of two working papers on the Social Science Research Network. They will both be published later this year in Daniel H. Cole and Elinor Ostrom, Property in Land and Other Resources (Cambridge, Mass.: Lincoln Institute of Land Policy, 2011):

"The Variety of Property Systems and Rights in Natural Resources" (with Elinor Ostrom) (available for download here).

"Property Creation by Regulation: Rights to Clean Air and Rights to Pollute" (available for download here).