Monthly Archives: February 2013

The D.C. Circuit as “Hostile Stranger”

Bruce Kraus & Connor Raso, Rational Boundaries for SEC Cost-Benefit Analysis, 30 Yale J. on Reg. 2 (2013 forthcoming), available at SSRN.

A happy account of judicial review of agency action holds that courts and agencies enjoy a “partnership.” Judge Leventhal provided a classic statement:

[A]gencies and courts together constitute a “partnership” in furtherance of the public interest, and are “collaborative instrumentalities of justice.” The court is in a real sense part of the total administrative process, and not a hostile stranger to the office of first instance. Continue reading "The D.C. Circuit as “Hostile Stranger”"

Why Would the Social Behavior of Good Firms Improve and that of Bad Firms Worsen?

Brayden King & Mary-Hunter McDonnell, Good Firms, Good Targets: The Relationship Between Corporate Social Responsibility, Reputation, and Activist Targeting, in Corporate Social Responsibility in a Globalizing World (2012), available at SSRN.

The global financial crisis fueled public discontent with the economic and political outcomes of capitalist regimes. This caused a mistrust of large businesses, with outrage towards the multinational banking sector in particular. It is therefore no surprise that corporations are increasingly the targets of mass social protests. To take a few prominent examples, in the US, the Occupy Wall Street movement has been challenging the legitimacy of American capitalism, and demanding a deep transformation in the relationship between government, corporations, and the public. In Spain, against a background of skyrocketing unemployment rates, the 15-M Movement has been calling into question the distribution of political power and institutionalized corruption. At the same time, in Israel, unprecedented mass protests during the summer of 2011 called into question the excessive market power of conglomerates, the high cost of basic necessities, and the contraction of the welfare state. These instances of mass social protest pose a threat to corporations’ and public agencies’ legitimacy, reputation and smooth operations.

How do corporations respond to, and manage, the threats imposed by social activism, and what are the consequences of their strategies? One would expect, and indeed hope, that democratic pressures – i.e. social activism – would render irresponsible corporations more responsive to societal expectations and demands. And second, we would like to think that social activism is targeted at irresponsible firms, whereas socially responsive and responsible corporations are rewarded inasmuch as they are less likely to be targeted by activists. King and McDonnell investigate the latter expectation and find that precisely the opposite is true. Continue reading "Why Would the Social Behavior of Good Firms Improve and that of Bad Firms Worsen?"

Generals Can Sometimes Be More Pro-Democratic Than Politicians

Ozan O. Varol, The Democratic Coup d’État, 53 Harv. Int’l L.J. 292 (2012).

How do liberal democracies deal with threats to liberal constitutionalism, when those threats come from political parties willing to use the existing mechanisms of liberal constitutionalism to gain power–and then eliminate liberal constitutionalism? This question was a concern for scholars of constitutionalism several generations ago. More recently, the phenomenon has been captured in the slogan, “One person, one vote, one time,” associated with some positions taken at the first stage in a transition away from authoritarianism–though perhaps only to another form of authoritarianism. Transitional situations are one thing, though; established liberal democracies are another. The experience of Weimar Germany was taken as an illustration–perhaps inapt in detail but useful for thinking through the problem–of the use by antidemocratic forces of democratic means to attain power.

After World War Two Germany responded by embedding in its Basic Law the idea of militant democracy, developed during the war by the exile political theorist Karl Loewenstein. Many other nations have followed suit. Militant democracy extends to political parties the idea that nations can permissibly use force against subversive individuals. According to the idea of militant democracy, liberal democracies can permissibly ban antidemocratic political parties and deny their members the ability to serve in public positions, even in the bureaucracy (because they might use their discretion to favor their antidemocratic comrades). Militant democracy is constitutionalism’s resolution of the problem in political theory of whether and why we should tolerate the intolerant. And, like that problem, the one militant democracy addresses is difficult to resolve. Power-holders may well misdescribe political opposition as a threat to democracy itself, and seek to suppress political parties that are “merely” forceful opponents of their programs. Continue reading "Generals Can Sometimes Be More Pro-Democratic Than Politicians"

Adjudging The Heuristics Debate

Mark Kelman, The Heuristics Debate (Oxford 2011).

In his accessible and thoroughly enjoyable book The Heuristic Debate, Mark Kelman demonstrates for the benefit, primarily, of legal scholars and policy makers, that there is not just one, but there are two challenges, or alternatives, to the economists’ rational choice model of decision making that has so influenced law and policy over the last few decades, both of which come to us from the discipline of cognitive psychology, with one of which — objections coming from the “heuristics and biases” school — lawyers are largely familiar, but the second of which – those coming from the group Kelman labels the “fast and frugal school” –  we are not. But we should be. The second challenge, Kelman suggests, cuts quite a bit deeper than the first, and yields insights of relevance to both law and policy which are at right angles with those offered by rational choice theorists and the heuristics and biases school both. Mark first presents these two schools – heuristics and biases (hereinafter HB) and fast and frugal (hereinafter FF) — as participants in an intra-cognitive psychology debate, as that is how both schools originated, rather than as responses to the economists’ rational choice model of decision making, much less the latter’s deployment in law and policy. Nevertheless, and as Mark eventually argues, it’s also useful to understand both schools in their quite differing relations to the rational choice model of decision making with which they are both in conflict. (Mark calls the latter “rat choice” for purposes of brevity, but I won’t, I’ll call it RC instead.)

I’ll quickly summarize what I understand as the book’s most basic claims, then make a perhaps unwarranted inference, although I hope not, that will sharpen and recast the differences between them but also sharpen the differences of the fast and frugal school with both the heuristics and biases school and the rational choice school.  My basic claim is that it is those differences, between FF on the one hand, and both RC and HB, that have the potential to reframe fundamentally the place of rational choice in our conception of law, and our understanding of alternatives to it.  By contrast to those differences, and that challenge, the familiar challenges posed to RC by HB look much more like friendly amendments – provocative, thoughtful, and fun amendments, but amendments all the same.  In my concluding remarks I will aim to cast somewhat differently what I take to be the most imaginative and interesting but also the weakest part of Mark’s book, to wit the discussion of Holmes and Langdell as exemplars of HB and the FF schools respectively and then finish up with some quick remarks about the role of these models of cognition in legal scholarship and legal policy debates quite generally. Continue reading "Adjudging The Heuristics Debate"