Law Commons^™

Inflation In The 21st Century: Taking Down The Inflationary Straw Man Of The 1970s, Daniel Alpert, Cornell Research Academy Of Development, Law, And Economics, Mario Einaudi Center For International Studies

Cornell Law Faculty Publications

This overview of the history of, and future prospects for, undesirable levels of price inflation in the U.S. economy concludes that concerns raised in 2021 by several well-known economists and analysts – regarding the prospects for accelerating levels of inflation as a result of pandemic-era and post-pandemic fiscal and monetary policy (enacted and proposed) – is misplaced. The wisdom of continuing expanded fiscal policy from late 2021 onwards is supported by an analysis of the prospects for future inflation in terms of both (i) the shortfall in aggregate domestic demand relative to existing endogenous and exogenous supply; and (ii) the …

Law, Lawyers And Sustainable Development: Reflections Of A Fellow Traveler, Muna B. Ndulo

Southern African Journal of Policy and Development

At the national level, the rule of law is necessary to create an environment for providing sustainable livelihoods and eradicating poverty. Poverty often stems from disempowerment, exclusion and discrimination. The rule of law fosters development through strengthening the voices of individuals and communities, by providing access to justice, ensuring due process and establishing remedies for the violation of rights. Security of livelihoods, shelter, tenure and contracts can enable and empower the poor to defend themselves against violations of their rights. Legal empowerment goes beyond the provision of legal remedies and supports better economic opportunities. In order for the rule of …

The Multiple Selves Of Economic Self-Determination, Odette Lienau

Cornell Law Faculty Publications

In this Essay, I argue that the contemporary world requires an explicitly plural and flexible conception of economic self-determination and especially a broader vision of the economic “self” at its center. I contend that older dyadic understandings of economic self-determination, formed largely in light of twentieth-century anticolonial struggles, are no longer sufficient. Individuals can be economically constrained across multiple vectors by newly powerful actors and innovative forms of control. They are thus potentially implicated in multiple political and economic selves—not just personal but also local, national, and transnational.

As such, those seeking to promote economic self-determination should more explicitly recognize …

Dealing With Disruption: Emerging Approaches To Fintech Regulation, Saule T. Omarova

Cornell Law Faculty Publications

“Fintech” refers to a variety of digital assets, technologies, and infrastructure that deal with the operation of today’s financial markets. The regulation of this presents both legal and regulatory challenges. This article examines the regulatory responses to fintech disruption; specifically, the “experimentation” approach, the “incorporation” approach, and the “accommodation” approach. These approaches provide a baseline for further discussion and policy analysis in response to “Fintech.”

New Tech V. New Deal: Fintech As A Systemic Phenomenon, Saule T. Omarova

Cornell Law Faculty Publications

Fintech is the hottest topic in finance today. Recent advances in cryptography, data analytics, and machine learning are visibly "disrupting" traditional methods of delivering financial services and conducting financial transactions. Less visibly, fintech is also changing the way we think about finance: it is gradually recasting our collective understanding of the financial system in normatively neutral terms of applied information science. By making financial transactions easier, faster, and cheaper, fintech seems to promise a micro-level "win-win" solution to the financial system's many ills.

This Article challenges such narratives and presents an alternative account of fintech as a systemic, macro-level phenomenon. …

Against Populist Isolationism: New Asian Regionalism And Global South Powers In International Economic Law, Pasha L. Hsieh

Cornell International Law Journal

This Article provides the most up-to-date examination of the Regional Comprehensive Economic Partnership (RCEP), which is poised to become the world’s largest free trade agreement (FTA). It argues that the 16-country mega-FTA will galvanize the paradigm shift in Asian regionalism and build a normative foundation for the Global South in international economic law. Based on intertwined theoretical and substantive claims, this Article opens an inquiry into the assertive legalism of developing nations in the new regional economic order. It further manifests the pivotal force of emerging economies against populist isolationism in the Trump era that undermines the neoliberal foundation of …

The Ethical Challenges Of The Marketplace, Eduardo M. Peñalver

Cornell Journal of Law and Public Policy

No abstract provided.

Markets For Self-Authorship, Hanoch Dagan

Cornell Journal of Law and Public Policy

Markets are complex phenomena with heterogeneous manifestations. They involve different types of goods and services and can be structured around different property and contract types. This plurality of markets justifies a careful attitude towards the definition of a market. It also counsels some suspicion towards overly-broad normative judgments, be they celebratory or critical, launched at markets-as-such.

But markets are powerful institutions that significantly impact individuals, affect relationships, and shape societies. They should thus be subject to critical scrutiny vis-A-vis the various goals that justify the complex legal arrangements which sustain them. Promoting social welfare, rewarding desert, inculcating virtues, and spreading …

Just Prices, Robert C. Hockett, Roy Kreitner

Cornell Journal of Law and Public Policy

In what sense do market prices represent or convey value? At first glance, such prices might look like the upshot of spontaneous social aggregation without exogenously imposed order: uncoordinated individual trading decisions yield "price information" that is said both to induce socially efficient productive decisions and to set a framework that facilitates coherent and welfare-enhancing consumer choice. But while some trading decisions might well be uncoordinated,far from all of them are; and the rules within which trade is conducted are in any event the product of social choice. When we recognize that these rules of trade and certain public practices …

Against Market Insularity: Market, Responsibility, And Law, Avihay Dorfman

Cornell Journal of Law and Public Policy

In this Article, I take stock of some leading attempts to drive a wedge between distinctively market reasoning and practical (including moral) reasoning. Although these attempts focus on different normative foundations-the epistemology of market interaction, the autonomy of its participants, the stability-enhancing quality of markets, and the authority of democratic decision-making-they are of a piece insofar as they seek to trivialize the role of private responsibility for realizing the demands of morality and justice. Essentially, they seek to insulate, at least to an important extent, the market practice of doing well from the demands of doing right. I argue that …

General Theory Of Law And Development, Yong-Shik Lee

Cornell International Law Journal

Although scholarship in law and development that explores the relationship between law and social and economic progress has evolved over the last four decades, this area of inquiry remains unfamiliar to many legal scholars, lawyers, and policy makers. Scholars have not yet been able to develop a theory that systematically explains the interrelationship between law and development, which would establish law and development as a robust and coherent academic field. This Article attempts to fill this gap by presenting a general theory that defines the disciplinary parameters of law and development, and explains the mechanisms by which law impacts development. …

Lgbt Rights Are Human Rights: Conditioning Foreign Direct Investments On Domestic Policy Reform, Dara P. Brown

Cornell International Law Journal

No abstract provided.

Law In Hiding: Market Principles In The Global Legal Order, Odette Lienau

Cornell Law Faculty Publications

Standing in the background of the global legal order are a range of what might be called “market principles” or “market givens” -- collective presentations or beliefs about how markets work -- which are treated as objective descriptions at a particular time and place. This Article argues that such market givens should be understood as a kind of “law in hiding,” shaping the policy space available to states and other actors and affecting global legal developments in important but unrecognized ways. Drawing on examples from global financial law, rules on capital mobility, and sovereign debt practices, I demonstrate how market …

Law-And-Economics Approaches To Labour And Employment Law, Stewart J. Schwab

Cornell Law Faculty Publications

This article describes the distinctive approaches that law and economics takes to labour and employment law. The article distinguishes between ‘economic analysis of law’ and ‘law and economics’, with the former applying economic models to generally simple legal rules while the latter blends messier institutional detail with legal and economic thought. The article describes three eras of law-and-economics scholarship, recognizing that economics teaches that markets work and markets fail. Era One emphasizes that labour laws and mandatory employment rules might reduce overall social welfare by preventing a benefit or term from going to the party that values it most highly. …

Pain And Suffering Damages In Personal Injury Cases: An Empirical Study, Yun-Chien Chang, Theodore Eisenberg, Tsung Hsien Li, Martin T. Wells

Cornell Law Faculty Publications

Many jurisdictions award pain and suffering damages, yet it is difficult for judges or juries to quantify pain. Several jurisdictions, such as California, cap pain and suffering damages or other noneconomic damages, and legal scholars have proposed ways to control such damages. Reforms and proposals, however, have been based on limited empirical evidence. It remains an open question whether components of economic damages explain pain and suffering damages. This study employs a unique dataset of Taiwan district court cases and uses detailed information on the components of pecuniary damages. Pain and suffering damages highly correlate with the plaintiff’s medical expenses, …

Putting Distribution First, Robert C. Hockett

Cornell Law Faculty Publications

It is common for normative legal theorists, economists and other policy analysts to conduct and communicate their work mainly in maximizing terms. They take the maximization of welfare, for example, or of wealth or utility, to be primary objectives of legislation and public policy. Few if any of these theorists seem to notice, however, that any time we speak explicitly of maximizing one thing, we speak implicitly of distributing other things and of equalizing yet other things. Fewer still seem to recognize that we effectively define ourselves by reference to that which we distribute and equalize. For it is in …

Inside The Arbitrator's Mind, Susan D. Franck, Anne Van Aaken, James Freda, Chris Guthrie, Jeffrey J. Rachlinski

Cornell Law Faculty Publications

Arbitrators are lead actors in global dispute resolution. They are to global dispute resolution what judges are to domestic dispute resolution. Despite its global significance, arbitral decision making is a black box. This Article is the first to use original experimental research to explore how international arbitrators decide cases. We find that arbitrators often make intuitive and impressionistic decisions, rather than fully deliberative decisions. We also find evidence that casts doubt on the conventional wisdom that arbitrators render “split the baby” decisions. Although direct comparisons are difficult, we find that arbitrators generally perform at least as well as, but never …

Social Security Is Fair To All Generations: Demystifying The Trust Fund, Solvency, And The Promise To Younger Americans, Neil H. Buchanan

Cornell Journal of Law and Public Policy

The Social Security system has come under attack for having illegitimately transferred wealth from younger generations to the Baby Boom generation. This attack is unfounded, because it fails to understand how the system was altered in order to force the Baby Boomers to finance their own benefits in retirement. Any challenges that Social Security now faces are not caused by the pay-as-you-go structure of the system but by Baby Boomers' other policy errors, especially the emergence of extreme economic inequality since 1980. Attempting to fix the wrong problem all but guarantees a solution that will make matters worse. Generational justice …

Don't End Or Audit The Fed: Central Bank Independence In An Age Of Austerity, Neil H. Buchanan, Michael C. Dorf

Cornell Law Faculty Publications

The Federal Reserve (the Fed) is the central bank of the United States. Because of its power and importance in guiding the economy, the Fed's independence from direct political influence has made it a target of ideologically motivated attacks throughout its history, with an especially aggressive round of attacks coming in the wake of the 2008 financial crisis and ongoing today. We defend Fed independence. We point to the Fed's exemplary performance during and after the 2008 crisis, and we offer the example of a potential future crisis in which Congress falls to increase the debt ceiling to show how …

Recursive Collective Actions Problems: The Structure Of Procyclicality In Financial And Monetary Markets, Macroeconomies And Formally Similar Contexts, Robert C. Hockett

Cornell Law Faculty Publications

The hallmark of a collective action problem is its aggregating multiple individually rational decisions into a collectively irrational outcome. Arms races, “commons tragedies” and “prisoners’ dilemmas” are well-known, indeed well-worn examples. What seem to be less widely appreciated are two complementary propositions: first, that some collective action problems bear iterative, self-exacerbating structures that render them particularly destructive; and second, that some of the most formidable challenges faced by economies, societies, and polities are iteratively self-worsening problems of precisely this sort. Financial markets, monetary systems and macroeconomies in particular are rife with them – as are other complex systems subject to …

Real Arrow-Securities For All: Just And Efficient Insurance Through Macro-Hedging, Robert C. Hockett

Cornell Law Faculty Publications

As a new hurricane season opened in June of 2006, it emerged that a number of online gaming sites were offering bettors the opportunity to wager on whether New Orleans might suffer another Katrina calamity. Commentators condemned the announced practice with howls of disgust, labeling it both tasteless and heartless. Perhaps they were right. All I could think about as one who grew up in New Orleans, however, was how risk pools might hereby be broadened to include all the world’s bettors. We shouldn’t condemn these people; we should use them—while requiring that they maintain margin accounts at their betting …

Paying For Risk: Bankers, Compensation, And Competition, Simone M. Sepe, Charles K. Whitehead

Cornell Law Review

Efforts to control bank risk address the wrong problem in the wrong way. They presume that the financial crisis was caused by CEOs who failed to super­vise risk-taking employees. The responses focus on exe­cutive pay, believing that exe­cu­tives will bring non-execu­tives into line—using incen­­­­tives to manage risk-taking—once their own pay is regu­lated. What they over­look is the effect on non-executive pay of the com­pe­­ti­­tion for talent. Even if exe­­cu­tive pay is regu­lated, and exe­cu­tives act in the bank’s best interests, they will still be trapped into providing incentives that encourage risk-taking by non-executives due to the negative exter­nality that arises …

The Macroprudential Turn: From Institutional 'Safety And Soundness' To Systematic 'Financial Stability' In Financial Supervision, Robert C. Hockett

Cornell Law Faculty Publications

Since the global financial dramas of 2008-09, authorities on financial regulation have come increasingly to counsel the inclusion of macroprudential policy instruments in the standard ‘toolkit’ of finance-regulatory measures employed by financial supervisors. The hallmark of this perspective is its focus not simply on the safety and soundness of individual financial institutions, as is characteristic of the traditional ‘microprudential’ perspective, but also on certain structural features of financial systems that can imperil such systems as wholes. Systemic ‘financial stability’ thus comes to supplement, though not to supplant, institutional ‘safety and soundness’ as a regulatory desideratum.

The move from primarily micro- …

Public Actors In Private Markets: Toward A Developmental Finance State, Robert C. Hockett, Saule T. Omarova

Cornell Law Faculty Publications

The recent financial crisis brought into sharp relief fundamental questions about the social function and purpose of the financial system, including its relation to the “real” economy. This Article argues that, to answer these questions, we must recapture a distinctively American view of the proper relations among state, financial market, and development. This programmatic vision – captured in what we call a “developmental finance state” – is based on three key propositions: (1) that economic and social development is not an “end-state” but a continuing national policy priority; (2) that the modalities of finance are the most potent means of …

The Limits Of Private Ordering Within Modern Financial Markets, Dan Awrey

Cornell Law Faculty Publications

From standardized contracts for loans, repurchase agreements, and derivatives, to stock exchanges and alternative trading platforms, to benchmark interest and foreign exchange rates, private market structures play a number of important roles within modern financial markets. These market structures hold out a number of significant benefits. Specifically, by harnessing the powerful incentives of market participants, these market structures can help lower information, agency, coordination, and other transaction costs, enhance the process of price discovery, and promote greater market liquidity. Simultaneously, however, successful market structures are the source of significant and often overlooked market distortions. These distortions--or limits of private ordering--stem …

Paying For Risk: Bankers, Compensation, And Competition, Simone M. Sepe, Charles K. Whitehead

Cornell Law Faculty Working Papers

Efforts to control bank risk address the wrong problem in the wrong way. They presume that the financial crisis was caused by CEOs who failed to super­vise risk-taking employees. The responses focus on exe­cutive pay, believing that exe­cu­tives will bring non-execu­tives into line—using incen­­­­tives to manage risk-taking—once their own pay is regu­lated. What they over­look is the effect on non-executive pay of the com­pe­­ti­­tion for talent. Even if exe­­cu­tive pay is regu­lated, and exe­cu­tives act in the bank’s best interests, they will still be trapped into providing incentives that encourage risk-taking by non-executives due to the negative exter­nality that arises …

Preliberal Autonomy And Postliberal Finance, Robert C. Hockett

Cornell Law Faculty Publications

Even American Founders whose views diverged as dramatically as those of Jefferson and Hamilton shared a view of finance and of enterprise that one might call “productive republican.” Pursuant to this vision, financial and other forms of market activity are instrumentally rather than intrinsically good — and for that very reason are of interest to the public qua public rather than to the public qua aggregate of “private” individuals. Citizens are best left free to engage in financial and other market activities, per this understanding, only insofar as these are consistent with sustainable collective republic-making. And the republic — the …

Materializing Citizenship: Finance In A Producers' Republic, Robert C. Hockett

Cornell Law Faculty Publications

This invited essay critically assesses a movement of which I consider myself to be part – the movement to “redemocratize” financial institutions in a manner that restores, to non-wealthy citizens, access to basic financial services comparable to those enjoyed by wealthy citizens. I argue that while financial redemocratization of this sort is necessary to the larger project from which it draws most of its meaning – viz that of redemocratizing access to the resources requisite to productive enterprise and meaningful citizenship more generally – it is far from sufficient to this task. We must therefore take special care not to …

Market Collaboration: Finance, Culture, And Ethnography After Neoliberalism, Annelise Riles

Cornell Law Faculty Publications

In the wake of the disasters of March 2011, financial regulators and financial-risk management experts in Japan expressed little hope that much could be done nor did they take great interest in defining possible policy interventions. This curious response to regulatory crisis coincided with a new fascination with culturalist explanations of financial markets, on the one hand, and a resort to what I term “data politics”—a politics of intensified data collection—on the other. In this article, I analyze these developments as being exemplary of a new regulatory moment characterized by a loss of faith in both free market regulation and …

Is New Governance The Ideal Architecture For Global Financial Regulation?, Annelise Riles

Cornell Law Faculty Publications

A central challenge for international financial regulatory systems today is how to manage the impact of global systemically important financial institutions (G-SIFIs) on the global economy, given the interconnected and pluralistic nature of regulatory regimes. This paper focuses on the Financial Stability Board (FSB) and proposes a new research agenda for the FSB’s emerging regulatory forms. In particular, it examines the regulatory architecture of the New Governance (NG), a variety of approaches that are supposed to be more reflexive, collaborative, and experimental than traditional forms of governance. A preliminary conclusion is that NG tools may be effective in resolving some …