Law Commons^™

Constitutional Clash: Labor, Capital, And Democracy, Kate Andrias

Northwestern University Law Review

In the last few years, workers have engaged in organizing and strike activity at levels not seen in decades; state and local legislators have enacted innovative workplace and social welfare legislation; and the National Labor Relations Board has advanced ambitious new interpretations of its governing statute. Viewed collectively, these efforts—“labor’s” efforts for short—seek not only to redefine the contours of labor law. They also present an incipient challenge to our constitutional order. If realized, labor’s vision would extend democratic values, including freedom of speech and association, into the putatively private domain of the workplace. It would also support the Constitution’s …

Racism As A Threat To Financial Stability, Cary Martin Shelby

Northwestern University Law Review

This Article draws from several theoretical frameworks such as critical race theory, law and economics, and rule of law conceptions to argue that the Financial Stability Oversight Council (FSOC) should formally recognize racism as a threat to financial stability due to its interconnectedness with recent and projected systemic disruptions. This Article begins by first introducing a novel model created by the author through which to dissect this claim. This “Systemic Disruption Model” provides a theoretical depiction of how racism drives every phase along the life-cycle continuum of a systemic disruption.

First, with respect to the Model’s “Introduction” phase, this Article …

Financial Inclusion, Cryptocurrency, And Afrofuturism, Lynnise Phillips Pantin

Northwestern University Law Review

As a community, Black people consistently face barriers to full participation in traditional financial markets. The decentralized nature of the cryptocurrency market is attractive to a community that has been historically and systematically excluded from the traditional financial markets by both private and public actors. As new entrants to any type of financial market, Black people have increasingly embraced blockchain technology and cryptocurrency as a path towards the wealth-building opportunities and financial freedom they have been denied in traditional markets. This Article analyzes whether the technology’s decentralized system will lead to financial inclusion or increased financial exclusion. Without reconciling the …

Fraud In A Land Of Plenty, Jonathan R. Macey

Northwestern University Law Review

This Essay discusses the regulation of fraud in a developed economy and offers some explanations for why fraud appears to be on the increase. Ironically, regulation designed to combat fraud can actually increase fraud by attracting economic activity to fraud-ridden industries. In other words, regulation can create problems of its own by fostering the false perception that fraud is being addressed even when it is not. This analysis is relevant in the context of the current surge in sentiment to regulate cryptocurrencies in the wake of the FTX and Sam Bankman-Fried debacle. Such regulation threatens to attract more resources to …

Auditing Overseas: How The United States Can Learn From Recent Financial Audit Reform In The United Kingdom, Daniel Damitio

Northwestern University Law Review

Financial auditing is one of the cornerstones of an effective capital market structure. When performed correctly, an independent financial audit provides investors with the security they need to effectively transact based on company disclosures. When this system fails, however, the results for investors and the economy as a whole can be devastating. In recognition of this danger, the market for financial auditing in the United States is regulated by a number of governmental and nongovernmental bodies charged with maintaining its health and effectiveness. But stakeholders within the U.S. market and government have criticized these regulators for failing to adequately respond …

Incentivized Torts: An Empirical Analysis, J. Shahar Dillbary, Cherie Metcalf, Brock Stoddard

Northwestern University Law Review

Courts and scholars assume that group causation theories deter wrongdoers. This Article empirically tests, and rejects, this assumption, using a series of incentivized laboratory experiments. Contrary to common belief and theory, data from over 200 subjects show that group liability can encourage tortious behavior and incentivize individuals to act with as many tortfeasors as possible. We find that subjects can be just as likely to commit a tort under a liability regime as they would be when facing no tort liability. Group liability can also incentivize a tort by making subjects perceive it as fairer to victims and society. These …

Bankruptcy's Cathedral: Property Rules, Liability Rules, And Distress, Vincent S.J. Buccola

Northwestern University Law Review

What justifies corporate bankruptcy law in the modern economy? For forty years, economically oriented theorists have rationalized bankruptcy as an antidote to potential coordination failures associated with a company’s financial distress. But the sophistication of financial contracting and the depth of capital markets today threaten the practical plausibility, if not the theoretical soundness, of the conventional model. This Article sets out a framework for assessing bankruptcy law that accounts for changes in the technology of corporate finance. It then applies the framework to three important artifacts of contemporary American bankruptcy practice, pointing toward a radically streamlined vision of the field. …

Amoral Machines, Or: How Roboticists Can Learn To Stop Worrying And Love The Law, Bryan Casey

Northwestern University Law Review

The media and academic dialogue surrounding high-stakes decisionmaking by robotics applications has been dominated by a focus on morality. But the tendency to do so while overlooking the role that legal incentives play in shaping the behavior of profit-maximizing firms risks marginalizing the field of robotics and rendering many of the deepest challenges facing today’s engineers utterly intractable. This Essay attempts to both halt this trend and offer a course correction. Invoking Justice Oliver Wendell Holmes’s canonical analogy of the “bad man . . . who cares nothing for . . . ethical rules,” it demonstrates why philosophical abstractions like …

Commitment And Entrenchment In Corporate Governance, K.J. Martijn Cremers, Saura Masconale, Simone M. Sepe

Northwestern University Law Review

Over the past twenty years, a growing number of empirical studies have provided evidence that governance arrangements protecting incumbents from removal promote managerial entrenchment, reducing firm value. As a result of these studies, “good” corporate governance is widely understood today as being about stronger shareholder rights.

This Article rebuts this view, presenting new empirical evidence that challenges the results of prior studies and developing a novel theoretical account of what really matters in corporate governance. Employing a unique dataset that spans from 1978 to 2008, we document that protective arrangements that require shareholder approval—such as staggered boards and supermajority requirements …

Behavioral Law And Economics: Its Origins, Fatal Flaws, And Implications For Liberty, Joshua D. Wright, Douglas H. Ginsburg

Northwestern University Law Review

No abstract provided.