Law Commons^™

The Federal Reserve We Need: It’S The Fed We Once Had, Timothy A. Canova

Timothy A. Canova

This article considers the empirical record of the 1942-1951 period of Federal Reserve history when the Fed was more politically accountable and more independent of private financial interests. During the 1940s, federal spending was nearly twice as high as today, and federal borrowing was more than three times higher. Yet, from 1942 to 1951, the Federal Reserve was directed by the White House and Treasury to peg interest rates at 3/8 of one percent on short-term Treasury borrowing and 2.0 to 2.5 percent on long-term borrowing. The U.S. economy grew at a real annual rate of 15 to 20 percent …

Black Swans And Black Elephants In Plain Sight: An Empirical Review Of Central Bank Independence, Timothy A. Canova

Timothy A. Canova

This paper critically reviews the empirical economic literature that seeks to correlate central bank independence with low inflation rates; discusses the relationship between central bank accountability, economic growth, income and wealth distribution, and financial stability; analyzes the contested theoretical views of central bank independence, and considers the constitutional issues raised by delegations of monetary authority to privately-directed central banks in the context of recent transparency and disclosure reforms in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The empirical literature that seeks to correlate central bank independence with lower inflation rates focuses on data prior to the 2008 collapse, …

Financial Market Failure As A Crisis In The Rule Of Law: From Market Fundamentalism To A New Keynesian Regulatory Model, Timothy A. Canova

Timothy A. Canova

This article considers the financial panic of 2008 in historical context by analyzing the institutional and regulatory factors that contributed to the financial and economic crisis. The move away from a Keynesian regulatory model was a function of larger institutional flaws. The Keynesian regime of command-and-control regulation focused on macroeconomic policy objectives designed to achieve full employment, more equitable distributions of wealth and income, greater transparency in the regulatory process, and reduction in monopoly exploitation of consumers. Central to this regime was a model of central banking that required greater accountability to elected branches of government and the use of …

Lincoln’S Populist Sovereignty: Public Finance Of, By, And For The People, Timothy A. Canova

Timothy A. Canova

This article considers Lincoln’s system of public finance in a broad historical perspective. In the weeks prior to Lincoln‘s inauguration, the financial markets were swept by panic, the hoarding of gold, and a crisis perhaps more dangerous than other classic Keynesian liquidity traps, such as in March 1933 and September 2008. In 1861, there was no central bank with the authority to issue currency and inject liquidity into the financial system to try to restrain the psychology of hoarding. The Lincoln administration was able to break the downward spiral and provide the resources to mobilize for war, as well as …

Legacy Of The Clinton Bubble: The Crisis In The Washington Consensus And The Return To Marginalist Analysis, Timothy A. Canova

Timothy A. Canova

This article, an early draft of which was published in the summer 2008 issue of Dissent magazine, analyzes the Clinton administration's record of financial deregulation, the continuities in policies between Democratic and Republican administrations, and the relationship between deregulatory policy and market developments in housing, credit and currency markets. Deregulation is examined on several levels: (1) selective credit controls in housing, consumer and stock market sectors, with particular attention to rules on minimum down payments (otherwise known as margin requirements); (2) the regulatory barriers between financial entities, with particular attention to the Glass-Steagall Act firewalls that had separated commercial banking, …

Non-State Actors And The International Institutional Order: Central Bank Capture And The Globalization Of Monetary Amnesia, Timothy A. Canova

Timothy A. Canova

The role of private, non-state actors in the international institutional and legal order is often praised for providing greater pluralism, public participation and transparency in the formulation of legal norms. Often overlooked are the ways that non-state actors undermine the sovereignty and practical capabilities of nation-states to provide for the welfare and security of citizens.

The growth of global capital and currency markets, fueled and dominated by non-state actors, has undermined the ability of states to incur deficits or to otherwise stimulate their economies.

Non-state actors also shape today's global order by capturing the institutions of the state, contributing to …

Symposium Introduction: International Law Confronts The Global Economy: Labor Rights, Human Rights, And Democracy In Distress, Timothy A. Canova

Timothy A. Canova

As the pace of globalization has intensified, lawyers and scholars continue to develop an appreciation for the many ways their own areas of expertise and practice relate to the global economy. This symposium issue of the Chapman Law Review, featuring papers presented at the inaugural conference of Chapman University's Center for Global Trade & Development, reflects the dynamic and evolving relationship between international law and the global economy, and the profound impacts of each on the course of democracy and human rights in the world today.

Each of our contributors were asked to consider the various ways that international law …

American Wartime Values In Historical Perspective: Full-Employment Mobilization Or Business As Usual, Timothy A. Canova

Timothy A. Canova

This paper explores the range of values implicated by war and compares today's dominant values with those that prevailed during previous American wars, with a particular emphasis on the World War Two and early Cold War period. War is related to values, and as economists like to remind us, what we value becomes apparent in the movement of people and prices. Part I of this Article considers the moral, ethical and monetary values that prevailed throughout the 1940's and early 1950's. The normative threads that kept the World War Two effort on track were those of mobilization and shared sacrifice. …

Campaign Finance, Iron Triangles & The Decline Of American Political Discourse, Timothy A. Canova

Timothy A. Canova

The Constitution protects the rights of Americans to participate in politics through assembly and membership in private interest groups. Yet the Founders recognized that interest groups and factions posed a particular danger in a democracy. According to James Madison, there was no way to remove the causes of faction without destroying liberty itself. The only solution, he said, was to control the effects of faction by encouraging the proliferation of factions to oppose and counter the influence of any particular faction.

This is a legalistic judicial discourse that ignores the realities of power imbalances in contemporary society. The modern theoretical …

Labor And Finance As Inevitably Transnational: Globalization Demands A Sophisticated And Transnational Lens, Timothy A. Canova, Claire M. Dickerson

Timothy A. Canova

The approach of law and economics raised the visibility of the business law curriculum in legal education. But its narrow focus on efficiency and aggregate growth failed to explain the weaknesses of the orthodox free market model. In contrast, law and socioeconomics should enrich legal education by offering more compelling descriptions of market realities while also providing the opening for richer and wider discussions about alternative reform possibilities. Two legal fields that have acutely felt the pressures of globalization are labor and finance law. This article describes how both of these areas affect and are affected by globalization. The authors …

Keynesian Comparative Economics: The Iconoclastic Vision Of Lynn Turgeon (1920-1999), Timothy A. Canova

Timothy A. Canova

The authors of this article review the late E. Lynn Turgeon's contributions to economics, including his studies of the Soviet economy, use of qualitative and demographic analyses, his Keynesian critique of U.S. economic performance, and his critique of international financial markets. Turgeon's comparative approach led to unique insights about the challenges that confronted planned economies, including the differential impact of military spending on the demand-constrained economy of the United States and the supply-constrained economy of the Soviet Union. His study of the Soviet and planned economies also informed his analysis of the U.S. economy and international adjustment mechanisms. Turgeon argued …

The Disorders Of Unrestricted Capital Mobility And The Limits Of The Orthodox Imagination: A Critique Of Robert Solomon, 'Money On The Move: The Revolution In International Finance Since 1980', Timothy A. Canova

Timothy A. Canova

This book review provides a critique of Robert Solomon's' Money on the Move: The Revolution in International Finance since 1980'. According to the reviewer, Solomon has written a highly descriptive account of some of the major developments in global financial markets over the past two decades. His impressive compilation of events is couched in an objective, value-neutral narrative, thereby suggesting that the tide of orthodox policy reforms is as inevitable as the sun rising. But lurking just beneath the surface are the usual neoclassical assumptions that one might expect of a former chief international economist of the Federal Reserve Board: …

Financial Liberalization, International Monetary Dis/Order, And The Neoliberal State, Timothy A. Canova

Timothy A. Canova

This article started as a plenary paper that was presented to the annual International Economic Law conference of the American Society of International Law. The conference itself posed the question of whether the new international economic order was leading to greater peace, stability, fairness and justice. At a time when American post-Cold War triumphalism was perhaps at its zenith, Canova answered with an unequivocal indictment of the global order for failing to deliver peace or justice.

The first part of the article critiques the international monetary system, and argues that the primary negative consequence of capital liberalization is the undermining …

Global Finance And The International Monetary Fund's Neoliberal Agenda: The Threat To The Employment, Ethnic Identity, And Cultural Pluralism Of Latina/O Communities, Timothy A. Canova

Timothy A. Canova

This Article places Lat-Crit scholarship in an institutional and inter-disiplinary context, providing a critique of the International Monetary Fund (IMF) agenda of structural adjustment and liberalization. It also questions the positioning of Lat-Crit scholars to remain silent or complicit with the IMF's agenda. The article provides a counter-narrative informed by heterodox economics, historical revisionism, and sociological analysis. The global unemployment crisis - which was largely ignored by orthodox economics and hidden by flawed government measurements prior to the 2008 financial collapse - is considered as an existential threat to individuals and communities alike. The Article closes with a discussion that …

Banking And Financial Reform At The Crossroads Of The Neoliberal Contagion, Timothy A. Canova

Timothy A. Canova

At the time of publication, this article provided the most in-depth critique of capital account liberalization in any U.S. law journal. The article stemmed from a paper presented by the author to the Seventh Annual Conference of the United States-Mexico Law Institute in Santa Fe, New Mexico on October 3, 1998, during the climax of one of the most volatile periods in the global financial markets. The Russian ruble was in free fall, and so was Long-Term Capital Management, a hedge fund that was threatening to bring down its own large creditors. The crisis was averted only by an emergency …

The Macroeconomics Of William Vickrey, Timothy A. Canova

Timothy A. Canova

This article analyzes the work of the late Dr. William Vickrey, the McVickar Professor Emeritus of Columbia University and 1996 Nobel-laureate in Economics. In choosing Vickrey for the Nobel prize, the Royal Swedish Academy of Sciences notes Vickrey's fundamental contributions to the economic theory of incentives, which he applied to the areas of taxation, auction theory, and pricing. His work focused on the economics of asymmetric and private information.

Critics of Vickrey's full-employment macroeconomic vision have noted that his Nobel was awarded not for such progressive views but for his earlier work in microeconomics. This article connects Vickrey's early theoretical …

The Transformation Of U.S. Banking And Finance: From Regulated Competition To Free-Market Receivership, Timothy A. Canova

Timothy A. Canova

This article offers a critique of the deregulation of banking and finance that started with the breakdown of the Bretton Woods regime of fixed exchange rates during the Nixon administration, accelerated with interest rate deregulation during the Carter administration, and was deepened during the Reagan administration. Deregulation is seen as a changing of paradigms, from the New Deal regulatory model that limited price competition and channeled credit to socially useful purposes. The monetary and fiscal implications are significant. The regulatory model, particularly in its heyday, served to limit the authority of the Federal Reserve, neutralized monetary policy, and invigorated other …

The Swedish Model Betrayed, Timothy A. Canova

Timothy A. Canova

This article provides a history of Sweden's financial liberalization, with special attention on the deregulation of interest rates and the ceiling on housing loans from banks and finance institutions. Throughout the 1980's, Sweden's Prime Minister Olof Palme stood out on the international stage as one of the leading opponents of the financial deregulation, monetarism, and fiscal austerity. The article recounts his efforts to resist and then compromise with this neoliberal agenda. After Palme's sudden assassination, in February 1986, the new government accepted a Riksbank proposal for elimination of Sweden's long-standing system of foreign exchange controls - the transnational policy analog …

Monologue Or Dialogue In Management Decisions: A Comparison Of Mandatory Bargaining Duties In The United States And Sweden, Timothy A. Canova

Timothy A. Canova

Management and labor are adversaries in both U.S. and Swedish industrial relations. The Swedish model, however, is marked by a continual dialogue between the adversaries with the objective of achieving mutual understanding on a wide range of issues. This dialogue has been fostered by Swedish labor law reforms, particularly the Swedish Act on Co-Determination, along with a comprehensive labor market policy to promote employment. The result of such reasoned dialogue is greater labor support for industrial restructurings and management support for the technological modernization of industry.

The American system could better be characterized as a monologue. In the U.S. the …

Monologue Or Dialogue In Management Decisions: The Duty To Negotiate And The Efficiency Of Dialogue, Timothy A. Canova

Timothy A. Canova

According to University of Stockholm law professor Ronnie Eklund, "Canova's comparative study is an important contribution in the literature of comparative labor law, highlighting both significant similarities and differences in Swedish and American labor law and policy."

Management and labor are adversaries in both U.S. and Swedish industrial relations. The Swedish model, however, is marked by a continual dialogue between the adversaries with the objective of achieving mutual understanding on a wide range of issues. This dialogue has been fostered by Swedish labor law reforms, particularly the Swedish Act on Co-Determination, along with a comprehensive labor market policy to promote …