Outline of Principles for a Free Society
Introduction
Epstein's defense of laissez faire: 2-3
Different understandings of the common good: 3-4
Chapter by chapter summary: 5-8
Chapter 1: Natural Law: The Utilitarian Connection
1. Two traditions in legal theory: deontological (natural law)
and utilitarian
a) the contrast explained 11-13
b) the practical congruence between the two: 14-15
c) outline of the rest of the chapter: 15.2
2. What makes natural law "natural":
a) human nature and Hume's "circumstances of justice": 16-17
b) different forms of altruism and confined generosity: 18-19
3. The Biological Model of Reciprocal Altruism:
a) its explanatory significance 20-21
b) the larger (social) significance of these
facts: 23.1
c) the natural lawyer and the utilitarian
agree about duties to family memmbers
4. Autonomy
a) autonomy as self-ownership: 23.3-24.1
b) the alternative: talents and abilities as
collective assets; entails redistribution; arguments for and against this on 24-25 are unpersuasive
5. Utilitarian arguments for and against redistribution: 24-25
a) rent-seeking costs as transactions costs
24.3
b) the congruence of natural rights and
utilitarian arguments for self-ownership: 25
6. First Possession:
a) Locke's argument is based on desert ("taking
pains"): 25.3. Two problems with this:
(1) Why doesn't that entitle the
worker to only the value added? (That's what he means when he says that the
laborer should have a lien for his labor
expended.)
(2) The other problem, not mentioned
by Epstein, is why this is a way of coming to own the thing that is unowned
rather than a way of losing one's
labor.
b) The utilitarian reply: 27
(1) To treat the value of the land
itself as a common pool asset would require its value to be determined and then
assigned.
(2) The costs of (re)assigning the
value to others might exceed the equity value of the land itself.
(3) Then there are incentive effects.
(4) Bottom line is that it is much
simpler to assign full liberal ownership to the first possessor.
c) Read 27.3
d) The Alternative: no one gets to mix his labor with a thing
until all agree on how to divide things up. Locke saw the folly of this: People
would
starve to death first. This is
the ultimate answer to Prudhon's challege: What justifies the imposition of
these coercively backed duties?
In a word, Utility. Read
28.3 Is there a problem here? Haven't we already sliced and diced the incidents
of ownership?
e) exceptions to the rule that possession is the root of
title: 29.2
f) The rule of first possession solves problems of
incentives, allocation, and administrative costs better than any alternative. Or
at least that's the claim.
And it seems plausible.
7. Inheritance and Exchange:
a) A utilitarian argument for allowing people to pass on
their property (esp. land) to heirs: Gives an incentive to conserve resources
(preserves the
value of the asset, since the owner
might sell it; taps into altruism within the family). The alternative would be
to leave this up to the political
process, which is in part what we do
now.
b) The origins of property are rooted in the social necessity
of coming to some sort of agreement about how to divvy up resources.
c) Once first possession has occurred (without consent), then
it becomes much more efficient to permit transfers of property only with
consent, i.e., by
contract.
8. Custom as a Source of Law: What follows on 32-39 is a discussion of
a lot of customs that came to have the force of law and the utilitarian
justification for that.
Chapter 2: Social Norms vs. Legal Commands
1. Theories of Law:
a) Chapter 2 opens with an account of some disputes about the
nature of law.
b) What he calls the ‘positivist account of law' is
contrasted with natural law theory and utilitarianism. The latter two attempt to
justify law, but
the positivist account does not. It
simply seeks to describe or delimit the domain of social behavior subject to
law. The crucial question is,
‘What counts as law and what
doesn't?'
c) The answer John Austin gives is that law is the set of
enforced commands that subjects habitually regard themselves as obliged to
obey.
It implies that durable social
relations must be superintended by the power of the sovereign.
d) This gets formalized in the famous Prisoners' Dilemma.
2. Reproduce the chart on p. 45.
3. The dominant strategy is to defect. Explain that.
The actions of the Sovereign preclude that, and of course he
can and will charge for his services.
4. Epstein's View of This:
a) Epstein thinks this accounts for a fairly broad range of
human behavior and social interactions, but not all.
b) Not all such problems are settled by the coercive power of
the law. Governments do not monopolize the control of misconduct.
c) A lot of this chapter is about how non-legal social norms
operate.
5. Hart's 4-Fold Distinction Between Law and Morals (50-54): Skip it.
6. Epstein's Answer:
a) Begins with the observation that legal sanctions are very
costly to administer as compared to social sanctions. Read 55.1
b) applied to aggression and theft: 55.2; 45.1 (Note the
sharp contrast with rights based theories)
c) applied to defamation, 56-57
d) applied to promises: 57.3-58.2 (note the phenomenon of
using arbitration as a form of opting out)
7. Two-Tiered Sanctions: 58.2-66.3
The basic idea behind two-tiered sanctions is that the law
tries to codify and "adjust" informal mechanisms for dealing with
disputes, bad
behavior. It does not work very well.
8. Employment: 58.2-63.1
a) Distinguish "at will" from "just
cause" policies; the efficiency of the "at-will" arrangement lies
mostly in the fact that neutral factfinders have to do
their work, which often requires that
they uncover tacit knowledge.
b) market power explanations ignore problems employers face
(59.3).
c) The law has created a vast web of exceptions to the
"at-will" doctrine. They list a variety of "forbidden
grounds" on which to make employment
decisions: race, gender, national
origin, religion, disability, age.
d) The discussion on p. 61 is fairly opaque. He does not give
enough details. But the basic idea is that the burden of accommodation for the
ADA
is all on the employer. Too
much of a good thing.
e) Gov't agents have sovereign immunity. Rules are hard to
change.
f) Businesses have contracted around this problem by
requiring binding arbitration, but I am not sure of the details.
9. Takings:
a) Explain Pennsylvania Coal Co. v. Mahon.
b) Once the Kohler Act was struck down, coal companies
returned to repairing the surface owners' houses.
10. Rent Control: Rent control puts landlords and tenants in a
permanent adversarial relationship (65)
11. Cattle Trespass: Landowners had a legal duty to fence out cattle
but social norms went the other way.
12. Hockey Helmets: Explain the point about hockey helmets on p. 69. Start with Sunstein's
depiction of it as a PD.
Chapter 3: Harm: The Gateway to Liability
1. Major theme: the Harm Principle was a bulwark or shield protecting liberty
in the 19th century but a sword against liberty in the 20th century.
2. Res Perit Domino:
a) "Let losses lie where they fall." In other
words, in self-regarding conduct, people should accept whatever harms they
suffer. This is part of the
natural law tradition.
b) But it looks arbitrary. People abhor risk, and accidents
are by definition no one's fault. So why not find some way to socialize risk? To
socialize
risk is to spread it among people who
might suffer an adverse event.
c) Epstein's point, which is not made clearly, is that the
private sector can handle (most? nearly all?) risks through insurance contracts.
d) The alternative is to have the state take over. This
immediately creates three problems:
(1) Who is covered? If you force
people to join a risk pool, it creates problems.
(2) One is the problem of implicit
subsidies. Consider health insurance. Some people are sicker than others; some
engage in more risky behaviors
than others. This is an inherently difficult problem for government to deal with
because some people will end up being forced to subsidize others.
Once
these questions are determined by the political process, all sorts of problems
arise: For example, provider groups lobby to get included as
a
matter of law (e.g., mental health coverage, chiropractors, optometrists,
dentists) and to keep premiums excluded from taxation.
(3) The costs of rent-seeking:
Rent-seeking is defined as the use of the political process to capture wealth
and income. Costs of lobbying.
Use the Caterpillar example.
(4) Net losers would seek out ways to
escape the burden of the subsidies.
e) The private sector would weed out the cross-subsidies, as
insurers would offer cheaper rates to those who represent lower risks.
3. What Happens When Insurance Cannot Be Written?
a) For example, insurance against congenital birth defects,
floods, hurricanes, and earthquakes.
b) Putting aside congenital birth defects, consider the
others:
(1) Flood insurance (water damage for
housing losses and crop losses) has been provided by the federal government for
many years. They do
not charge actuarily fair rates. The effect has been to induce people to build
in areas where they should not, e.g., on the Gulf Coast, along the
banks of the Mississippi, etc. When floods strike, the government bails people
out through various subsidized loan programs. (This includes
bailing out states and local communities.) Under NFIP, as long as you don't lose
over 50% of the value of the property, you can rebuild.
(2) Hurricane coverage: bolt the
exits. Cross-subsidization.
(3) Earthquake Coverage: California
(4) The inability to get coverage is
not itself a bad thing. It may signal that some risks cannot be insured
against.
4. Connection with Rawls and Dworkin:
a) Rawls wants to redress inequalities of natural talents and
abilities.
b) Ronald Dworkin has argued for something called Luck
Egalitarianism: Justice demands that variations in how well off people are
should be
wholly attributable to their
responsible choices and not to differences in their unchosen circumstances. This
expresses the intuition that it is a bad
thing for some people to be worse off
than others through no fault of their own. Luck egalitarians therefore
distinguish between outcomes that are
the result of brute luck (e.g.
misfortunes in genetic makeup, or being struck by a bolt of lightning) and those
that are the consequence of conscious
options (such as career choice or
fair gambles). Luck egalitarianism is intended as a fundamental normative idea
that might guide our thinking about
justice rather than as an immediate
policy prescription. The idea has its origin in John Rawls's thought that
distributive shares should not be influenced
by arbitrary factors, but Rawls was
not himself a luck egalitarian.
c) What would Epstein say? He would say that there is no way
to figure out what part of a person's distributive shares is due to (bad) luck
and
what is due to bad choices. Once you
adopt this as a guiding principle, you are inviting people to make claims on
society (i.e., the state) based
on their supposed bad luck. There is
no practical way to disentangle the two.
d) That still leaves a problem about what to do with those
with congenital conditions.
5. Harm to Others:
a) When it comes to harm to others, everything changes.
b) No one denies that people should be prevented from harming
others.
c) The real issue is what counts as harm to others?
d) Death and personal injury are the easy cases and should be
handled by the criminal law. But what about anything else? Epstein considers:
(1) competitive harms
(2) blocked views
(3) personal offense
(4) false or insulting words
e) The broader the definition of harm, the more extensive the
state. Stakes are high.
6. Competitive Harms:
a) Epstein and Mill's broadly utilitarian outlook asks us to look to the larger
social consequences of permitting competitive harms. Those consequences
are
uniformly positive, except for its immediate effects on the competitor. (Think
through the alternative–government bailouts for everyone!)
b) One point he does not make is Hayek's point that social knowledge is gained
about the state of the market when firms are allowed to go under.
(Most new
businesses fail.)
c) Thus, competitive harms should not be legally actionable.
7. Defamation:
a) He thinks it is obvious that defamation should be legally actionable. It
shows, however, that tort law cannot be limited to physical harms.
Libel
(written) and slander (oral) can do real harm.
b) Torts: Non-criminal harms
8. Physical Harms Again:
a) The point of the discussion on 83-84 is to show that the gains of allowing
force to be used against random strangers are minuscule compared
to the losses
imposed on the victims.
b) It's a utilitarian calculation.
9. The Harm Principle in the Twentieth Century:
a) The original purpose of Mill's Harm Principle was to solve the
"line-drawing problem" for government action, i.e., what is the proper
scope of
government?
b) But in the twentieth century, it had a different purpose. Instead of shield
against state action, it became a sword to be wielded by private parties
against
one another.
c) He talks about 4 cases:
(1) Competitive Harms: Epstein opposes protectionist measures that are enforced
by the big regulatory bureaucracies such as the old ICC,
CAB, FCC, and the NLRB.
The idea behind these bureaucracies is that certain practices are deemed
"unfair" because they hurt protected
industries (e.g., steel tariffs
to protect steel companies against susidized steel imports). And, of course,
they do hurt! Epstein has two pieces
of advice:
(a) Don't create government cartels
(b) Outlaw only anti-competitive practices, though how you determine what they
are he does not say. At a minimum, he says either prosecute
price-fixing or
don't enforce contracts that fix prices.
(c) Explain why cartels tend to break down because of cheating.
(d) Explain predatory pricing
(2) Discrimination: Discuss pp. 94-95. Force and discrimination are of different
orders of seriousness because of what happens in the aftermath
(i.e., what are
the alternatives)
(3) Social Insurance: If A is sickly and B is healthy, B's premiums will be less
than A's. Subsidies will tend to be "bled out." If we think of this as
imposing a harm on A, there is no stopping the state from imposing all manner of
restrictions. (Epstein has written a whole book on this: Mortal Peril.) See p.
97.2
(4) Environmental Harms: Extension of the law of nuisance to protect wetlands
andthe ESA.
Chapter 4: The Benefit Principle:
1. The Benefit Principle:
a) This is just our old friend, the Principle of Fairness. It
says that one should receive compensation for benefits conferred on others
without their
consent. The crucial question is
under what circumstances this principle applies.
b) The law provides for it under the heading of restitution.
c) Any discussion of this principle and how it differs from
tort law presupposes a distinction between harms prevented and benefits
conferred.
Epstein starts with a philosophical
discussion of this distinction.
2. The Lucas Case:
a) Tell basic facts of the case.
b) The "police power" exception: When the state
prohibits someone from doing something in the course of exercising its police
power, compen-
sation is not owed. The traditional
way this distinction is drawn is based on the question of harm to others. If
others are being harmed, no
compensation is owed. If benefits are
being conferred on others, then compensation is owed.
c) Some Examples:
(1) the scholarship case–107.2
(2) criminal assaults–108.2
d) More Examples:
(1) Gov't does not have to compensate
criminals who have been hurt by the cops resisting arrest.
(2) Gov't does not have to compensate
landowners who have been discharging pollutants onto someone else's property.
That can be forbidden by
injunction and no compensation is owed.
(3) Gov't does not have to compensate
Hadachek when it forces him to close down his brickmaking operation. It used to
be outside of town but the
suburbs encroached. (2) and (3) are cases of nuisances.
e) Still More Examples:
(1) But what about when the state
takes someone's land and uses it to confer benefits on others, as for example,
when it uses the land for a public
park? Then it seems that compensation would be owed. And indeed the Fifth
Amendment includes the "Takings Clause," which says that
"private property shall not be taken for public use without just
compensation."
(2) Lucas's property was taken but no
compensation was offered. Epstein wants to object, however.
f) What counts as a benefit and what counts as a harm depends
on what he calls, "the choice of baselines," which is really a choice
of a system
of property rights. Why, then, does
he favor the system of property rights defended by Locke (full, liberal
ownership)?
f) Uniting the incidents of exclusive physical possession,
use, and disposition (right to alienate) is the most efficient way to proceed.
The only limitation
inherent in having title to a piece
of property is the prohibition on creating a nuisance. Then the question becomes
whether Lucas is creating a
nuisance when he builds (intends to
build) on the beach. Is he harming anyone? No. What about the environment? Won't
do.
3. Scalia's Mistake:
a) We can now understand Scalia's mistake: It consists in the
belief that the baseline against which we judge something as conferring a
benefit
vs. preventing a harm is
arbitrary.
b) To see clearly why, see 108** and 111*
c) Legitimate crossings of the right to exclude require
justification, e.g., abating a nuisance, necessity, mistake.
d) The example on 110 is too convoluted to worry about.
e) The point on 112* is well taken.
f) You can skip the discussion of externalities on pp.
113-15.
4. Restitution:
a) The discussion of restitution brings us back to a topic
first discussed in Nozick: Compensation for (permissible, justifiable) boundary
crossings.
b) He discusses two kinds of cases involving restitution:
(1) Necessity: Cotnam v.
Wisdom involved a physician who administered surgical treatment to a man
mortally injured in a streetcar accident.
The treatment failed. The question for the court to decide was whether the
physician should be paid out of the man's estate. The court said,
yes, but did not allow enquiry into the decedent's wealth.
(2) Mistake: Suppose A
harvests B's timber (by mistake) worth $1000 at a cost of $250. But B could have
havested it for $200. A owes B $800,
which
would have been B's net profit. What if the numbers are reversed? Epstein thinks
A should still compensate B to the tune of $800, so
that A
has an incentive to be sure he owns the timber he is cutting.
Suppose
A is acting in bad faith. In other words, he knows that the timber belongs to B.
A should be out his costs as an incentive to find out
ownership.
5. Social Contract Theory and the Benefit Principle:
a) This is important. Epstein says the appeal of the Benefit
Principle is the best explanation for the continued appeal of Social Contract
Theory.
(I think it's something else–the
appeal of game theory–but that's just a hunch.)
b) Explain the system of general average contribution.
Suppose cargo owner A values his goods at $100,000 and the total value of the
cargo
and ship is $1,000,000. If cargo has
to be tossed overboard, he loses 10% of the total losses of cargo. He has no
incentive overvalue his cargo
(else he would lose more) or
undervalue his cargo (he loses more than it is worth if he undervalues
it.) See also the note on 123.
c) Here consent is required–or one's goods are not shipped.
d) So how does it work in the larger, political case? I.e.,
in justifying the state?
e) The Founding Fathers tried to ground it in some kind of
consent. Read 124.1
f) Rawls uses hypothetical consent: 124.3
6. Epstein's Move:
a) There really isn't any contract because there is no
consent. But the Benefit Principle points the way. The quasi-contract is binding
because there
is mutual gain. Mutual gain, not
consent, is the true basis for the state.
b) Forced exchanges are ok because of the holdout problem
(explain) anchored in necessity. 125.2 Note the tie-in with the benefit
principle.
c) The benefits of political society become the basis for the
obligation to obey the law.
7. Baselines Again:
a) The problem of baselines recurs. What is the point of
comparison? After all, if the point of comparison is a state of nature, as it
would seem to be,
then the following would be OK:
(1) State of Nature: 1 State: 10
(2) State with Redist. Taxation:
12/-5: 7 is better than 1. So what's the problem?
b) Clearly, what maximizes utility is if the state offers
only Pareto Improvements (explain). 127.3. This is what James Buchanan
calls,
'the Productive State.'
c) Examples include special assessments for public
improvements.
d) Discuss implicit in-kind compensation 129.1
Chapter 5: Altruism
1. Outline of Chapter: 135.1-.2
2. Universal Benevolence:
a) generates an ideal distribution of goods without a
reduction in output, but it is impossible.
b) Advocates of the welfare state prefer to keep the police
force intact even while they redistribute.
3. Selective Altruism:
a) The source of much mischief. It does explain voting
behavior by people who get some gain from seeing their favored candidate
elected.
b) Madison's nightmare: The problem of faction. Altruism for
the favored group when property rights are weak or open to constant
re-definition.
c) Even worse, selective altruism explains ethnic strife.
4. More on the Problem of Faction and its Solution:
a) The problem of faction is that a mor or less permanent
majority can form and use its power in a democracy to tyrannize (i.e., violate
the rights of)
a minority. Such majorities are
likely to form along geographical, racial, ethnic, or other lines. (cf.
Federalist Papers, p. 56). This problem is most
likely to occur when both the
majority and minority are small.
b) Madison's solution:
(1) Make the republic large and
create a federal structure. To some extent, this solution was implicit in the
task the Founding Fathers faced. They
had to form a central government that united the states but did not usurp all
the perogatives of the state. But the real question is how to balance
the two.
(2) Make it difficult for those with
a common interest or passion to act together by instituting a system of
separation of powers with checks
and balances.
5. A Thought Experiment:
a) Why should we object to determining who raises what child
by means of a lottery? (Not the totalitarian objection, nor the bureaucratic
nightmare
involved in its
implementation.)
b) The answer has to do with the kind of care the children
would get. The current system takes advantage of biological altruism. 139.1-.2
c) Cf. informal lending societies. 139.3
d) Cf. also informal exchanges of goods and services within a
neighborhood or a community.
e) Considerations of fairness grease the wheels of informal
arrangements (141.3)
6. Reciprocal Altruism:
a) There is a name for all this: Reciprocal Altruism.
b) The theory explains all manner of informal transactions.
As long as these transactions are small in size and number, the prospects of
someone
ending up shorted are small. One way
this can go wrong is if there are lots of small transactions. This makes
it more likely that someone will
end up shorted.
c) Past relationships impose norms of fairness.
d) The theory of self-enforcing contracts is given at 144.3
e) This carries over to gov't regulation in cases where there
is an average reciprocity of advantage, notably zoning laws.
6. An Alternative Theory:
a) A communitarian approach that emphasizes bonds of empathy
and concern.
b) The key question is what happens when altruism is not
universal? Are governments or markets more effective? Two types of intervention:
(1) intervention to prevent
exploitation of vulnerable parties
(2) redistribution through state-run
social services
7. Selective Altruism Again:
a) Treating the polity like family creates numerous problems.
For some key differences, see 148.1
b) A commitment to public altruism creates a large
redistributive state, which leads to rent-seeking.
c) The forces of selective altruism translate in a group
cohesion that intensify political struggles.
d) For an illustration, see the quotation from Michelman on
p. 150
e) The lifecycle of gov't programs: 150.3
Chapter 6: Forfeiture
1. Positive Rights and the Role of the State: 159-61
a) He notes the shift from negative rights to positive rights
in the twentieth century.
b) Positive rights entitle citizens to certain goods and
services that in turn require redistributive taxation.
c) The principal question of this chapter concerns changes in
what is expected from citizens who are entitled by law to assistance from the
taxpayers. It is an odd sort of
question.
d) Read 160.3-161.1.
The Common Law of Forfeiture in the 19th Century:
1. Contract: 161-166
a) There are utilitarian reasons why plaintiff (laborer)
misconduct voids recovery. 163.2
b) The opposite problem, employer misconduct, is addressed at
164.2
2. Tort: The question: What happens when both parties do wrong?
a) In a car crash, the parties are held to the same
negligence standard.
b) the case of industrial accidents:
(1) Utilitarian reasons why employers
should take the lead
(2) Explain the doctrines of
contributory negligence, the fellow servants rule, and assumption of risk. Also,
indicate that factual matters were
hard to settle.
c) Employers were obligated to protect employees from
forseeable risks in the workplace. Also, both the negligence standard and the
excuse of
contributory negligence were altered.
The worker no longer had to prove negligence on the part of the employer to
recover, and the excuse of
contributory negligence by other
workers could not exclude liability. What employees had to give up, however, was
the right to full recovery
of damages. (This is like current
workers' comp.) The utilitarian advantage of this is that workers are typically
partially responsible for workplace
accidents, and this system gives them
an incentive to avoid causing accidents. 168.3
d) Voluntary unemployment insurance as a modification to the
common law rules: 168.2-.3
3. Charity: 169-174
a) There was an absolute right to deny benefits to anyone,
and there was immunity from liability for medical malpractice (though no
immunity from
torts against outsiders)
b) How best to deliver services to those in need? Charities
made a distinction between he "deserving" poor and the
"undeserving poor."
c) the moral hazard problem in charity: 171-72. Those who ran
these organizations wanted to know about the details of why a person was in
need.
d) The threat of forfeiture of benefit was the only way these
charities had of controlling behavior (172).
The Twentieth Century Welfare State:
4. Contract: 174-177
a) The twin assumptions are of huge economic power imbalances
and that reputational sanctions are ineffective: 175
b) The problem of dealing with employee incompetence or
misbehavior:employment at will was abandoned and some form of "just
cause" doctrine
came to dominate. The way this
happened is the expansion of the class of exceptions to cover various categories
of employees. When that happens,
it is necessary to create a
paper trail, because discriminatory motive becomes the default explanation for
discharge. You have to prove you had
good reason to discharge the
employee.
c) The discussion on 175 of the NLRA and the Railway Labor
Act can be skipped.
d) Concerns about exploitation led to the minimum wage law
(which reduces employment among the young). The ADEA works at
cross-purposes
with the other forms of
anti-discrimination law.
e) Job formation becomes more difficult.
5. Tort Law:
a) Explain the shift from contributory negligence (which bars
recovery) to comparative negligence: 177.3
b) Mandatory workers' comp covers most workplace accidents,
except in Texas.
c) Consumer product liability: 178
(1) Companies can be held liable for
foreseeable misuse of products.
(2) This creates enormous moral
hazard problems (178.2)
d) The common thread is a lessening of moral responsibility
for accidents.
e) Two cases in the early 60s–Henningsen v. Bloomfield
Motors and Greenman v. Yuba Power explicitly rejected all contractual
defenses in
personal injury cases.
f) Charitable organizations were limited by the 1986 passage
of the Emergency Medical Treatment and Active Labor Act, which
required
people to be given medical treatment
at Emergency Rooms, regardless of ability to pay. Patient misconduct permits no
right to refuse treatment.
(179.3)
g) Unintended consequences: Hospitals close down emergency
rooms
6. Welfare Rights: (180)
a) State bureaucracies cannot draw on an army of volunteers.
b) Social workers have to be given a lot of latitude in
dealing with particular cases, but this exposes them to liability when bad
decisions are made.
A bureaucracy is likely not to find
the right mix between flexibility and predictability.
c) The really big problem is the effect on recipients'
behavior. (183.2)
7. Charitable Organizations:
a) Recipients could no longer agree not to sue: follows
product liability cases: 178-179
b) Emergency rooms: EMTALA 179; unintended consequences–180
c) Disadvantages of public welfare provision: 181.3-182.3
d) Are the trends coincidences? 182.3-184
Chapter 7: Boundaries: Firm and Fuzzy
1. Nozick's pre-occupation with compensation for boundary crossings misses
the fact that boundaries are "semi-permeable" and that compensation
is often "in-kind." We let others cross our
boundaries in exchange for them letting us cross their boundaries.
a) The boundaries around the self are like this. Some
touching is allowed. On the other side, boundaries extend to our "personal
space," which "close
talkers" invade.
b) Boundaries around land presume private property, which has
the advantage of requiring agreement about its uses from only a relatively
small
number of people.
2. Two Forms of Boundary Crossing:
a) Trespass
b) Nuisance. The latter involves physical invasions that fall
short of trespass. Noise pollution, unpleasant smells, etc. Here too, however,
the boundaries
are semi-permeable. This is captured
in the dictum, "Live and let live." Everyone benefits from this rule,
which requires others to put up with noises,
etc. in exchange for allowing me to
create small problems for them. Notice that no compensation must be paid because
everyone benefits–there is an
average reciprocity of advantage.
c) People can sort themselves into communities that have
different tolerance levels for various types of nuisances.
d) Lateral support: Each person has a duty of lateral
support. What this means is that one may not excavate the earth near one's
property line so
that land collapses on other people's
property.
e) I am going to skip the discussion of spite fences and
easements for air and light.
3. Coming to the Nuisance:
a) He has an elaborate discussion of the case of the druggist
and the physician, but there is an easier case that merits some discussion: Hadacheck
v.
Sebastian. Hadacheck owned and
operated a brickyard in the distant suburbs of Los Angeles. The operation of the
brickyard created no prob-
lems until people started moving into
the area. Then it became a nuisance. The question is, ‘Should the government
force the shutdown of the
brickyard.?'
b) Epstein's answer is that it should be able to do that
because it is a nuisance. No compensation is owed because the government is
exercising its
police power in preventing the
nuisance.
c) But only for nuisances. This would mean that the state
shouldn't be able to pass zoning laws mandating large lot sizes, etc., which are
used to
keep out minorities.
4. Privacy:
a) The law prohibits the use of listening devices to invade
the privacy of others. The Supreme Court heard a case in 1967 on this and
decided it
on the basis of "reasonable
expectations" of the property owner.
b) This creates a problem when the government has itself been
snooping.
5. Air Waves:
a) Broadcast signals required a new system of property
rights. Here usage followed the common law, allowing first possession to
establish
ownership, though it could not be
intermittent. See 212.2
b) Instead, the system became one of public ownership, which
broadcasters then had to lease according to whatever rules the government set.
Chapter 8: From Rights to Remedies
1. Rights and Remedies:
a) Where there are rights, there are remedies.
b) The law does permit some self-help procedures in executing
remedies.
(1) self defense
(2) defense of property
(3) recapture of goods: An individual
being sued for trespass may offer a defense of recapture of goods, as law allows
for the reclaiming of goods
provided no force or violence are used. If the goods were not his in the first
place, this defense would fail and he could be charged with theft.
2. Other Remedies:
a) Damages (compensation, usually taking the form of monetary
payment)
b) Injunctions (court order forbidding certain behaviors)
c) Specific Performances (e.g., in contract law)
3. Property Rules and Liability Rules:
a) An entitlement is protected by a property rule to
the extent that someone who wishes to remove the entitlement from the holder
must purchase it
from him in a voluntary
transaction.
b) Whenever someone may destroy the initial entitlement if he
is willing to pay an objectively determined value (i.e., value determined by a
third party)
for it, that entitlement is
protected by a liability rule.
c) Basically, property rules dominate liability rules
for good utilitarian reasons. See 219.2 for a discussion of why. We don't allow
people to "take
and pay," though there are
some exceptions, notably, necessity, mistake, and the law of eminent domain.
4. Contract Rules and Liability Rules:
a) The modern rule given at 221.1, but Epstein thinks it is a
bad one in part because it is difficult to determine expectation damages
(219.3).
Only when performance is impossible
do liability rules kick in.
b) Necessity defenses are tightly circumscribed (223.1). Skip
the stuff about Ayers and Balkins.
c) Why the focus on holdout and expropriation risks? Answer:
In cases of the former, the one who holds out gathers all the consumer surplus;
in the case of the latter, the person
who expropriates the property of another is also able to garner all the consumer
surplus. Why is this a problem?
Answer: It might prevent a
bargain from being reached.
d) In cases of encroachment, there is a risk of accession to
ownership by adverse possession (explain) See 227.2
e) The question about injunctions or damages mirrors the
property rule/liability rule dispute. Injunctions are before the fact; damages
after the fact.
5. Defendants will avoid taking actions that risk boundary crossings for 4
reasons:
a) neighborliness (236.1)
b) the possibility of self-injury (236.2)
c) risk of tort liability for damages (236.3)
d) the possibility of injunctive relief (237.1). Injunctive
relief is appropriate only when there is clear and present danger of a boundary
crossing.
6. Permits:
a) When property owners must get permits to develop their
property, they become supplicants before the state and state officials.
b) Explained at 237.1-.2
c) The limits of tort law: 237.3-238.1.
d) Why not seek injunctive relief? No one else cares.
7. Eminent Domain:
a) The Eminent Domain clause is a liability rule. Also, it
requires public use, which (in theory, anyway) constrains its application. The
Mill Acts
assumed the public use requirement
was satisfied, whether it was a grist mill or a mill used to generate electrical
power.
b) The Eminent Domain clause avoids a (site specific) holdout
problem.
c) Mill owners could not unilaterally and willy-nilly flood
others' property; the state had to give permission. Also, compensation had to be
paid,
usually at a premium of 50% of the
value of the property. This assured that there was a large net advantage.
d) This rule was also applied in Miller v. Schoene, discussed
at 241.3. The state entomologist had to certify that the trees represented a
hazard.
e) Nollan and Dolan discussed on 244-45.
(1) In Nollan the California
Coastal Commission required that the Nollans allow access to a public beach
across their land in order to get the
permit.
They didn't and it went to court.
(2) In Dolan, the City of Tigard wanted Mrs. Dolan to
construct a bike path and to give the city a flood easement as compensation for
allowing her
to pave over some land to
expand her property. A flood easement is a guarantee that floodwaters will not
back up on anyone's property. The
problem was that the city did
not require this of other landowners similarly situated. As to the bike path,
that was purely gratuitous.
Chapter 9: Common Property
1. Private and Public Property:
a) There are some cases where public property is best:
(1) air and water
(2) highways and parks
b) But Locke thought that all property should be private.
Sensitive to the charge of egotism, he sought to impose two constraints: the
non-wastage
condition and the Lockean Proviso.
Each has problems. The non-wastage condition does not guarantee that no negative
externalities will be
imposed. The problem with the Proviso
is just the opposite: it can never be satisfied. But that overlooks Nozick's
discussion. As Nozick shows,
you shouldn't take it literally.
c) Because of the negative effects on 3rd parties, private
property cannot be represented as all gain and no pain.
d) But common property has costs too. The problem is not
merely one of distributing spoils. (255.1) Someone has to coordinate production,
and
there are incentive problems as well.
e) Many systems of water rights are partly open and partly
closed. Only riparians may draw from the streams but navigable rivers are open
to all.
2. Utilitarian Justification for Different Systems of Property Rights:
a) Economists have discovered efficiency advantages of
different systems of property rights. See 257.3
b) Even modern societies allow hunting across property lines.
c) Two senses of ‘natural' for natural law: 259.2
(1) common to all nations regardless
of variation in local customs
(2) enduring and immutable
d) But what justifies so-called ‘natural law?'
e) Epstein's answer: Utility
3. Common Property:
a) Separate ownership of land makes little sense in a
hunter-gatherer society where no one makes any specific investments in the land.
But this does
not hold with outsiders, who will be
excluded.
b) Now consider water. The costs and benefits of exclusion
have to be weighed against the costs and benefits of coordinated use of water
when it is
held in common. (261.3) In a regime
of common waterways, coordination costs are pretty low. Private usage can be
tolerated, however, so that
some water can be diverted for
private use (262.2). But not too much.
4. Private Property: (266)
a) There is a kind of instability in systems in which some
things are privately owned and some are not. Epstein thinks that the best (i.e.,
most efficient)
rule is one that allows original
appropriation pretty easily and straightforwardly.
b) Thereafter, transfer is effected by voluntary exchange,
etc.
c) Blackstone (distinguished English jurist) thought that
inheritance was a right bestowed by the state, which could revoke it at will.
Ep. thinks this is
wrong because the alternatives are to
allow something to return to an unowned state or for it to revert to the gov't,
neither of which is a good idea.
d) Demsetz shows that the capture rule for wild animals was
an efficient response to a situation in which hunting and fishing are done
solely for a local
community. But when an outside market
arises, the problem is one of overfishing and overhunting. You need to privatize
hunting preserves.
e) The labor theory of acquisition does not tell us whether
the acquisition of private property will destroy some valuable commons. See
269.3*
5. Navigational Servitude:
a) I am going to skip the discussion up to 275.
b) In Kaiser Aetna v. United States (1979), Kaiser
Aetna had dredged a pond at their own expense. When they cut a channel to link
it to a river,
the gov't asserted that it's
navigational servitude canceled any claims of private rights. And no
compensation was owed.
Chapter 10: Common Carriers
1. Common Carriers:
a) railroads, gas and power companies, telecommunications,
water works
b) The key problem: Unregulated rates open up the prospect of
monopoly exploitation; regulated rates open up the possibility of confiscation.
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