From: lkk@panix.com (Larry Kolodney)
Newsgroups: misc.legal,sci.econ
Subject: Re: Law and Economics
Date: 21 Jul 92 03:28:44 GMT
Distribution: usa
Organization: PANIX Public Access Unix, NYC

In <1992Jul20.034441.25202@midway.uchicago.edu> thf2@ellis.uchicago.edu (Ted Frank) writes:

>In article <1992Jul20.022326.6237@panix.com> lkk@panix.com (Larry Kolodney) writes:
>>In <1992Jul19.213642.15687@midway.uchicago.edu> thf2@ellis.uchicago.edu (Ted Frank) writes:
>>>Show me where law and economics does not give poor and rich equal footing.
>>
>>Its not law and economics that does not give poor and rich equal
>>footing, its just L&E's most famous practitioners, who use L&E to
>>justify anti-regulatory, and anti-civil rights policy choices.

>Leaving aside the arguable second clause of your statement, I'd like
>to address the first contention.

>Assume for a moment that L&E's most famous practitioners do use L&E
>to justify, etc.  How is that the fault of the methodology?

Did I fault the methodology?  Read what I said, "Its NOT law and
economics that <etc> ...."


>The advantage of L&E is that it forces legal thought into an analytical
>framework.

Yes, and that analytical frame work is useful for answering a narrow
range of questions.  It does not, as Posner et al seem to believe,
serve as a universal language of human desire and social value.

  When a Richard Epstein uses L&E to attack Title VII, his
>assumptions are laid out to bare, and the flaws in his formal model
>can be exposed (as they arguably have been by other L&E folks such as
>Ian Ayres and John Donoghue) in a way they couldn't if he used a straight 
>libertarian philosophical argument, which would have turned into a 
>Pythonesque Argument Clinic.

I'm not sure which "flaws" you are refering to.  Are you saying that
his math is wrong, or that his economics is wrong?

It may be that the flaws of his formal model may be exposed.  But even
if there were no technical flaws in his formal model, he would still
be wrong, for reasons which have nothing to do with economic modeling.


>I assume you're referring to Epstein (who honestly believes that he *is*
>giving rich and poor equal footing).  Posner's come out in favor of
>gay rights.

Posner has also waged an virulent battle against the regulatory state
and attempts to redistribute income.  He is, however interesting his
writing, basically an apologist for entrenched economic power, Gay
rights notwithstanding.

For example, Posner argues from Coase's theorem that, given a choice
of legal rules governing transactions between two parties, the correct
rule is always the one which avoids transactions costs (i.e. imposes
the outcome that would have accured after a Coasian transaction).  The
rationale is obviously that such a rule is more efficient.

Of course, Posner's claim is nothing more than ideology dressed up a
neutral science.  There is nothing in Posner's calculation which tells
us whether it is better, in any given case, to increase efficiency or
to redistribute wealth.  Clearly, Posner was on the efficient side all
along, and used fancy equations and talk about pareto-superiority to
justify it.


>I must take issue with your use of the word "justify," because it implies
>that anti-regulatory stances are the ex ante purpose of L&E rather than
>the ex post conclusion.  If it were the former, perhaps you could show
>where in L&E corners are cut to justify bad policies.

See above.


  L&E in and of itself
>is neutral.

No it isn't.  It necessarily excludes certain types of data from the
calculus, data which would tend to support (dare I say it)
"counter-hegemonic" conclusions.  L&E is useful for making predictions
about outcomes *in the current system*.  Unless you beleive that
neo-classical economics is a universal science of human behavior, than
you must see that L&E has an inherent bias toward a liberal free-trade
and instrumental economic outlook.


> The results may show, for example, that the one regulatory
>regime cost society more than another, but it doesn't necessarily follow
>from that that the one that costs less is better, as I discussed in a post
>a few days ago in misc.legal regarding the 1964 Civil Rights Act.  It's
>important to separate criticism of Posner's theory that wealth maximization
>is the appropriate goal of a society from criticism of law and economics
>in and of itself.  One can take advantage of the latter without subscribing
>to the former.
>-- 

As you know, Ted. I've used economic analysis in my own (decidedly
anti-establishmentarian) writing, so you don't need to tell me this.  

What is truly obnoxious about Posner is not that he used L&E, but that
he has the pretense to think that he can explain everything with it.

-- 
larry kolodney:(lkk@panix.com) 
_(*#&)#*&%)@(*^%_!*&%^!)*&#+!*&$+!?&%+!*&^_)*&#%)*&^%#+&
The past is not dead, it's not even past.   - Wm. Faulkner
Newsgroups: misc.legal