Why Government Fails So Often: And How It Can Do Better (77 page)

143
. Colin A. Carter & Henry I. Miller, “Corn for Food, Not Fuel,”
New York Times
, July 31, 2012.

144
. Matthew L. Wald, “E.P.A. Upholds Federal Mandate for Ethanol in Gasoline,”
New York
Times
, November 17, 2012. The EPA also denied a waiver request by Texas governor Rick Perry during the 2008 drought emergency; see “Ethanol vs. the World.”

145
.
See, e.g., Michael S. Barr, “Credit Where It Counts: The Community Reinvestment Act and Its Critics,”
New York University Law Review
80 (2005): 513–652.

146
. Sumit Agarwal, Efraim Benmelech, Nittai Bergman, & Amit Seru, “Did the Community Reinvestment Act Lead to Risky Lending?” National Bureau of Economic Research Working Paper 18609 (2012).

147
. See, e.g., Lawrence J. White, “The CRA: Good Goals, Flawed Concept,” in Federal Reserve Banks of San Francisco & Boston,
Revisiting the CRA: Perspectives on the Community Reinvestment Act
(2009): 185–88.

148
. Richard Scott Carnell, Jonathan R. Macey, & Geoffrey P. Miller,
The Law of Banking and Financial Institutions
, 4th ed. (2009), 24–32.

149
. Peter Eavis, “Senators Introduce Bill to Separate Trading Activities from Big Banks,”
New York Times
, July 12, 2013, B3.

150
. Joseph E. Stiglitz, “Knowledge as a Global Public Good,” in Inge Kaul, Isabelle Grunberg, & Mark A. Stern, eds.,
Global Public Goods: International Cooperation in the 21st Century
(1999), 308, 310.

151
. Winston,
Government Failure versus Market Failure
, 54.

152
. See, e.g., Michael Heller,
The Gridlock Economy: How Too Much Ownership Wrecks
Markets, Stops Innovation, and Costs Lives
(2010); Alex Tabarrok,
Launching the Innovation Renaissance: A New Path to Bring Smart Ideas to Market Fast
(2011); Matt Ridley, “A Welcome Turn Away from Patents,”
Wall Street Journal
, June 22, 2013; and Charles Duhigg & Steve Lohr, “The Patent, Used as a Sword,”
New York Times
, October 7, 2012.

153
. Winston,
Government Failure versus Market Failure
, 59.

154
. “Stuck to the Ground by Red Tape,”
Economist
, June 1, 2012, Technology Section, 3.

155
. For overviews, see Jody Freeman & Charles D. Kolstad, eds.,
Moving to Markets in
Environmental Regulation: Lessons from Twenty Years of Experience
(2007); Ted Gayer & John K. Horowitz,
Market-Based Approaches to Environmental Regulation
(2006), 110–11.

156
. Jody Freeman & Charles D. Kolstad, “Prescriptive Environmental Regulations versus Market-Based Incentives,” in Freeman & Kolstad, eds.,
Moving to Markets in Environmental Regulation
, 4.

157
. Dieter Helm,
The Carbon Crunch: How We’re Getting Climate Change Wrong—and
How to Fix It
(2012).

158
. Robert Stavins, “Market-Based Environmental Policies: What Can We Learn from U.S. Experience (and Related Research)?” in Freeman & Kolstad, eds.,
Moving to Markets in Environmental Regulation
, chap. 2; Gayer & Horowitz,
Market-Based Approaches to Environmental Regulation
, chap. 4.

159
. See Jonathan Baron, William T. McEnroe, & Christopher Poliquin, “Citizens’ Perceptions and the Disconnect between Economics and Regulatory Policy,” in Cary Coglianese, ed.,
Regulatory Breakdown: The Crisis of Confidence in U.S. Regulation
(2012), chap. 7.

160
. See, e.g., Ryan Tracy & Ben Lefebvre, “Fraud Fears Put a Chill in Fuel Programs,”
Wall
Street Journal
, August 3, 2012.

161
. Matthew L. Wald, “A Program for Green Fuels Has Drawn Counterfeiters,”
New York
Times
, October 12, 2012.

162
. See, e.g., Elizabeth Rosenthal & Andrew W. Lehren, “Carbon Credits Gone Awry Raise Output of Harmful Gas,”
New York Times
, August 9, 2012.

163
. Freeman & Kolstad, “Prescriptive Environmental Regulations,” 14.

164
. “Extremely Troubled Scheme,”
Economist
, February 16, 2013, 75; Felicity Barringer, “A Market in Emissions Is Set to Open in California,”
New York Times
, November 14, 2012. On February 19, 2013, the EU’s effort to rescue the Emissions Trading System seemed unable to prevent its collapse. Sean Carney, “Europe’s Emissions Plan Hits Turbulence,”
Wall Street Journal
, February 20, 2013.

165
.
Cass R. Sunstein,
The Arithmetic of Arsenic
,
http://www.law.uchicago.edu/files/files/135.CRS_.arsenic.pdf
.

166
. “Complete Disaster in the Making,”
Economist
, September 15, 2012, 72.

167
. Stanley Reed, “Europe Vote Sets Back Carbon Plan,”
New York Times
, April 17, 2013.

168
. “ETS, RIP?”
Economist
, April 20, 2013, 75.

169
. Nathaniel O. Keohane, “Cost Savings from Allowance Trading in the 1990 Clean Air Act: Estimates from a Choice-Based Model,” in Freeman & Kolstad, eds.,
Moving to Markets in Environmental Regulation
, 194.

CHAPTER 9: THE LIMITS OF LAW

1
. Jonathan Rauch, “Tunnel Vision,”
National Journal
, September 19, 1998, 2153.

2
. Neil K. Komesar,
Imperfect Alternatives: Choosing Institutions in Law, Economics, and Public Policy
(1994), 103.

3
. See Roland Benabou & Jean Tirole, “Incentives and Prosocial Behavior,”
American Economic Review
96 (2006): 1652–78.

4
. For one such protest, see Philip K. Howard,
The Death of Common Sense: How Law Is Suffocating America
(1995).

5
. Aaron Chatterji, “Why Washington Has It Wrong on Small Business,”
Wall Street Journal
, November 12, 2012,
http://online.wsj.com/article/SB10001424052702303768104577460040429463650.html
.

6
. “Unhappy Birthday to You,”
Economist
, July 28, 2012, 64 (on a small bank’s legal challenge to Dodd-Frank).

7
. Richard A. Epstein,
Simple Rules for a Complex World
(1995).

8
. See, generally, Peter H. Schuck, “Legal Complexity: Some Causes, Consequences, and Cures,”
Duke Law Journal
42 (1992): 1–52.

9
. This is one of the implications of the famous Coase Theorem. Ronald J. Coase, “The Problem of Social Cost,”
Journal of Law & Economics
3 (1960): 1–44.

10
. See, e.g.,
Hanks v. Powder Ridge Restaurant Corp
., 885 A.2d 734 (Ct. 2005).

11
. See Peter H. Schuck, “When the Exception Becomes the Rule: Regulatory Equity and the Formulation of Energy Policy through an Exceptions Process,”
Duke Law Journal
1984 (1984): 163–300.

12
. See, generally, Nicholas Georgescu-Roegen,
The Entropy Law and the Economic Process
(1971); and Talcott Parsons,
The Social System
(1951).

13
. Carol M. Rose, “Crystals and Mud in Property Law,”
Stanford Law Review
40 (1988): 577–610.

14
. See, e.g., Jerry L. Mashaw, “Regulation and Legal Culture: The Case of Motor Vehicle Safety,”
Yale Journal on Regulation
4 (1987): 257–316. But see also Jason Webb Yackee & Susan Webb Yackee, “Delay in Notice and Comment Rulemaking: Evidence of Systemic Regulatory Breakdown?” in Cary Coglianese, ed.,
Regulatory Breakdown: The Crisis of Confidence in U.S. Regulation
(2012), chap. 8 (most agencies issue a good number of regulations relatively quickly).

15
.
United States v. Booker
, 543 U.S. 220 (2005)

16
.
Heckler v. Campbell
, 461 U.S. 458 (1983).

17
. See, generally, Samuel Issacharoff, Pamela S. Karlan, & Richard H. Pildes,
The Law of Democracy
, 4th ed. (2012).

18
. See, generally, John H. Langbein, David A. Pratt, & Susan J. Stabile,
Pension and Employee Benefit Law
, 5th ed. (2010).

19
. See, e.g., Stephen G. Breyer,
Active Liberty: Interpreting Our Democratic Constitution
(2005); Antonin Scalia & Bryan A. Garner,
Reading Law: The Interpretation of Legal Texts
(2012); and Jack M. Balkin,
Living Originalism
(2011).

20
.
Most of this section is taken from Schuck, “Legal Complexity,”
part 2
. Supporting references for the propositions in the text can be found there.

21
. John D. McKinnon, “Firms Pass Up Tax Breaks, Citing Hassles, Complexity,”
Wall Street Journal
, July 23, 2012.

22
. Patricia M. Wald, “The ‘New Administrative Law’—with the Same Old Judges in It?”
Duke Law Journal
1991 (1991): 668–69.

23
. For the provenance of this term, see Mila Sohoni, “The Idea of ‘Too Much Law,’ ”
Fordham Law Review
80 (2012): 1587n8. Sohoni is skeptical of the hyperlexis critique.

24
. See, e.g., Michael J. Graetz, “100 Million Unnecessary Returns: A Fresh Start for the U.S. Tax System,”
Yale Law Journal
112 (2002): 261–310.

25
. National Taxpayers Union,
A Taxing Trend: The Rise in Complexity, Forms, and Paperwork Burdens
, NTU Policy Paper #130 (April 17, 2012),
http://www.ntu.org/news-and-issues/taxes/tax-reform/ntupp130.html
.

26
. James S. Eustice, “Tax Complexity and the Tax Practitioner,”
Tax Law Review
45 (1989): 19.

27
. McKinnon, “Firms Pass Up Tax Breaks.”

28
. See Cass R. Sunstein, “Incompletely Theorized Agreements,”
Harvard Law Review
108 (1995): 1733–72.

29
. Robert Pear, “Ambiguity in Health Law Could Make Family Coverage Too Costly for Many,”
New York Times
, August 11, 2012.

30
.
Brown v. Allen
, 344 U.S. 443, 540 (1953).

31
. See Adam Liptak, “In Congress’s Paralysis, A Mightier Supreme Court,”
New York Times
, August 20, 2012.

32
. The classic exploration of this subject is Kenneth Culp Davis,
Discretionary Justice: A Preliminary Inquiry
(1969).

33
. For a recognition of the importance of agency discretion in immigration enforcement, see
Arizona v. United States
, 132 S. Ct. 292, 2499 (2012).

34
. See Philip Howard,
The Death of Common Sense
.

35
. Anthony Lewis, “Cases That Cry Out,”
New York Times
, March 18, 2000.

36
. The classic statement of this position is David Schoenbrod,
Power without Responsibility: How Congress Abuses the People through Delegation
(1993).

37
.
A.L.A. Schechter Poultry Corp. v. United States
, 295 U.S. 495 (1935).

38
. See Peter H. Schuck, “Delegation and Democracy: Comments on David Schoenbrod,”
Cardozo Law Review
20 (1999): 775–93.

39
. See, e.g., Rachel Barkow, “The Prosecutor as Regulatory Agency,” in Anthony S. Barkow & Rachel E. Barkow, eds.,
Prosecutors in the Boardroom
(2011), chap. 8.

40
. See, e.g.,
Connick v. Thompson
, 131 S. Ct. 1350 (2011).

41
. U.S. Constitution, Art. II, Sec. 2. This power has sometimes been abused, as in president Bill Clinton’s January 20, 2001 pardon of Marc Rich.

42
. U.S. Department of Justice,
Rules Governing Petitions for Executive Clemency
,
http://www.justice.gov/pardon/clemency.htm
.

43
. Steven M. Davidoff & David Zaring, “Regulation by Deal: The Government’s Response to the Financial Crisis,”
Administrative Law Review
61 (2009): 466.

44
.
Mathews v. Eldridge
, 424 U.S. 319 (1976).

45
. For a critical assessment of the test, see Jerry L. Mashaw, “The Supreme Court’s Due Process Calculus for Administrative Adjudication in Mathews v. Eldridge: Three Factors in Search of a Theory of Value,”
University of Chicago Law Review
44 (1976): 28–59.