Transcendental Nonsense

The argument of this post is as follows: In many areas of the law the left is constantly asking government to save their butt—save the seals, protect their wages, don’t discriminate—while the right can’t help but express the importance of judicial restraint, institutional competence and the pernicious effects of micro-management.  In Hohfeldian terms, one can think of these conflicts as the left asking for a “right” while the right requesting a “privilege”.  There are cases where these roles are inverted such as the family, where the left yearns to be left alone while the right wants government to come in and do something.

My argument is that the left should focus on getting more privileges instead of more rights.  Here I want to use a law and economics argument.  In most cases, privileges cost courts less to enforce than rights. In other words, it is easier for courts to say that A is allowed to injure B (a privilege) than to say that B has a right which the court will enforce to prevent A from injuring him.  The reason why in most cases privileges are cheaper is because they only require the court to validate action that parties are already taking—A is hitting B. In the case of rights, the court has to use some of the government’s volition to prevent A from hitting B.  In both cases the court acted: in one it allowed behavior; in the other it prohibited it.  But the prohibition requires its active involvement, while the privilege allows it to step back and let them fight it out.

If privileges are less costly than rights, my conclusion is that the wealth that the left may be able to extract through privileges may be greater than through rights.

More to come! (First example will juxtapose the seals case with the recent Animal Planet show Whale Wars).

The idea behind this post is extremely centrist and perhaps right-wing. But here it is: if you are one of those that thinks crises are bad and we should try to minimize them, then how about applying modern portfolio theory to the array of assets we call “society”?

One of the tenets of modern portfolio theory is that diversification is good.  It allows one avoid firm specific risk by buying stock in several firms, and to avoid industry specific risk by buying in several industries.  Moreover, the theory argues that one who does not diversify incurs “uncompensated” risks because the price of the stock only reflects the risks that one cannot diversify.

If you buy into this theory, how would a diversified portfolio of society’s assets look like?  In the political arena this would mean that you shouldn’t vote all the time democrat. You should, like big corporations do, give money to both parties.  Whoever is in power will benefit you.  Just like if you buy stock from competing companies if one goes down the other is likely to go up. This same analysis applies to having diversified centers of power.  Federalism, localism and internationalism come in here.

But the real concern of this post are also the so-called “private” sources of power.  Hence, one thing that bothers me is why are we so stupidly listening to whatever those market analysts constantly say?  As if they were some kind of oracles.  That seems to me to be clearly an undiversified source of information.  Maybe we should ask the workers, what do they know?  Maybe we should ask mothers, maybe they know.  Maybe we should ask priests, they should know–they were the original oracles.

Thus, I think that part of the reason for the current financial crisis is our individed attention to a very small group of people.   The natural response to this is, “Yeah, we are listening to them and for a reason: they are the ones making us rich.”  Maybe, maybe, but if you were an investment advisor, with the benefit of modern portfolio theory, you would’t have told your client to put all his stocks in tech companies before the 2001 bubble or for that matter to put them all in clean tech today.  By the same token, just because financial people are making money we shouldn’t be listening solely, or even primarely, to them.  Our world is just too complex for us to trust our hands into so few people. But more fundamentally trust is simply the basis for monopoly rents: do you want to be the consumer in such a market?

In conclusion, I think distrust, disloyalty and skepticism are in.  A well diversified outlook to society would be constantly betraying the winners because we think their victory is not going to last.

Trusts and Estates is essentially about what to do with the dead body and all the largese that he or she has accumulated.  You need to imagine a rooting body covered with flies and a bunch of jackals surrounding the corpse hoping to get a bite of the fat old lady or guy.

You would think this is an extremely fertile field for polical contestation.  After all, there is a lot of wealth involved and the supposed owner is thankfully dead.  But no, this is not to be.  Today, Trusts and Estates is seen as a largely family planning field concerned with striking the right balance between the wishes of the beneficiaries and settlors.  One’s goal is that of the technician trying to make everyone in the family as happy as possible while reforming cumbersome old “rigid” laws and procedures that only benefited corrupt or inefficient probate judges.

Nowhere does one find talk about the distribution of wealth or the oppressive effects of today’s favorite devise, “The Trust”.  In line with much or of our Law and Economics understanding of the law, whenever some asks about distribution we are referred to taxes, death taxes.  The rules themselves are not about distribution but about striking the right balance between the dead hand and the beneficiaries. This is a story that CLS has criticized in other fields.  It has been done in Contracts (Duncan Kennedy’s Political Stakes in Merely Technical Issues in Contract Law), in Torts (Morton Horwitz, Transformation I), in Property (David Kennedy (Some Cautionary Thoughts About Property Rights), but I haven’t seen it in Trusts and Estates.

My intuition is that today Trusts and Estates is a very right-wing area of law. According to Prof. Robert Sitkoff there are billions of dollars in trust assets and the average trust has about 1 million.  (He has the better numbers).  All this money is being held “in trust”.  Almost all trusts are spendthrift and the latest innovation is the self settled asset protection trust that forbids creditors from reaching even the money one earns during life.

Why is the field right-wing?  It is so because today trust law seems powerfully tilted towards creating barriers that prevent society in general from coming in and taking a chunk of that exemplary citizen.  The first barrier is the settlor.  Today he or she is ascribed importance almost as great as that accorded to the Founding Fathers under Originalism.  Thus, removal of the trustee cannot be effected unless doing so does not go against a material purpose of the settlor.  Another is the abolition of the rule against perpetuities.  The second barrier are the beneficiaries, themselves.  Beneficiaries have the power to chance trusts to a special needs trust that prevents the money from the trust being use to pay for health care payments that otherwise have be borne by the government.  Similarly, there is the presumption against the res going to the state.  Why not have a presumption in favor of the wealth going to the state?

My feeling is that trusts and estates today is extremely centered towards the self; wealth going to the other (the state or those unknown poor people out there) is presumptively disfavored.

My guess is that trust and estates has the form it has after more than 20 years of conservative jurisprudence, if one thinks of the law and economics movement as growing in strength with Reagan.  This of course need not be so.  One could imagine a more other-centered trusts and estates jurisprudence, just like it could be seen in areas of tort liability or employment contracts.

But the basic image I want to impart is that of a person walking around the city with a huge golden bag in his or her head: the beneficiary. His creditors and society in general can’t touch the bag, because it is “in trust”.  We are after all fulfilling the wishes of that omnipresent settlor, up there watching over us.  His bidders, that Golden Guard called the bank and bar, protecting the beautiful bag from the corrosive claws of the government and the mass.

Here, I want to make a somewhat surprising claim, namely that contracts should best be viewed as a procedural field for making law.  Historically, we have tended to view a core set of courses constituting private law. Most often they have been contracts, property, tort and, less importantly, family law. Then, specially with the growth of the administrative state we dubbed a set of courses as public law; most notably labor and environmental Law. Public law has also included constitutional and criminal law.

In my view, this is the wrong way of thinking about the issues. Not only are there theoretical problems with this organization but there are also political consequences to it. It lends itself to thinking that private law courses are free from the public; that all we are really concerned here are the relations between private parties and that society really does not have much stake (or say) in what happens there. Thus, somehow, public law (environmental and labor, in particular) are imposed upon this realm of freedom. Hence any regulation coming from these fields is inherently suspect in terms of freedom.

Now, what proposal do I have to get rid of this distinction? I think one of the most fruitful things we could do is to think of the law in terms of procedure and substance. Procedure is involved in the making of the right and in its enforcement. Substance is whatever the right is. Today, we recognize three procedures for law making: Passing a law through the legislature (statutes), executive pronouncements (regulations), and court decisions (common law). The most controversial thing I’ll say today is that the fourth procedure for making law should be contracts. Under this view (following Robert Hale), contracts are the power that the legislature has delegated to private parties to engage in lawmaking. As such contracts is an essentially procedural device, not unlike the devices of passing statutes, issuing regulations or decreeing opinions.

This four sources with lawmaking authority (legislatures, executive agencies, courts and individuals) represent the procedural side of the equation. What do they produce? Substantive law would then be property, environmental, labor, torts, and criminal law. What this characterization does is that it gets rid of the presumption that “public law” is encroaching on “private law.” Hence it would in all likelihood relieve the burden on the idea the freedom is in the private and lack of freedom in the public.

One obstacle to thinking of areas of law in these terms is the Constitution–after all it says that “all legislative powers…” Yet, one can also use the Constitution to find support for the law making authority of the 3 other institutions, most notably for our purposes is the prohibition against states passing “law[s] impairing the obligation of contracts.”

Lastly, besides the political implication of calling contract law procedural in my view it just makes more sense to think of it that way. Why else do we think it springs up again and again in so many different subjects? It can be used in family law, in labor, in property, even in torts. It is so because we using contracts can be one of the procedural devices best suited for deciding the issue in that particular field.

I’ll stop here. Hopefully, it was somewhat interesting. But the idea is that instead of the private/public dichotomy we could use the procedure/substance one.

If we hold to the idea that peace is war by other means, it would seem that law is the weapon of choice for war by other means. I have in mind a recent case of a dam that was to be built in India. The Indian government rescinded the contract and the dam ended up never being constructed, yet India is still paying for the dam–millions of dollars annually. This is the same principle present in the Home Improvement case, which section 7 recently had in Contracts. There, a homeowner ordered window construction, rescinded the contract a few days later and was then demanded to pay more than half the amount of the full project. In that case however the court held the agreement unconscionable as it required a large amount of money for barely anything in exchange.

A good case can be made that such agreement was not in fact unconscionable but that is not my concern in this post. Here I am concerned with how legal rules can make “war” on other parties and, when the parties are countries, countries. Imagine we wanted to destroy India’s dam. It would require a cost on our part–we would need gas to flight the F-16s and ammunitions to destroy the structure. Those are resources we lose. But with the use of lawyers in this case we are draining their resources while increasing ours. It’s almost as if we are taking territory away from them. From this point of view, making war the military is less efficient than with lawyers. In the former case we both lose resources, in the latter we win resources while they lose.

What follows from the fact that lawyers can make “war”? What I hope follows is a recognition that lawyers have the power to leave a country in shambles, or make it rich, depending where we are distributing the resources. Through the use of legal rules like Home Improvement we create imaginary stop signs that give green light to some while stopping others.

And by free I don’t mean that we may have already paid for it with our tuition, but rather the kinds of attachments and predispositions that receiving all these things create in us. I’m a starting 1L and I’ve been struck by how many free things we get. Have you thought about how much all these things cost? And how painlessly we get them? Backpacks, UBS drives, water and coffee bottles, hard hats etc…they are all great and today I picked one of each and a couple of some. But for some reason, I feel guilty about it; I think of the people that served me the fajitas today–mostly Latinas in their 30s and 40s–and think of the sticker on a light post in Hastings, “Prestige cannot feed us.” Am I that different from them? Those workers in crimson shirts I see every morning cutting the grass, cleaning pipes, taking my trash? Do I deserve their serving me?

I fear I will get used to this lifestyle of free things. Who doesn’t like to be pampered? Yet a different picture arises when we ask, who has to do the pampering? Remember the Michael Jackson video “Remember the Time?” In one of the starting sequences, women around Eddy Murphy are gently blowing wind at him; isn’t that nice? In much the same way I feel when I receive free food from a Salvadorian mother speaking in short English sentences.

I was recently browsing the yellow pages and, as I looked at the index, found the heading “Financial and legal services.” Lawyers, could be argued, have always served the landed and propertied interests, but it seems to me a new development to be on the same category as–almost indistinguishable from–the banks. A strong case can be made that there are important differences in the professional codes of lawyers and bankers. Lawyers have justice, even in its cynical reincarnations, as one of the core values of the profession. By contrast, I’m not sure justice needs to rank very high in a bankers value-list.

A view of lawyers as bankers–as essentially caretakers of money–diminishes the legal profession and is ultimately counterproductive. It diminishes the profession by taking out the sense of higher calling that the profession attributes to itself. To speak such heavy-sounding words like justice and truth is not easily done, yet the legal profession prides itself for having used them for centuries. Without them the profession may be more akin to a trade–content with delivering “goods.” With the ongoing specialization of the legal profession and the larger world, perhaps it’s better that way; perhaps we should leave those questions to philosophers and academics. It’s certainly easier. It’s also just passing the buck on our actions and letting someone else worry about them.

The reason why the trend of lawyers as bankers would be ultimately counterproductive is linked to the previous answer. Historically, lawyers have served key funcions in society by mobilizing and influencing public opinion (John Adams defending the royalist guard after the Boston Massacre, comes to mind). It is possible that the combination of ever increasing profits in major law firms, the nation-wide increase in the gap between the poor and the rich and the lawyer as banker mind-set, would do away with whatever confidence our incantations of justice and truth have created in the already distrustful general public. This may not be that bad. Perhaps it won’t be that different from the way it’s now, but I suspect most of us would rather be admired than distrusted.

Instead of lawyers as bankers, I believe lawyers should swing back the pendulum in the direction of lawyers as doctors. Lawyers as women and men that cure social ills. Lawyers that serve as much the rich as the poor, whose work ultimately is not too far away from their vision of a just society.