In another triumphant British Justice, trade credit is much more likely in common law countries and in countries with honest courts.
Sales to locations with weak contractual enforcement are more likely to be cash in advance
22 Mar 2015 Leave a comment
in comparative institutional analysis, development economics, law and economics, property rights
David Friedman on global warming, population and problems with the externality argument
02 Mar 2015 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, constitutional political economy, David Friedman, economic history, economics of information, economics of regulation, environmental economics, environmentalism, global warming, law and economics, population economics, property rights Tags: climate alarmism, competition as a discovery procedure, David Friedman, externalities, global warming, population bomb, The fatal conceit, The pretence to knowledge
Buzz Aldrin punches Moon landing conspiracy theorist stalker after being harassed by him
15 Feb 2015 1 Comment
in economics of crime, economics of media and culture, health economics, law and economics, property rights Tags: Buzz Aldrin, conspiracy theorists, moon landing hoax, privacy, self-defence, stalking
HT: Liar_tuck
An alternative to the no fault Accident Compensation Scheme in New Zealand
13 Feb 2015 Leave a comment
in health and safety, labour economics, law and economics, politics - Australia, politics - New Zealand, property rights Tags: ACC, accident compensation, right to sue, workers' compenstaion, workplace fatalities
New Zealand has a unique government monopoly since 1974 which provides compensation for personal injuries from accidents wherever they may occur in New Zealand.
The right to sue in court under tort law was abolished. Instead, there is a lower but more certain right to be compensated for loss of income and medical expenses and various other losses. The scheme is funded by a levy of about 1.4% on incomes earned, insurance premiums paid by employers and levies on motor car registrations.
The scheme essentially folds no fault workers compensation and no fault car accident insurance into a scheme that covers you for all other accidents.
What is peculiar is the abolition of the right to sue in court for ordinary damages. I never liked this taking away of the right of vindication in court.
In Australia, they have a much simpler system in some states. You can sue for personal injury under the common-law, but any damages you might win for loss of income, medical expenses and other losses is deducted dollar for dollar from any of damages you might be awarded under the compulsory insurance scheme for either workplace or car accidents. This system allows everyone to be compensated to some degree and protected against judgement proof employers, car owners and other wrongdoers. It also saves on legal costs.
The Australian dual system both gives people the right of vindication and allows those who are poorly compensated by the government monopoly to continue to be compensated for losses. For example, the compensation for lost income under the government monopoly is based on your last 12 months income rather than prospective income. This seriously disadvantages young people and students in particular at the start of their working lives and mothers who are out of the workforce.
Another thing I like about the Australian system and deeply dislike about the New Zealand system is you do not have the right to sue cowboy employers to bankrupt them.
The system of funding in New Zealand is simply a flat rate premium applies the different occupations. Premiums do not increase for high risk employers or employers who repeatedly have accidents because they are careless or negligent. This increases the number of accidents and deaths. The penalties for workplace accidents and deaths under New Zealand workplace safety regulation are rather weak. Reckless employers are fined, no one is bankrupted nor goes to prison.
The government monopoly insurer of personal accidents in New Zealand also doesn’t pay for pain and suffering. Initially it did, but that right of compensation was taken away as a cost-cutting measure about 20 years ago. Prior to that pain and suffering compensation was initially limited to $10,000, then increased to $17,000 before it was abolished.
This lack of a legal remedy for the pain and suffering from a personal injury is a grave injustice. The courts were pretty stingy on pain and suffering, so the government monopoly has taking away what was a pretty limited right anyway, but a very important right nonetheless. That common-law right was to be made whole again after being injured wrongfully.
Posner and Easterbrook opine upon the law and economics of rent control
20 Jan 2015 1 Comment
in applied price theory, applied welfare economics, law and economics, property rights, Public Choice, rentseeking, Richard Posner Tags: Frank Easterbrook, rent control, Richard Posner
POSNER, Circuit Judge, with whom EASTERBROOK, Circuit Judge, joins in 819 F. 2d 732 – Chicago Board of Realtors Inc v. City of Chicago:
The stated purpose of the ordinance is to promote public health, safety, and welfare and the quality of housing in Chicago. It is unlikely that this is the real purpose, and it is not the likely effect.
Forbidding landlords to charge interest at market rates on late payment of rent could hardly be thought calculated to improve the health, safety, and welfare of Chicagoans or to improve the quality of the housing stock.
But it may have the opposite effect. The initial consequence of the rule will be to reduce the resources that landlords devote to improving the quality of housing, by making the provision of rental housing more costly. Landlords will try to offset the higher cost (in time value of money, less predictable cash flow, and, probably, higher rate of default) by raising rents. To the extent they succeed, tenants will be worse off, or at least no better off.
Landlords will also screen applicants more carefully, because the cost of renting to a deadbeat will now be higher; so marginal tenants will find it harder to persuade landlords to rent to them. Those who do find apartments but then are slow to pay will be subsidized by responsible tenants (some of them marginal too), who will be paying higher rents, assuming the landlord cannot determine in advance who is likely to pay rent on time. Insofar as these efforts to offset the ordinance fail, the cost of rental housing will be higher to landlords and therefore less will be supplied–more of the existing stock than would otherwise be the case will be converted to condominia and cooperatives and less rental housing will be built…
The provisions that authorize rent withholding, whether directly or by subtracting repair costs, may seem more closely related to the stated objectives of the ordinance; but the relation is tenuous. The right to withhold rent is not limited to cases of hazardous or unhealthy conditions. And any benefits in safer or healthier housing from exercise of the right are likely to be offset by the higher costs to landlords, resulting in higher rents and less rental housing.
The ordinance is not in the interest of poor people. As is frequently the case with legislation ostensibly designed to promote the welfare of the poor, the principal beneficiaries will be middle-class people.
They will be people who buy rather than rent housing (the conversion of rental to owner housing will reduce the price of the latter by increasing its supply); people willing to pay a higher rental for better-quality housing; and (a largely overlapping group) more affluent tenants, who will become more attractive to landlords because such tenants are less likely to be late with the rent or to abuse the right of withholding rent–a right that is more attractive, the poorer the tenant. The losers from the ordinance will be some landlords, some out-of-state banks, the poorest class of tenants, and future tenants.
The landlords are few in number (once owner-occupied rental housing is excluded–and the ordinance excludes it). Out-of-staters can’t vote in Chicago elections. Poor people in our society don’t vote as often as the affluent. See Filer, An Economic Theory of Voter Turnout 81 (Ph.D. thesis, Dept. of Econ., Univ. of Chi., Dec. 1977); Statistical Abstract of the U.S., 1982-83, at pp. 492-93 (tabs. 805, 806). And future tenants are a diffuse and largely unknown class.
In contrast, the beneficiaries of the ordinance are the most influential group in the city’s population. So the politics of the ordinance are plain enough, cf. DeCanio, Rent Control Voting Patterns,Popular Views, and Group Interests, in Resolving the Housing Crisis 301, 311-12 (Johnson ed. 1982), and they have nothing to do with either improving the allocation of resources to housing or bringing about a more equal distribution of income and wealth.
A growing body of empirical literature deals with the effects of governmental regulation of the market for rental housing. The regulations that have been studied, such as rent control in New York City and Los Angeles, are not identical to the new Chicago ordinance, though some–regulations which require that rental housing be "habitable"–are close. The significance of this literature is not in proving that the Chicago ordinance is unsound, but in showing that the market for rental housing behaves as economic theory predicts: if price is artificially depressed, or the costs of landlords artificially increased, supply falls and many tenants, usually the poorer and the newer tenants, are hurt…
Timur Kuran – Why the Middle East Became Economically Underdeveloped
08 Jan 2015 Leave a comment
in development economics, growth disasters, growth miracles, law and economics, property rights Tags: Timur Kuran
Environmental Law 101 | Richard Epstein
05 Dec 2014 Leave a comment
in environmental economics, law and economics, liberalism, property rights, Richard Epstein Tags: environmental law, law of nuisance, Richard Epstein, tort law
Back in 1999, Richard Epstein wrote a great summary of what should be environmental law from an old common law perspective, from a classical liberal perspective, and a pragmatic economic libertarian perspective:
Stated bluntly, nothing in the theory of property rights says that my property is sacred while everybody else’s property is profane. That single constraint of parity among owners should lead every owner to think hard…
This recognition of the noxious uses of private property is the source of the common law of nuisance.
That law dates from medieval times, certainly by 1215, at the time of the Magna Carta. It is no new socialist or environmentalist creation for the twentieth century.
When the common law of nuisance restricts the noxious use of property, it benefits not only immediate neighbours but the larger community. If I enjoin pollution created by my neighbour, others will share in the reduction of pollution.
Simply by using private actions, we have built a system for environmental protection that goes a long way toward stopping the worst forms of pollution.
Epstein does not stop there. He recognises as he should that the common law of nuisance is not enough to stop all problems of pollution:
Yet before we leap for joy, we must recognize that private actions are not universally effective in curbing nuisances.
Sometimes pollution is widely diffused—waste can come from many tailpipes, not just one—so that no one can tell exactly whose pollution is causing what damage to which individuals.
Under those circumstances, private enforcement of nuisance law can no longer control pollution…
We do not change the substantive standards of right and wrong, but we do use state regulation to fill in the gaps in private enforcement.
Epstein then makes a plea for private covenants to deal with a great deal of the social frictions that arise in the suburbs:
But often when individuals worry about their local environments, they’re not particularly happy to treat the nuisance law, however enforced, as the upper bound of their personal protection.
They want (especially as their wealth increases) more by way of aesthetics and open spaces. Fortunately, our legal system has a way to accommodate these newer demands.
One of our most important land-use control devices is the system of covenants by which all the holders of neighbouring lands agree among themselves and for their successors in title
Covenants might work in Greenfields developments in modern cities. But they really doesn’t work in managing land use conflicts in the inner city where regulation is been used to substitute the covenants for many decades.
Epstein’s ideal for modern environmental law is:
In sum, the system of public and private enforcement of nuisances and public and private purchases of environmentally sensitive sites is the way that sound environmental policy should proceed.
Utopia, you are standing in it! 
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