Deeply humbled by this generous review of my new paper, Congressional Securities Trading, by Prof. Stephen Bainbridge (UCLA), one of the deans of corporate law scholarship.
Tag Archives: scholarship
Podcast Interviews (Business Scholarship Podcast) on “Congressional Securities Trading,” Transit Funding
The Business Scholarship Podcast is running a series of interviews on the COVID-19 crisis.
In Episode 4, JW Verret (GW Law) and I joined host Andrew Jennings (Stanford Law) to discuss allegations of congressional insider trading on the pandemic, including my Congressional Securities Trading piece.
In Episode 1, I serve as a co-host, interviewing recognized authority on transit and transportation funding Yonah Freemark (MIT urban planning) to discuss the transit funding crisis.
Both episodes, along with the rest of the special series, may be accessed here.
Podcast Interview (Talking Headways) on “Should Law Subsidize Driving?”
In early March 2020, back when such things were still possible, I sat down with transportation journalist and urban planner Jeff Wood in San Francisco to record a live show at Manny’s in the Mission, hosted by two impressive local organizations (Urban Environmentalists and YIMBY Action). The podcast recording and (abridged) transcript are now available here!
Podcast Interview (Ipse Dixit) on “Congressional Securities Trading”
Link here.
“Should Law Subsidize Driving?” to be Published in NYU Law Review
I’m delighted to share that my latest article, Should Law Subsidize Driving?, will be published in the New York University Law Review. The abstract appears below. I’m very grateful for the comments I’ve received to date, and welcome additional feedback.
Should Law Subsidize Driving?
Abstract
A century ago, captains of industry and their allies in government launched a social experiment in urban America: the abandonment of mass transit in favor of a new personal technology, the private automobile. Decades of public and private investment in this shift have created a car-centric landscape with Dickensian consequences.
In the United States, motor vehicles are now the leading killer of children and the top producers of greenhouse gases. They rack up trillions of dollars in direct and indirect costs annually, and the most vulnerable—children, the poor, and people of color or with disabilities—pay the steepest price. The appeal of cars’ convenience and the lack of meaningful alternatives has created a public health catastrophe.
Many of the automobile’s social costs originate in the individual preferences of consumers, but an overlooked amount is encouraged—indeed enforced—by law. Yes, the U.S. is car-dependent by choice. But it is also car-dependent by law.
This Article conceptualizes this problem, and offers a way out. It begins by identifying a submerged, disconnected system of rules that furnish indirect yet extravagant subsidies to driving. These subsidies lower the price of driving by comprehensively reassigning its costs to non-drivers and society at large. They are found in every field of law, from traffic law to land use regulation to tax, tort, and environmental law. Law’s role is not primary, and at times it is even constructive. But where it is destructive, it is uniquely so: law not only inflames a public health emergency but legitimizes it, extending its longevity.
The Article urges a teardown of this regime. It also calls for a basic reorientation of relevant law towards consensus social priorities, such as health, prosperity, and equity.
News Outlet Features Story about “Should Law Subsidize Driving?”
A reporter for StreetsBlog wrote a story today summarizing and discussing my draft article:
New Article, “Should Law Subsidize Driving?”, Is Up on SSRN
A draft of my latest Article, Should Law Subsidize Driving?, is now up on SSRN. I’m happy that it has begun to attract a readership in its first 24 hours (about 120 downloads). The Article conducts a law and economics analysis of every field of law that touches on driving, and infuses it with the best work from half a dozen other fields from public health to traffic engineering, before concluding that law subsidizes driving extravagantly and pervasively. This creates immense negative externalities that are not tracked with any comprehensiveness or rigor.
The Article also introduces a novel term, automobile supremacy, to describe the systematic discrimination that law practices—in hidden, often unintentional or counterintuitive ways—against not just other forms of transportation but virtually all other social objectives in service of the car.
It’s my most ambitious work yet, and parts of this draft will almost certainly be edited down and shifted to a book project. Feedback is most welcome.
Should Law Subsidize Driving?
Abstract
A century ago, captains of industry and their allies in government launched a social experiment in urban America: the abandonment of mass transit in favor of a new personal technology, the private automobile. Decades of public and private investment in this shift have created a car-centric landscape with Dickensian consequences.
In the United States, motor vehicles are now the leading killer of children and the top producers of greenhouse gases. They rack up trillions of dollars in direct and indirect costs annually, and the most vulnerable—children, the poor, and people of color or with disabilities—pay the steepest price. The appeal of cars’ convenience and the lack of meaningful alternatives has created a public health catastrophe.
Many of the automobile’s social costs originate in the individual preferences of consumers, but an overlooked amount is encouraged—indeed enforced—by law. Yes, the U.S. is car-dependent by choice. But it is also car-dependent by law.
This Article conceptualizes this problem, and offers a way out. It begins by identifying a submerged, disconnected system of rules that furnish indirect yet extravagant subsidies to driving. These subsidies lower the price of driving by comprehensively reassigning its costs to non-drivers and society at large. They are found in every field of law, from traffic law to land use regulation to tax, tort, and environmental law. Law’s role is not primary, and at times it is even constructive. But where it is destructive, it is uniquely so: law not only inflames a public health emergency but legitimizes it, extending its longevity.
The Article urges a teardown of this regime. It also calls for a basic reorientation of relevant law towards consensus social priorities, such as health, prosperity, and equity.
New Article: “The Golden Leash and the Fiduciary Duty of Loyalty”
I’m delighted to share a new article by yours truly on corporate governance and shareholder activism, The Golden Leash and the Fiduciary Duty of Loyalty, that will be published in the UCLA Law Review.
The “golden leash” is a controversial form of third-party compensation under which activist hedge funds supplement the salaries of directors they nominate to the board, in exchange for increasing the value of the company. A director compensated pursuant to such an arrangement stands to earn millions of dollars rather than the $250,000 paid to a typical director of a large public company, though the more richly compensated director usually works much harder and takes a lot of public abuse.
I offer a qualified defense of the golden leash, situating it in the context of other, more mainstream structures that depend on a more relaxed, porous conception of the fiduciary duty of loyalty than is commonly applied in the context of the golden leash. I also offer thoughts on how a properly disclosed golden leash can not only work for shareholders but improve procedural corporate governance more broadly.
The abstract follows. I welcome any comments on the draft.
The Undead Norm of Unenforceability in Sovereign Debt
True story: two years ago, U.S. hedge fund NML Capital seized an Argentine navy vessel in Ghana. NML recently won an important series of rulings in US courts on defaulted sovereign bonds issued by the Latin American nation.
As the Argentina sovereign debt litigation hurtles towards its thrilling conclusion (or at least a new phase), I’ve sketched this proposal for a new paper and welcome any thoughts:
The Undead Norm of Unenforceability in Sovereign Debt
Historically, sovereigns have repaid their debts not because they feared court orders if they didn’t but to preserve their good name in global capital markets. Courts played along, tolerating transgressions of their enforcement authority even beyond what sovereign immunity would require. This dance has allowed courts to lend their expressive support to the fiction of enforceability while avoiding the downsides—for courts and markets—that aggressive attempts at enforcement against foreign sovereigns would bring. However, in NML v. Argentina, the latest round of litigation over Argentina’s 2001 default, the SDNY signaled a shift: it issued an unprecedented injunction prohibiting the world payments network from processing Argentina’s bond payments unless the sovereign also tendered payment in full to a group of holdout creditors. This ultimately pushed Argentina into default in July 2014, prompting some legal scholars and the financial press to declare that the episode would seriously impair future efforts to restructure sovereign debt.
In The Undead Norm of Unenforceability in Sovereign Debt, I intend to argue that the NML decision (which was upheld on appeal) is poised to close the gap between the rhetoric of obligation and the reality of enforcement, but only temporarily, and that the systemic effects many fear are unlikely to materialize. NML provides a clear example of some of the dangers I write about in Boilerplate Shock: Sovereign Debt Contracts as Incubators of Systemic Risk: standard terms in private, foreign-law contracts—in this case, a provision known as the pari passu clause—are driving macroeconomic events to a degree that no one anticipated.
However, the magnitude of the harm here will probably be contained. The near-term systemic impact has not been (and was unlikely to be) great in part because, unlike Greece (whose bonds I use as an example in Boilerplate Shock), Argentina is not a member of a monetary union. On a longer horizon, the effects seem even likelier to dissipate. Argentina’s contract-driven default is just the type of salient event that will prod the market to update boilerplate terms, in this case probably by restricting the reach of pari passu in future bond issues and perhaps in existing ones (by adding Collective Action Clauses, for example, which virtually eliminate the holdout problem). This should allow restructurings to continue on the flexible, ad hoc basis on which they currently occur—which is to say, without excessive judicial interference at the enforcement stage. Far from demonstrating that the norm of unenforceable sovereign debt is dead, this episode suggests it can’t be killed.
For this article, I’ll be standing on the shoulders of a rich literature on the Argentina dispute and drawing on research I’ve done at the intersection of commercial law, private international law, and financial regulation. In Boilerplate Shock, for example, I argue that currency and governing law clauses in Eurozone sovereign bonds are magnifying systemic risk in ways no one imagined when they selected those contract terms. In Ending Judgment Arbitrage: Jurisdictional Competition and the Enforcement of Foreign Money Judgments in the United States, I argue that fragmentation in the U.S. judgment enforcement regime post-Erie renders that system ripe for manipulation by savvy judgment creditors via a process I call “judgment arbitrage.”
Undead shares many commonalities with these two articles (particularly Boilerplate Shock). Perhaps most important, together they posit that private contracts—combined with choice of law rules and expansive conceptions of jurisdiction that make it possible to secure and actually enforce judgments based on them—are driving international economic events to a degree that no one anticipated. This is mainly a story of cascade effects, amplified by standardization: the interpretation of a given contract term impacts other actors (whose rights are determined by similar contracts) in the relevant market, and where that market is systemically significant, it can affect the global financial system.
As I suggest above and in the Boilerplate Shock abstract, I think the risk of contract-driven systemic failure (which I call “boilerplate shock”) is far more manageable today in the case of Argentina than in the Eurozone sovereign lending market. Let’s hope the risk does not materialize in Europe either; we already live in pretty exciting times.
Photo: Reuters/NYT
Harvard International Law Journal/Opinio Juris Symposium on “Judgment Arbitrage”
Yesterday, the Harvard International Law Journal and the blog Opinio Juris hosted a symposium on my article, “Ending Judgment Arbitrage: Jurisdictional Competition and the Enforcement of Foreign Money Judgments in the United States,” which was published in the Harvard International Law Journal last fall. The article is about the domestication of foreign judgments in the United States and focuses on an example of extreme forum shopping that I call “judgment arbitrage,” in which plaintiffs can exploit differences in state law to make it easier for them to enforce foreign judgments in states that otherwise would have rejected them.
Professor Christopher Whytock, an expert on international litigation at UC Irvine, wrote a very thoughtful response to the article. I replied.
I want to thank Chris for contributing, and also to make a quick note here about the value of these types of exchanges.
Greg Shill 