Decentralization, Corruption, and the Unofficial Economy

We analyze the implications of decentralization for the incentives of local governments to provide productivity enhancing local public goods and extort bribes from local entrepreneurs. We show that an increase in the share of locally raised tax revenue left with the local government raises its incentives to provide public goods and brings more entrepreneurs into the official economy. Corruption, measured by the size of bribes that local officials charge entrepreneurs for issuing licenses for operating officially, may increase or decrease, depending on the extent to which public goods enhance the entrepreneur’s productivity. The tests using cross-sectional country-level data support the model’s implications.decentralization, local public goods, corruption, unofficial economy

The Arc and Architecture of Private Enforcement Regimes in the United States and Europe: A View Across the Atlantic

The United States and Europe have traditionally taken very different approaches to the regulation of harmful conduct. Previously, European nations relied almost entirely on the public enforcement of laws, whereas the United States relied on a mix of public and private actors. In the United States, private rights of action have played a central role deterring illegal conduct—and, in fact, provided greater deterrence than public enforcers in some areas of law. They have also allowed injured parties to obtain compensation. Despite their very different histories, the private enforcement systems in the United States and Europe are showing signs of convergence today. Since the 1970s, industry in the United States has waged a potent public relations campaign against private rights of action. This pro-business crusade has depicted corporations as victims of a litigation explosion and cast plaintiffs and their attorneys as unscrupulous mercenaries. This narrative has little, if any, empirical support. Nonetheless, based on this mythology, the Supreme Court and other federal courts have erected a number of procedural obstacles to effective private enforcement of law. While private enforcement is in retreat in the United States, the European Union seeks to strengthen private rights of action, with an emphasis on private enforcement of antitrust law. Recent EU initiatives established some of the foundations for private parties to protect their rights in court. European policymakers, however, have as yet declined to establish effective claims’ aggregation and litigation funding mechanisms, citing the business victimhood mythology spread by private industry in the United States. Encouragingly, a few EU Member States have rejected this paradigm and established some of the elements of strong private rights of action. In particular, Denmark, the Netherlands, Portugal, and the United Kingdom have passed laws that are likely to foster effective private litigation. A comparative analysis of enforcement institutions on both sides of the Atlantic reveals a complex picture. American and European consumers, workers, and other large groups will generally face major obstacles to vindicating their rights. In cases generating larger individual claims, American and European plaintiffs’ lawyers may still be able to use aggregate settlement procedures to hold corporate defendants to account. When understanding its contribution to the deterrence of harmful conduct, private enforcement has to be viewed together with public enforcement. Because much of the enhancement of private enforcement in the European Union arises in the context of antitrust, it is an area ripe for cross-continent examination. With antitrust, the overall enforcement landscapes in the United States and European Union will likely be drastically different in the medium term. Due to limited public enforcement, a decrease in private lawsuits will severely compromise overall antitrust enforcement in the United States. In Europe, strong public enforcement will offset generally weak private enforcement and result in far more effective protection of consumer rights

Evolutionary constraints on the complexity of genetic regulatory networks allow predictions of the total number of genetic interactions

Genetic regulatory networks (GRNs) have been widely studied, yet there is a lack of understanding with regards to the final size and properties of these networks, mainly due to no network currently being complete. In this study, we analyzed the distribution of GRN structural properties across a large set of distinct prokaryotic organisms and found a set of constrained characteristics such as network density and number of regulators. Our results allowed us to estimate the number of interactions that complete networks would have, a valuable insight that could aid in the daunting task of network curation, prediction, and validation. Using state-of-the-art statistical approaches, we also provided new evidence to settle a previously stated controversy that raised the possibility of complete biological networks being random and therefore attributing the observed scale-free properties to an artifact emerging from the sampling process during network discovery. Furthermore, we identified a set of properties that enabled us to assess the consistency of the connectivity distribution for various GRNs against different alternative statistical distributions. Our results favor the hypothesis that highly connected nodes (hubs) are not a consequence of network incompleteness. Finally, an interaction coverage computed for the GRNs as a proxy for completeness revealed that high-throughput based reconstructions of GRNs could yield biased networks with a low average clustering coefficient, showing that classical targeted discovery of interactions is still needed.Comment: 28 pages, 5 figures, 12 pages supplementary informatio

From Conley to Twombly to Iqbal: A Double Play on the Federal Rules of Civil Procedure

This Article discusses the effects of the recent Supreme Court decisions in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal on the model of civil litigation established by the Federal Rules of Civil Procedure in 1938. Those Rules created a procedural system giving a litigant, using plain language and presenting the essential elements of a claim for relief an opportunity to pursue discovery and have his or her rights adjudicated on the merits. This Article discusses the basic values underlying that system and its importance in promoting broad citizen access to our federal courts and enabling the private enforcement of substantive public policies. The Article then discusses how Twombly and Iqbal have destabilized both the pleading and the motion-to-dismiss practices as they have been known for over sixty years. The cases are seen as the latest in a sequence of increasingly restrictive changes during the last quarter century. These have created expensive and time-consuming procedural stop signs that produce earlier and earlier termination of cases, thereby increasingly preventing claimants from reaching trial particularly jury trial. This Article contends that there has been too much attention paid to claims by corporate and other defense interests of expense and possible abuse and too little on citizen access, a level litigation playing field, and the other values of civil litigation. Much fine-grained empirical research is needed to separate fact from fiction. This Article finds that setting significantly higher and more resource-consumptive procedural barriers for plaintiffs and moving to the ever-earlier disposition of civil suits now exacerbated by the two Supreme Court decisions runs contrary to many of the values underlying the Federal Rules. Concluding that the Court\u27s preoccupation with defense costs is misplaced and its belittlement of case management as a way of cabining those costs is unpersuasive, the Article offers several proposals that the Advisory Committee on Civil Rules (or Congress) might consider to reverse recent developments and ameliorate some of their negative aspects. Ultimately, the Article asks a basic question: after Twombly and Iqbal, is our American court system still one in which an aggrieved person, however unsophisticated and under-resourced he may be, can secure a meaningful day in court? Finding that the important values of civil litigation are in jeopardy, this Article Urges that the egalitarian, democratic ideals espoused by the original Federal Rules not be subordinated to one-dimensional claims of excessive litigation costs and abuse that have not been validated

Iqbal, Twombly, and the Expected Cost of False Positive Error

Iqbal and Twombly introduced a new standard for pleading federal claims by overruling five-decades old language from Conley v. Gibson. Instead of plaintiffs being entitled to discovery unless the complaint affirmatively forecloses the possibility of recovery, Iqbal and Twombly require a more searching evaluation of the complaint under an ambiguous plausibility standard. The policy behind this increased burden on plaintiffs is to prevent the false positive error that burdensome discovery creates. How the plausibility standard from Iqbal and Twombly should operate in the real world is poorly understood. There is general acknowledgement that no clear guidance exists about how to ensure only plausible inferences are indulged. Professor Josh Davis recently summed up the sentiments: Twombly is a very confusing decision. I really do think . . . it\u27s going to be a while before we get a rule that produces predictable results. Professor Adam Steinman is more hyperbolic: thanks to Twombly and Iqbal, federal pleading standards are in a crisis. This Article fills the void in scholarly and judicial thought by providing an understanding of the Twombly/Iqbal pleading standard that is both theoretically sound and pragmatic. Our approach turns on the policy underlying Iqbal and Twombly-a concern that permitting the case to proceed past the motion to dismiss creates a high-expected cost of false positive error through non-merit-based settlements. The expected cost of false positive error is a function of two variables: the cost to society if the error occurs and the likelihood that the error will occur. The cost to society if false positive error occurs varies among different areas of substantive law. The likelihood that false positive error will occur varies by the type of facts in controversy. We use antitrust law as an example of the effects of those two variables. Because false positive error in antitrust is costly to society, the analysis focuses on the likelihood of false positive error. The likelihood of false positive error depends on the nature of the facts in controversy and the manner in which proof of those facts will be made. If evidence of contested facts is uniquely in the defendant\u27s hands, it can be retrieved (or its absence shown) only through burdensome and asymmetrical discovery by the defendant. If evidence of contested facts is public or quasi-public in nature, it can be gathered without disproportionate burden being placed on the defendant. Whether discovery will be disproportionately burdensome on the defendant will affect the defendant\u27s incentive to settle. Settlements to avoid burdensome discovery result in false positives. Using antitrust law as an example, we demonstrate that different elements of different substantive claims give rise to different likelihoods of false positives. This approach is trans-substantive, and the same inquiry we conduct should be conducted for any claim brought in federal litigation. This analysis resolves the uncertainty left in the wake of Twombly and Iqbal