Credit Reporting\u27s Vicious Cycles

This article argues that, despite being the least discriminatory form of underwriting in history, consumer credit reporting can reinforce and deepen systemic inequalities. Credit reports can create two sorts of vicious cycles, which can contribute to cycles of poverty and deepen race-based disenfranchisement. The first takes place in credit markets themselves. Even on a neoclassical model of credit reporting, and especially on a model that accounts for cognitive imperfections, credit reports can amplify past problems with debt, most of which can be traced to broader forces that shape economic inequality. The second cycle arises when credit reports are used in extra-lending contexts. In non-lending contexts such as employment credit checks, credit reports do not seem to provide any useful information to employers, but they do reinforce the first vicious cycle and the disadvantage it amplifies. In quasi-lending contexts like insurance pricing, credit reports may provide predictive information, but the information they reveal seems only to be information about economic instability. By forcing economically unstable individuals to pay more for insurance (or making it harder to rent an apartment), the use of credit reporting deepens this instability. The fact that even a cheap and generally accurate system of underwriting can reinforce and deepen racial and economic inequities should provide reason to rethink the notion that equal access to consumer credit markets can truly serve egalitarian goals when the credit market is embedded in such a fundamentally unequal system

The Law and Political Economy of a Student Debt Jubilee

The notion of a student debt jubilee has begun its march from the margin of policy debates to the center, yet scholarly debate on the value of canceling student debt is negligible. This article attempts to jump start such debate in part by presenting a novel policy proposal for implementing a jubilee. In addition to reviewing the history of student debt and the arguments for canceling much or all of it, it presents a detailed legal argument that canceling public student debt (which accounts for 95% of student debt outstanding) could be undertaken by the Executive Branch without further legislation. The Secretary of Education has already been given the authority to modify and to compromise, waive, or release its claims against students. There is a strong argument under current case law that this authority is a grant of prosecutorial discretion, which would be unreviewable by courts. Even if a court were to rule otherwise, at least some cancellation plans would likely survive arbitrary and capricious review. In any case, this litigation risk is not a good enough reason for a President not to try to relieve the burdens of student debt if Congress cannot agree on a bill that will do so

At the Nexus of Antitrust & Consumer Protection

This Essay uses Section 5 of the Federal Trade Commission Act to examine the theoretical and practical relationship between antitrust and consumer protection law. It argues that, since roughly 1980, there has been a hegemonic neoliberal framework, one that has in recent years been challenged by an emerging moral economy framework. The neoliberal framework conceptualizes antitrust as preventing firms from conspiring to throttle output, with a focus primarily on consumers\u27 interests in low prices, and consumer protection as making consumers informed, rational, and able to switch between competitors with relatively low cost. The moral economy framework conceptualizes both areas of law as aiming to prevent powerful players from using their power to manipulate conditions in their favor and away from a more general (though contested) notion of the public interest. Implications of each view for the application of Section 5 are explored, with attention to the case law surrounding each area of doctrine

What Is Consumer Protection for?

When law and economics barreled its way into consumer protection scholarship two score years ago, it brought with it the consumer sovereignty framework: an approach to analysis in which actual markets are compared to an ideal market in which consumers optimize exogenous welfare functions by choosing between optimally competitive sellers. Even after two decades of behavioralist critique and even with increasingly critical perspectives taking root since the Global Financial Crisis, this consumer sovereignty ideal continues to serve as both a descriptive and normative baseline for consumer protection scholarship. This Article argues that it is time to reconsider the consumer sovereignty framework in toto. A moral economy framework would be better. Instead of treating consumers as welfare maximization machines that sometimes malfunction, we ought to conceptualize them as bundles of socially influenced habits. Instead of treating markets as deviations from an ideal of perfect competition, we ought to conceptualize them as socially constructed and reproduced institutional forms. Instead of treating the goal of consumer markets as having rational consumer choice drive all outcomes, we ought to treat consumer markets as having multiple purposes, in accordance with their role in contributing to (a contestable account of) human flourishing. In sum, consumer markets are collectively created spaces to serve social ends. Thinking about consumer protection in this way allows us to see many existing laws in a new light, to draw together disparate strands of scholarship that dissent from economic orthodoxy, and to ask different sorts of questions about what and for whom consumer protection is for

The Law and Political Economy of a Student Debt Jubilee

The notion of a student debt jubilee has begun its march from the margin of policy debates to the center, yet scholarly debate on the value of canceling student debt is negligible. This article attempts to jump start such debate in part by presenting a novel policy proposal for implementing a jubilee. In addition to reviewing the history of student debt and the arguments for canceling much or all of it, it presents a detailed legal argument that canceling public student debt (which accounts for 95% of student debt outstanding) could be undertaken by the Executive Branch without further legislation. The Secretary of Education has already been given the authority to “modify” and to “compromise, waive, or release” its claims against students. There is a strong argument under current case law that this authority is a grant of prosecutorial discretion, which would be unreviewable by courts. Even if a court were to rule otherwise, at least some cancellation plans would likely survive “arbitrary and capricious” review. In any case, this litigation risk is not a good enough reason for a President not to try to relieve the burdens of student debt if Congress cannot agree on a bill that will do so

Beyond the Black Box, or, When Shrouded Clauses Are Pro-Consumer

This article compares two clauses in credit card contracts providing for alternative dispute resolution (ADR). Arbitration clauses use ADR to cut off consumer remedies, while reversal clauses use ADR to expand them. Holding constant the possibility of earning extra money by exploiting consumer biases, it is argued that the coexistence of these two clauses must be explained in terms of which aspects of a firm\u27s institutional structure leads it to instantiate this possibility. Viewing a firm as a forum to mediate the interests of the constituencies that either own or contract with it, one can ask how the aggregate interests of a firm\u27s constituencies (including consumers) affect its incentives to take advantage of consumer biases. Ownership can explain the low rate of arbitration clauses in credit union credit card contracts. Contracting patterns, specifically cross elasticity of merchants and consumers, can explain the consumer ftiendliness of reversal clauses. Implications for analyzing credit card contracts and consumer regulation more broadly are discussed

What Makes a Belief Warranted? A Pragmatist’s Answer

Philosophical theories of warrant and justification are thought to answer the question of what makes some beliefs better to belief than others. Traditionally, philosophers have tried to find general qualities that beliefs share to get at the nature of warrant. Some of the most prominent theories based on these attempts are criticized. It is then suggested that what all of these theories miss is the fact that whenever the warrant of a belief is being evaluated, characteristics of the evaluator – not just the belief or the believer – affect the epistemic status of that belief. A pragmatist account of warrant is offered that takes into account the evaluator’s role in determining the epistemic status of a belief

At the Nexus of Antitrust & Consumer Protection

This Essay uses Section 5 of the Federal Trade Commission Act to examine the theoretical and practical relationship between antitrust and consumer protection law. It argues that, since roughly 1980, there has been a hegemonic “neoliberal” framework, one that has in recent years been challenged by an emerging “moral economy” framework. The neoliberal framework conceptualizes antitrust as preventing firms from conspiring to throttle output, with a focus primarily on consumers’ interests in low prices, and consumer protection as making consumers informed, rational, and able to switch between competitors with relatively low cost. The moral economy framework conceptualizes both areas of law as aiming to prevent powerful players from using their power to manipulate conditions in their favor and away from a more general (though contested) notion of the public interest. Implications of each view for the application of Section 5 are explored, with attention to the case law surrounding each area of doctrine

The Folklore of Unfairness

The Federal Trade Commission Act\u27s ban on unfair ... acts and practices would, on its face, seem to give the FTC an awesome power to define proper treatment of consumers in changing conditions. But even in a world of widespread corporate surveillance, ongoing racial discrimination, impenetrably complex financial products, pyramid schemes, and more, the unfairness authority is used rarely, mostly in egregious cases of wrongdoing. Why? The standard explanation is that the more expansive notion of unfairness was tried in the 1970s, and it failed spectacularly. The FTC of this era was staffed by bureaucrats convinced of their own moral superiority and blind to the self-correcting dynamics of the market. When the FTC finally reached too far and tried to ban television advertising of sugary cereals to children, it undermined its own legitimacy, causing Congress to put pressure on the agency to narrow its definition of unfairness. This Article argues that this standard explanation gets the law and the history wrong, and, thus, that the FTC\u27s unfairness authority is more potent than commonly assumed. The regulatory initiatives of the 1970s were actually quite popular. The backlash against them was led by the businesses whose profit margins they threatened. Leaders of these businesses had become increasingly radicalized and well-organized and brought their new political clout to bear on an unsuspecting FTC. It was not the re-articulation of the unfairness standard in 1980 that narrowed unfairness to its current form, but rather the subsequent takeover of the FTC by neoliberal economists and lawyers who had been supported by these radicalized business leaders. The main limitation on the use of the unfairness authority since then has been the ideology of regulators charged with its enforcement. In fact, the conventional morality tale about the FTC\u27s efforts in the 1970s are part of what keeps this ideology dominant. A reconsideration of the meaning of unfairness requires situating the drama of the 1970s and 80s in a longer struggle over governance of consumer markets. Since the creation of the FTC, and even before, an evolving set of coalitions have battled over what makes markets fair. These coalitions can be divided roughly into those who favor norm setting by government agencies informed by experts held accountable to democratic publics and those who favor norm setting by business leaders made accountable via the profit motive. The meaning of unfair ... acts and practices has been defined and redefined through these struggles, and it can and should be redefined again to reconstruct the state capacity to define standards of fair dealing

Peace Coalition Politics: The Liberal Experiment, 1954-1965

This study offers an overview of the peace movement in the United States during the decade preceding the Vietnam War. This movement, unlike its forerunners, was led by liberals who attempted to reform the system from within. A coalition of established and new groups was forged, with the major constituencies drawn from world federalists and pacifists. This seemingly unlikely combination is analyzed through historical investigation with some aid from the political science mathematically-based theory of coalition formation. The creation of this coalition was facilitated by their championing of a nuclear test-ban in a period when the health hazards of atmospheric nuclear explosions were becoming known to the public. It was this issue that carried the movement until its final demise upon the signing of the limited test ban treaty in August of 1963. Given the generally negative assessment of the achievement of this peace coalition, the study attempts to analyze what the true goals of the various factions of this movement were and the shortcomings built into these objectives. Furthermore, alternative strategies and tactics are suggested for current and future activists looking to history for direction and precedent. Several pitfalls of the liberal peace experiment should be noticed throughout the study. The gradual co-opting of the peace movement into the government camp was possible because of the coalition liberal\u27s desire to maintain legitimacy, especially through its anti-communist vigilance. Secondly, liberals held a preponderance of power in the coalition, not the radicals, who were in the position of outsider so necessary to lead a reform movement to success