On Hearsay

I need to place the remarks that follow in context. And that means I need to acknowledge a number of heresies: I don’t like legal jargon; I don’t like the complexity of legal jargon; I don’t like the legal profession’s indifference to brevity; I don’t like the tendency of lawyers and judges always to be looking to the past for answers to novel questions; and I don’t consider law to be a science or remotely like a science. I want law to be simple and commonsensical and forward-looking. I take my judicial credo from a poem by the great Irish poet William Butler Yeats: “And I grew weary of the sun / Until my thoughts cleared up again, / Remembering that the best I have done / Was done to make it plain.” Or, in the words of another though lesser known poet, Ezra Pound, “MAKE IT NEW!

On Hearsay

I need to place the remarks that follow in context. And that means I need to acknowledge a number of heresies: I don’t like legal jargon; I don’t like the complexity of legal jargon; I don’t like the legal profession’s indifference to brevity; I don’t like the tendency of lawyers and judges always to be looking to the past for answers to novel questions; and I don’t consider law to be a science or remotely like a science. I want law to be simple and commonsensical and forward-looking. I take my judicial credo from a poem by the great Irish poet William Butler Yeats: “And I grew weary of the sun / Until my thoughts cleared up again, / Remembering that the best I have done / Was done to make it plain.” Or, in the words of another though lesser known poet, Ezra Pound, “MAKE IT NEW!

Social Costs of Monopoly and Regulation

When an industry is monopolized, price rises above and output falls below the competitive level. Those who continue to buy the product at the higher price suffer a loss, but this loss is exactly offset by the additional revenue that the monopolist obtains by charging the higher price. Other consumers, who are deflected by the higher price to substitute goods, suffer a loss, that is not offset by gains to the monopolist. This is the "deadweight loss" from monopoly, and in conventional analysis the only social cost of monopoly. The loss suffered by those who continue to buy the product at the higher cost is regarded merely as a transfer from consumers to owners of the monopoly seller and has not previously been factored into the social costs of monopoly. However, the existence of an opportunity to obtain monopoly profits will attract resources into efforts to obtain monopolies, and the opportunity costs of those resources are social costs of monopoly, too. Although the tendency of monopoly rents to be transformed into costs is no longer a novel insight, its implications both for the measurement of the aggregate social costs of monopoly and for a variety of other important issues relating to monopoly and public regulation (including tax policy) continue to be ignored. The present paper is an effort to rectify this neglect. Part I introduces the material. Part II presents a simple model of the social costs of monopoly, conceived as the sum of the deadweight loss and the additional loss resulting from the competition to become a monopolist. Part III uses the model to estimate the social costs of monopoly in the United States, and the social benefits of antitrust enforcement. Part IV explores the implications of the analysis for a variety of issues relating to monopoly and public regulation, such as public policy toward price discrimination and the choice between income and excise taxation.

The Management of Staff by Federal Court of Appeals Judges

Federal court of appeals judges have staffs consisting usually of a secretary and four law clerks; some judges have externs as well (law students working part time without pay). These staffs are essential, given judicial workloads and judges’ limitations. Yet not much is known about how the judges manage their staffs. Each judge knows, of course, but judges rarely exchange information about staff management. Nor is there, to our knowledge, a literature that attempts to compare and evaluate the varieties of staff management techniques employed by federal court of appeals judges. This Essay aims to fill that gap. It is based on interviews, some in person, most by telephone, of seventy-five judges drawn from a number of different federal courts of appeals

Adjudication as a Private Good

This paper examines the question whether adjudication can be viewed as a private good, i.e., one whose optimal level will be generated in a free market. Part I focuses on private courts, noting their limitations as institutions for dispute resolution and rule creation but also stressing the important role that the private court, in its various manifestations, has played both historically and today. Part II discusses a recent literature which has argued that the rules generated in the public court system, in areas of the law where the parties to litigation are private individuals or firms and the rules of law are judge-made, are the efficient products of purely private inputs. Our analysis suggests that this literature has overstated the tendency of a common law system to produce efficient rules, although areas can be identified where such a tendency can indeed be predicted on economic grounds. Viewed as a contribution to the emergent literature on the positive economic theory of law, our finding that the public courts do not automatically generate efficient rules is disappointing, since it leaves unexplained the mechanisms by which such rules emerge as they seem to have done in a number of the areas of Anglo-American judge-made law. However, our other major finding, that the practices and law governing private adjudication appear to be strongly influenced by economic considerations and explicable in economic terms, is evidence that economic theory has a major role to play in explaining fundamental features of the legal system.

Legal Precedent: A Theoretical and Empirical Analysis

The use of precedents to create rules of legal obligation has, to our knowledge, received little theoretical or empirical analysis. This paper presents and tests empirically an economic approach to legal precedent that is derived mainly from the analysis of capital formation and investment. We treat the body of legal precedents created by judicial decisions in prior periods as a capital stock that yields a flow of information services which depreciates over time as new conditions arise that were not foreseen by the framers of the existing precedents. New (and replacement) capital is created by investment in the production of precedents.