Legal Education from the Demand Side

We law professors spend a great deal of time thinking about how to help our students graduate and pass the Bar—how to supply the market with lawyers, in other words. We spend far less time thinking about the demand side of the equation—whether our students will find jobs. That sort of specialization makes sense. Law profs focus on teaching whereas students, driven by self-interest and helped by their law schools' placement offices, focus on building their careers. Still, though, law profs might benefit from taking on occassional walk on the demand side of legal education.

I recently got that sort of opportunity thanks to Chapman Law School's "Employment Blitz," a special event where faculty and alums try to help graduating students find jobs. We brought our rolodexes, laptops, and cellphones to a large room filled with desks and phones, met one-on-one with resumé-toting students, and started making calls. The experience gave me a newfound—or perhaps I should say, "long forgotten"—appreciation of the perils and promises of trying to land an entry-level law job.

To their credit, the graduating students showed calm resolve, and all of the acquaintances and former students that I phoned seemed eager to help. I usually got little more then tentative leads and earnest well-wishing, granted, but even that helped to lift the students' spirits. And hearing somebody reply, "Send him down to my office! I've got some work for him!" definitely made the effort worthwhile.

[Crossposted at Agoraphilia, MoneyLaw, and College Life O.C..]

Insider Trading and Private Prediction Markets

People who run in-house, corporate prediction markets have told me that U.S. laws against illegal insider trading give them nightmares. The problem arises because a private prediction market typically generates material nonpublic information about the corporation that hosts it. If somebody misuses that information to time the purchase or sale of the corporation's stock, liability for illegal insider trading could follow.

I plan to say a great deal more about this problem, and some proposed cures, in a paper I'm writing for the Journal of Prediction Markets. In very brief, I propose several strategies that should help to mitigate the risks that private prediction markets create under illegal insider trading laws:

• Segregate markets for traditional insiders from other markets.
  
• Broaden safeguards against illegal insider trading to reach beyond traditional insiders.
  
• Treat the market's claims and prices as trade secrets.
  
• Set up decoy claims and prices.
  

Alternatively, of course, a corporation could simply make public the claims and prices of its in-house prediction market. Illegal insider trading laws only speak to material nonpublic information, after all. It seems very unlikely that any corporation would willing disclose so much and such probative information about its management, however.

[Crossposted at Agoraphilia and Midas Oracle.]

Forget about Memorization

A recent article in Wired, Want to Remember Everything You'll Ever Learn? Surrender to This Algorithm, offers both a fascinating sketch of Piotr Wozniak's single-minded pursuit of memorization and all that you need to know if you want to match his incredible achievements. It boils down to this: Use Wozniak's program, SuperMemo, if you yearn to remember lots of data.

Alas for my students, however, SuperMemo probably won't help much with the study of law. As first-year students quickly discover—often to their evident chagrin—you cannot learn the law simply by memorizing it. SuperMemo might work for, say, drumming conjugations of French verbs into your head, but it won't help you figure out whether a promise to forego demanding payment of a debt constitutes illusory consideration. In that, the law resembles physics: Learning the rules couts for far less than figuring out how to apply them to particular facts.

I don't know of any sure-fire way to master that sort of learning. We law profs muddle along with a mixture of classroom demonstrations, abstract theorizing, rough rules-of-thumb, and hands-on practice. I'd love to offer my students something like a SuperMemo program for mastering the law, but I doubt that so complicated a task could easily fit into a neat algorithm.

[Crossposted at Agoraphilia, MoneyLaw, and College Life O.C..]

Communist Paternalism

It's scary how many people could draw exactly the wrong conclusion from this:

When the Soviet empire began to unravel in 1989, Cuba was hit with serious food and fuel shortages. From 1991 to 1995, people were getting only about 1800 calories a day and had to walk or cycle wherever they needed to go.

The result was an average drop in body mass index of 1.5 units, and a halving of the obesity rate to just 7 per cent. In the years that followed, deaths from potentially fatal diseases fell dramatically - diabetes by 51 per cent, coronary artery disease by 35 per cent and stroke by 20 per cent...

In countries like Canada and the US, where obesity rates are around 30 per cent, the gains from population-wide weight loss would be even greater, the authors argue.

I offer two possible conclusions:

1. People would be better off if the U.S. adopted economic policies more like those of communist Cuba.

2. People have values other than maximizing their health.

I leave it to the reader to guess which conclusion I favor.

Amsterdam on the Reservation

I'm currently attending a Liberty Fund conference on, "Liberty, Property, and Native America." The assigned readings, drawn largely from Self-Determination: The Other Path for Native Americans (2008), have exposed me to a wonderful range of new ideas. The chapter written by Ronald N. Johnson, for instance, "Indian Casinos: Another Tragedy of the Commons," opened my eyes to a way by which Native Americans might both radically increase their fortunes and our liberties. The idea, in brief: The same loophole that allows them to run casinos might also allow Indians to offer legal access to recreational drugs, prostitution, and extreme fighting.

Native Americans won the right to run casinos thanks to cases like California v. Cabazon Band of Indians, 480 U.S. 202 (1987), and Seminole Tribe of Florida v. Butterworth, 658 F.2d 310 (5th Cir. 1981), and the Indian Gaming Regulatory Act ("IGRA") that such cases inspired. To generalize, U.S. law allows sovereign tribes to offer gaming services on their reservations, subject to three conditions:

• First and foremost, a reservation's host state must permit the particular sort of activities in question, even if under a very restrictive regulatory regime, rather than prohibiting and criminalizing them. In Seminole Tribe of Florida, for instance, the tribe successfully relied on the claim that Florida law allowed certain forms of bingo.
  
  
• Second, to judge from cases forbidding the sale of fireworks on reservations, and the illegality of Indians offering Internet gaming to off-reservation customers, a tribe must not exercise its sovereign powers so as to gut the effect of its host state's regulations. What happens on the reservation must, in other words, stay there.
  
  
• Third, as a matter of rhetoric if not hard law, it helps a tribe to emphasize that it has a long history of enjoying the same amusements that it offers its guests. Indian casinos thus often emphasize the role that games of chance traditionally played in the host tribe's culture.

Depending on the state and tribe, those three conditions might apply to a tribe offering recreational drugs, prostitution, and extreme fighting on its reservation. Thanks to Employment Division v. Smith, 494 U.S. 872 (1990), and 42 U.S.C. 1996a, for instance, states must permit the religious use of peyote, a traditional practice among some Native Americans. So long as a tribe administers that sacrament under controlled conditions, rather than by selling it for off-reservation use off, offering peyote would arguably qualify for the same sort of legal protections that have allow Indian casinos to thrive. Similar arguments might well apply to marijuana in many states (though here the case for traditional Indian use appears weaker than with regard to peyote), prostitution in Nevada and Rhode Island (though, again, the alleged "wife sharing" customs of some tribes do not quite equate to the same practice), and violent or even deadly sports among consenting adults.

According to Ambrose L. Lane, Sr.'s book, Return of the Buffalo: The Story Behind America's Indian Gaming Explosion 44 (1995), in 1979, California's Cabazon Band of Mission Indians considered cultivating marijuana and jimson week (a traditional Native American hallucinagen), only to set the idea aside. Beyond that, I've found no evidence that any tribe has considered pursuing the sort of legal strategy I've described. Given the large profits that offering drugs, sex, or extreme martial arts might garner tribes, however, and the competition that increasingly cuts into their gambling businesses, we might soon see many Native American Amsterdams.

Unintentional Humor

Or is it? Here's an advertisement for the Audi A5:



Okay, I actually chuckled at the whole "you will [verb] one of these three [nouns]..." sequence. But when it got to the three cars, I thought that Audi would be one of them! Seriously, if you were going to add one more car to the sequence, "Mercedes, BMW, Lexus," wouldn't it be Audi? That's hardly breaking the cycle.

Obama: An Oppressed Minority Who Might End the War

As an oppressed minority, Barak Obama has seen life from a perspective all too rare among politicians. He has suffered being cast out of restaurants and other public accomodations. He has strived to pass himself off as a member of the ruling majority, only to have his efforts cast into doubt and his minority status thrown back into his face. Some people think that none of this matters—that we should not discuss Obama's minority status, much less consider it as a factor in his candidacy. To the contrary, I think we should celebrate it as a something that makes him more likely than McCain or Clinton to pursue a policy of peace.

I refer, of course, to Obama's nicotene habit and how it might encourage him to take a fresh perspective on the ongoing Drug War.

As a cigarette smoker, Obama has, like others in that oppressed minority, suffered shame and rejection. Obama has evidently tried to stop or at least hide his habit, only to have reporters badger him about his efforts and doubt his sincerity. Some people think we shouldn't care whether or not Obama smokes. As someone who struggles with addiction daily, though, Obama surely knows better than most that criminalizing drugs offers a very poor way to help the afflicted. More than any other presidential candidate, he can understand first-hand the appeal of recreational drugs, and can empathize with those who let their bad habits get the best of them.

Thanks to his addiction to cigarettes, Obama offers us the hope of a kinder, freer, more peaceful America.

Musing about Correlations

In the course I'm currently teaching, the exams usually consist of two sections: multiple choice and short answer. I just finished recording the midterm grades, and for curiosity's sake I calculated the correlation between the two sections. For one class, the correlation between multiple choice and short answer was 0.59; for the other class, it was 0.70.

The question is, what correlation should I hope to get if the test has been optimally designed? Two things occur to me:

1. I don't want a correlation of zero, because I expect smarter and better prepared students to well on both parts (and dimmer and less prepared students to do poorly on both parts). A correlation of zero would raise the worry that my test doesn't really measure ability and preparation.

2. I don't want a correlation of one, because that means the sections are effectively redundant. Multiple choice is much easier to grade, so why bother grading the short answers if the multiple choice section tells me everything I need to know? If the two sections measure different things, correlation should be less than perfect.

So the correlation should be in between zero and one. But that's a pretty wide range. How much correlation should I aim for? Is there even a right answer to the question?

Death of the Diet: Doubting the Data

I wish I had known last Tuesday was “Death of the Diet Day.” I probably would have celebrated it. It sounds like a really fun day.

But why March 18th? That’s supposedly “the day when more commitments will fall by the wayside than on any other day in the calendar” (in the U.K.). The article implies that the commitments in question are New Year’s resolutions. So in other words, DoD Day is defined as the modal day of commitment breaking. Why not report the median or mean day?

It’s easy enough to dismiss the mean. If there are enough people who successfully keep their commitments indefinitely, then it’s mathematically impossible to calculate the mean, because the largest observations are excluded.

But what about the median? That would seem to be more useful than the mode; it would tell the day by which exactly 50% of commitments have been broken. So why not tell us that? I have a hypothesis, though I’d need to see the underlying data to be sure. If the distribution of diet-breaking dates is positively skewed, meaning we have a relatively large number of people keeping their commitments a long time (or indefinitely), then the median is probably a good bit later than the mode. That is, the situation probably looks something like this:

So reporting the median would mean waiting longer to announce the failure of our collective willpower, and that would not be consistent with the ongoing campaign to convince Westerners that we’re all too fat and need somebody to come to our rescue.

I’m also skeptical about the very notion of a diet being broken on a specific day. I’ve never had a successful diet that didn’t allow for the occasional indulgence. To construe any one indulgence as “breaking” the diet is to miss the point badly. Having treats every once in a while is part of a good diet. The demise of a diet is not revealed by what happens on any single day, but by a pattern of behavior over time.

Listen to Me

I'm scheduled to be interviewed on Mike McConnell's radio show this morning (Wednesday) at 10:00 a.m. Eastern time. I'll be talking about the World Health Organization's ranking of national healthcare systems. The show is on Cincinnati's WLW (AM 700); you can listen to it live here; and it's also on XM satellite radio.

Also, I recently discovered that my 2006 testimony before a subcommittee of the Minnesota State House of Representatives, on the subject of alcohol regulation, is available here. So if you just can't get enough of my voice, you can listen to that as well.

Transtemporal Economics

Tyler Cowen considers the economics of time travel. Actually, he starts with the economics of interstellar travel, but if you take relativity seriously, it’s the same thing. Tyler is most interested in how time travel in the presence of time dilation would affect interest rates (e.g., what happens if someone saves a penny and then travels into the future?; what happens if everyone tries to do that?).

I’m more interested in the effect of time travel on migration and trade. If wages are expected to be higher in the future, then once the cost of time travel falls low enough, we can expect people to start migrating in large numbers into the future – just as they migrated from Europe to the North America from the 1500s onward, and just as they migrate from Mexico to the U.S. today. A simple model of transtemporal migration would therefore predict equalization of wages over time, as wages rise in the present (from reduced labor supply) and fall in the future (from increased labor supply). But wage equalization does not even clearly result from international migration today. New arrivals, aside from increasing the supply of labor, both (a) increase the demand for goods and services, and (b) to the extent they are willing to work for less, lower the price of goods and thus increase purchasing power. The future might be able to absorb the time-traveling arrivals with little impact.

Moreover, there could actually be increasing returns from larger populations, because more people interacting with each other generate more ideas and innovations that can benefit larger numbers of people. Maybe the future would leave the present behind, not just temporally but economically, as its population grows while ours shrinks.

And that’s assuming time travel is only possible in a forward direction. (I think time dilation only makes forward time travel possible, but I confess that I’ve never fully wrapped my head around relativity.) If backward time travel is also somehow possible, maybe firms in the future will choose to outsource some of their operations to the past, locating their manufacturing and other services in lower-wage time periods. This opens the possibility of transtemporal gains from trade... assuming, of course, that governments don’t implement effective trade barriers. Would America-3000 place tariffs on goods from America-2000? Would temporal nativists call for the construction of a time-wall to keep out the trans-temporal immigrants -- even if those immigrants were, in fact, their own ancestors?

* I use ‘transtemporal’ to refer to economic phenomena related to time travel, since ‘intertemporal’ already has an economic meaning without time travel.

Rum Thoughts

I recently finished reading -- and enjoying -- And a Bottle of Rum: A History of the New World in Ten Cocktails. It's just what it sounds like. Each chapter is named after a rum drink, from kill-devil through the mojito, each drink representing an era of our history. Lots of fun for fans of history, economics, and strong drink. I won't offer a full review, but I wanted to post a couple of my favorite passages before passing the book on to a friend. On how rum is made:

Distillation concentrates and intensifies the subtle tastes found in the original low-alcohol product. Brandy has thus been called the distilled essence of wine, and whiskey the distilled essence of beer.

And rum? It is, as we shall see, the distilled essence of fermented industrial waste.

And on rum's distinctly American qualities:

Bourbon fanciers, who often claim for their tipple the title of "America's spirit," drink one of the most regulated spirits known. To be labeled bourbon, it has to be made with a certain percentage of corn and aged in a certain kind of barrel. But excessive regulation is not the spirit of America. Unrestricted experimentation is. Rum embodies America's laissez-faire attitude: It is whatever it wants to be. There have never been strict guidelines for making it. There's no international oversight board, and its taste and production varies widely, leaving the market to sort out favorites. If sugarcane or its by-products are involved in the distillation process, you can call it rum. Rum is the melting pot of spirits -- the only liquor available in clear, amber, and black variations.

More Self-Promotion on Healthcare

At the American Spectator online, I have an op-ed based on my Cato Policy Briefing on the WHO healthcare rankings.

The title ("WHOm Are They Kidding") was not my creation. While whom is grammatically correct in that sentence, in general I think it's okay to use who in idiomatic sayings like "who are you kidding," "who's fooling who," and "who do you think you're fooling" -- traditional grammar rules notwithstanding.

Technology as Modularity

Via Arnold Kling, I found this interview with Drew Endy, a professor of biological engineering at MIT. It’s long, meandering, and sometimes repetitive, but still fascinating reading. The main lesson I extracted from it (and it would be hard to explain how, much less find specific quotations for support) is that technology is useful to the extent that it promotes modularity. Technology makes scientific discoveries portable, thereby allowing them to be used in a countless ways unforeseen by the original discoverer.

The creators of standardized nuts and bolts (to pick one simple example from the interview) couldn’t possibly have predicted all the ways those nuts and bolts would be used, but that’s okay. That’s even the point. Now the inventor of a new furniture design or engine block or medical device doesn’t have to make all the component parts, or even understand exactly how they work. Nuts and bolts harness a few basic physical principles in useful form.

What biological engineering aims to do is to create biological building blocks, or better yet devices for churning out such building blocks, so that subsequent designers don’t have start from scratch. Much as computer programming language works invisibly beneath the surface of a word-processing program, allowing people to use the programming language for innumerable purposes of their own without even understanding it, biological engineering could eventually give people the means of synthesizing useful proteins – or whole organisms – without fully understanding the underlying mechanics of DNA, base pairs, and so on.

In a sense, then, technological modularity is much like the price system – another social device that, as Friedrich Hayek famously observed, allows people to use information without possessing or understanding it, thereby making decentralized economic decision-making possible.

As You Sow, So Shall You Reap

The only people I think should be prosecuted for victimless crimes are people who have prosecuted others for those crimes. Eliot Spitzer qualifies.

(Via Radley.)

A Puzzle

What do handguns and soda containers have in common?

Leave answers in the comments section. (Yes, yes... I realize there's an infinite possible number of correct answers -- they're both tangible, they're both products, etc. -- but in keeping with the convention of puzzles like this, you have to find the relatively narrow and interesting category into which both fall. And besides, as it happens, at least one of them has been in my kitchen.)

Against the Drug War

Via Radley, here is an outstanding editorial by the creators of The Wire advocating an end to the drug war. At the end, they call for outright jury nullification:

If asked to serve on a jury deliberating a violation of state or federal drug laws, we will vote to acquit, regardless of the evidence presented. Save for a prosecution in which acts of violence or intended violence are alleged, we will — to borrow Justice Harry Blackmun's manifesto against the death penalty — no longer tinker with the machinery of the drug war. No longer can we collaborate with a government that uses nonviolent drug offenses to fill prisons with its poorest, most damaged and most desperate citizens.

Nice. Too bad this public manifesto means that none of the authors will ever be on the jury for a drug case. Our system is rigged to make sure drug-crime defendants never get the most sympathetic jurors.

State vs. Community

I really liked this post by Jonah Goldberg (linked by Arnold Kling):

... I don't know that you should be against building community and helping the community. I'm not against either of those things. What I generally (though not absolutely) oppose are efforts to build the state while invoking the language of community as if the two are the same thing. The state isn't the community and the community isn't the state.

Exactly right. However, I want to quibble with what comes next:

And what I passionately and absolutely oppose in almost every instance (freeing slaves, smashing Jim Crow, are good exceptions to this rule) are efforts to destroy traditional community with inorganic state-imposed customs all the while claiming to be on the side of community.

My problem is with the parenthetical, which implies that slavery and Jim Crow were instances of organic community traditions that the state had to dismantle. On the contrary, both were the products of heavy state involvement. Slavery was enforced by means of taxes and the conscription of able-bodied men (including non-slave-holders) to chase down runaway slaves. Jim Crow prohibited everyone (including the non-bigots) from freely associating and doing business with blacks on equal terms with whites. This is not to say that there weren't community norms that favored discrimination; clearly there were. But those norms were buttressed by the power of the state, and they might have crumbled sooner without state support.

Mixed Feelings

I mildly prefer Obama to Hillary, for pretty much the reasons given by Radley Balko and David Boaz. Nevertheless, I wasn't terribly disappointed by last night's big win for Hillary. Why not? Because politics is most easy to stomach when taken as a form of entertainment. Hillary staying firmly in the race enhances the odds of having a brokered Democratic Convention, and that will assuredly prove much more exciting than the usual love-fest for the anointed one.