A legal cycle is legislation that takes effect contingently, where contingent factors are ex ante known to fluctuate with some level of predictable regularity. Apart from broad constitutional mandate, lawmakers have historically and suboptimally responded to legal cycles with general and patchwork patterns of legislation involving repeal, amendment, and new enactment. This is true across nearly all domains of codified law. This chapter develops a normative theory of how lawmakers should respond to legal cycles by setting forth the optimal architecture of stabilization rules. Under a general set of conditions, stabilization rules work toward smoothing fluctuations in rulemaking and exert downward pressure on short-term legislative pathologies that result from cognitive bias and interest group politics. The potential of welfare-enhancing stabilization rules is discussed across banking law, budget law, environmental law, health law, national security law, and criminal sentencing. Keywords: timing rules, contingent law, legal cycles, stabilization rules, climate change, budget law, availability bias
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Eric A. Posner
I present for the first time in the literature a quantitative analysis of the efficacy of the “political safeguards of federalism.” I also test the popular theory that congressional control of state authority to tax maximizes national welfare. Both analyses rely on a hand-collected data set of every federal statute from 1789 to 2011 affecting state power to tax. Overall, the data suggest that federal decisions to curtail state autonomy are influenced by congressional self-interest. Conditional on enactment, statutes affecting state taxing power are more likely to reduce state authority when a concentrated special interest group stands to benefit and also when the reduction would diminish competition between states and Congress. I argue that these results suggest that state power to influence Congress is not absolute, and that they should cast doubt on recent calls to grant control of state taxing authority solely to Congress.
- Elgar Research Reviews in Economics
Richard A. Posner and Francesco Parisi
Eugene Kontorovich and Francesco Parisi
Edited by Eugene Kontorovich and Francesco Parisi
Why do countries break up? What are the costs and benefits of secessions? When are secessions efficient or inefficient from an economic perspective? How is political disintegration related to globalization and democratization? Do decentralization and federalism affect the incentives to secede? How is the size of nations impacted by conflict and wars? These complex questions, traditionally addressed by historians and political scientists, are now also at the center of a growing economics literature on the formation and breakup of sovereign states and political unions. This paper presents concepts and results from this line of economic analysis. First, we discuss the key trade-off between economies of scale in the provision of public good and political costs from heterogeneity of preferences. Second, we present four economic perspectives on the formation of borders: efficient borders, borders as democratic outcomes, borders in a world of rent-seeking Leviathans, and borders as outcomes of conflict and wars. Finally, we provide an analytical illustration of the basic ideas within a simple framework.