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This Essay examines Richard Posner’s critique of F.A. Hayek’s legal theory and contrasts the two ... more This Essay examines Richard Posner’s critique of F.A. Hayek’s legal theory and contrasts the two thinkers’ very different views of the nature of law, knowledge, and the rule of law. Posner conceives of law as a series of disparate rules and as purposive. He believes that a judge should examine an individual rule and come to a conclusion about whether the rule is the most efficient available. Hayek, on the other hand, conceives of law as a purpose-independent set of legal rules bound within a larger social order. Further, Posner, as a legal positivist, views law as an order consciously made through the efforts of judges and legislators. Hayek, however, views law as a spontaneous order that arises out of human action but not from human design. For Hayek, law as a spontaneous order—of which the best example is the common law—contains and transmits knowledge that no one person or committee could ever know, and thus regulates society better than a person or committee could. This limits t...

Developing countries enter into bilateral investment treaties ("BITs") in order to increase forei... more Developing countries enter into bilateral investment treaties ("BITs") in order to increase foreign direct investment ("FDI"). Ignoring this straightforward fact has led to a great deal of confusion in the assessment of BITs and their protection of regulatory takings. This article addresses the question of how a BIT should approach regulatory takings with the purpose of increasing FDI in mind. It explores the background of the United States Supreme Court's Penn Central test and the test's incorporation into the post-NAFTA round of U.S. BITs. Then, the article examines whether an uncertain and flexible test such as Penn Central is suitable for treaties that seek to provide foreign investors with incentives to invest in developing counties. The article argues that Penn Central is not appropriate for BITs because it does not provide a clear rule of law that will induce a foreign investor to send its capital overseas to a developing country. This is partly due to the greater need for clarity in public law than in private law. For this distinction the article employs the work of F.A. Hayek and "rules of just conduct" versus "rules of organization of government." The article also addresses criticisms of the incentives BITs provide to foreign investors and to host governments and how those incentives counsel for clear regulatory takings rules. Whatever the merits there may be for a flexible regulatory takings rule when interpreting the Fifth Amendment's Takings Clause, those reasons do not apply to BITs. The article acknowledges that BITs may not actually succeed in increasing FDI, as the empirical evidence on the question is mixed. However, if they do, then BITs with clear regulatory takings standards will be more successful than those with vague standards, such as Penn Central. Drafters of BITs can still take into account other objectives such as environmental protection, but should do so with clear rules of law so foreign investors can plan their investments accordingly.

ABSTRACT Multiemployer collective bargaining relationships between unions and employer associatio... more ABSTRACT Multiemployer collective bargaining relationships between unions and employer associations easily devolve into legalized cartels. Once unions establish themselves as the bargaining representative for employers' employees, the employers have much to gain from banding together as an association, raising their prices and eliminating non-union competition, with unions happily serving as enforcement agents in the scheme. In return, unions receive a share of the increased oligopolistic profits in the form of higher wages and benefits. A threat to such a cartel is an employer who wants to bargain with the union but does not want to accept the terms the association has bargained for. This Article examines the status of such an employer. It outlines how unions and (especially) associations work to thwart such an employer from bargaining directly with a union despite the federal labor policy of protecting an employer's freedom in selecting its bargaining representative. This anticompetitive behavior not only hurts individual non-association employers but also non-association employers' union employees, as the union will refuse to realistically bargain with their employer unless it agrees to the terms in the association agreement. This leads to the employer either being forced to accept the association's terms, which it cannot afford, or, if it survives a strike and picket, becoming non-union. A middle ground of real bargaining that serves the non-association employer's union employees' interests is not available. In enforcing this scheme a cartel's primary tactic is the use of "most favored nations" clauses in multiemployer collective bargaining agreements. Another is the design and use of multiemployer ERISA plans. The Article also discusses the labor antitrust exemptions and how, notwithstanding the suggestions of other scholars, antitrust law is an ineffective tool to remedy union-association cartel behavior. Instead, the Article puts forward changes that can be made to the labor laws and to ERISA that would allow individual employers to escape the terms of association collective bargaining agreements and encourage unions to nevertheless bargain with them. This does not mean that multiemployer bargaining itself should be banned. Multiemployer bargaining has always been with us, and is not going away, but its anticompetitive effects can be tempered.

bepress Legal Series, 2005

The coming of the New Deal may have spelled the end of the Lochner era in the federal courts, but... more The coming of the New Deal may have spelled the end of the Lochner era in the federal courts, but in the state courts Lochner's doctrine of economic substantive due process lives on. Since the New Deal, courts in almost every state have rebuffed the United States Supreme Court and have interpreted their own state constitutions' due process clauses to provide substantive protections to economic liberties. This Article presents a comprehensive survey of state court use of economic substantive due process since the New Deal. It includes an enumeration of every instance since 1940 of a state court of highest review protecting economic liberties through state constitutional economic substantive due process. Previous work on the subject has examined this post-New Deal rejection of the United States Supreme Court's jurisprudence, but this is the first study to comprehensively analyze the trends of that rejection. This comprehensive analysis reveals an intriguing, and potentially controversial, discovery. The discovery is that although state courts still to some degree apply state constitutional economic substantive due process in protecting economic liberties, the rate of that application declined dramatically in the 1970s and 1980s. The decline is surprising considering that through the 1940s, 1950s, and even 1960s, a full thirty years after the New Deal, state courts did not shy from invoking the long-past ghost of Lochner. This Article argues that the reason for this relatively sudden decline is that many state judges were comfortable applying economic substantive due process until the coming of Roe v. Wade and its related right to privacy cases. Because the right to privacy cases utilized substantive due process, but of the non-economic variety, a continued use of economic substantive due process provided legitimacy to their holdings. Faced with either legitimizing opinions legalizing abortion and other privacy rights, or rejecting substantive due process altogether, conservative state jurists chose the latter. These conservatives joined with progressive jurists who were already hostile toward the protection of economic liberties. Thus, with these strange bedfellows aligned, the use of economic substantive due process under state constitutional law quickly withered into the rare, but not quite extinct, doctrine that it is today.

bepress Legal Series, 2005