“Should Law Subsidize Driving?” to be Published in NYU Law Review

I’m delighted to share that my latest article, Should Law Subsidize Driving?, will be published in the New York University Law Review. The abstract appears below. I’m very grateful for the comments I’ve received to date, and welcome additional feedback.

Should Law Subsidize Driving?

Abstract

A century ago, captains of industry and their allies in government launched a social experiment in urban America: the abandonment of mass transit in favor of a new personal technology, the private automobile. Decades of public and private investment in this shift have created a car-centric landscape with Dickensian consequences.

In the United States, motor vehicles are now the leading killer of children and the top producers of greenhouse gases. They rack up trillions of dollars in direct and indirect costs annually, and the most vulnerable—children, the poor, and people of color or with disabilities—pay the steepest price. The appeal of cars’ convenience and the lack of meaningful alternatives has created a public health catastrophe.

Many of the automobile’s social costs originate in the individual preferences of consumers, but an overlooked amount is encouraged—indeed enforced—by law. Yes, the U.S. is car-dependent by choice. But it is also car-dependent by law.

This Article conceptualizes this problem, and offers a way out. It begins by identifying a submerged, disconnected system of rules that furnish indirect yet extravagant subsidies to driving. These subsidies lower the price of driving by comprehensively reassigning its costs to non-drivers and society at large. They are found in every field of law, from traffic law to land use regulation to tax, tort, and environmental law. Law’s role is not primary, and at times it is even constructive. But where it is destructive, it is uniquely so: law not only inflames a public health emergency but legitimizes it, extending its longevity.

The Article urges a teardown of this regime. It also calls for a basic reorientation of relevant law towards consensus social priorities, such as health, prosperity, and equity.

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New Article, “Should Law Subsidize Driving?”, Is Up on SSRN

A draft of my latest Article, Should Law Subsidize Driving?, is now up on SSRN. I’m happy that it has begun to attract a readership in its first 24 hours (about 120 downloads). The Article conducts a law and economics analysis of every field of law that touches on driving, and infuses it with the best work from half a dozen other fields from public health to traffic engineering, before concluding that law subsidizes driving extravagantly and pervasively. This creates immense negative externalities that are not tracked with any comprehensiveness or rigor.

The Article also introduces a novel term, automobile supremacy, to describe the systematic discrimination that law practices—in hidden, often unintentional or counterintuitive ways—against not just other forms of transportation but virtually all other social objectives in service of the car.

It’s my most ambitious work yet, and parts of this draft will almost certainly be edited down and shifted to a book project. Feedback is most welcome.

Should Law Subsidize Driving?
Abstract

A century ago, captains of industry and their allies in government launched a social experiment in urban America: the abandonment of mass transit in favor of a new personal technology, the private automobile. Decades of public and private investment in this shift have created a car-centric landscape with Dickensian consequences.

In the United States, motor vehicles are now the leading killer of children and the top producers of greenhouse gases. They rack up trillions of dollars in direct and indirect costs annually, and the most vulnerable—children, the poor, and people of color or with disabilities—pay the steepest price. The appeal of cars’ convenience and the lack of meaningful alternatives has created a public health catastrophe.

Many of the automobile’s social costs originate in the individual preferences of consumers, but an overlooked amount is encouraged—indeed enforced—by law. Yes, the U.S. is car-dependent by choice. But it is also car-dependent by law.

This Article conceptualizes this problem, and offers a way out. It begins by identifying a submerged, disconnected system of rules that furnish indirect yet extravagant subsidies to driving. These subsidies lower the price of driving by comprehensively reassigning its costs to non-drivers and society at large. They are found in every field of law, from traffic law to land use regulation to tax, tort, and environmental law. Law’s role is not primary, and at times it is even constructive. But where it is destructive, it is uniquely so: law not only inflames a public health emergency but legitimizes it, extending its longevity.

The Article urges a teardown of this regime. It also calls for a basic reorientation of relevant law towards consensus social priorities, such as health, prosperity, and equity.

New Article: “The Golden Leash and the Fiduciary Duty of Loyalty”

I’m delighted to share a new article by yours truly on corporate governance and shareholder activism, The Golden Leash and the Fiduciary Duty of Loyalty, that will be published in the UCLA Law Review.

The “golden leash” is a controversial form of third-party compensation under which activist hedge funds supplement the salaries of directors they nominate to the board, in exchange for increasing the value of the company. A director compensated pursuant to such an arrangement stands to earn millions of dollars rather than the $250,000 paid to a typical director of a large public company, though the more richly compensated director usually works much harder and takes a lot of public abuse.

I offer a qualified defense of the golden leash, situating it in the context of other, more mainstream structures that depend on a more relaxed, porous conception of the fiduciary duty of loyalty than is commonly applied in the context of the golden leash. I also offer thoughts on how a properly disclosed golden leash can not only work for shareholders but improve procedural corporate governance more broadly.

The abstract follows. I welcome any comments on the draft.

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More on the Delaware Judgment Arbitrage Case (Alberta Securities Comm’n v. Ryckman)

Over at Letters Blogatory, friend of the blog Ted Folkman has published his take on Alberta Securities Commission v. Ryckman, the recent Delaware decision that (as I wrote last week) provides a good example of judgment arbitrage. Thank you again, Ted, for bringing the case to my attention.

Judgment arbitrage is a term I coined for a particular strategy for enforcing unenforceable judgments. It is a method of forum-shopping that allows creditors to exploit a quirk in American law that allows them to enforce foreign-country judgments in a forum where they would not otherwise be able to. There’s more discussion of the strategy in my Ryckman postthis symposium piece, and the original article where I lay out the theory.

In Ryckman, the creditor sought to collect Delaware assets in satisfaction of a Canadian judgment. The twist here was that the creditor first got its Canadian judgment recognized in Arizona, hopped a plane east, and then sought to use what was at that point technically an Arizona judgment to collect assets in Delaware. It was undisputed that the underlying Canadian judgment—a fine imposed by a Canadian agency—was not enforceable in Delaware, yet the Delaware court ordered enforcement anyway, because it was enforcing the Arizona judgment. It did so in the name of Full Faith and Credit, falling back on an articulation of that principle that I believe to be an incomplete. (There is a growing consensus, which I discuss at pp. 487-91 of the article, that FF&C does not compel states to grant full credit categorically to sister-state judgments.)

Ryckman is a good example of arbitrage. The creditor was able, with minimal friction, to profit from a major difference between Arizona and Delaware law governing the recognition of foreign judgments. Merriam-Webster defines arbitrage as “the practice of buying something (such as foreign money, gold, etc.) in one place and selling it almost immediately in another place where it is worth more.” The Canadian judgment wasn’t simply more valuable in Delaware for having transited Arizona first; it would have been completely worthless under Delaware law otherwise. The cost of unlocking additional assets for the creditor via the Arizona judgment was a little legal complexity and paperwork. It’s the essence of arbitrage.

Ted’s post disputes that the case is really arbitrage because the debtor, not the creditor, was the one to choose Arizona as the recognition forum—after all, he moved his domicile there. I find this point logically appealing, but my read of the law is that many courts wouldn’t place much stock in it…

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