Please Join Us For A Conference On Intellectual Property Law
INTELLECTUAL PROPERTY & GLOBAL PROSPERITY
Keynote Speaker: Dean Kamen
October 6-7, 2016
Antonin Scalia Law School
George Mason University
**9 Hours CLE**
Please Join Us For A Conference On Intellectual Property Law
INTELLECTUAL PROPERTY & GLOBAL PROSPERITY
Keynote Speaker: Dean Kamen
October 6-7, 2016
Antonin Scalia Law School
George Mason University
**9 Hours CLE**
I am sharing the press release below:
George Mason University receives $30 million in gifts, renames School of Law after Justice Antonin Scalia
Largest combined gift in university’s history will support new scholarship programs
Arlington, VA— George Mason University today announces pledges totaling $30 million to the George Mason University Foundation to support the School of Law. The gifts, combined, are the largest in university history. The gifts will help establish three new scholarship programs that will potentially benefit hundreds of students seeking to study law at Mason.
In recognition of this historic gift, the Board of Visitors has approved the renaming of the school to The Antonin Scalia School of Law at George Mason University.
“This is a milestone moment for the university,” said George Mason University President Ángel Cabrera. “These gifts will create opportunities to attract and retain the best and brightest students, deliver on our mission of inclusive excellence, and continue our goal to make Mason one of the preeminent law schools in the country.”
Mason has grown rapidly over the last four decades to become the largest public research university in Virginia. The School of Law was established in 1979 and has been continually ranked among the top 50 law programs in the nation by U.S. News and World Report.
Justice Scalia, who served 30 years on the U.S. Supreme Court, spoke at the dedication of the law school building in 1999 and was a guest lecturer at the university. He was a resident of nearby McLean, Virginia.
Justice Ruth Bader Ginsburg, his esteemed colleague on the Supreme Court for more than two decades, said Scalia’s opinions challenged her thinking and that naming the law school after him was a fine tribute.
“Justice Scalia was a law teacher, public servant, legal commentator, and jurist nonpareil. As a colleague who held him in highest esteem and great affection, I miss his bright company and the stimulus he provided, his opinions ever challenging me to meet his best efforts with my own. It is a tribute altogether fitting that George Mason University’s law school will bear his name. May the funds for scholarships, faculty growth, and curricular development aid the Antonin Scalia School of Law to achieve the excellence characteristic of Justice Scalia, grand master in life and law,” added Ginsburg.
“Justice Scalia’s name evokes the very strengths of our school: civil liberties, law and economics, and constitutional law,” said Law School Dean Henry N. Butler. “His career embodies our law school’s motto of learn, challenge, lead. As a professor and jurist, he challenged those around him to be rigorous, intellectually honest, and consistent in their arguments.”
The combined gift will allow the university to establish three new scholarship programs to be awarded exclusively and independently by the university:
Antonin Scalia Scholarship – Awarded to students with excellent academic credentials.
A. Linwood Holton, Jr. Leadership Scholarship – Named in honor of the former governor of the Commonwealth of Virginia, this scholarship will be awarded to students who have overcome barriers to academic success, demonstrated outstanding leadership qualities, or have helped others overcome discrimination in any facet of life.
F.A. Hayek Law, Legislation, and Liberty Scholarship – Named in honor of the 1974 Nobel Prize winner in economics, this scholarship will be awarded to students who have a demonstrated interest in studying the application of economic principles to the law.
“The growth of George Mason University’s law school, both in size and influence, is a tribute to the hard work of its leaders and faculty members,” said Governor Terry McAuliffe. “I am particularly pleased that new scholarship awards for students who face steep barriers in their academic pursuits will be named in honor of former Virginia Governor Linwood Holton, an enduring and appropriate legacy for a man who championed access to education for all Virginians.”
The scholarships will help Mason continue to be one of the most diverse universities in America.
“When we speak about diversity, that includes diversity of thought and exposing ourselves to a range of ideas and points of view,” said Cabrera. “Justice Scalia was an advocate of vigorous debate and enjoyed thoughtful conversations with those he disagreed with, as shown by his longtime friendship with Justice Ginsburg. That ability to listen and engage with others, despite having contrasting opinions or perspectives, is what higher education is all about.”
The gift includes $20 million that came to George Mason through a donor who approached Leonard A. Leo of the Federalist Society, a personal friend of the late Justice Scalia and his family. The anonymous donor asked that the university name the law school in honor of the Justice. “The Scalia family is pleased to see George Mason name its law school after the Justice, helping to memorialize his commitment to a legal education that is grounded in academic freedom and a recognition of the practice of law as an honorable and intellectually rigorous craft,” said Leo.
The gift also includes a $10 million grant from the Charles Koch Foundation, which supports hundreds of colleges and universities across the country that pursue scholarship related to societal well-being and free societies.
“We’re excited to support President Cabrera and Dean Butler’s vision for the Law School as they welcome new students and continue to distinguish Mason as a world-class research university,” said Charles Koch Foundation President Brian Hooks.
The name change is pending approval from the State Council of Higher Education for Virginia.
A formal dedication ceremony will occur in the fall.
About George Mason
George Mason University is Virginia’s largest public research university. Located near Washington, D.C., Mason enrolls more than 33,000 students from 130 countries and all 50 states. Mason has grown rapidly over the past half-century and is recognized for its innovation and entrepreneurship, remarkable diversity, and commitment to accessibility.
About the Mason School of Law
The George Mason University School of Law is defined by three words: Learn. Challenge. Lead. The goal is to have students who will receive an outstanding legal education (Learn), be taught to critically evaluate prevailing orthodoxy and pursue new ideas (Challenge), and, ultimately, be well prepared to distinguish themselves in their chosen fields (Lead).
About Faster Farther—The Campaign for George Mason University
Faster Farther is about securing Mason’s place as the intellectual cornerstone of our region and a global leader in higher education. We have a goal to raise $500 million through 2018.
Henry Manne was a great man, and a great father. He was, for me as for many others, one of the most important intellectual influences in my life. I will miss him dearly.
Following is his official obituary. RIP, dad.
Henry Girard Manne died on January 17, 2015 at the age of 86. A towering figure in legal education, Manne was one of the founders of the Law and Economics movement, the 20th century’s most important and influential legal academic discipline.
Manne is survived by his wife, Bobbie Manne; his children, Emily and Geoffrey Manne; two grandchildren, Annabelle and Lily Manne; and two nephews, Neal and Burton Manne. He was preceded in death by his parents, Geoffrey and Eva Manne, and his brother, Richard Manne.
Henry Manne was born on May 10, 1928, in New Orleans. The son of merchant parents, he was raised in Memphis, Tennessee. He attended Central High School in Memphis, and graduated with a BA in economics from Vanderbilt University in 1950. Manne received a JD from the University of Chicago in 1952, and a doctorate in law (SJD) from Yale University in 1966. He also held honorary degrees from Seattle University, Universidad Francesco Marroquin in Guatemala and George Mason University.
Following law school Manne served in the Air Force JAG Corps, stationed at Chanute Air Force Base in Illinois and McGuire Air Force Base in New Jersey. He practiced law briefly in Chicago before beginning his teaching career at St. Louis University in 1956. In subsequent years he also taught at the University of Wisconsin, George Washington University, the University of Rochester, Stanford University, the University of Miami, Emory University, George Mason University, the University of Chicago, and Northwestern University.
Throughout his career Henry Manne ’s writings originated, developed or anticipated an extraordinary range of ideas and themes that have animated the past forty years of law and economics scholarship. For his work, Manne was named a Life Member of the American Law and Economics Association and, along with Nobel Laureate Ronald Coase, and federal appeals court judges Richard Posner and Guido Calabresi, one of the four Founders of Law and Economics.
In the 1950s and 60s Manne pioneered the application of economic principles to the study of corporations and corporate law, authoring seminal articles that transformed the field. His article, “Mergers and the Market for Corporate Control,” published in 1965, is credited with opening the field of corporate law to economic analysis and with anticipating what has come to be known as the Efficient Market Hypothesis (for which economist Eugene Fama was awarded the Nobel Prize in 2013). Manne’s 1966 book, Insider Trading and the Stock Market was the first scholarly work to challenge the logic of insider trading laws, and remains the most influential book on the subject today.
In 1968 Manne moved to the University of Rochester with the aim of starting a new law school. Manne anticipated many of the current criticisms that have been aimed at legal education in recent years, and proposed a law school that would provide rigorous training in the economic analysis of law as well as specialized training in specific areas of law that would prepare graduates for practice immediately out of law school. Manne’s proposal for a new law school, however, drew the ire of incumbent law schools in upstate New York, which lobbied against accreditation of the new program.
While at Rochester, in 1971, Manne created the “Economics Institute for Law Professors,” in which, for the first time, law professors were offered intensive instruction in microeconomics with the aim of incorporating economics into legal analysis and theory. The Economics Institute was later moved to the University of Miami when Manne founded the Law &Economics Center there in 1974. While at Miami, Manne also began the John M. Olin Fellows Program in Law and Economics, which provided generous scholarships for professional economists to earn a law degree. That program (and its subsequent iterations) has gone on to produce dozens of professors of law and economics, as well as leading lawyers and influential government officials.
The creation of the Law & Economics Center (which subsequently moved to Emory University and then to George Mason Law School, where it continues today), was one of the foundational events in the Law and Economics Movement. Of particular importance to the development of US jurisprudence, its offerings were expanded to include economics courses for federal judges. At its peak a third of the federal bench and four members of the Supreme Court had attended at least one of its programs, and every major law school in the country today counts at least one law and economics scholar among its faculty. Nearly every legal field has been influenced by its scholarship and teaching.
When Manne became Dean of George Mason Law School in Arlington, Virginia, in 1986, he finally had the opportunity to implement the ideas he had originally developed at Rochester. Manne’s move to George Mason united him with economist James Buchanan, who was awarded the Nobel Prize for Economics in 1986 for his path-breaking work in the field of Public Choice economics, and turned George Mason University into a global leader in law and economics. His tenure as dean of George Mason, where he served as dean until 1997 and George Mason University Foundation Professor until 1999, transformed legal education by integrating a rigorous economic curriculum into the law school, and he remade George Mason Law School into one of the most important law schools in the country. The school’s Henry G. Manne Moot Court Competition for Law & Economics and the Henry G. Manne Program in Law and Economics Studies are named for him.
Manne was celebrated for his independence of mind and respect for sound reasoning and intellectual rigor, instead of academic pedigree. Soon after he left Rochester to start the Law and Economics Center, he received a call from Yale faculty member Ralph Winter (who later became a celebrated judge on the United States Court of Appeals) offering Manne a faculty position. As he recounted in an interview several years later, Manne told Winter, “Ralph, you’re two weeks and five years too late.” When Winter asked Manne what he meant, Manne responded, “Well, two weeks ago, I agreed that I would start this new center on law and economics.” When Winter asked, “And five years?” Manne responded, “And you’re five years too late for me to give a damn.”
The academic establishment’s slow and skeptical response to the ideas of law and economics eventually persuaded Manne that reform of legal education was unlikely to come from within the established order and that it would be necessary to challenge the established order from without. Upon assuming the helm at George Mason, Dean Manne immediately drew to the school faculty members laboring at less-celebrated law schools whom Manne had identified through his economics training seminars for law professors, including several alumni of his Olin Fellows programs. Today the law school is recognized as one of the world’s leading centers of law and economics.
Throughout his career, Manne was an outspoken champion of free markets and liberty. His intellectual heroes and intellectual peers were classical liberal economists like Friedrich Hayek, Ludwig Mises, Armen Alchian and Harold Demsetz, and these scholars deeply influenced his thinking. As economist Donald Boudreax said of Dean Manne, “I think what Henry saw in Alchian – and what Henry’s own admirers saw in Henry – was the reality that each unfailingly understood that competition in human affairs is an intrepid force…”
In his teaching, his academic writing, his frequent op-eds and essays, and his work with organizations like the Cato Institute, the Liberty Fund, the Institute for Humane Studies, and the Mont Pelerin Society, among others, Manne advocated tirelessly for a clearer understanding of the power of markets and competition and the importance of limited government and economically sensible regulation.
After leaving George Mason in 1999, Manne remained an active scholar and commenter on public affairs as a frequent contributor to the Wall Street Journal. He continued to provide novel insights on corporate law, securities law, and the reform of legal education. Following his retirement Manne became a Distinguished Visiting Professor at Ave Maria Law School in Naples, Florida. The Liberty Fund, of Indianapolis, Indiana, recently published The Collected Works of Henry G. Manne in three volumes.
For some, perhaps more than for all of his intellectual accomplishments Manne will be remembered as a generous bon vivant who reveled in the company of family and friends. He was an avid golfer (who never scheduled a conference far from a top-notch golf course), a curious traveler, a student of culture, a passionate eater (especially of ice cream and Peruvian rotisserie chicken from El Pollo Rico restaurant in Arlington, Virginia), and a gregarious debater (who rarely suffered fools gladly). As economist Peter Klein aptly remarked: “He was a charming companion and correspondent — clever, witty, erudite, and a great social and cultural critic, especially of the strange world of academia, where he plied his trade for five decades but always as a slight outsider.”
Scholar, intellectual leader, champion of individual liberty and free markets, and builder of a great law school—Manne’s influence on law and legal education in the Twentieth Century may be unrivaled. Today, the institutions he built and the intellectual movement he led continue to thrive and to draw sustenance from his intellect and imagination.
There will be a memorial service at George Mason University School of Law in Arlington, Virginia on Friday, February 13, at 4:00 pm. In lieu of flowers the family requests that donations be made in his honor to the Law & Economics Center at George Mason University School of Law, 3301 Fairfax Drive, Arlington, VA 22201 or online at http://www.masonlec.org.
The famous epitaph that adorns Sir Christopher Wren’s tomb in St. Paul’s Cathedral – Si monumentum requiris, circumspice (“if you seek his monument, look around you”) – applies equally well to Henry Manne, who passed away on January 17. Wren left a living memorial to his work in St. Paul’s and the many other churches he designed in the City of London. Manne’s living memorial consists in the law and economics institutions which he created and nurtured during a long and productive career.
Manne is justly deemed one of the three founders of the law and economics movement, along with Guido Calabresi and the late Ronald Coase. Manne’s original work on the theory of the firm and the efficiency justifications for insider trading was brilliant and provocative. Of greatest lasting significance, however, was his seminal role in creating and overseeing institutions designed to propagate law and economics throughout the legal profession – such as the Law and Economics Institutes for Professors, Judges and Economists, and the Center for Law and Economics at Emory University (later moved to George Mason University). Furthermore, with the expansion of law and economics programs to include foreign participants, law and economics insights are influencing litigation, transactions, and regulatory analysis in many countries. Manne’s initiative and entrepreneurial spirit were a critical catalyst in helping trigger this transformation.
The one institution that is perhaps most intimately associated with Manne and his philosophy – Manne’s St. Paul’s Cathedral, if you will – is George Mason Law School in Arlington, Virginia. When Manne became George Mason’s Dean in 1986, he arrived at a fledgling school of no particular distinction, which was overshadowed by major long-established Washington D.C. law schools. Manne immediately went about overhauling the faculty, bringing in scholars with a strong law and economics orientation, and reinstituting the Center for Law and Economics at Mason. Within a few years Mason Law became a magnet for first rate young law and economics scholars of a free market bent who found a uniquely collegial atmosphere at Mason. Mason retained its law and economics orientation under subsequent deans. Today its faculty is not only a source of pathbreaking scholarship, it is a fount of wisdom that provides innovative (and highly needed) advice to help inform and improve Washington D.C. policy debates. This would not have been possible without Henry Manne’s academic leadership and foresight. (Full disclosure – I have been an adjunct professor at George Mason Law School since 1991.)
Finally, I should mention that those of us who write for Truth on the Market (TOTM), not to mention countless other websites that share TOTM’s philosophical orientation, are indebted to Henry Manne for his seminal role in the law and economics movement. I am sure that I speak for many in offering my heartfelt condolences to Henry’s son, Geoffrey Manne, the driving force behind TOTM. Geoff, like the visitors to Christopher Wren’s masterwork, we look around us and delight in your father’s accomplishments.
In a June 12, 2014 TOTM post, I discussed the private antitrust challenge to NCAA rules that barred NCAA member universities from compensating athletes for use of their images and names in television broadcasts and video games.
On August 8 a federal district judge held that the NCAA had violated the antitrust laws and enjoined the NCAA from enforcing those rules, effective 2016. The judge’s 99-page opinion, which discusses NCAA price-fixing agreements, is worth a read. It confronts and debunks the NCAA’s efficiency justifications for their cartel-like restrictions on athletic scholarships. If the decision withstands appeal, it will allow NCAA member schools to offer prospective football and basketball recruits trust funds that could be accessed after graduation (subject to certain limitations), granting those athletes a share of the billions of dollars in revenues they generate for NCAA member universities.
A large number of NCAA rules undoubtedly generate substantial efficiencies that benefit NCAA member institutions, college sports fans, and college athletes. But the beneficial nature of those rules does not justify separate monopsony price fixing arrangements that disadvantage athletic recruits – arrangements that cannot legitimately be tied to the NCAA’s welfare-enhancing interest in promoting intercollegiate athletics. Stay tuned.
The National Collegiate Athletic Association’s (NCAA’s) longstanding cartel-like arrangements once again are facing serious legal scrutiny. On June 9 a federal antitrust trial opened in Oakland featuring college athletes’ attempt to enjoin the NCAA from exploiting the athletes’ names, images, and likenesses (“rights of publicity”) for profit. Rights of publicity are a well-recognized form of intellectual property. Although the factual details concerning the means by which NCAA institutions may have extracted those rights (for example, from signed waivers that may have been required as a condition for receipt of athletic scholarships) remain to be developed, a concerted NCAA effort to exploit the athletes’ IP, if proven, would be highly anticompetitive. Consistent with the TOTM tradition of highlighting challenges to NCAA competitive arrangements, let’s look at what’s at stake.
The NCAA is involved in major sports-related revenue-producing projects with its corporate partners, such as Electronic Arts (EA), a $4 billion company that produces video games. The money is big – EA’s NCAA Football game alone is reported to bring in over $200 million a year in gross revenues. Although the NCAA has denied using player likenesses in video games, the creators of the NCAA Football series have indicated that actual athletes’ jersey numbers and attributes are used, a fact apparently known to NCAA executives. Moreover, recent separate $20 million and $40 million settlements agreed to by the NCAA and EA in suits brought by college athletes provide additional indications that the NCAA may be aware that it has exploited college players’ rights of publicity.
So what is the antitrust angle? In dealing with student athletes, the NCAA, which represents the interests of its member colleges, acts like a monopsony cartel, as Judge Posner has noted, and as Blair and Harrison have explained in detail. Anticompetitive monopsony buyer agreements have long been struck down by the courts as Sherman Act violations, as in Mandeville Farms and in National Macaroni Manufacturers v. FTC, and occasionally have been the subject of criminal prosecution.
This does not necessarily mean, however, that all restrictions the NCAA places on student athletes run afoul of the antitrust laws. As the Supreme Court made clear in the 1984 NCAA case, the federal antitrust laws apply to the NCAA, but competitive restraints may pass muster if they are justifiable means of fostering competition among amateur athletic teams, such as uniform rules defining the conditions of a sports contest, the eligibility of participants, or the sharing of responsibilities and benefits integral to the NCAA’s joint venture.
Like the anticompetitive restrictions on member colleges’ separate television contracts struck down by the Supreme Court in NCAA, however, the NCAA’s profiting from student athletes’ rights of publicity is not vital to the preservation of balanced collegiate amateur competition. Likewise, it is not needed to avoid the payment of student salaries that some might argue smacks of disfavored “professionalism” (although others would argue it promotes healthy competition and avoids exploitation of athletes). In contrast, a policy of vindicating athletes’ right of publicity enables them to capture the value of the intellectual property generated by their accomplishments, and thus incentivizes outstanding athletic achievements, consistent with the legitimate ends of NCAA competitions. Proof of a concerted effort by the NCAA to deny this benefit to student athletes and instead to share the IP-generated proceeds only with member institutions would, if shown, appear to lack any cognizable efficiency justification, and thus be ripe for antitrust condemnation.
Whatever the outcome of the current rights of publicity litigation, the NCAA may expect to face antitrust scrutiny on a number of fronts. This is as it should be. While the organization clearly yields efficiencies that benefit consumers (such as establishing and overseeing rules and standards for many collegiate sports), its inherent temptation to act as a classic cartel for the financial benefit of its members will not disappear. Indeed, its incentive to seek monopoly profits may rise, as the money generated by organized athletics and related entertainment offshoots continues to grow. Accordingly, antitrust enforcers should remain vigilant, and efforts to obtain NCAA-specific statutory antitrust exemptions, even if well-meaning, should be resisted.
Yet another loss of a giant in the world of law and economics. On December 19, it was Robert Bork. Today, we lost economist James M. Buchanan, Nobel laureate, George Mason professor, and one of the fathers of Public Choice economics. Regular readers of TOTM will know that several of us–including yours truly–have been heavily influenced by the insights of Public Choice (see, e.g., here and here).
I was alerted to Buchanan’s passing by my friend and collaborator, Virginia Law’s Charles Goetz, co-author of the Goetz & McChesney (now Goetz, McChesney & Lambert) antitrust casebook. I asked Charlie if he’d pen a few words in honor of Buchanan, his dissertation director and mentor, and he heartily agreed to do so. Here they are:
Nobel Laureate James McGill Buchanan has passed away and one less giant now walks the pathways of Economics, pathways that he extended and widened. Jim was my dissertation director, my mentor, my sometime colleague and coauthor—and my friend. There is an old compliment that denotes a man “a gentleman and a scholar.” Jim was certainly both, to the quintessential degree.
I often reflect on how fortunate I’ve been with many things, but certainly among the luckiest of things was to be an Economics graduate student at the University of Virginia in the early 1960’s. It was a golden time when Jim and a handful of others were midwifing the birth of what came to be known as Public Choice economics. I got to watch and listen as great men did great things.
I remember what an eye-opening experience it was for me to take Buchanan’s year-long course in Public Finance. He was an incredibly effective teacher. He was far from a classroom showman, but had the genius of asking such devilishly interesting and revelatory questions. I have acknowledged publicly on a number of occasions that, if he could charge me for the intellectual value-added that he created in me, he would be owed a very large sum indeed. But I am profoundly in his debt, even if not in a pecuniary sense.
In the days and weeks to come, others will write many highly complimentary things about James M. Buchanan as a scholar. Deservedly so. I would have little new to add to that outpouring. Still, there is a revealing anecdote about Jim as a man that can come only from me, the sole witness and participant.
Buchanan generally had a very formal relationship with students and I understandably regarded him with awe and no little bit of fear. But, one day, he gave me a great big smile and told me a story that made me appreciate, for the first time, the lurking, devilish sense of humor that went with this proper Tennessee Gentleman.
“Goetz,” he said, “you’re a New Yorker, aren’t you? But, . . . you’re a pretty good fellow anyway.”
“I often dislike New Yorkers because they act like obnoxious know-it-alls. There was a New Yorker like that in my class at Navy Officer Candidate school during World War II. This fellow didn’t have much use for a simple Tennessee boy like me and tried to lord it over us country boys. But I fixed him.”
“At the end of our OCS course, the Navy gave us a battery of tests that it used in allocating new ensigns to their first duty assignment. I started a rumor that this NY fellow had come out second in the whole class. At first, he denied it since, of course, he had no basis to believe it. Gradually, though, he began to accept congratulations and to puff up more and more about the compliments.”
“Then I started the second rumor, about our further training to battle the Japanese: the first three men in the class were being sent to One-man Submarine School.”
Somehow, I saw Jim with different eyes after that story. Maybe you will as well.
Requiescat in pace, J. M. Buchanan, the little-known joker and man of honed wit, wit in more ways than the scholarly. In the midst of our sadness, maybe a chuckle is good medicine.
Today, thirty-one prominent deans, professors, and former government officials who specialize in law and economics and antitrust submitted a letter to the Senate Commerce Committee supporting Josh Wright‘s nomination to be a Commissioner at the Federal Trade Commission.
The letter, which is addressed to Chairman John D. Rockefeller IV and Ranking Member Kay Bailey Hutchison of the United States Senate Committee on Commerce, Science and Transportation, strongly urges confirmation of Josh, praising him for his knoweldge and his many accomplishments. Here’s just a small snippet:
As a young professor, Josh has a well-deserved reputation for producing rigorous, high-quality scholarship that explores important issues in competition and consumer protection policy. His scholarly work reflects that rare professor who possesses impeccable academic and intellectual integrity in combination with thoroughgoing knowledge in economic theory, econometric and empirical skill, and knowledge of relevant legal institutions. The rigor of his scholarly work is second to none, because it is truly bottom-up, data-driven in its conclusions. As a result, his scholarly output at this early stage in his academic career, in terms of its quantity, quality, and impact, is unsurpassed within his field.
. . . .
As a result of his rigorous and scrupulous analysis of data according to well-established empirical and economic methodologies, Professor Wright is widely regarded as a top antitrust law scholar of his generation, and his scholarly efforts have had a significant impact in the academic and public policy debates. Top antitrust and law and economics scholars, moreover, consistently cite his scholarship, and Professor Herbert Hovenkamp, the author of the leading antitrust treatise, has described Josh as a “top scholar of competition policy and intellectual property.”
I can attest that this is all well-deserved praise, as I have learned much from Josh in the years that we have been colleagues at George Mason. I will be very sorry to lose him as a colleague, but I can think of no other better person for this position. I wish him all the luck in his confirmation hearing tomorrow, but he doesn’t need it, because as the letter rightly concludes, his is “an easy case for the Senate’s approval of his nomination.”
Read the whole letter here.
The U.S. Department of Justice sued eBay last week for agreeing not to poach employees from rival Intuit. According to the Department’s press release, “eBay’s agreement with Intuit hurt employees by lowering the salaries and benefits they might have received and deprived them of better job opportunities at the other company.” DOJ maintains that agreements among rivals not to compete for workers have long been deemed per se illegal. (Indeed, Google, Apple, Adobe, and Pixar quickly settled antitrust claims based on similar non-poaching arrangements in 2010.)
DOJ is right to attack this type of arrangement. Apart from harming individual employees, non-poaching agreements occasion a societal harm: They preclude labor resources from being channeled to their highest and best uses. To poach a competitor’s star employee, you must offer to pay that employee more than she’s currently making (or otherwise adjust the terms of her employment in a way she deems desirable). Her current employer will usually have a chance to counter your offer. If you win the bidding war, it’s likely because the current employer’s willingness-to-pay for the employee—an amount reflective of the degree by which the employee enhances her firm’s value—is less than yours. If you can derive more value from the employee, you should have her. When employers agree to limit competition for workers, they preclude labor resources from flowing to their highest and best ends, causing an “allocative inefficiency.”
So perhaps DOJ should go after the members of the Association of American Law Schools. Pursuant to a Statement of Good Practices to which AALS members scrupulously adhere, each law school has agreed to limit competition with its rivals by refraining from making lateral offers of employment after March 1 each year. Unlike the eBay/Intuit arrangement, the competing law schools’ trade restraint is applicable for only part of the year–from March 1 until the fall hiring season–but it has the same basic effect as the eBay arrangement. And, despite the law schools’ claims to the contrary, it isn’t justified on efficiency grounds.
By preventing law professors from credibly threatening to leave their existing employers after March 1, the AALS restraint significantly reduces professors’ ability to negotiate higher wages or more favorable employment terms. If you announce a competing school’s offer six weeks before fall classes start, you’re much more likely to receive an attractive counter-offer from your current employer than you would be if you sprang the news of your potential departure six months before the start of classes, when you’re more easily replaced. What’s more, law schools generally don’t tell professors what they’ll be earning the following year until after March 1, when it’s too late for a disgruntled professor to secure another offer elsewhere. The AALS restraint thus artificially depresses the salaries of a school’s most desirable professors.
Now this might not seem like something to get worked up over. Most people think law professors are a spoiled lot. They have relatively low teaching loads and, despite the fact that most lack PhDs, they generally earn a good deal more than most academics. Why should DOJ intervene on behalf of these fat cats? Because the law schools’ non-poaching arrangement diminishes the quality of legal education. Here’s why.
At most law schools, where equality of end-states tends to be fetishized, professors are generally compensated in lock-step according to seniority. There’s some variation, but apart from endowed positions, starting salaries and annual raises are around the same level for everyone.
Talent and effort, by contrast, are not evenly distributed. Most law schools have some super-stars who are exceptional teachers and scholars, a number of “solid” professors who put in their time and provide competent teaching and enough scholarship to stay engaged, and a fair bit of dead weight. Lock-step compensation depresses the incentive to move into the first category and enhances the attractiveness of the last. It’s favored by administrators, though, because it permits them to avoid awkward conversations about merit.
If late-in-time departures of professors were a real possibility, administrators would have a stronger incentive to keep their most productive folks happy. They could stand to lose teachers with low course enrollments, so they probably wouldn’t worry too much about keeping their salaries relatively high. They’d also know that their less productive scholars are unlikely to receive a late offer. But highly productive scholars who also provide lots of the thing the law school is ultimately selling–law teaching–would likely begin to earn higher salaries than their less valuable colleagues. With compensation more accurately reflecting the value professors provide, labor resources would be allocated more efficiently. And, of course, law professors would have an increased incentive to make themselves both “poachable” and indispensable by firing on all cylinders–teaching, scholarship, and service.
But don’t the law schools need their non-poaching arrangement in order to prevent scheduling disorder that would hurt students? That’s certainly what they claim. The “Statement of Good Practices” memorializing the law schools’ collusive agreement begins:
[T]he departure of a full-time law teacher always requires changes at the law school. Unless the school is given sufficient time to make the necessary arrangements to find another to offer the instruction given by the departing teacher, the reasonable expectations of students will be frustrated and the school’s educational program otherwise disrupted. To serve the best interests of the program of legal education from which the teacher is departing and that to which she or he may be going, the Association urges that law schools and law faculty members follow these suggested practices….
A horizontal restraint of trade, though, isn’t necessary to prevent the sort of harm the law schools envision. If a law school believes it needs some amount of lead time to prepare for a professor’s departure, it may unilaterally negotiate contracts with its professors obligating them to provide a certain amount of notice before any departure and specifying liquidated damages for breach. Unlike the “one-size-fits-all” AALS restraint, such contracts could accommodate heterogeneous needs and preferences. For example, required lead times and the amount of liquidated damages could vary based on the location of the school (urban with lots of adjunct possibilities vs. rural with few), the degree to which the professor’s course offerings require a specialized background (Securities Regulation vs. Contracts), and the pedagogical importance of the courses (Business Organizations vs. Law & Literature). Moreover, this contractarian approach, unlike the AALS’s horizontal restraint, would further allocative efficiency across law schools: If Raider Law is willing to pay Target Law’s hot professor an amount that will increase her salary and cover the liquidated damages she owes Target because of an untimely departure, then Raider must value her more than Target and should get her. Thus, it is possible to achieve the practical benefit the AALS restraint purports to pursue without using a horizontal restraint and in a manner that permits allocative efficiency.
A horizontal agreement not to compete should not be allowed to stand when a less restrictive, easily achieved vertical option could secure the retraint’s benefits. See, e.g., Maricopa County Med. Soc’y (condemning an efficiency-enhancing maximum price-fixing agreement among physicians and observing that the procompetitive benefit occasioned by the restraint could be achieved via vertical agreements rather than a horizontal restraint); NCAA (refusing to allow the need for competitive balance to immunize a naked horizontal restraint because such balance could be achieved less restrictively); cf. Professional Engineers (horizontal agreement not to engage in price negotiations in order to assure high-quality engineering illegal when substantive quality standards could achieve same result).
Perhaps one day the DOJ will acknowledge that American law schools are competitors and, for the benefit of law students and the legal profession, ought to act like it.
I have recently joined my colleague Bruce Johnsen as co-director of the Robert A. Levy Fellowship in Law and Liberty at GMU Law. It is a very generous fellowship — a tuition waiver plus a generous stipend — for economists who have their PhD’s or “ABD” status to come to law school on our dime along with a stipend of up to $27,000 annually. PhD’s and doctoral candidates in other social science disciplines are also welcome to apply. Several Levy Fellows have successfully ventured into the legal academic market over the past few years, and we continue to look for economists and economists-in-training with an interest in law and legal institutions. Among others, Levy Fellow alumni include Jonathan Klick (University of Pennsylvania School of Law), Moin Yahya (University of Alberta), and James Cooper (former Director of the Office of Policy and Planning at the Federal Trade Commission, former student of our TOTM’s own Paul Rubin, and now Research Director at the George Mason Law & Economics Center). More recently, Levy alum Murat Mungan joined the faculty at Florida State as a Visiting Assistant Professor; and Levy Fellow alum Jeremy Kidd is now as Assistant Professor at Mercer.
If the opportunity is of interest — please contact me via email, or check out the details in the advertisement below, as well as the website with further details on the application process.
GMU Law is a great place to do law and economics. The GMU Law and Economics Center, with a new and ambitious research and policy agenda under Henry Butler, is a wonderful asset for a rising law and economics scholar, and the law and economics faculty here are interested in a wide range of legal topics and play an integral part in the Levy Fellow program. The program isn’t for everybody. We’re looking for economists and other social scientists who are interested in understanding legal institutions and plan on entering the academic job market. Experimental economists interested in the special opportunities available at the Interdisciplinary Center for Economic Science and Center for the Study of Neuroeconomics might also find the program especially attractive.
The full text of the advertisement is below the fold. Contact me if you have questions about the application process.
GEORGE MASON UNIVERSITY
School of Law
Robert A. Levy Fellowship
George Mason University School of Law invites applications for the Robert A. Levy Fellowship in Law & Liberty. The Levy Fellowship includes an annual stipend of up to $27,000 per year plus a tuition waiver and is available to PhD or ABD economists who wish to pursue a JD at George Mason.
Applicants will be evaluated for their promise as Law and Economics scholars capable of making a significant contribution to understanding the institutions of a free society. We are pleased in recent years to have placed fellows in highly ranked institutions. Two or more fellowships will be awarded for the 2013/14 academic year. Applicants should arrange to take the LSAT no later than February 2013. George Mason University is an equal opportunity-affirmative action institution.
A special opportunity now exists for those interested in experimental economics. Levy Fellows will have the opportunity to run experiments and collaborate with faculty at the path breaking Interdisciplinary Center for Economic Science and Center for the Study of Neuroeconomics.
Please provide all items requested in standard law school application process, including LSAT/LSDAS, PLUS cover letter with three references, curriculum vitae, graduate transcripts, and a copy of current research.
Letters should be sent to the:
George Mason University School of Law
Office of Admissions
3301 Fairfax Drive
Arlington, VA 22201
Or calls made to:
Tel: (703) 993-8010
The co-director of the Levy Fellowship program:
CONTACT: Professor Joshua Wright
Email: jwrightg at gmu dot edu