Archives For marriage

Should domestic relationships be modeled on corporations, partnerships or other business associations?  This idea may seem attractive.  As I have argued, both business and family relationships can be viewed as standard forms, which are useful for filling gaps in long-term contractual relationships.  Borrowing contract-type thinking from business associations also could help break through the norm-driven rigidity of family law.  Thus, I have argued (here, and in Chapter 8 of The Law Market) for using business associations as a model for a choice-of-law approach to same sex marriage.

My writing got me an invitation to the very interesting “Love or Money” conference at Washington University, which explored “the false dichotomy in life and law between activities initiated for affective reasons, such as love or altruistic impulses, and those undertaken for profit.” 

But I probably disappointed the organizers by insisting on some “dichotomy” — that is, a separation between the statutory standard forms used for “love” (intimate relationships) and for “money” (business associations).  My point is that merging the two, while it may have political advantages, could muddy both legal areas.  This is based on my theory of the functions of these standard forms articulated in several papers, and most completely in my book, Rise of the Uncorporation

My paper from that long-ago conference, Incorporating the Hendricksons, has finally been published.  (Of course the title refers to much missed Big Love). Here’s the abstract:

The family is evolving rapidly, but not fast enough for some people. Several commentators suggest freeing family law of its traditional constraints by applying the contractual business association model. Business models, though superficially similar to domestic relationships, ultimately are unhelpful or counter-productive to defining the family. This Article discusses the essential differences between business and domestic partnerships and the potential havoc from trying to merge the two.

One nice result of the conference and paper is that I finally got to use this title for a blog post.

The European Commission, in particular the Directorate-General for Competition, has shown interest in promoting competition in the market for legal services since the early 2000s.

Some countries such as the United Kingdom have taken this matter seriously. After a long review process, the British government has recently implemented a new regulatory set-up for legal services in order to foster competition, innovation, consumer protection as well as a so-called accountable regulatory enforcement (under the Legal Services Act 2007).  These reforms were prepared by the Clementi report (published by December 2004) which argued for alternative business structures (allowing nonlawyers to go into business with lawyers as well as nonlawyer’s ownership of law firms including the possibility of public trading of shares in law firms), an independent agency to deal with disciplinary complaints (rather than leaving it to self-regulation; currently the Legal Ombudsman and the Office for Legal Complaints), and greater freedom for legal service providers to compete (under the supervision of the Legal Services Board operational since 2010). The reform failed to suppress the distinction between solicitors and barristers, but the new alternative business structures could in the future further contribute to blur this distinction. It is probably too early for a full-fledged assessment of the impact of these legal reforms on the market for legal services in the United Kingdom, but the general sense seems to be that they have modernized the institutional framework in the right direction while making the market more competitive just in time for the 2008 recession. I do not know of any empirical study on the effect of these reforms on legal fees but it would be important to know whether or not more competition and plausibly a better regulatory setup have reduced average fees.

Not all countries have moved in the direction of deregulation. Until recently Spain had no bar exam. Law graduates simply needed to register with the local bar at the end of their degree (of five years in the past, now four years). The consequence is that Spain has currently one of the highest numbers of lawyers in per capita terms (slightly behind the United States). However, a large proportion of these “lawyers” are actually not practicing law, but merely registered with the local bar. With the excuse that Spain was different from the other EU Member States, the Spanish government has introduced a bar exam in 2007, effective from 2011. At this stage, we do not know what the passing rates will be, but we can easily see the new bar exam being used to reduce entry to the profession under the pretense of improving quality.

Another example is Portugal. Law graduates are accepted for a training period at the end of which there is a (national) bar exam with a significantly high passing rate. Due to an expansion of legal education in the mid 1990s, the number of lawyers has increased considerably in the last decade or so. As a consequence there has been a pressure for more competition in a market traditionally characterized by strong cartelization and considerable rent-seeking. The response from the national bar was simple: introduce a new (national) bar exam to enter the training period with a passing rate of less than 10%. There is no doubt that such change has satisfied the “incumbents.”!

China

Paul H. Rubin —  27 June 2011

There are many stories about unrest in China.  Many factors are blamed for this unrest, including low wages, poor working conditions, and political factors.  But there is one thing that is not generally mentioned:  demographics.  The one child policy coupled with a preference for males (due to both economic and cultural factors) means that there ar significant numbers of unmarried and probably unmarriageable males.  This leads to severe male-male competition.  However, it also means that there are large numbers of socially discontent men with little to lose.  Similar factors probably operated in the Arabic world.  In both cases, it may be difficult to maintain an open democratic society.  I discussed this in Darwinian Politics, beginning at page 118.  It is also the theme of the book Bare Branches by Valerie M. Hudson and Andrea M. den Boer.  Because of demographic factors relating both to a very peculiar age structure and the gender imbalance mentioned here, China is going to face serious difficulties in the future.  Those projecting increasing power for China do not always take these factors into account.

NY’s decision to fully legalize same sex marriage (here’s a useful news roundup) can be seen among many other things as a demonstration of legal evolution in our federal system.

For some background on marriage and the market for law see Buckley and Ribstein (published 2001 Illinois Law Review 561), Ribstein 2005, and O’Hara & Ribstein, Chapter 8.  The 2001 and 2005 articles anticipated the state law competition that unfolded at a time when the once-promising same sex marriage movement was floundering.

Three years ago I summarized the state of play, noting the ups and downs in the marriage law market.  Fifteen years ago Hawaii looked like it was going to lead the nation.  This spurred federal DOMA and the state DOMAs.  But these developments left the “market” intact in any state that had not rejected same sex marriage, and therefore an opening for the same sort of evolution of choice of law as happened with corporate law.

Indeed, the market did develop.  First Massachusetts, then California.  This put pressure on NY, which actually adopted same sex marriage by gubernatorial decree in 2008 recognizing the validity of out of state same sex marriages.  Then Massachusetts, with an eye on the lucrative market for marriage ceremonies, decided to let out of state couples marry in Massachusetts. At that point I asked “Any bets on how long it will take for NY to allow same sex marriages to be performed in NY? When that happens, the marriages will be fully legal in NY, California and Massachusetts.”

Then Connecticut went for same sex marriage via court decision. I said at the time, “this move by the state located between NY (which recently recognized out-of-state same sex marriages) and Massachusetts, and next to Vermont (which has quasi-same-sex-marriage), was predictable.”

As I said just before the 2008 election, when things seemed to be looking pretty good for same sex marriage:

Those favoring a particular legal regime can further their interests not just by lobbying a particular legislature, but also by “shopping” for law in other jurisdictions, including by getting married in the relevant state. These other jurisdictions have an incentive to supply law to attract residents, ceremonies, legal work. Even non-supplier jurisdictions have an incentive to enforce the foreign law because the “shoppers” (including affluent and productive same sex couples) can avoid non-recognizing states. We’ve seen this competition play out, among other areas, in corporations and commercial contracts, and it is happening in Europe as well as the US.

But then, as we know, Prop 8 happened, and the legal aftermath.  The 2008 election was generally bad for same sex marriage, as significant Obama constituencies voted against it. (There’s no mystery why he’s still dithering on the issue.)

Although the NY decision may end up being a watershed, all indications for the future aren’t necessarily favorable for same sex marriage.  Even NY couples aren’t so much better off than they were the day before yesterday.  Basically what’s changed is they can get married at home rather than in Greenwich, benefiting NY caterers and hotels (which as just indicated may have figured in the political decision).  But their marriages still may not be enforceable in 45 jurisdictions.  Priests, ministers and rabbis don’t have to marry the couples (and this religious exemption might end up triggering invalidation of the NY law). 

There is an increasingly strong temptation to clear up the legal chaos confronting same sex couples, added to the moral and philosophical reasons for legalizing same sex marriage.  Moreover, NY’s recognition of same sex marriage is likely to register in public opinion which will directly affect Congress and perhaps even the Court.

On the other hand, as I said in my 2005 article (footnotes omitted):

[T]he relevant question is whether the process is likely in the long run to disregard rights that deserve recognition. A decision invalidating laws against same sex marriage would leave many questions unanswered concerning potential differences between same sex and heterosexual relationships. Agnosticism is particularly important for family law, given the clash of normative views and the difficulty of getting reliable data. * * * Courts and legislators can observe the results, particularly as children grow up under different regimes. Evolution also permits the law to adapt incrementally to unpredictable future events and changing mores, provides feedback as to alternatives, and minimizes the cost of mistake compared to a Supreme Court decree.

So what should happen now?  About half of the country is still opposed even after having been exposed to it in the media and their daily lives.  Many (particularly African-Americans) believe that recognition of same sex marriage would weaken marriage, which is still a valuable institution.  On the other hand, same sex couples have increasing state law options, including but not limited to marriage, for supporting their relationships.  On the third hand, their situations are far from ideal. 

I personally favor same sex marriage and would vote for it whenever I have the opportunity.  The plight of same sex couples registers more heavily with me than the more abstract objections that many have to same sex marriage.  But, believe it or not, I don’t have a bottom line.  I just have the observation that the market for law should have something to do with it.

The New York Times has an interesting story about land markets in China.  In order to get married a man needs to own property and land prices are very high in China.  As it its habit, the Times blames “overeager developers who force residents out of old neighborhoods.”

In fact, the Times gets it backwards.  The information needed to understand the issue is in the story: “The marriage competition is fierce, and statistically, women hold the cards. Given the nation’s gender imbalance, an outgrowth of a cultural preference for boys and China’s stringent family-planning policies, as many as 24 million men could be perpetual bachelors by 2020, according to the report.”  So what is happening is that there is a shortage of marriageable women and it is competition for the land needed to attract these women that is driving up land prices.

This competition is one unfortunate side effect of the one child policy and the Chinese preference for boys.  These 24 million unmarriageable men are going to be a long term problem for China.  In my book Darwinian Politics I argue that a large core of perpetual bachelors makes a free and open society difficult because this core will lead to social instability; the argument is also forcefully made in Bare Branches: The Security Implications of Asia’s Surplus Male Population by  Valerie M. Hudson and Andrea M. Den Boer. 

Much has been written about the problem of China’s aging population but I don’t think we have paid enough attention to the issues of gender imbalance.  More generally, I think much of the course of world politics over the next century is going to be driven by major demographic trends, and I think these worthy of increased study.  Nicholas Eberstadt of AEI is doing this sort of work, but I think there is much more to be done.

Here.

(HT: Freakonomics)

And other lessons in the (applied) economics of marriage (HT: Mankiw).

E-marriage at the AALS

Larry Ribstein —  3 January 2011

I’ll be speaking at the AALS on a “hot topic” devoted to this interesting subject, Yosemite C, ballroom level at the Hilton, 4-5:45 January 7.  Here’s a brief excerpt from a longer description  of the program:

The panel explores the likelihood that technology, modern-day mobility, and patterns in affiliation will produce increasing numbers of marriage formalizations that do not strictly conform to a requirement of physical presence by all parties in the granting jurisdiction.  * * * Among the issues the panel will explore are 1) the practical value to a couple of an official marriage ceremony in a state that will deny recognition to the marriage, 2) the potential for backlash in the instance of gay marriage, 3) the legal and long-term cultural acceptability of limiting relief from the physical presence requirement to couples either chosen by state statutory law (active duty military, prisoners, the moribund) or clerk discretion, 4) prudent forms that state legislation might take, 5) the incentives for states to pass legislation modernizing marriage procedure for a mobile society, and 6) the risks that states will withhold recognition to marriages on the basis of the procedure, despite being willing to recognize the substance, of a marriage authorized by another state.

Other panelists are Joanna Grossman (Hofstra), Mae Kuykendall and Adam Candeub  (MSU), Monu Bedi  (Stetson), Aviva Abramovsky   (Syracuse) and June Carbone  (UMKC).  Here’s a website on the project, and the Candeub and Kuykendall article that started it all.  I blogged on the subject here and here.  

My interest stems from my writings on jurisdictional competition generally and on marriage in particular. See my articles Calling a Truce in the Marriage Wars (with Buckley) and A Standard Form Approach to Same-Sex Marriage, and Chapter 8 of my book with O’Hara, The Law Market.

Although I’m big on jurisdictional competition for marriage, and I like the creativity that has gone into this proposal, I have some skepticism about what might be accomplished by e-marriage, which I’ll share at the AALS.

And while we’re talking about e-marriage, how about e-abortion:

[T]elemedicine abortions. . . allow women to go to a branch clinic to consult via Internet videoconferencing with a physician located miles away. Then, with the push of a remote control, the doctor can open a drawer in the clinic that contains RU-486, known as the abortion pill.

Currently, telemedicine abortions are available only in Iowa, where more than 2,000 women have used the practice since 2008 through the state’s Planned Parenthood affiliate. Previously, the organization provided abortions at half a dozen clinics, concentrated in the state’s larger cities. Because of the telemedicine program, women in the first nine weeks of pregnancy can obtain abortion pills at most of the organization’s 19 centers, which are scattered across the state.

Supporters say the program provides a vital service to women in the state’s rural reaches, where abortions can be virtually impossible to obtain. They say the process is identical to an in-person appointment.

As per usual, Justin Wolfers is there to clean up misconceptions about the data and explain what is really going on.  As it turns out, claims that recessions have killed marriage have been grossly exaggerated.  Here’s a picture Justin shows to demonstrate the point (the gray bars are recessions).

Also interesting on the economics of marriage, here is Justin’s NY Times Op-Ed explaining trends in the marriage rate and the “hedonic model” of marriage proposed by Wolfers and Betsey Stevenson, i.e. marriage based on complementarities rather than the “opposites attract” model of specialization:

It used to be that a typical marriage involved specialized roles for the husband and wife. Usually he was in the marketplace, and she was in the home, and this arrangement led to maximum productivity.

But today, when families have easy access to prepared foods, inexpensive off-the-rack clothing and labor-saving technology from the washing machine to the robot vacuum cleaner, there’s much less benefit from either spouse specializing in homemaking. Women, now better educated and with greater control over their fertility, are in the marketplace, too, and married couples have more money, more leisure time and longer lives to spend together. Modern marriages are based not on the economic benefits of playing specialized roles but on shared passions.

This new model of “hedonic marriage” has had an effect on who marries, and when — as research I have conducted with my better half, the economist Betsey Stevenson, has documented. In the old days, opposites attracted; an aspiring executive groom would pair up with a less-educated bride. And they would wed before the stork visited and before the couple made the costly investment of putting the husband through business school.

Great stuff.

Love, marriage and firms

Larry Ribstein —  17 September 2010

I’ve been working on the relationship between family law and business associations. My current paper, discussed here, shows why business association standard forms may be inappropriate for domestic relationships.

Another question regarding the relationship between families and firms concerns the extent to which the family is a substitute for the firm as a business organization structures. Conventional wisdom is that families help supply the trust that may be lacking elsewhere in a culture or economy. I noted in my Rise of the Uncorporation:

As Kerim Bey told James Bond in From Russia with Love, “All of my key employees are my sons. Blood is the best security in this business.” Before the development of modern technologies for controlling agency costs, all business was as dangerous as Bey’s spy business and the family was the only feasible way to bind agents. The Roman societas were more like Mafia families than modern partnerships. Partnerships evolved from families to firms in response to the globalization of trade and development of more sophisticated contracts and business technology.

This suggests that whether families serve as firms depends on the local business technology. But might it also depend on local family technology? This is the insight in Mehotra, Morck, Shim and Wiwattanakantang’s recently posted Must Love Kill the Family Firm. Here’s the abstract:

Family firms depend on a succession of capable heirs to stay afloat. If talent and IQ are inherited, this problem is mitigated. If, however, progeny talent and IQ display mean reversion (or worse), family firms are eventually doomed. This is the essence of the critique of family firms in Burkart, Panunzi and Shleifer (2003). Since family firms persist, solutions to this succession problem must exist. We submit that marriage can transfuse outside talent and reinvigorate family firms. This implies that changes to the institution of marriage, notably, a decline in arranged marriages in favor of marriages for “love” bode ill for the survival of family firms. Consistent with this, the predominance of family firms correlates strongly across countries with plausible proxies for arranged marriage norms. Interestingly, family firm dominance interacted with arranged marriage norms also correlates with lower GDP per capita, suggesting that cultural inertia may also impede convergence to more efficient economic organization.

In other words, arranged marriages, and proxies such as the Japanese practice of adopting adult heirs, help families run firms, and are themselves products of other factors in the culture.

The authors conclude that “[h]ow arranged marriages affect corporate governance, corporate strategies, corporate organization, and other central questions about the organization of economic activity remains largely unexplored . . .”

This market/business oriented blog will only contribute a few of the zillions of words that will be written on this case. I will, of course, focus on the market aspects – that is, the market for law.

I have previously discussed same sex marriage in the context of the U.S. federal system – in a 2008 post on Prop 8, my initial article (with Buckley) on the law market for marriage, a more recent article analyzing marriage as a standard form contract, and my book with O’Hara, The Law Market, chapter 8 of which analyzes the market for marriage law. My blog post summarizes that book’s theory as it relates to marriage:

Those favoring a particular legal regime can further their interests not just by lobbying a particular legislature, but also by “shopping” for law in other jurisdictions, including by getting married in the relevant state. These other jurisdictions have an incentive to supply law to attract residents, ceremonies, legal work. Even non-supplier jurisdictions have an incentive to enforce the foreign law because the “shoppers” (including affluent and productive same sex couples) can avoid non-recognizing states. We’ve seen this competition play out, among other areas, in corporations and commercial contracts, and it is happening in Europe as well as the US.

Now of course the Law Market shouldn’t trump the constitution. The problem is that the constitution just isn’t as clear on same sex marriage as it is, say, on slavery. I would have voted against Prop 8. I don’t think much of the arguments against same sex marriage. But does the constitution compel others to accept this view?

As argued in my “standard form” article, I would leave this knotty question to the Law Market (footnotes omitted):

[T]he relevant question is whether the process is likely in the long run to disregard rights that deserve recognition. A decision invalidating laws against same sex marriage would leave many questions unanswered concerning potential differences between same sex and heterosexual relationships. Agnosticism is particularly important for family law, given the clash of normative views and the difficulty of getting reliable data. Among other things, there are questions about the optimal mix of standard forms that each state should offer, and the nature of the restrictions on who can use each form. * * * [A] choice-of-law approach lets states experiment with various approaches. Courts and legislators can observe the results, particularly as children grow up under different regimes. Evolution also permits the law to adapt incrementally to unpredictable future events and changing mores, provides feedback as to alternatives, and minimizes the cost of mistake compared to a Supreme Court decree.

So where does the law market stand with same sex marriage? According to this website, a significant majority of 29 states have actually gone to the trouble of adopting specific laws against same sex marriage. Another 12 have traditional marriage laws on the books defining marriage as one man and one woman. The states authorizing same sex marriage are limited to an enclave in the northeast (NH, VT, CT, MA) plus DC and Iowa. California ultimately put itself in the anti-same-sex-marriage position through Prop 8, which its supreme court let stand.

Now a federal judge has ruled that “Proposition 8 deprives [plaintiffs] of due process and of equal protection of the laws contrary to the Fourteenth Amendment and that its enforcement by state officials violates 42 USC § 1983.” The court reasoned:

For the reasons stated in the sections that follow, the evidence presented at trial fatally undermines the premises underlying proponents’ proffered rationales for Proposition 8. An initiative measure adopted by the voters deserves great respect. The considered views and opinions of even the most highly qualified scholars and experts seldom outweigh the determinations of the voters. When challenged, however, the voters’ determinations must find at least some support in evidence. This is especially so when those determinations enact into law classifications of persons. Conjecture, speculation and fears are not enough. Still less will the moral disapprobation of a group or class of citizens suffice, no matter how large the majority that shares that view. The evidence demonstrated beyond serious reckoning that Proposition 8 finds support only in such disapproval. As such, Proposition 8 is beyond the constitutional reach of the voters or their representatives.

In other words, a judge in a San Francisco court has ruled that plaintiffs’ experts should decide this case rather than California’s voters.

Ironically, I suspect that this issue ultimately would have played out in favor of same sex marriage. Not long ago same sex marriage was recognized nowhere. The tide is turning despite the fervent efforts of religious groups and others. Although it will take time, the law market eventually will follow attitudes evolving toward homosexuality and accept same sex marriage. State statutes will clarify rights at least within states, and state laws likely will evolve toward uniformity. Even in California, a replay of Prop 8 by ballot rather than court decision likely would come out different today.

Instead, we are likely to get a Supreme Court decision that either affirms and fuels decades of resentment and confusion about exactly which state family laws are valid, or reverses and stalls the momentum of the same sex marriage movement. I am not sure even proponents of same sex marriage should celebrate either outcome.