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It wasn’t too long ago that I blogged about the purported end of the Demarcus Cousins saga.  For TOTM readers that want to catch up to speed, here is how things stood about a month ago:

For those who haven’t, Cousins is a blue chip high school basketball recruit who has been bargaining hard with the University of Alabama-Birmingham (UAB) over signing his National Letter of Intent — the letter that commits a player to attend the university and imposes the penalty of giving up a full year of eligibility if the student-athlete transfers. Cousins wants to commit to UAB to play for former Indiana University coach Mike Davis but wanted to seek contractual insurance for the possibility that after signing the letter of intent and making specific investments to UAB, Davis might leave the program. Cousins alleged that Davis promised that UAB would release Cousins without penalty if Davis was no longer his coach.

When we last left Cousins, he was holding out, talking to other programs, and attempting to bargain for this term in his National Letter of Intent.  He’s now signed with Memphis.

Back then, I noted that I thought it was odd that UAB could not find a way to include the contractual provision in Cousins’ NLI and wondered whether other athletes were successful in doing so.  It turns out recent developments give answer to that question, and also involve Cousins.

As the college basketball world now knows, former Memphis coach John Calipari (who successfully got the verbal commitment from Cousins) has accepted the head coaching position at the University of Kentucky.

With Calipari accepting the Memphis job, the question now turns to whether his excellent recruiting class will stay at Memphis.  But what about the NLI provisions that commit a player to attend or take the one year penalty for transferring?  Apparently, Cousins only committed to Memphis verbally and so is free to transfer.  ESPN reports that Cousins may stay at Memphis but that Calipari is likely to have a wonderful shot at him heading to Kentucky.

But here is the interesting new fact (at least to me and as it has been reported on ESPN): Another blue chip recruit that had signed an NLI with Memphis, Xavier Henry, but ESPN reporters continue to reference his NLI including a provision that allows him release without penalty in the case of Coach Calipari leaving.  My immediate reaction is that the fact that the competitive process for top recruits allows those players to extract these sorts of commitments from programs like Memphis convinces me that the problem at UAB must be related to a dispute between their coach (Mike Davis) and the UAB administration.  Of course the coach wants the provision.  But perhaps administrations at mid-majors want to increase the cost of early departures by prohibiting coaches from leaving and keeping recruits at the new school whereas this is less of a problem at major programs that have other substitute methods of keeping their coaches on staff for long periods of time.  For example, this list of terms reported to be included in Calipari’s Kentucky deal are too good not to post:

  • The $31.65 million deal making John Calipari the highest-paid coach in college basketball is packed with perks beyond his annual salary, including membership to the country club of his choice, two cars and incentives for reaching the NCAA Sweet Sixteen and Final Four and winning a national title.
  • The Wildcats paid Memphis $200,000 as part of Calipari’s buyout of his Tigers’ contract, which had paid him $2.35 million per year.
  • Including $3 million in retention bonuses he’ll get for staying with Kentucky through March 31, 2016, Calipari is in line to receive an average of $4 million a year over the eight years.
  • Two “late model, quality automobiles,” plus mileage.
  • Membership in a country club of his choice, including monthly dues and initiation fees.
  • 20 prime “lower-level” season tickets to UK home games.
  • Eight tickets for each UK home football game.
  • Hundreds of thousands of dollars in incentives for reaching certain milestones, such as a 75 percent graduation rate or better ($50,000), winning the Southeastern Conference ($50,000), winning the SEC tournament ($50,000), making the NCAA tournament round of 16 ($100,000), making the Final Four ($175,000), or winning the national title ($375,000).
  • The right to income from conducting basketball camps using UK facilities.
  • Should the university fire Calipari without cause, he would still receive $3 million for each year left on the contract, double the annual buyout former Kentucky coach Billy Gillispie says he is entitled to under his memorandum of understanding.

"Screw off, John"

Josh Wright —  21 October 2008

Emailed James Heckman in response to fellow the Milton Friedman Institute (MFI) committee member John Cochrane, who had warned Heckman about his publicly expressed views that he was open to considering changing the name of the MFI and that at least some of the now well-cataloged objections to the MFI were rooted in the view that U of C too hastily approved the MFI proposal (HT: Levitt). Here’s what Cochrane reportedly wrote to his colleague:

My strong, personal suggestion is that you are digging yourself deeper and deeper into public statements that you will regret. Now, not only is Friedman’s name expendable, the GSB political, but President [Robert] Zimmer ’rushed this through.’ He’ll be delighted to see that in print. You may have long, convoluted explanations, but that won’t do much good when this sort of thing gets out.

It is a sad statement how far afield this debate has gone from Friedman’s intellectual achievements as a research economist and in advancing economic thought. In my view, those contributions alone justify the MFI and it strikes me as fairly disingenuous to object to a social science research institute in his honor.  I don’t think opening discussions about re-naming the MFI helps matters.  If the opposition is fairly represented by their own letter (thoroughly rebutted here), they seem content to ignore any serious discussion of Friedman’s contributions to social science.

While much has been said about the recent Milton Friedman Institute scuffle at the University of Chicago (including here at TOTM here), Chicago GSB Professor John Cochrane’s scathing comments on the original Protest letter have stirred up some additional commentary worth reading.  In particular, Craig Newmark (who adds the new fact that apparently the Protest letter was not sent to the economics department, the GSB, or the Institute — does this mean it was sent to the law school?) and Steve Horwitz, who quiet nicely turns the Protesters complaints about the negative externalities imposed on “other” Chicago faculty by the university’s free-market reputation on its head:

I’d like the Chicago humanities faculty to tell me how I’m supposed to feel when these students ask me why so many US humanities faculty, including some of my colleagues at SLU, still think Marxism and socialism have social value when those ideas were the inspiration, even if wrongly interpreted, for thugs who engaged in the killing of tens of millions of innocent people and the destruction of the economies of billions. I’d like them also to tell me how I’m supposed to feel when a Cuban refugee who risked his life to come to the US asks me why some US college students, including some at SLU, think it’s cool to wear Che Guevara t-shirts, implicitly honoring a murder and torturer.

Whatever the flaws of free market capitalism as it was applied in the real world, its sins pale in comparison to those of really-existing socialism. When the Chicago humanities faculty have to explain to these students why my colleagues and students have sympathy for the ideas that motivated the impoverishment and death of millions of their fellow citizens, then maybe I’ll some sympathy for them having to explain away sweet old Milton Friedman.

The following email from Henry Manne takes up our previous discussion of the future of law and economics (available here in downloadable form) and is published with permission. I’ve inserted a few links where Manne references a few blog posts responding to our earlier discussion. With that said, here is Manne:

It is a little disappointing that there has not been a larger debate stirred up by our efforts, but that may tell us something about the level of interest either in L&E or in what happens in law schools today. Frankly I think I would put my money on the latter explanation. I think the entire legal education enterprise has become so politicized and ideological (and you know in which direction that leans) that there really are comparatively few law professors, especially among the younger ones, who even identify with the problem we were discussing. They don’t even know that law schools not too many years ago were intellectual wastelands. They still are, but the field is ersatz social science instead of doctrinal law.

That is what more and more leads me to regret losing the old approach of lawyers teaching doctrine to would-be lawyers. At least they did a creditable job of that. And incidentally I think Solum is too parochial when he asserts that there is no social justification for that approach to law. I think Hayek’s defense of common law is just that and very powerful.

There may be room for Solum’s PhD idea, but I do not think it will be occur
in the law schools (Harvard and Michigan and Stanford would never forego the training of practicing lawyers). His third possibility, the mixed interdisciplinary law school is the model that I think we have already seen won’t work, if for no other reason than the low quality of the non-law discipline scholarship. (His model of universities as a market for truth instead of a more traditional market just won’t fly unless he can adduce some far different evidence than I have seen.) The other blog, discussing engineers and physicists does nothing more than repeat the problem in an
analogy which is far from perfect. Engineers, unlike lawyers, do not have much choice of careers after graduation, and woe be unto the bridge builder whose ends don’t meet – unlike the would-be philosopher kings among self-described L&E scholars, who don’t know one end from another.)

Having said all that I want to warn against predicting the future in anything as chaotic as our universities. I don’t think there is much that is systematic in any not-for-profit organizations, and the problems are just compounded in our universities. One really good charismatic academic entrepreneur could do more to set the tone of future law schools than anything we have discussed. But whether such a person will ever exist and what he or she will look like I have not a clue.

Dan Drezner raises the plausible possibility that the real reason for the objection of some 8% (101) of the full-time faculty to the Milton Friedman Institute at the University of Chicago, which we blogged about earlier here, is “grounded less on ideology and more on an effort to ensure these departments get a bigger slice of the pie.”  HT: Jon Adler.  The letter itself concedes that funding is a motivating factor for some dissenters:

Many of us are also perturbed that other units of the University that routinely engage the issues that the Friedman Institute is designed to address were not included in the planning, nor included in the ongoing core scholarly endeavors of the Institute….

Still others believe that, given the influx of private contributions to the MFI, the University now has the opportunity to provide roughly equivalent resources for critical scholarly work that seeks out alternatives to recent economic, social, and political developments.

And for more support for Drezner’s theory, he points out that: “the modal department affiliations of the petitioners are Anthropology, East Asian Languages, English, History, and Political Science.”

In my prior post, I noted that “I’m particularly interested to know whether any members of the University of Chicago Law School signed this or alternatively, have publicly supported the Milton Friedman Institute.”  Well, from the list of signatories, we can answer the first question.  None from the law school.     But what about the lack of public support?  I’ve seen a few economists come out in defense of the Milton Friedman Institute, e.g. Steve Levitt, but nothing so far from Chicago’s law school faculty unless I’ve missed it.

The NWU 2 Year Program

Josh Wright —  21 June 2008

Bill Henderson has some thoughtful commentary on Northwestern University’s announcement of its 2 Year JD.  He likes it.  Here’s an excerpt:

So let’s get this straight:  NWU Law is going to attract applications from all the experienced, motivated students who want their elite JD degrees in two years versus three.  Then it is going to give them, through mandatory coursework, business training that will bridge the traditional gap between lawyers and their MBA clientèle.   Sorting plus training.  Why would an employer prefer a 25 year-old fresh out of another elite law school?  Because the education was stretched over 32 months rather than 24 months–that trumps work experience and mandatory business training?

Read the whole thing.  Bill looks to the market for evidence that the NWU program is a good idea (and finds it).   As an economist, I am inclined to agree with Bill that this approach is superior to ” taking a poll in the faculty lounge.”  Along those lines, there is a rule of thumb in antitrust analysis that a fairly reliable indicator for assessing the competitive effects of some proposed conduct: if customers complain, the conduct is likely to be anticompetitive, but if it is competitors that are complaining, the proposed conduct probably makes the firm a more effective competitor and is good for consumers.  Through this lens, the critical comments from representatives of Northwestern’s in state rivals University of Chicago and University of Illinois (Chicago Professor Geoff Stone went so far as to describe the program as “irresponsible”) look like good news for consumers of legal education.

So says Jagdish Bhagwati about the recent objections by 100 or so University of Chicago faculty members to the establishment of the Milton Friedman Institute.  (HT: Chicago Tribune).  Here’s the whole quote as reported from the Chicago Tribune:

“It is nonsensical to object. . . . Chicago should be proud it has someone like Milton on its rolls … . Anybody who can claim that Milton was not one of the major thinkers of his time is crazy.

A copy of the letter sent to the U of C President and Provost is available here.  The faculty proposal for the MFI is here.  I cant find the identities of the signatories anywhere.  I’m particularly interested to know whether any members of the University of Chicago Law School signed this or alternatively, have publicly supported the Milton Friedman Institute given that its mission as described in the Tribune article includes “attract[ing] visiting scholars who will conduct research on topics related to economics, business and law.”  The proposal indicates that Eric Posner is the sole law school member of the MFI faculty committee, along with Lars Peter Hansen, Gary Becker, John Cochrane, James Heckman, Robert Lucas, and Kevin Murphy.

I’ve compiled (with some light editing) the blog posts from the future of law and economics series into an article, including the response from Henry G. Manne, entitled “The Future of Law and Economics: A Discussion.”  For those interested in reading the blog posts in their original form, along with the comments, I’ve indexed the links below:

Part I: The Future of Law and Economics
Part II: Mathematics, Retailing L&E and Detachment
Part III: L&E Scholarship
Part IV: Potential Solutions

Part 5: A Reply from Henry Manne
Part 6: Wrap Up & A Brief Reply to Henry Manne on Empirical L&E

From Peter Boettke at the Austrian Economists blog.  Boettke gives detailed advice on how to prepare for your first year of a graduate program in economics, but the general message of the advice is more broadly applicable.   I agree with virtually everything he says about the economics (start writing early and read lots of Alchian are amongst the recommendations), and you should read his post for those details, but the last paragraph is advice worth sharing here for both law students and economics graduate students:

And finally, find the brightest and those who love economics among your fellow students and become close friends, and pursue the graduate education and research journey together.  You will learn as much, if not more, from your fellow students as compared to your professors.  Choose wisely.

That passage certainly resonates with my own graduate school experience a great deal.  Go read the whole thing.

In Part V of the series on the future of law and economics (Parts I, II, III, and IV), Henry Manne graciously offered a reply to my thoughts on where L&E might be headed and why. I encourage the readers interested in the series to take time to re-read Henry’s response in its entirety. While Henry and I agree on many points concerning the problems facing L&E and what might be causing them, I interpret his post as raising two major points of disagreement. The first is that I largely ignored issues of ideology (see also Brian Tamahana’s comment here) and their role as a force pushing modern L&E out of law schools. That is fair enough. I agree with this point in the sense that I don’t think there is any doubt that the shift in the content of modern L&E toward empiricism, behavioral law and economics, and theoretical modeling is consistent with a theory that those forms of L&E are likely to be much more acceptable to the political left than the L&E scholarship of the previous several decades.

But I want to offer brief rejoinder concerning our second point of disagreement, the role and future of empirical L&E in law schools. Henry describes my defense of empirical L&E in law schools as “somewhat surprising,” and notes correctly that a large fraction of modern empirical L&E suffers from the same retail problems described throughout the series. But I think we largely, but not completely, agree here as well. For instance, we both agree that some empirics play an important role in L&E. We also agree that without the retail component of L&E there is really no basis for L&E to remain in law schools, that is, economists or social scientists in other departments would be better situated to do it. Finally, we agree that there are some important differences between modern empirical L&E and the empirical L&E of the past several decades both in terms of technique and tone. In terms of technique, there is no doubt that methodological changes have shifted (consistent with the general trend in economics) in favor of less accessibility. Comparing modern empirical scholarship to the original empirical L&E (e.g. Stigler), it is tempting to focus solely on the differences in the mathematical sophistication of the methods.

But there is also an important difference in terms of tone. What is most surprising to me is that modern empirical L&E scholars seem to be much less interested in retail in terms of judges and the general legal audience. One might suspect that blogs, as a complement not a substitute for legal scholarship, would facilitate this kind of retail (again, think Freakonomics and especially Levitt and Wolfers). And of course, there are all sorts of noteworthy exceptions. But my casual sense is that empiricists seem much less interested in retail than the used to be. Which brings me to my main point. I do not believe that the choice must be made between sophisticated methods and retail. This is a post about economics by an economist, so I’m certain to tell you that there are tradeoffs! But I do believe the success of books like Freakonomics with the general population provide some evidence that these methods *can* be retailed in various forms (articles, workshops, books, monographs) to judges and legal scholars in ways that make the work accessible, in sufficient detail that the reader can understand intuitively what is being done, and without sacrificing sophisticated methods. This last part is important. These sophisticated methods take a lot of heat for their formality and inaccessibility. They shouldn’t. At least not on those grounds alone. To the extent that these methods allow us to more reliably and more accurately identify causal relationships, magnitudes of effects, etc., we should be willing to embrace them so long as the empiricists embrace L&E by investing in retail.

Perhaps I’m wrong about this. Or just hopeful. But in my humble and perhaps overly optimistic and admittedly self-interested view, the technical advances in econometric methods do not require empirical L&E to abandon retail. I guess at the end of the day my view is that if the modern empirical L&E scholar cared enough about it, and they ought to, then some retail of L&E would remain possible. Perhaps they don’t. Or perhaps some of the various legal institutions that care about L&E at the retail level should target some of their efforts at increasing the production of accessible empirical scholarship (or collaborations, or translations …). In any event, I thought these final points were worth sharing.

I will of course leave the very last word on this to Henry should he find anything I wrote requires a response, correction, or critique. But I’m very interested in what empirical L&E types have to say about these trends and what they mean for the future of empirical L&E. Is there more retail level L&E going on than I think? Am I right that there seems to be less interest in retail empirical L&E as opposed to papers speaking largely to each other? Any other responses?

I’ve had a wonderful time writing this series on the future of law and economics. When I started the series (Part I, Part II, Part III, and Part IV), I thought it would be a fun thought experiment for me to think through aloud and hopefully start a valuable conversation. By that measure, it has been a success. I’ve received many valuable comments, critiques and responses in blog posts, emails, and in person. But I couldn’t possibly dream up a better way to end the series than with a response from Henry Manne, a founder of the L&E movement, who is perhaps more responsible than any other single figure for its dissemination throughout the legal academy. I think this response is a treat for our readers who are interested in this topic and want to personally thank him for taking the time to offer his thoughts on my series.

As you’ll see, Henry agrees with some of my points and disagrees with others. It appears that our major disagreement centers around my optimism for the empirical L&E agenda in law schools. I will reserve one last modest response on this particular point for a later post, as I believe it presents the opportunity for further valuable discussion, but will also be happy to give Henry the last word should he desire a sur-reply. Without further ado, here is Henry’s response to the series on the future of law and economics:

I found some very thoughtful, even profound, points in your series, but I also found some glaring weaknesses. In the same spirit in which you wrote your ideas, I offer you some passing thoughts on the subject. I have by no means sought to make an orderly response to your discussions, nor to be exhaustive of the many interesting topics you raise. You will just have to sort out for yourself the parts that are relevant for your purposes and those that may do no more than reflect the musings of a never-satisfied old warrior. I might add that this was written in haste (will repentance follow?), and I reserve the right to change my mind tomorrow.

First I want to examine your right-on delineation of the problem as resulting from too much mathematics and over-formalization, the accessibility problem. I was somewhat surprised to find you never mentioning one salient fact in this issue, that the task of a law school is to prepare students for the practice of law and to do the kind of scholarship (research) that serves an instrumental social benefit within the area of law professors’ expertise. I am afraid that your approach to this has been somewhat distorted by your own training and expertise, a problem that afflicts most academics. You show an unmistakable tendency to want to protect the value of the skills that you have. Thus you make what to me seems a somewhat surprising defense of econometricians in law schools (I’ll discuss this point later). Now please understand that I do not criticize you personally for this, for that is exactly what I tried to do starting in the 1950’s, i.e. utilize the skills that I had and to increase the demand for those particular skills. I was fortunate that there happened to be a convergence between my approach and what worked for the law schools of that time. As you and I agree, Law and Economics has been of extraordinary value to legal education. It took it out of the doldrums of anti-intellectualism and mechanical thinking about law, and made law schools respectable partners in the greater role of universities. That was no small development, and I do not think that it is in any immediate danger of being reversed., though sometimes, when I see the quality of what some law professors pass off as Law and Economics scholarship, I wince and think that perhaps the old style law schools were better since at least they could at least pass the Hypocritical test of doing no harm.

But to get back to my main point, I really do not think that we should be bothering in law schools with either teaching or research that in some ways does no make for better lawyers or for better legal scholars (not necessarily the same thing, but again there is convergence in the long run). I do not see any reason for the law reviews to be full of arcane economic jargon that will never be used by any practicing lawyer or comprehended by any sitting judge (with some very rare exceptions). And here I get to my main point. I think that most of that is the result of the very peculiar “market” forces that operate in universities and not from any thought-out rationale of making better laws or lawyers. (See my “The Political Economy of Modern Universities”). In other words, it is part of the general pattern of professors writing for each other and not for the outside world. That was not the thrust of the original L&E approach. Rather the original approach was simply a marginal (jurisprudential) movement from what most legal-realist-oriented law professors were already doing but, alas, doing very badly. They were trying to explain why one rule of law was better than another (and that did implicate eventually some need for econometrics to be able to do a careful cost-benefit calculus; thus I do not reject your emphasis on the importance of empirics, but I may disagree with you on who is best positioned to do it), but the focus was always on improving the law and not on showing the methodological skills of the authors. This was the intellectual victory which revolutionized the law school world, and it was all because of one thing that you rightly note; that is the power of economics, vastly greater than that of any other discipline, to resolve what had appeared to be purely normative issues in a positive way. It was the introduction to this kind of power that opened the eyes of many law professors back in the 1970s, and which I think still has the power to amaze people who are not familiar with economics’ great analytical powers. Of course, her I mean the kind of economics that you were first taught and which I internalized into my very soul at the feet of Aaron Director, Armen Alchian and Harold Demsetz.

And that gets me to my central point, one which I am afraid that you have missed. I think that the major issues are now, as they were fifty years ago, mainly ideological, and I believe that the causes forcing L&E out of the law schools today are the very same ones that operated to prevent my getting better jobs in the 1960s and for most senior law professors to think that what I was advocating was sheer nonsense, “to the right of Genghis Kahn,” as they used to be so stupidly amused at repeating ad nauseum. They were protecting their intellectual investment in skills and ideology against the threat of a new paradigm in which they could not share the rents, and I do believe that that is exactly what is still happening. While you and I see enormous social benefits from a legal system based on the idea of property rights and their protection, all they see is less role for the government and themselves. Perhaps this acts at an unconscious level, but it unmistakably is at work whatever the source of the peculiar leftist ideology of most academics.

What I am saying is that it is impossible to separate completely a discussion of the role of L&E in legal education from the ideological aspects of the subject. I honestly believe that at some level the turn of L&E to econometrics and empirical work is a flight from the implications of a thoroughgoing Alchianesque kind of economics. Perhaps that is even more clear with the current popularity of Behavioral Economics, and of late I even notice in the literature a somewhat open attack on the very idea of freedom of contract. I do not think these developments are accidental or random; I believe that they are inherent in the very structure of modern universities and law schools, and I, therefore, suggest that perhaps you are looking in the wrong direction for a solution to the problem you describe.

Certainly economics faculties, though they have much less motivation to enter the public arena than do law professors, are better situated to do the economics of law than are law professors, who mainly have a very different kind of educational mission. Even if that is not popular with them at the moment (other than perhaps in IO), that is not part of the concern of law schools (we don’t see Biology and Economics in Biology departments just because the economists happen not to be doing that kind of work), nor do I think it is the job of law professors to make significant advances in economic theory. They should utilize the insights of economics at the level at which it works for lawyers and judges, and that is all (it is a lot) that economics should be in law schools. As for empirical work, I like your idea of emphasizing collaboration and translation; that is probably the most meaningful kind of interdisciplinary work; but I see a fairly limited role for law professors in that (largely explaining to the empiricists what factual issues need measuring and what legal implications they might otherwise misunderstand).

I always thought that my idea of economics for law professors was vastly more important than the idea of economics for judges. I still think that, and I also still think that University Economics is the approach that makes sense in this task. But if that is not to be, and L&E is to go the way I see it at the moment (and we agree on most of that), then I would just as soon see it totally disappear from the law schools, though I do not really think there is much chance of that happening.

My colleague and fellow UCLA alumnus Thomas Hazlett and I have published an op-ed in the Chicago Tribune proposing a partial solution, partially inspired by the early exit of Kevin Love from our beloved Bruin basketball squad, to the problem of early exit by potential NBA draftees.  We note that the problem is the NCAA cartel, which restricts payments to college players while attempting to maintain the charade of amateurism.  While this restriction on cash payments is not likely to be lifted any time soon, we proposed that universities extend insurance coverage that will allow interested potential draftees to stay in school and insure the risk of draft slippage.   Here’s an excerpt:

So the answer, given that universities cannot pay athletes market wages, is to at least insure them. Were underclassmen to be appraised, via draft rankings, and then offered compensation in the event—post-graduation—they slipped by some increment, they could hedge this very considerable exposure. The NCAA allows players to insure, but the player pays even though it is largely the university (and its fans) that benefits. Moreover, policies can only insure against career-ending injuries, leaving the more common outcomes—less serious injuries and performance-related changes in draft status—terrifying prospects.

The schools should extend broader coverage. The contracts we propose do not fully compensate college athletes for their valuable service, and would thus retain only some of the talent now jumping early to the pros. Yet, the approach would preserve the NCAA’s “amateur” wink, while allowing student-athletes to play college ball until their 21st birthday without risking the family jewels. A slam dunk, really.

Check out the whole thing.