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Tax Assignment and Revenue Sharing in the United States
Daniel L. Rubinfeld
In President Reagan's budget proposal for fiscal year 1983, a call was made for a major change in the U.S. federal system. The proposed change included a switch in responsibilities for certain expenditure programs between state governments and federal governments. The exchange would give the federal government full responsibility for medical care for the poor (Medicaid), and the states would take over welfare (aid to families with dependent children) and food stamps. In addition, the proposal would modify substantially the pattern of federal aid to state governments, with the federal government giving responsibility for a large number of grant programs to the states ( over 40 , including transportation and other categorical programs) , most of which would be paid for initially by a special trust fund financed through federal revenues . After several years the trust fund would be eliminated and states would assume responsibility for financing many of these programs on their own. Behind these Reagan proposals is not only a desire for a shift from federal to state financing of expenditures, but a desire to lower public spending generally. The Reagan proposals make this a timely opportunity for one to reflect broadly about government finance in the United States. This paper is primarily descriptive, involving some detail about U.S. federal, state and local tax systems. Of course, any descriptive paper would not be complete without some suggestions concerning public policy. The normative theory which serves as the basis for such suggestions comes from the usual public finance framework discussed previously in this volume. The emphasis in this paper is on economic efficiency, as it relates to the choice of tax instruments and the level of government which can best utilize that instrument. Within an economy such as that of the United States, with multiple jurisdictions and multiple levels of government, any efficiency analysis is difficult at best, because of the externalities created when individual governments' actions affect individuals residing in neighboring jurisdictions, or when these actions indirectly affect the mobility of individuals and other factors of production. This is particularly true in the U.S. context in part because of the large and diverse number of jurisdictions and in part because of the mobility of the population. As a consequence, the theory of an efficient allocation of individuals among local jurisdictions has received substantial attention in the economics literature, and will be relied on here. The descriptive portion of the paper begins with a look at the growth of U.S. government, concentrating on the forms of revenue utilized to finance that growth. Because of the diversity of local jurisdictions, the locational resource implications associated with the choice of various tax instruments are particularly important and receive special treatment. Finally, I look with some care at the growth of federal and state grants-in-aid programs, and evaluate some of the suggested reforms.
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Attempt
Stephen J. Schulhofer
To be punishable as a criminal attempt, conduct must consist of an intent to perform an act or to bring about a result that would constitute a crime, together with some substantial steps taken in furtherance of that intent. This article describes the historical development of criminal liability for attempts, the policies served (and disserved) by punishment in attempt cases, and the current scope of liability for attempts in American law.
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Corpus Delicti
Stephen J. Schulhofer
Corpus delicti literally means the body or substance of the crime. In law the term refers to proof establishing that a crime has occurred, that is, proof establishing each of the necessary elements of the offense in question. Although misunderstanding about corpus delicti has been common among lawyers and laymen alike, it can be seen that the term does not refer to a dead body. There is a corpus delicti of robbery, arson, perjury, tax evasion, and, indeed, of every criminal offense. Moreover, even in a homicide case, a “dead body” is neither necessary nor sufficient to establish the corpus delicti. Testimony that a ship's passenger deliberately pushed the deceased overboard on the high seas can establish the corpus delicti of murder even if the body is never recovered. Conversely, the body of a child killed in a fire would not establish the corpus delicti of murder in the absence of proof that the fire was caused by some criminal act. When a failure to prove some fact essential to the charge (such as a failure to prove intercourse in a rape case) implies that the offense was not committed by anyone, the courts sometimes say that reversal of the conviction is required by the absence of a corpus delicti (Azbill v. State, 84 Nev. 345, 440 P.2d 1014 (1968)). It would be equally accurate, and perhaps less mysterious, to say simply that the reversal results from the prosecutor's failure to prove an essential element of the case.
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Double Jeopardy
Stephen J. Schulhofer
[Double jeopardy, t]he principle that a defendant may not be tried twice for the same offense[,] has been described as “one of the oldest ideas found in western civilization,” with roots traceable to early Greek, Roman, and canon law (Bartkus v. Illinois, 359 U.S. 121, 151-155 (1959) (Justice Black dissenting)). . . . William Blackstone recognized it as a “universal maxim of the common law of England that no man is to be brought into jeopardy of his life, more than once for the same offence”. The exact origins of the “universal maxim,” however, are not clear. A controversy in the twelfth century between Henry II and Archbishop of Canterbury Thomas a Becket over the trial and punishment of clerks in both ecclesiastical and King's courts may have influenced the adoption of the doctrine. It is also possible that the double jeopardy principles were not native to England and were taken from the Continent through canon law. The development of double jeopardy protection in England was strongly influenced by the political environment and by changes in criminal law and procedure. The tensions between church and state during the twelfth century caused sporadic application of the protection against punishment in both the ecclesiastical and King's courts. Within the King's courts, criminal procedure of the period permitted a penal proceeding to be initiated either by a private person (an appellor) or by the king or his agent. In the thirteenth century, the courts established that a suit by an appellor that resulted in either an acquittal or a conviction of the defendant was a bar to another suit by the same appellor. An indictment by the king was subject to the same limitation. A suit by an appellor, however, did not bar an indictment by the king. Further, double jeopardy limitations applied to capital offenses only. Not until the second half of the seventeenth century did the "universal maxim" receive more serious attention in English law. It was then held that a trial in another jurisdiction would bar further proceedings (Rex v. Thomas, 83 Eng. Rep. 1180 (K.B. 1664)). The Court of King's Bench ruled that reprosecution should be barred after an acquittal (Rex v. Read, 83 Eng. Rep. 271 (K.B. 1660)). In addition, the courts attempted to end the practice of discharging the jury when it appeared that a defendant would be acquitted, a practice instituted so that the prosecution could bring another action after improving the evidence. The movement in seventeenth-century England toward increased protection was not enough for some American jurisdictions, and therefore the double jeopardy doctrine was further expanded in the colonial period. For example, the doctrine was extended, first by Massachusetts and eventually by other colonies, to all offenses, capital and otherwise. Double jeopardy protection was generally not included in the first colonial constitutions, but the doctrine did appear in the case law. In 1789, the prohibition of double jeopardy was included in the Bill of Rights: the Fifth Amendment provides that no person shall “be subject for the same offense to be twice put in jeopardy of life or limb.” These words, although simple, did little to clarify the meaning and scope of the protection. States formulated their own protection against double jeopardy, and many adopted standards different from those of the federal government. In 1969, however, the Supreme Court held that the Fifth Amendment double jeopardy clause applied to the states and that the same constitutional standards of double jeopardy restricted both state and federal governments (Benton v. Maryland, 395 U.S. 784, 793-796 (1969)).
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Gambling
Jerome H. Skolnick
Gambling can be defined broadly as participation in any risk-taking activity, from investing in stocks to planning nuclear weapons strategies to taking a lover. It can also be defined more narrowly as a bet or wager on the outcome of a probability game designed for risk-taking, or on a sporting event. This discussion concentrates upon the latter type of gambling, which historically and cross-culturally has been regulated or prohibited by law. Why this should be so is not entirely clear. Gambling cannot by any stretch of the imagination be considered inherently evil (malum in se). Those who gamble do so voluntarily. Why, then, has gambling been given so much negative attention by governments? Why is betting—or accepting bets—sometimes viewed as a crime? Reasons that can be singled out are that gambling has been thought to be destructive of personality, to be fundamentally immoral, to invite fraud and deception, and to engender social decay.
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Police: Vice Squad
Jerome H. Skolnick
Historically, the vice squad is that organizational branch of a local police department which specializes in the enforcement of laws prohibiting prostitution and gambling and, more recently and importantly, the use and sale of illegal drugs. The laws enforced by the vice squad are accordingly among the most controversial in the armamentarium of the criminal law. The vice squad enforces “victimless crimes” lying at the “borderland” of criminal justice. No systematic statistical studies of vice squads have been undertaken to determine how many exist, their average size, or what portion of law enforcement resources they expend. A minor survey of West Coast police departments conducted in the summer of 1981 revealed that every major police department in California maintained a vice squad and that smaller cities might join in forming a countywide narcotic enforcement unit. A rough idea of size and scope might be gained from the following comparisons. San Francisco, with a population of 642,900, maintained a vice squad of seventy-two, or 3.89 percent of the total police force. Oakland, whose population was 327,300, maintained a vice squad of fourteen, or 2.64 percent of the total force, and Merced, a farming community of 34,000, increasing to 45,000 during the harvest season, assigned six officers out of seventy, or 8.5 percent of its force, to its vice squad. Oakland's vice squad is fairly typical of the organization and operations of such units in middle-sized cities. A lieutenant, two sergeants, and eleven patrolmen constitute the squad. The lieutenant reports directly to the deputy chief who heads the bureau of investigation. A majority of the squad's members are assigned to narcotic enforcement, and the remainder try to contain the city's population of prostitutes and illegal gamblers.
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The Limits of Administrative Law
Richard B. Stewart
The uneasy sense that we are a society overburdened by lawyers and litigation is no more evident than in administrative law. Our traditional reliance on judicial and adversary procedural controls to channel and discipline administrative decision-making is today experiencing severe stress. As court dockets swell with Social Security appeals and proceedings to review mammoth regulatory records, sharp questions are being raised about the abilities of judges to contribute to administrative justice. The United States stands quite alone among the great industrial democracies in our extreme reliance upon adversary litigation to control administration. There are, to be sure, important historical and cultural factors that underlie that reliance. But the dysfunctional elements in our current administrative law have become sufficiently marked that serious consideration must be given to basic institutional reordering. No one, I believe, would seriously argue that courts ought to be excluded entirely from control of administrative decision-making. Moreover, any substantial cutback in the present judicial role would have to be matched by the creation of alternative institutional means of review and accountability. In that sense, we shall doubtlessly always require an administrative law. But the time seems ripe to shift a large portion of the responsibility for its enforcement from courts to other authorities.
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Private Property and the Public Domain: The Case of Anti-Trust Law
Richard A. Epstein
It takes no acute observer of the modern scene to note the massive impact of economic analysis upon the normative and positive studies of legal rules and institutions. While economics is but one of many social sciences, it is a social science with a difference—or more precisely, with a theory. With its postulate of rational self-interest of individual actors, it is able to convert statements about human behavior into propositions about the maximization of benefits or the minimization of costs. Its set of formalized premises allows economists to generate insights and testable hypotheses that necessarily escape those who are limited to the more intuitive tools of hunch and experience. More to the point here, the powerful and well-thought-out vocabulary of economics is so easily incorporated into legal discourse that it seems as though law and economics must perforce become natural allies. It is difficult to talk about the public interest without mention of transaction costs, public goods, holdouts, and free-rider problems; about antitrust law, without competition. and monopoly; about negligence without risk preference, risk neutrality, and risk aversion; about the duties of trustees, without portfolio theory and efficient markets; about tort damages without discounting the present value. The list of examples can be expanded almost at will to show how economic concepts are embedded in the fabric of legal thought. Indeed, the real question is not whether economics has any relevance to law but, Is there any other game in town?
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An Experimental Examination of Auction Mechanisms for Discrete Public Goods
John A. Ferejohn, Robert Forsythe, Roger G. Noll, and Thomas R. Palfrey
In previous research (Ferejohn et al., 1976, 1977, 1979a, 1979b) we have addressed the problem of designing well-behaved choice mechanisms for simultaneously purchasing more than one discrete public good from among several independent alternatives. A "discrete public good" is a public good which is provided in a single, fixed quantity. The initial example that motivated our work (see Ferejohn et al., 1976) was the selection of roughly 30 television programs of fixed duration and content from more than 100 programs that were proposed to public television stations. Several other examples are equally germane, such as the selection of research proposals to be supported by a foundation or the decision by partners in a joint oil exploration venture as to the tracts in a field on which to bid. In practice, most collective decisions are posed as a choice among discrete alternatives to simplify the selection process. See Ferejohn et al. (1979b) for more examples.
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On the Properties of Stable Decision Procedures
John A. Ferejohn and David M. Grether
Nonunanimous voting processes seldom possess voting equilibria if the number of alternatives is large. The discovery of this fact has led to an intense search for new “solution concepts” for voting games that are capable of predicting outcomes in cases in which equilibria fail to exist. The reader is referred to papers by Kramer (1977), Fiorina and Shepsle (this volume), and Riker (this volume) for examples and further discussion.
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Translators’ Introduction
Stephen Holmes and Charles Larmore
The focal concern of this volume is the historical uniqueness of the West—of “modernity” in all its preconditions and ramifications. In this respect, if not in others, Niklas Luhmann shares the preoccupations of Max Weber. Although the essays that are collected below were composed over a period of fifteen years (from 1964 to 1979), they have a single and clearly defined purpose. Luhmann's ultimate aim, in fact, is to develop a conceptual vocabulary that is refined, variegated, and supple enough to capture what he sees as the unprecedented structural characteristics of modern society. His books and articles are typically prefaced with a claim that many of the most influential ideas inherited from the great tradition of ancient and early modern political philosophy are far too coarse, rigid, and simplistic to help us grasp the hypercomplexity of our present social order. Thus, Luhmann argues that social theory must routinely begin with a “critique of abstraction,” with the dismantling of obsolete and procrustean theoretical frameworks. This exercise in razing the past, of course, must be followed by a more difficult (and thus more tentative and experimental) process of building up, by an attempt to replace the jettisoned frameworks with a more flexible and realistic set of categories and questions. What should be stressed at the outset is that the highly abstract, sometimes difficult and abstruse quality of Luhmann's sociology results from his ongoing endeavor to provide a highly general map with which empirical and historical research can approach the study of modern society. One of the methodological rules to which Luhmann constantly recurs is this: we must always resist the temptation to blame modern society for deficiencies in our outmoded theories. Indeed, his entire approach is predicated on the belief that naive moralism, afflicting both Marxist and conservative social thought, frequently stems from the anachronistic inadequacy of our descriptive schemata. All too often, he tells us, modern society is diagnosed as “in the throes of crisis” simply because its complex order and novel patterns of change do not pliantly conform to our antiquated concepts of integration and stability. A revamping or updating of the basic categories of social theory, of course, does not dictate a jubilant celebration of “all modernity.” But it may help us approach our unsurveyably complex social order in a more cogent and exploratory (and less plaintive) fashion. This, in turn, should allow us to unearth solutions and alternatives for action that have hitherto been concealed by tradition-skewed misperceptions of modernity.
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International Distributive Justice
David A. J. Richards
In this essay, I investigate the application of the concept of justice to relations among states in contrast to the more familiar issues of justice arising within states. My starting point is that contractarian theory, in the form developed by John Rawls in A Theory of Justice, enormously clarifies critical discussion of arguments about distributive justice in the forms in which they arise within developed industrial states. In what way, if at all, can or should this analytic framework be deployed in the analysis and explication of issues of justice outside this context, for example, claims of justice between or among states or claims of intergenerational justice? This chapter addresses the problem of international distributive justice, by way of an examination of certain difficulties that contractarian theory allegedly experiences in this area. In general, I defend the coherent plausibility of contractarian theory in providing foundations for strong moral duties in the international area, both of mutual aid for persons in life-endangering distress (in the form suggested by Peter Singer, and more precisely elaborated by Brian Barry), and of redistributive justice along the lines of Rawls's difference principle (in line with early suggestions of David Richards and Brian Barry, and the more recent elaboration of Charles Beitz.)
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Justice and Equality
David A. J. Richards
Since the earliest philosophical reflection on the concept of justice and its place in political and social discourse, justice has been supposed to involve or implicate the idea of equality; and, this view of the concept has, despite dramatic shifts in the substantive interpretation of what equality is or should be, remained a perennial constant of serious self-conscious discourse and debate about justice. In this essay, I try to explain the formal idea of justice which appears to unite all serious philosophical reflection on the ideas, and then to focus on two levels of disagreement about how the underlying idea of equality should be interpreted – first, the level of common-sense criteria (like need, merit, rights, or the like), and second, the level of fundamental moral principles (utilitarianism, Kantian mutual respect, and the like). Finally, I turn to the implications of these philosophical disagreements for the understanding of various substantive controversies over issues of justice, for example, distributive justice of basic goods and resources, the liberal priority of free speech and personal autonomy, and the retributive justice of punishment.
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Property Tax Reduction in Michigan
Daniel L. Rubinfeld and Robert Vishny
In the past few years, there have been numerous attempts to limit state and local government spending and taxes. The most famous of these, Proposition 13 in California, passed by an almost two-to-one margin and reduced property taxes about $7 billion. At the present time, limitations of one sort of another are in effect in sixteen states, seven of which apply specifically to property taxes. It is perhaps no coincidence that the most successful attempts to limit taxes have focused on the property tax. Widely recognized in opinion polls as the most unpopular tax in the land, the property tax fell into even greater disfavor in the 1970s. With residential property values increasing at a rate higher than the rate of inflation, property value assessment increases have become a matter of grave concern for many taxpayers. While these increases may have acted as catalysts for the proliferation of property tax relief plans in the 1970s, the public’s dissatisfaction with the property tax may run deeper. Is the public’s apparent desire for property tax relief related solely to the tax itself? Current evidence suggests an alternative point of view. The property tax serves as a useful outlet for individuals’ frustrations arising from a number of factors unrelated to the tax itself – declining real incomes, unemployment and so on. Why focus on the property tax? First, the tax is the primary source of revenue for local expenditures which provide services such as fire, police and education – services which directly affect individuals on a regular basis. Frustration about the quality of public services may be directed against the revenue source which finances those services – the property tax. Second, the tax is authorized through a series of referenda. In many communities these property tax-service referenda provide the only direct outlet through which individuals can express their preferences. Third, the tax is often paid up-front, in a few large payments, rather than being withheld from individual pay checks. Even the use of bank escrow accounts does not fully eliminate the effect caused by relatively direct payment of the tax. Is there anything special about Michigan that suggests it ought to be the focus of a tax-relief program? Unlike California, the Michigan state government has not used increases in assessed values to obtain higher taxes and a large government surplus. Increases in assessments have been slow relative to the recent California changes. And while property tax levies roughly doubled during the 1972 to 1979 period, the amount of state and local property taxes per $1,000 of state personal income steadily declined from $53 to $44, a 17 percent decrease. Examination of some national figures does not provide the answer to our question. A 1980 ACIR study reveals that in 1978 the amount of state and local property taxes paid per $1,000 of state personal income in Michigan was only 5 percent above the national average. Also, in Michigan in 1978, the property tax comprised 36.5 percent of all state and local taxes, while the national average was only slightly lower at 34.3 percent. Michigan taxes are higher than average, but not unusual in their magnitude. In fact, these figures are misleading, since they exclude the benefits from Michigan’s property tax relief, or circuit-breaker program, one of the most extensive programs of its kind in the country. In 1979 for example, benefits of the circuit-breaker in Michigan equalled 9.5 percent of all property tax collections (ACIR 1980). All of the evidence suggest that Michigan’s property tax system in not very different from that of other states. Why the apparent desire for tax reduction? Perhaps one answer lies in the residential portion of the property tax. Between 1971 and 1980 taxes on residential properties measure in current dollars rose about 2.5 times. And residential taxes per capita rose at a faster rate (150 percent) than average per capita personal income (133 percent). While these trends were moderated by the circuit-breaker system, the increase in two-earner households and in younger workers may cause our income per capita measure to overstate the growth of average homeowner income. Whatever the reason however, there is a clear sentiment among many citizens that property tax reductions would be desirable. For some this sentiment is based on the belief that cuts in government expenditures can be made with little or no loss in real output. For others, however, real cuts in expenditures are expected and are desirable. Our objective here is not to answer the questions of why or whether cuts are desired and whether they really make sense at this time. Rather, we will take as given that property tax reductions are to be made, and we will ask, what are the advantages and disadvantages of making cuts in a number of different ways. Before proceeding with the detailed analysis of alternative tax cut plans, some additional information will prove useful. In the next section we briefly review and characterize tax relief plans that have been in effect in other states, as well as the Michigan circuit-breaker. We will see that tax relief is not a new idea. Following this, in the third section, we begin the analytical portion of the chapter by discussing the set of criteria that one might use to evaluate property tax relief plans. Our focus will be on the distributional consequences of various plans, but other criteria are worthy of serious consideration as well. In the fourth section, we utilize data from a sample of 2,000 Michigan individuals in 1978 to analyze a set or reasonable tax reform plans. The fifth section describes the problem of program participation and how it can be improved, while the last section contains some concluding comments.
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The Legal Structure of Interstate Resource Conflicts
Richard B. Stewart
We have explored the history of U.S. regional conflict and looked at a few of its modern manifestations through the prism of the energy “crisis” that began in 1973-74. In the last chapter three case studies of the current conflicts were examined in some detail. The case of Colorado River salinity, the Montana coal tax, and the Waste Isolation Pilot Plant in New Mexico display important differences, but one striking similarity is that all three conflicts encountered the legal process at some point, whether through Indian and international treaties or in the courts, up to and including the U.S. Supreme Court. As such conflicts typically engage the legal process, this chapter examines the legal structure for dealing with regional resource conflicts between and among states and their political subdivisions (regions as such have not legal standing). In the past, the federal courts have taken the initiative in deciding controversies between states and in invalidating state regulation and taxation that restrict the free flow of capital and labor through the national economy. Litigants are demanding that the federal courts play a similar role in resolving interstate resource conflicts. During its 1980 term, the U.S. Supreme Court heard no fewer than four cases involving such controversies. In disposing of these cases, however, the Court made clear that the federal judiciary will not play a major role in resolving conflicts among states over natural resources. Unless Congress intervenes, states will have considerable freedom to make independent decisions about the development and taxation of resources within their borders. Political questions in the United States almost inevitably evolve into legal questions, but the courts may decide to remit conflicts for resolution by political and economic processes. In the context of interstate resource conflicts, this judicial retreat is desirable in many respects. For example, as we will see, state taxation and regulation of natural resources that do not by their terms discriminate against other states should be substantially immune from federal judicial scrutiny. But there is an important class of cases—those involving out-of-state impacts that are not economic—that calls out for a strong federal judicial role. Transboundary pollution is an important example. In most cases, informal bargaining among states cannot resolve conflicts such as that concerning acid rain, or river salinity, in part because of the large number of states involved and because upwind or upstream states have little incentive to bargain, absent offers of “bribes” or side payments from downwind or downstream states. In theory, Congress has ample authority to resolve such conflicts through legislation, but in practice substantial constitutional and political barriers bar effective legislative solution. The federal judicial retreat in this area has created a vacuum that must be met by new decision-making mechanisms. The operation of the U.S. federal system historically has been a dialectical process, with alternating surges of centralization and decentralization playing back on one another. The country now is undergoing a surge of decentralization that in my opinion is largely healthy. But the choice is not a simple, sweeping election between state and federal authority. The role of different branches of government—legislative, judicial, and administrative—must be considered, along with the particular problem at issue. Traditional mechanisms of accommodation and resolution have been overstressed by some of the conflicts generated by increased energy and raw material prices, the resulting pressures to develop the sparsely populated and scenic West, environmental insults imposed by modern technologies, and heightened concern about environmental degradation. The system is far from radical failure, but the adequacy of our institutions to deal with such conflicts clearly must be reexamined.
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Why Voters Support Tax Limitation Amendments: The Michigan Case
Paul N. Courant, Edward M. Gramlich, and Daniel L. Rubinfeld
The paper reports on an attempt to survey a random sample of 2001 respondents in Michigan in 1978 to see why they voted for or against various tax limitation proposals. The results of the survey are that respondents in general do not favor large cuts in public expenditures and taxes—indeed, the median respondent desires no change in the overall level of government spending. Measures to predict the tax limitation vote of respondents based on those preferences were only partly successful—it was found necessary to combine preferences with information about perceptions of the likely impact of the amendments to explain the votes adequately.
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A Call to Abolishing the Juvenile Justice System
Martin Guggenheim
The continued existence of juvenile justice as a separate discretionary system is a mistake. The juvenile court has operated on a number of premises which are diametrically opposed to basic principles enbodied in the Constitution of the United States. Normally, the state, as a creation of the people, has limited powers to interfere with the liberty of individuals. Most of these limitations are ignored in juvenile justice because of the professed intention of the state. Punishment and the deprivation of liberty, we are told, are at most secondary purposes of bringing children before the court. But it is ludicrous to consider delinquency cases as involving anything other than traditional criminal justice concerns. The juvenile justice system appears to be little more than an excuse to circumvent basic rights of Americans. It is fair to say generally in the juvenile justice system that the liberty rights of children are not taken seriously, even when these rights have been established beyond cavil for adults. It is past time to look objectively at the juvenile justice system in the United States and to call for its complete abandonment. So long as there remains the vestige of a gloss of beneficence, the dangers of bringing too many children into the system are too great. In 1973, for example, a Texas federal court revealed that a juvenile court judge had found delinquent and ordered the incarceration of seventy-five children who had never even appeared in court. Additionally, hundreds of children were found confined in the juvenile prison system who had never been represented by counsel. Bear in mind that this is many years after Gault. A declaration of the United States Supreme Court that children have certain rights is, by itself, only words. For rights to have meaning, they must be respected by the trial courts, in this case, juvenile court judges. But these rights are not respected. And I suggest that this occurs for reasons other than the particular judges who sit in juvenile court. Instead, I believe that it reflects the prevailing view of the juvenile justice system itself. Because judges regard themselves primarily as helping needy children, they simply do not consider it necessary to give to children due process protection. After all, the judges are already protecting them. Lest some of you think that New York is exempted from this, consider the following. In New York State in 1974, outside of the city of New York, only 59% of the juveniles appearing before the Family Court in delinquency and PINS (status offense) cases were represented by counsel. More than two in five children are legally unrepresented in a state which required court assigned counsel fully five years before the Supreme Court mandated it in Gault. Even for the 59% represented by counsel, there is considerable room to question the quality of that representation. Outside of the city of New York where the Legal Aid Society represents juveniles in the Family Court with admirable and unquestioned zeal, almost all juveniles are represented by lawyers from the private bar who are assigned by the court and paid for each case. Many of these lawyers believe, as do many of the judges, that protecting a child's rights means finding a suitable placement for him without going through the formalities of a trial. Those lawyers who believe in representing their clients the way the Supreme Court contemplated it—preparing a defense and contesting the court's jurisdiction—face the risk of being removed from the list of lawyers to be assigned in the future. One excellent indication of the depth and quality of representation is the number of appeals taken from adverse rulings in the trial court. Outside of the city of New York very few appeals are taken each year. Because of the star chamber quality of the Family Court, outsiders are not able to directly monitor the quality of representation children receive in this state. But few cases are tried in any event. Instead, most matters are settled in the judge's chambers with counsel and the court agreeing on what is best for the juvenile. All of this occurs for one central reason-the myth of beneficence. Even as there is now a decided trend in this country to officially recognize punishment as a bona fide purpose of juvenile courts, there nonetheless remains a smugness on the part of juvenile court officials that whatever they do to children is for the children's own good.
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The Barbarism of Reflection
Stephen Holmes
The concept of “barbarism of reflection” is paradoxical not merely because of Vico's systematic identification (throughout the New Science) of barbarism with pre-reflective, and reflection with post-barbaric, stages of social evolution. More difficult than this superficial paradox is the problem of self-reference. Even though Vico's thinking is reflective (and could only emerge when men in general had become reflective enough to attribute agency to themselves and not merely to the gods), he is so far from being disturbed by any barbaric potential inherent in his own thought as to declare quite boldly that his book will be “useful” for postponing the eventual rebarbarization of the republics. Such is the motivating dilemma behind this brief paper: in what way did Vico consider himself to have successfully turned reflection against reflection, and thus to have postponed (not to say prevented) the otherwise inevitable disintegration and decay of advanced society? I do not, however, plan to solve here the problem of the practical consequences of Vico's unquestionably descriptive science. My goal is the more modest one of trying to set up the conceptual framework within which alternative solutions to this problem must be proposed and judged. To do this I will first of all have to make clear how it was possible for Vico to couple “reflection” both with the process of civilization and with the process of rebarbarization. In order to make my analysis as compact as possible, I want to begin with a distinction between two (in reality interrelated) contexts within which, according to Vico, reflection plays both a civilizing and a decivilizing role. I will first consider Vico's idea of pagan religion, concentrating on the contribution made by theological misinterpretations of natural contingency to the survival of primitive societies. I will then go on to analyze the related function of the mythical idea of “natural superiority” in the legitimation of social hierarchy and chains of command. It seems clear that Vico, first of all, associates “reflection” with a process of refinement and civilization because it re-exposes the contingency of the natural and social worlds (the fact that things do not have to be the way they are) and thereby introduces a novel flexibility and “modal” awareness of other accessible possibilities into society. Originally, of course, these "other possibilities" had been concealed by religious fables. Now, Vico also believes that this new and secular awareness of other possibilities has a self-perpetuating and self-augmenting dynamic of its own, that it inevitably leads to the nihilistic conclusion that, indeed, everything is possible and nothing is inherently “right.” Emblematic of the way a reflective re-exposure of theologically suppressed “other possibilities” can change from a civilizing to a barbarizing act is the “natural” slippage from the flexibility of judicial discretion to the hyper-flexibility of moral relativism or the sophistic willingness to argue either side of a case indifferently.
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Comments on “ERISA and the Prudent Man Rule”
Lewis A. Kornhauser
As Professor Blair has pointed out, modern portfolio theory suggests a multitude of irrationalities in common law standards for trustees managing investment funds. In elaborating the statutory standards for the “prudent expert” established by the Employee Retirement Income Security Act, these perversities are certainly to be avoided. Using portfolio theory to criticize the current standards, however, is a different and much simpler task than using the theory to promulgate new standards that courts can use effectively. In the shift from criticism of rules to their reformulation, at least two kinds of difficulties may arise. First, the assumptions underlying the formal economics models—here, the capital assets pricing model and the efficient market hypothesis—may not be robust. In the economic analysis of tort law, for example, we have discovered that elegant efficiency results in the world of complete information, uniform costs, and Nash behavior must be modified substantially when any of the three assumptions is relaxed. Further, the inquiries suggested by the modifications are more complex than those in the simpler world. The second source of difficulty arises if the level of detail necessary for legal decisions is significantly greater than the analytic power of the economic models. This type of problem arises frequently in antitrust. The courts must determine whether a particular practice or a minute change in the market structure will adversely effect competition; economic theory fails to resolve the question at so microanalytic a level. A third type of difficulty should also be noted. In both tort law and antitrust law many judges and lawyers maintain that the law is and should remain informed by values other than economic ones. Thus the torts scholar argues that considerations of fairness require rules that deviate from ones that would be strictly efficient. In the analysis of ERISA, however, the goals of the law conform rather closely, if not completely, to goals of optimal economic decision making. Because the difficulty engendered by the need to trade off other values for efficiency seems minimal, I shall restrict myself to suggesting a few problems that may arise in connection with the other two kinds of difficulties. As will become evident, these two kinds of problems interact; the indeterminancy of the theory at some level of specificity arises from the need to distinguish some axioms. A number of challenges to a manager's decisions can be imagined. ERISA imposes a duty to diversify on the funds' managers. This duty should be elaborated in conformity with the findings of modern portfolio theory. How is this to be done? What questions will courts be likely to confront and in what format? What specific tests will implement the commands of portfolio theory? An employee may object to the inclusion or the exclusion of a particular security from the fund's portfolio. Alternatively, an employee may object to the portfolio as a whole not only because it results in an inappropriate mix of return and risk given the employee's preferences, but also because the manager has not included the proper number of securities in the portfolio and has not followed the best maintenance strategy of the portfolio. Finally, a pension beneficiary may object to the expenditure of funds on analyzing securities of various types. Each of these objections can be rephrased in economic terms; each new formulation raises an issue unresolved in the economics literature. First, one must note that court rules will be based not on Markowitz's formulation, which arises from the subjective expectations of the individual investor, expectations that are difficult to observe and to evaluate, but from the Sharpe-Lintner formulation, which compares the movement of the security to the movement of the market as a whole. The evaluation of any security, and whether it should be included or excluded from a portfolio, as well as the evaluation of the portfolio as a whole thus depend on the calculation method of the “betas.” Implementing the dictates of modern portfolio theory requires a set of rules to be used to ascertain when sufficient care has been taken in determining a beta. Unfortunately, betas of individual securities are not stable over time; their use in evaluating the choice of particular stocks thus becomes problematic. A recent empirical study of the betas of utility companies, for instance, indicated that the estimate of the beta from historical data—the only means of making the capital assets pricing model operational—did not always lead to accurate estimates of future behavior. The author of the study concluded that careful evaluation of the adjustment process may allow the use of betas “as one of the many factors to consider” in a rate of return proceeding.
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Non-Attorney Justice
Linda J. Silberman
Judicial reform movements during the twentieth century exerted great efforts to reduce or eliminate the role of non-attorney judges in the United States. These judges, for the most part, exercised jurisdiction over only minor civil and criminal matters, but they decided factual and legal questions like any lawyer-judge. Thus the call came for a “professionalization” of the judiciary. As early as the 1930s several states had overhauled their largely non-attorney justice of the peace courts, and in the 1940s several states introduced requirements that lower courts be staffed by judges educated in the law. By the mid-1960s, although non-attorney judges were still permitted in most states, various reforms had been implemented to curtail jurisdiction, implement selection procedures, revise compensation structures, and place these courts under the supervision of central administrative authorities. Indeed, a 1974 California Supreme Court decision, Gordon v. Justice Court, held that a defendant tried before a non-attorney judge for a criminal offense punishable by a jail sentence had been unconstitutionally deprived of his effective right to counsel. The obituary for non-attorney justice in the United States seemed all but officially written. However, in 1976, the Supreme Court of the United States rendered its decision in North v. Russell, upholding the constitutionality of non-attorney judge courts within certain parameters. In North, the defendant had been found guilty of drunken driving by a lay police judge in Lynch, Kentucky, and sentenced to thirty days in jail. Instead of requesting a de novo trial on appeal before an attorney judge under the Kentucky two-tier procedure. North sought habeas corpus to raise constitutional due process and equal protection challenges to his conviction by a non-attorney judge. Affirming the Kentucky court’s denial of relief, the Supreme Court of the United States upheld the constitutionality of Kentucky’s lay judge system. The Supreme Court held that the Kentucky procedure providing for a de novo trial on appeal, regardless of whether defendant pled or was found guilty at the original trial, removed any due process objection. Despite its imprimatur on non-attorney justice in North the Supreme Court seemed implicitly to acknowledge the existence of potential due process objections to the unrestricted use of judges without legal training. Moreover, Justice Stewart, in a strong dissent, argued that trial before a lay judge that results in a prison sentence deprives a defendant of his right to a fair trial with the effective assistance of counsel. Thus, the North result, although officially recognizing the propriety of non-attorney justice systems, refocused attention on various safeguards for those systems, which include de novo review and transfer mechanisms, and improved training programs for non-attorney judges.
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Broadcast Regulation and the First Amendment
Oscar G. Chase
In thinking about regulation of networks, one of the most basic questions is how far the free-speech guarantees of the first amendment allow Congress or a federal agency like the FCC to go. Acknowledging that no one could fully treat that question in a chapter of this length, let me attempt a reasonable compromise. I will first discuss some recent first amendment developments in the law of broadcasting that are of special interest and will then try to relate those legal “passages” to a single currently lively issue—the right of access to the broadcast media, that is, the right of members of the public to express themselves over the air (or through cable) free of control of content by the licensee. It is axiomatic that broadcasting occupies a special place in first amendment theory. The Supreme Court and society generally have permitted a degree of government control over broadcast content that would be unthinkable if applied to other media. The government's role in broadcast regulation has historically been justified by reference to the scarcity of the electromagnetic spectrum, the attendant need to keep competing users from drowning each other out, and the desire to ensure that those users blessed with government licenses operate in the public interest. A major goal of government regulation has been diversity of programming—the notion that the airwaves should not be the exclusive personal podiums of the licensees but should be used to bring a wide range of ideas and experiences from many sources to the American people. Recent decisions have endorsed growing government control, but this has come, ironically and regrettably, at the expense of diversity in broadcasting. Proponents of greater public access to the airwaves cannot be comforted by these shifts in the nature of and the justification for broadcasting regulation.
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