Why does capitalism triumph in the West but fail almost everywhere else? Elegantly, and with rare clarity, Hernando de Soto revolutionizes our understanding of what capital is and why it has failed to benefit four-fifths of mankind -- and explains the solution. 'A revolutionary book ...may not be in the class of Das Kapital, Adam Smith's Wealth of Nations or Keynes's General Theory. But if the criteria for joining that exclusive club is a capacity not only to change permanently the way we look at the world, but also to change the world itself, then there are good grounds for thinking that this book is surely a contender.' Donald Macintyre, The Independent 'Few people in Britain have heard of Hernando de Soto ...but The Mystery of Capital has already led the cognoscenti to put him in the pantheon of great progressive intellectuals of our age.' Mark Leonard, New Statesman 'A crucial contribution. A new proposal for change that is valid for the whole world' - Javier Perez de Cuellar (Former Secretary United Nations)

http://capeyorkpartnership.org.au/wp-content/uploads/2015/07/The-Mystery-of-Capital_Hernando-de-Soto-book-review-by-Noel-Pearson.pdf

The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else

In 1974 an article appeared in Science magazine with the dry-sounding title “Judgment Under Uncertainty: Heuristics and Biases” by a pair of psychologists who were not well known outside their discipline of decision theory. In it Amos Tversky and Daniel Kahneman introduced the world to Prospect Theory, which mapped out how humans actually behave when faced with decisions about gains and losses, in contrast to how economists assumed that people behave. Prospect Theory turned Economics on its head by demonstrating through a series of ingenious experiments that people are much more concerned with losses than they are with gains, and that framing a choice from one perspective or the other will result in decisions that are exactly the opposite of each other, even if the outcomes are monetarily the same. Prospect Theory led cognitive psychology in a new direction that began to uncover other human biases in thinking that are probably not learned but are part of our brain’s wiring.

Thinking fast and slow.

Scholars of culture, humanities and social sciences have increasingly come to an appreciation of the importance of the legal domain in social life, while critically engaged socio-legal scholars around the world have taken up the task of understanding "Law's Empire" in all of its cultural, political, and economic dimensions. The questions arising from these intersections, and addressing imperialisms past and present forms the subject matter of a special symposium issue of Social Identities under the editorship of Griffith University's Rob McQueen, and UBC's Wes Pue and with contributions from McQueen, Ian Duncanson, Renisa Mawani, David Williams, Emma Cunliffe, Chidi Oguamanam, W. Wesley Pue, Fatou Camara, and Dianne Kirkby. This paper introduces the volume, forthcoming in late 2007. The central problematique of this issue has previously been explored through the 2005 Law's Empire conference, an informal but vibrant postcolonial legal studies network.

Law's Empire

We document the widespread existence of antisocial punishment, that is, the sanctioning of people who behave prosocially. Our evidence comes from public goods experiments that we conducted in 16 comparable participant pools around the world. However, there is a huge cross-societal variation. Some participant pools punished the high contributors as much as they punished the low contributors, whereas in others people only punished low contributors. In some participant pools, antisocial punishment was strong enough to remove the cooperation-enhancing effect of punishment. We also show that weak norms of civic cooperation and the weakness of the rule of law in a country are significant predictors of antisocial punishment. Our results show that punishment opportunities are socially beneficial only if complemented by strong social norms of cooperation.

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Antisocial Punishment Across Societies

A substantial literature over the past thirty years has evaluated tradeoffs between money and fatality risks. These values in turn serve as estimates of the value of a statistical life. This article reviews more than 60 studies of mortality risk premiums from ten countries and approximately 40 studies that present estimates of injury risk premiums. This critical review examines a variety of econometric issues, the role of unionization in risk premiums, and the effects of age on the value of a statistical life. Our meta-analysis indicates an income elasticity of the value of a statistical life from about 0.5 to 0.6. The paper also presents a detailed discussion of policy applications of these value of a statistical life estimates and related issues, including risk-risk analysis.

/pdf/the-value-of-a-statistical-life-a-critical-review-of-market-4vq0tnp3xu.pdf

The value of a statistical life: A critical review of market estimates throughout the world

In 1960 Israeli agents kidnapped Adolf Eichmann from Argentine territory. This violation of international law sparked protests from all quarters. Israel, having accomplished its goal, apologized to Argentina, which had no great desire to draw attention to its colony of former Nazis and accepted the apology.1 The world turned its eyes to Eichmann's trial, and the incident was forgotten. Should Israel have refrained from kidnapping Eichmann because this act was a violation of international law? There are two ways to answer this question. The first assumes that the only reason to comply with international law is to avoid retaliation from other nations or to avoid their distrust. Kidnapping Eichmann would have been wrong if other states had retaliated against Israel or had concluded from its actions that Israel could not be trusted to comply with the treaties that it has signed. If these are the only costs of violating international law, then criticizing Israel for kidnapping Eichmann amounts to a prudential claim that Israel did not properly calculate the costs and benefits of its behavior. In this argument, there is nothing special about law: Violating the law is morally neutral, like deciding to raise tariffs against Argentine imports in order to protect a domestic industry even though doing so will hurt Argentine industry and invite a punitive response. The second possible answer to the question is that Israel should have refrained from kidnapping Eichmann because it is wrong to violate international law. The wrongfulness of violating the law is distinct from the wrongfulness, if any, of kidnapping Eichmann. One might believe that it would have been morally permissible for Israel to kidnap Eichmann if international law had not forbidden this behavior, just as one might believe that it is morally permissible to build a house on a seashore but would be wrong to

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Do States Have a Moral Obligation to Obey International Law

Regulatory agencies take account of the potential unemployment effects of proposed regulations in an ad hoc, theoretically incorrect way. Current practice is to conduct feasibility analysis, under which the agency predicts the unemployment effects of a proposed regulation, and then declines to regulate (or weakens the proposed regulation) if the unemployment effects exceed an unarticulated threshold, that is, seem “too high.” Agencies do not reveal the threshold, do not explain why certain unemployment effects are excessive, and do not explain how they compare unemployment effects and the net benefits of the regulation. Many agencies also predict unemployment effects incorrectly. The proper approach is for agencies to incorporate unemployment effects into cost-benefit analysis by predicting the amount of unemployment that a regulation will cause and monetizing that amount. Recent economic studies suggest that monetized cost of unemployment is significant, possibly more than $100,000 per worker. If agencies used this figure, there could be significant consequences for a wide variety of regulations.

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Regulation, Unemployment, and Cost-Benefit Analysis

Exemption laws enable people who default on loans to protect certain assets from liquidation, both inside and outside bankruptcy. Every state has its own set of exemption laws, and they vary widely; the federal bankruptcy law also establishes a set of exemptions, which debtors in bankruptcy are permitted to use instead of their state's exemptions unless the state has formally "opted out" of the federal system. We test a wide range of public interest and public choice explanations for exemption laws, using a data set consisting of the exemption laws in all states over twenty-two years, and also exploiting the opt out choice of the different states. We find that states are more likely to opt out, and to increase their exemptions in the process, if they are conservative, start with low exemptions, and have a high bankruptcy filing rate. We find little evidence for popular theories of exemptions levels; the most important factor correlated with exemption level is the historical generosity of a state's exemption laws.

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The Political Economy of Property Exemption Laws

Covenants not to compete (CNCs) are used in employment contracts to prevent an employee from working for other employers, and in so doing pro- tect the firm's investment in human capital. We analyze the motives for including a CNC in employment contracts using an incomplete contracts perspective. We allow for both ecient and inecient breach, and compare covenants not to com- pete with the alternative breach remedies of specific performance and liquidated damages. We conclude that CNCs may be preferable to specific performance and liquidated damages when renegotiation of the contract is not possible, and thus eciency-minded courts should enforce CNCs. With renegotiation, a CNC can lead to both first-best performance and investment, but the eciency of the con- tract will depend on the scope of the CNC, namely how limiting it is in terms of restricting employment. A CNC with too broad a scope will be inecient by allowing a firm to extract quasi-rents from other firms, thus overcompensating the employer for investment. A CNC with too narrow a scope may not allow the em- ployer to appropriately recover his investment in human capital. We argue that courts need to deter parties from agreeing to covenants that are too broad, but also to recognize the eciency of CNCs, in particular when employees are capital constrained and judgment proof.

/pdf/investing-in-human-capital-the-efficiency-of-covenants-not-1o1bknkew8.pdf

Investing in human capital: the efficiency of covenants not to compete

/pdf/soft-law-lessons-from-congressional-practice-2asitn57jr.pdf

Eric A. Posner

Papers

Do States Have a Moral Obligation to Obey International Law

Regulation, Unemployment, and Cost-Benefit Analysis

The Political Economy of Property Exemption Laws

Investing in human capital: the efficiency of covenants not to compete

Soft Law: Lessons from Congressional Practice