Suppose you were empowered with a magic wand of reform over the legal system.
 

Question: Suppose you were empowered with a magic wand of reform over the legal system. What single reform would you make and why? Bring your understanding of law & economics, as developed over the course of this semester, to bear on your response. For example, explain how your reform would address the main ideas that we have discussed in class this semester (institutions, incentives, efficiency and other values such as equity and justice). (400 words max)

Real answer given by an undergrad student:

I would make whatever reform the highest bidder wanted. That’s right, I would sell my wish. If there’s one thing that I’ve learned about the law, it’s that the true, original intent is never fully implemented, and that loop holes will be fiercely sought-after (damn you rent-seekers!), and if my reform choice (or the highest bidders in this case) is controversial, then the government will simply reform my reform, making my magic wand useless, since it only has one use, while the Senate and House have unlimited potential to ruin all the fun. The other reason I would sell off my wish is that reform is a very expensive game. Whole committees and groups with millions of dollars are dedicated to single issues, and it seems that on the most controversial ones (which are the most likely ones to win out for highest bidder as they are seen in the public eye as the most important) have the most money on both sides. Since I have little interest in trying to solve the problems of everybody else, I’ll pull an Adam Smith and let the market decide which is the best issue to reform. With all the money I will make from selling my magic wish I will be able to be one of the privileged few that have become so rich that minding the law is low-priority. The selling of the wish doesn’t even have to be a bad thing, because as the seller I can just decide not to give it to anyone that wants me to wish for something against my own interests (such as a reform on the sale of magic). Does this reasoning make me jaded? Likely. Is the reasoning outside the realm of reality? Much less likely. While all the other students will be playing white-knight to America, beating their brow and sweating in their seats, I will be chilling on a white-sand Caribbean beach, and the only sweating will happen in the sauna. Suck it, the game of law. I’m gonna go buy a wife and some gin.

Question: 1. Explain why state ownership and private property is a false dichotomy for certain types of resources, and what type of rights can emerge, and by what type of process, to manage more efficiently those types of resources. Obviously your answer should detail the characteristics of those “certain types” of resources and offer examples. (400 words or less)

Real answer given by an undergrad student:
State ownership is the optimal institution for public goods and “free market” is the optimal institutions for private goods. However, none of them is the optimal institution for common pool resources (CPRs). The reason is because CPRs are really rivalrous, but they are non-excludable. CPRs such as water or fish in a river are hard to draw the line and assigned who owns which parts. Moreover, since they are non-excludable, people will always have the incentive to overuse them. A fish in a river means nothing to the fisher man if he does not catch it today since it may not be there tomorrow. This gives him the incentive to catch the fish whenever he has a chance (low marginal cost) creating inefficiency since the fisherman who values it more will not get it. This is a kind of “prisoners’ dilemma” with the dominant strategy is non-cooperate (catching as many fish as possible). What happens if the state comes into the game and forces the fishermen to cooperate? If it has the perfect information and is able to punish the right “prisoner,” it will be able to change the outcome of the game. However, it is impossible to obtain perfect information; hence the result will be the same, non-cooperative players. Since state ownership and private property is a false dichotomy, communal rights can emerge to manage more efficiently those types of resources. There are several reasons for this. The first reason is that people who have tasted the “pie” have better and more correct information about it. They will know which part of it is good, which part has coated sugar, how big it is, etc. Therefore, they will know best how to manage it and divide it fairly among the community. The second reason is that because they have daily and close interactions with the resource, they can police and prevent each other from gaming with the system and overusing the resource.

Post #1 is irational in general in regards to the power of a magic wand and absolute changes that fit together with our framework. However, clearly this guy desires the 1% lifestyle that is so unfair to his people. He neglects acknowledging that lobbies are rich and powerful because of strength in numbers, and not inherrently corrupt corporation fueled cash orgies.

#2 is pretty pathetic. He lost me at "divide it fairly among the community" because he failed to acknowledge work-ethic and skill as a reasonable market advantage. I'd like to award him a participation trophy. He actually lost me at the "communal rights".

Sub'd. I'm going to sleep (:cjerk:) now, but tomorrow I'm getting in on this. I love these "magic wand of how you'd do things" questions, this is the kinda stuff I think about when I'm going to sleep or on the john.