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 Rule of Law
The Pursuit of Justice
The Independent Institute Publications, United States Wednesday, December 1, 2010

In The Pursuit of Justice Edward L. López shows how the United States legal system is wasteful and unjust as of the faulty incentive system. The United States is a nation of jailers as of the bad incentive system, not because of the war on drugs. Consumers suffer from the lack of market competition for legal services. Making judges more independent of political influences may reduce government corruption. Judges, lawyers, juries, police, forensic experts, and others who work in the legal system respond to incentives and things go wrong when these are perverse, writes Robert D Tollison in the Independent Institute Publications.


    * Public opinion polls consistently show a lack of confidence in the American legal system. A leading source of this dissatisfaction is the waste and injustice fostered by perverse incentives that operate throughout the legal system. The Pursuit of Justice examines this problem and proposes reforms to help align incentives with the public interest.

    * America has become a “nation of jailers.” With 2.3 million people behind bars and another 5.1 million people on parole or probation, a staggering one in 31 adults in the United States is “in the system.” Although many pundits blame the war on drugs, the deeper problem is bad incentives in criminal law. 


* Mistakes in fingerprint analysis cause up to 4,762 wrongful felony convictions each year in the United States. Making the fingerprint experts, the police, and prosecutors work more independently of each other would slash wrongful-conviction rates and save tens of millions of dollars. Triplicate fingerprint examinations in felony cases would cost about $9 million annually, but it would save U.S. taxpayers more than $61 million per year in direct expenditures on incarceration by eliminating over 98 percent of the false felony convictions that result from errors in fingerprint analysis.

    * Consumers suffer from the lack of market competition for legal services. Regulations, licensure requirements, and unlawful practice of law statutes protect lawyers from competition and make it illegal for non-attorneys to provide legal services. Judges tend to rule in favor of lawyers’ interests.


    * Making judges more independent of political influences may reduce government corruption in the legislative and executive branches. Corruption convictions are less common in U.S. states where judges have greater independence (as measured by judge pay, judicial selection methods, and term length) and where the state constitution requires a larger majority to propose an amendment.



Judges, lawyers, juries, police, forensic experts, and others who work in the legal system respond to incentives. As in business and politics, incentives shape the outcomes of the legal system: they can either support the pursuit of justice—or they can undermine it, leading to wrongful convictions, frivolous lawsuits, higher attorney fees, restricted access to the courts, political interference, and government corruption. To improve our legal system significantly we must therefore first seek to understand precisely how our institutions structure the incentives that decision-makers face.

The Pursuit of Justice: Law and Economics of Legal Institutions, edited by Edward L. López, does exactly that. It shows why faulty incentives lie at the heart of numerous failures of the U.S. legal system. Rather than the romanticized version of the law as portrayed in television dramas and in much academic research, it portrays the legal system as it actually performs in practice. This realism, in turn, provides the basis for reform proposals in a host of areas—from fingerprinting to criminal sentencing, from lawyer licensing to judicial selection, and from eminent domain to wealth transfers via class-action lawsuits.


The book’s strength comes in part from the inspiration and analytical toolkit provided by public choice theory, traditionally the economic study of politics, as Robert D. Tollison explains in his foreword to the book. “As the original generation of public choice and law and economics scholars fade into the history of economic thought, a new generation steps up to carry on, defend, and extend the hard-earned intellectual gains,” writes Tollison. “That is why reading The Pursuit of Justice is such a refreshing intellectual experience.”


Private Interests and the Law

Too often the law is driven to serve particular narrow interests instead of the public interest. This is hardly a new trend, as the history of Anglo-American legal institutions demonstrates. For example, in their chapter “The Rise of Law Enforcement in England,” Nicholas A. Curott and Edward P. Stringham show that the fiscal demands of kings in medieval England played a leading role in the gradual centralization of the legal institutions of that era.

Lawyers and judges have also been the intended beneficiaries of changes to the legal system. In “The Lawyer-Judge Hypothesis,” Benjamin H. Barton examines a series of twentieth-century court rulings that tilted laws governing the legal profession in their favor.


Judicial Selection and Perverse Incentives

Judges respond to incentives, and no body of evidence demonstrates this point better than studies of judicial selection methods. In “Electoral Pressures and the Legal System: Friends or Foes?,” Russell S. Sobel, Matt E. Ryan, and Joshua C. Hall show that experts perceive the quality of the legal system to be lower in U.S. states that elect their judges than in states where governors appoint the judges. Quality is even lower—and government corruption is higher—in jurisdictions where judges are elected in partisan elections and subject to the political pressures of re-election, as Adriana S. Cordis shows in her chapter, “Judicial Checks on Corruption.”


Let Markets Improve Forensic Science

Like political institutions, forensic science can also suffer from bad incentives that foster undesirable outcomes. In “Romancing Forensics: Legal Failure in Forensic Science Administration,” Roger G. Koppl proposes a system to reduce false convictions.


Eminent Domain and Limited Government

State and local governments routinely use the takings power to enhance their tax bases and prop up inefficient but glitzy developments. Defenders of this trend argue that the just-compensation requirement is a sufficient deterrent to misuse, but critics argue that assessment disputes strongly favor governments’ heavier legal firepower. In his chapter, “On the Impossibility of ‘Just Compensation’ when Property Is Taken,” John Brätland goes further than most critics by arguing that the concept of “just compensation” is inconsistent with involuntary transfer.


The Law as a Means to Redistribute Wealth

Critics bemoan the excessive litigation of the American tort system, and federal reforms have aimed to curb frivolous lawsuits. But the root cause is bad incentives in the tort system. Chasing “jackpot justice,” some lawyers and judges have worked on the margins of the law. Their expansion of the meaning of various legal doctrines has benefited their own professional interests, sometimes at the expense of other segments of society.


Class actions have also been moved into previously uncharted areas like securities litigation. In “Class Action Rent Extraction: Theory and Evidence of Legal Extortion,” Jeffrey Haymond draws attention to the growing number of states that use settlements with corporate defendants to supplement general tax revenues. This explains a New York Times report that 95 percent of a sample of tobacco-settlement revenues had gone to fund public-works projects or tax relief, not the victims of cigarette smoke.

This article was published in the The Independent Institute Publications on Wednesday, December 1, 2010. Please read the original article here.
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