Friday, 29 June 2007

David Card - An Emperical Economist

I have a big problem with economics as it's currently taught. The 'Nobel' prizes are won by abstract mathematical economists that have no real world value what so ever. They plug in ridiculous axioms and make so many assumptions to just make their theories work. The sad thing is that these prescriptions are lapped up by policy makers because it turns political choices into market realities. Thus, outside democratic choice.

Take one example, the Coase Theorem. I came across this theory in a Tort class. Law professors love to analyse legal problems with economic tools, because the majesty of purported objective formalism gives a good rationale for an overall encompassing theory of tortious jurisprudence. Thus the Theorem becomes "The starting-point for [The] economic analysis of law" [Markesins & Deakin's:26].

I was intrigued at such an ambitious claim, rarely in jurisprudence does one concept shed light on everything. The only exception I can think of is Hart's distinction between primary and secondary rules, which does a pretty good job of exposing the rest of his legal theory - but even that is general theory, not based on an actual area of practiced law. But much like Hart's primary and secondary rules, which have no evidential basis[p44] - nor does the Coase Theorem, which assumes there are no transactions costs and externalities are quantifiable. This is ridiculous, and free market proponents of the Chicago school advocate this as a viable alternative to Pigovan Taxes.

I was pleased to read an interview by David Card, an economist I hadn't heard of. To surmise his findings in his career

  • The minimum wage does not have an effect on employment levels.
    • "small raises in the minimum wage won't have much of an effect [on employment levels].
  • "Skill-based technical change' does not explain wage inequality [in the US].
    • "Like a lot of other ideas in economics, I think that “skill-biased technical change” can be pulled off the shelf and used to explain inequality in a very superficial way"
    • SBTC holds that people with lower skill should have slower wage growth than people with higher skill. Women, have lower wages, evidence of their lack of skills. However, during the 1980's women did far better than men. Over the 90s women's relative wages were stable.Basically
    • Basically, the trend in the female labour market shows trends SBTC predict.
  • Immigration
    • imigration has minimal effect on unskilled domestic labour
    • "the best available evidence is the effect is on the order of a couple of percents nationwide over 25 years"

Card's summation of the economics profession as a whole is also bang on:

Economics as a whole is really a combination of two kinds of people: those who are very practically oriented and those who are more like mathematical philosophers. The mathematical philosophers get most of the attention. They deal with the big unanswerable questions. Labor economists try to be more scientific: looking for very specific predictions and trying to test these as carefully as possible. The mathematical philosophers get very frustrated by labor economists. They come up with a broad general theory, and we tell them it doesn't fit the evidence.

And this is the problem I have with anarcho-capitalist proponents. Take one example off a message board

it is a well known law of nature (economics) that a monopoly can neither efficiently nor effectively provide goods or services because of the lack of market input in the determination of production values and proper allocation of resources.

This is absurd. Theories of economics and laws of nature are not the same thing. Einstein's theory of relativity is a law of nature, but even physicists aren't so arrogant to call this theory, that has been empirically proven thousands of times, a law. Off hand I can think of examples of efficient monopolist state supplied healthcare, which is far more efficient than the private market.

Furthermore, if theories of Chicago school economists were theories of nature, they would have an essential property of a theory of nature - symmetry. Which means that relativity applies on earth as it does on the moon as it does in a distant galaxy. Also mere mortals cannot break laws of nature, the keyboard I'm typing into cannot teleport over to mars (microscopic quantum tunnelling aside!), but I can easily be an efficient monopoly supplier - if I disobey the first commandment (axiomatic assumption) of free markets - the profit motive. Healthcare is a good example; people are motivated by more than money.


Markesins & Deakin's, Tort Law 5th Ed.

Thursday, 28 June 2007

Rebuilding Iraq

Iraq has been given out to massive US corporations to rebuild with no competitive tender. In stark contrast to the liberal free market (not to mention democratic) principles dictated for others, contracts are won on Bush family nepotism. Apologists for the process proclaim that the US based corporations are simply the best at what they do. I always thought that was for the wonderful market to decide? Or for some unknown reason, Arabs are simply unable to reconstruct for themselves; as Kenneth Pollack writes, in Foreign Affairs "the Iraqis have proven frustratingly unwilling to participate actively in reconstruction. To some extent, this passivity is a common feature across the Arab Middle East".

Racist assertions aside, which have no evidence adduced, let’s look at an example of ‘passive’ Arabs doing it themselves.


Hezbollah serve as a good example of what popular domestic based reconstruction can achieve, despite lack of billions of dollars in support. When Israeli aggression in South Lebanon 1982 (on the pretext of evicting the PLO 'terrorists' of course) forced thousands of Shiites to flee north, they settled in the southern suburbs of Beirut. The once middle-class district turned into a shanty town as the desperate population swelled into areas not designed for living. The city dump and sewer proved the only place Shiites could build. As Hala Jaber, the Arab journalist writes "The government felt threatened by the influx of refugees and did not lift a finger to improve the situation" [Jaber:146]. The Christian Druze in power took care of Christian areas but neglected the Shiites.

As a result Hezbollah tackled the Shiite situation themselves. With Iranian help, they embarked on what amounted to building social welfare infrastructure for the Shiite's. Of course, this wasn't all benign; Iran saw the dire conditions the Shiites faced as fertile ground for exporting its revolution. By 1988 The Interior Ministry officially registered the Islamic Health Committee and Jihad al-Bianna (the social welfare arms of Hezbollah). They covered charitable, humanitarian and social work, business ventures, health and educational programmes. They were licensed to construct schools, hospitals, clinics, centres for higher education, research institutes, orphanages, centres for the physically handicapped, even investing any capital it receives from Iran or through Islamic taxes, using the profits of which to pay for more community based projects.

Jihad al-Binaa is also well versed in repairing damage caused by Israeli shelling and bombing. One of their first large scale projects was to rebuild the village of Maydoun, which had been become a ghost town after a massive Israeli ground and air assault and in 1992 alone, they had rebuilt 957 homes [Jaber:157] destroyed by Israeli aggression. It's worth looking at the accounts of the organisations and contrasting them with the US. In 1992 the Relief Committe distributed:

1,988,670.87 USD$ to 6,885 families [Jaber:149]
and a further 916,149.45 USD$ given to families 'in dire financial difficulties' [Jaber:150]

The United States, on the other hand has spend billions and has no idea where the money goes as the Guardian revealed.

· Bremer maintained one slush fund of nearly $600m in cash for which there is no paperwork: $200m of it was kept in a room in one of Saddam's former palaces

· 19 billion new Iraqi dinars, worth about £6.5m, was found on a plane in Lebanon that had been sent there by the new Iraqi interior minister

· One ministry claimed to be paying 8,206 guards, but only 602 could be found

· One American agent was given $23m to spend on restructuring; only $6m is accounted for

It should also be noted that these welfare schemes work on Islamic principles which require taxes to be given by the well off (Khums), socialist in nature of course. Iran also funds a great deal of this, but all we hear in the press is how they channel money through to 'terrorist organisations' bent on "eliminating Israel off the face of the earth". Perhaps the truth that welfare works is an even worse for the administration and the corporate press, so that is why we do not hear about it.

Lessons for Iraq

If the CPA was serious about reconstructing, instead of lining the pockets of its masters friends and family, they should have engaged Iran. Iran would have setup welfare stations in Iraq, just like in Lebanon. Arabs are not stupider or less inventive than any other race, they can freakin reconstruct for themselves - as the record shows. But of course a Shiite majority 'bribing' minorities by welfare could perhaps lead to a united Iraq, who would use her billions in oil for herself and not restrict supply so ExxonMobil enjoys record profits.


Jaber, Hezbollah: Born with a Vengance

Wednesday, 27 June 2007

Morality and Property Rights

Just read some interesting ideas from Marxist economics that have answered a conundrum in my mind - the morality of expropriating wealth to redistribute it and the infringements of liberty therein.

In an ideal society, tax would be progressive, in order to raise revenue for various welfare projects (schools, hospitals etc.). This would obviously involve a redistribution of wealth from richer to poorer. Let me make explicit this doesn't entail equal, merely a minimum standard for everyone which no one can fall below and thus a Lorenz curve that's closer to x=y.

Now the proponents of libertarian schools of thought proclaim that such tax is theft and an infringement of liberty. However, in a Marxist analysis; which I believe to be accurate, this ignores the historical and social relationships that resulted in the current state of affairs. The world was not created spontaneously in the present. What is now is not what will always be; there's causation to be considered - that is, historical reasons why we are where we are.

To quote Robert Freedman's excellent summary of Marx's idea of 'Commodity Fetishism'

"Bourgeois economists are prone to study the exchange relationship between commodities forgetting that was the relationships between material things really expresses is the social relationships between people. Thus when Ricardo and others speak of value, rent, wages, profit, interest etc. as though they were inevitable categories of economic life (without respect to time or culture), they obscure the class character of social relationships. These economic forms, really only characteristic of capitalism, appear to be eternal and therefore just. The superstructure which rests upon these forms - ethical, legal and social - also appears eternal and just, instead of being the manifestation of a special form of social organization in a particular historical period". [Freedman :p50]

This struck me as quite profound. I've come across Commodity Fetishism in my jurisprudence classes, however I've never thought of it as above. Perhaps this was because I'd not had the experience researching English legal history, as I now do. Which brings me to the evidence of Marx's theory:

Enclosure Acts in England

Prior to the rise of capitalism, great areas of land where used by free Englishmen (and women) to graze their live stock, take wood and glean land for crops. These lands had been used from time immemorial, and only for the purposes of each family and communities need. There was no expropriation of vast amounts of land by a single person. Once the aristocracy realised that a profit could be made from owning land they perused radical illegal agenda. Douglas Hay, the respected legal historian summarises it best:

"a law of 1769 suggests how the class that controlled Parliament was using the criminal sanction to enforce two of the radical redefinitions of property which gentlemen were making in their own interests during the eighteenth century. The food riot was an organised and often highly disciplined popular protest against the growing national and international market in foodstuffs, a market which alarmed the poor by moving grain from their parishes when it could compel a higher price elsewhere, and which depended on a growing corps of middlemen whom the rioters knew were breaking Tudor and Stuart legislation by wholesale trading in food... Some mills had been torn down in the nationwide riots of 1766 and 1767, and the 1769 act plugged a gap in the law by making such destruction a capital offence. If death for food rioters was an excellent idea, so was transportation for enclosure rioters. Within three days the bill was enlarged so that gentlemen busy on the expropriation of common lands by Acts of Parliament were as well protected as the millers." [Hay p21].

Indeed once their land had been stolen by Parliament (in the moral sense of course) people were unable to take wood, or glean it. Parliament enacted a wealth of capital offences criminalising such customary behaviour. 17th and 18th Century English legal history really shows us where the current elites garnered their power and John Locke's was their intellectual apologist justifying this property grab.

So, why it isn't an infringement of liberty to redistribute wealth? Private Property is a legal concept that is not immutable. Private property jurisprudence has changed radically over the years, as Hay showed prior to the 17th Century; its present form was unfathomable. A non-democratic Parliament thus pushed out common law rights and expropriated lands for new landed gentry. In turn, this is of course where the large corporations of today base their (realty) property rights. That is all it is – a legal basis stemmed from Locke’s jurisprudence. As Marx believed, “[t]he superstructure which rests upon these forms - ethical, legal and social - also appears eternal and just”. And there in lies the answer to the conundrum – our morality has been shaped by the current state of social relations. What seemed alien to the masses in the 17th Century, namely, vast amounts of private property, seems natural to us now. Why? Because Locke’s legal concepts have reflected back on morality.

It’s is an elementary moral truth that ‘stealing is wrong’. (I do not wish to indulge in Meta-Ethics, so let’s raise this to a postulate). Thus, massive amounts of wealth that are taxed by a truly representative democracy are, de facto, theft or an infringement of liberty. Traditionally this is justified on grounds that one of society’s aims – liberty - is justifiably infringed by another one of its core aims: equality. The current trend in scholarship tends to be that “politically important values like equality and liberty are in deep conflict with one another so that comprise among them is necessary” [Dworkin p26] However, I do not believe this is so, at least not in the case of massive amounts of property owned by colossal trans-nationals purely because such concentrations of wealth have only occurred because of the Enclosure Acts and via undemocratic means. The holder of vast amounts of property, who is complaining that redistributing some of it is theft has to prove he is the rightful owner, he cannot appeal to morality to do so because that land was immorally taken away from the masses – all he can do is appeal to a legal right, which inevitably changes over time.


Dworkin, Justice in Robes
Hay, Property, Authority and the Criminal Law in Albion’s Fatal Tree
Freedman, Marx on Economics

Monday, 4 June 2007

My legal essays

I thought I’d upload the papers/essays I wrote while at law school at The University of Birmingham. The quality varies, the first year papers are awful (apart from the Mental Health Bill). The final year ones are of the highest quality. Hopefully it’ll help out current students and aid research, especially the final year papers. I’ve put the marks I attained next to each title in [square] brackets.

All papers are 10 credits, apart from the Dissertation which was 30 credits.

If you would like to cite any essays just use Patel, D. Essay Title, Available Online [2006].

1st Year (2003/04)

Public Law - Discuss the proposition that the United Kingdom is acquiring a codified Constitution by a process of stealth. [64 ]

[doc] [html] [pdf]

Contract law - Doctrine of Unconscionablity [47]

[doc] [html] [pdf]

Criminal Law and Justice - Evaluate Present Mental Health Legislation and Assess the Likely Impact to Offenders or Those Likely (as defined by the draft bill) to Offend Due to Any Proposals to Reform. [68]

[doc] [html] [pdf]

2nd Year (2004/05)

Legal Foundations of the European Union - “Some commentators have argued that the commitment of the European Court of Justice to fundamental rights has provided the EU with the much needed ethical foundation which it lacked on account of its origins as a Common Market and the constant emphasis on economic goals.” Discuss this statement in the light of recent developments. [63] [doc] [html] [pdf]

Jurisprudence 1 - The Outcome of a case is determined neither by the facts nor by the law. Findings of fact and statements of law are used only to justify the decision of the judge. Do you agree? [64] [doc] [html] [pdf]

Jurisprudence 2 - Proclaiming the importance of the concept of the 'rule of law' is just a modern form of unjustifiable idolatry. Do you agree? [62] [doc] [html] [pdf]

Final Year (2005/06)

Environmental Law 1 - What are the main obstacles for effective environmental law? [74] [doc] [html] [pdf] *the title was long and fancy, but unfortunately I did not make a note of it anywhere. This is the essence of the paper.

Environmental Law 2 - To what extent has the EC evolved from a pure trade entity into an organisation which effectively protects the environment. What difficulties has it faced and will it face in the future? [81] [doc] [html] [pdf]

Tort case Note: Watkins v Secretary of State for the Home Department [2004] EWCA Civ 966 [68] [doc] [html] [pdf]

Dangerousness - Dangerousness is a Dangerous Concept [74] [doc] [html] [pdf]

Dissertation - An Enquiry into Anarchist Jurisprudence [68] [doc] [html] [pdf]