Book review: What Money Can't Buy: The Moral Limits of Markets by Michael J. Sandel

By Professor Jeffery Atik

In What Money Can't Buy, Michael Sandel decries the emergence of markets that displace older norms, "commodifying" earlier forms of social organization that better correspond to our (or Sandel's) ethical intuitions. Sandel is bothered by fast track lanes, priority boarding, sales of organs or surrogate mothering services, paying for grades, and what he describes as the "skyboxification" of American society. While there remain some things money cannot buy, many things can be bought today that in prior times were allocated using non-market norms.

Sandel views with alarm the increasing hegemony of markets -- where markets are the go-to policy prescription for every social want. If we wish to boost the performance of inner-city school children, we should pay them for academic achievement -- according to a market-line of thinking. There's a cost, argues Sandel, to the application of market notions to novel domains, as markets operate (through "incentives," a neologism that Sandel mocks) to displace other values, such as inculcating a love of learning, devoting oneself to one's children and savoring a sense of community. Markets intrude on moral domains and limit the scope for moral discourse -- and this loss is under-appreciated.

All true enough -- but in at least some cases non-market values have displaced markets. For much of its history, the draft had market features. One could buy one's way out of Lincoln's draft -- or find a replacement to serve. And during most of the Vietnam era, the wealthy could avoid the draft by remaining in school. The draft, of course, has been suspended for several decades, but it is hard to imagine its return in any form with buy-outs. There may be other examples where the relevant institutional shift is away from markets: it was much easier to buy one's way into an Ivy League school a generation ago than it is now (Sandel concedes that even now it may be possible for some to do so).

Expanding the Scope of American Disability Law

On August 27, 2012, Loyola was fortunate to host a delegation of 20 Japanese lawyers and academics. These lawyers, all of whom have an interest in disability law and policy, spent the day at Loyola learning about American and California disability law. After an overview of the area from Professor Michael Waterstone (pictured, right), they heard from Professor Sande Buhai, Professor Jan Costello, Professor Michael Smith, and Professor Julie Waterstone (Southwestern) about the ways disability law is taught in American Law Schools. After lunch, there was a distinguished panel of practitioners who discussed their practice experience in this area. Wilmer Harris, a partner at Schonbrun DeSimone Seplow Harris Hoffman & Harrison, LLP, Chris Knauf, the founder and sole proprietor of Knauf Associates, and Autumn Elliot, an Associate Managing Attorney at Disability Rights California, participated in this panel. The delegation then visited the Disability Rights Legal Center at Loyola's Downtown Public Interest Center to hear about their work.
This session was part of an ongoing collaboration between Michael Waterstone and Professor Jun Nakagawa of Professor at Hokusei Gaukuen University and Professor Yoshimi Kikuchi at Waseda University. We look forward to working together on similar events in the future.

Book review: Paper Promises: Debt, Money and the New World Order< by Philip Coggan

By Professor Jeffery Atik

As its subtitle suggests, Philip Coggan's book examines the relationship between debt and money and its implications for the 21st century economy. Coggan takes us through familiar territory (the nature of money) and familiar debates (Keynesianism vs. monetaristm), yet offers a novel framing that make this book a valuable read.

Coggan has an unusual view of the fundamental divide in political economy. Rather than seeing class struggle everywhere, Coggan treats the conflict between creditors and debtors as the central fracture motivating politics, though he notes that -- all things being equal -- creditors tend to be wealthier (and fewer in number) than debtors.

In speaking of debt, Coggan slides (perhaps too easily) between private and public debt. The debt that interests Coggan is the burgeoning debt that tends toward default (as opposed to the under-remarked debt that is extinguished by repayment in the ordinary course). This is the persisting debt that in usual times is rolled over upon each maturation. He writes of unsustainable debt -- again, both private and public -- that will of necessity lead to some degree of default. In the case of public debt, the default scenarios include -- importantly -- devaluation, a course open to most states to reset the exchange value of the money in which a debt is expressed and thus unilaterally reduce the value of the debt (as expressed in some other value, such as gold or a harder currency).

Loyola Law School' Project for the Innocent Awarded $250,000 Grant from Department of Justice

The Project for the Innocent at Loyola Law School, Los Angeles was awarded a $250,000 grant from the Department of Justice's Office of Justice Programs that will fund the project's initiatives for two years. The project, founded by student volunteers and part of Loyola's Alarcón Advocacy Center, pursues claims of innocence on behalf of those who have been wrongfully convicted. Launched in 2008, the project made national headlines in 2011 for its work to secure the release of its first client, who served 17 years in prison for a murder he did not commit.

"I am so grateful to the Justice Department for its support," said Laurie Levenson, David W. Burcham Professor of Ethical Advocacy and director of the project. "The attorney general has made an incredible commitment toward pursuing justice. All of us at the Loyola Project for the Innocent will work our hearts out to ensure these cases are handled professionally and expeditiously."

Students participating in the project review claims of innocence under the supervision of Professor Levenson and Adam Grant, senior fellow at the project. The project receives dozens of queries weekly from those who allege they have been wrongfully convicted, and its active case log continues to grow.

The project found success with its first client, Obie Anthony, a man wrongfully convicted of murder in 1994. Project students began researching Anthony's potential claims of innocence in 2008, interviewing witnesses and conducting legal research. Working in conjunction with the Northern California Innocence Project, Loyola students participated in the drafting of Anthony's petition for habeas corpus and his 2011 evidentiary hearing. Los Angeles Superior Court Judge Kelvin Filer granted Anthony's petition and ordered him released.

The Project for the Innocent plays an integral role in Loyola's subject-matter Concentrations, which give students the opportunity to focus in an area of law. It satisfies the intensive, practical experience requirement for completion of the Criminal Justice Concentration. The project is one of several clinics that comprise the Alarcón Advocacy Center, which was inaugurated in September 2011 during a ceremony featuring speeches by the Hon. Arthur L. Alarcón, U.S. Court of Appeals for the Ninth Circuit, and the Hon. Anthony M. Kennedy, associate justice, U.S. Supreme Court. Related clinics include the Capital Habeas Litigation Clinic, in which students pursue habeas claims with the office of the Federal Public Defender for the Central District of California. Students' work includes interviewing witnesses, assisting with hearings, drafting pleadings and writing claims.

Abandoning the Euro, Saving the Euro

By Professor Jeffery Atik

The Euro crisis tests more than the viability of the current currency arrangements. The sovereign debt crisis affecting Greece and Ireland, Italy and Spain is also testing the limits of wider European democracy. The status quo will likely be abandoned. The open question is whether the Euro crisis will lead to deeper integration among the EU Member States (as an artifact of a Euro rescue) -- or whether a collapse of the Euro will signal a retreat from the past achievements of the European project.

The European Union began as a common market for goods and services. A common European currency space is a more recent development -- the Euro serves as the currency of most (but not all) EU Member States. Adoption of the Euro has reduced trading costs, and has led to more transparent prices.

The Euro crisis is first and foremost a sovereign debt crisis, initially affecting a handful of EU Member States running unsustainable deficits. The sovereign debt crisis is itself an artifact of the establishment of the Euro -- neither Greece nor Spain would have been able to borrow as much in their former currencies (or on such favorable terms) as they were able to using the Euro. Prior to the Euro crisis, the financial markets valued Euro-denominated Member State obligations similarly. As the crisis developed, lenders became far more discriminating, demanding much higher Euro interest rates from weaker Member States (such as Greece and Spain) than from others.

For the grossly indebted Member States, there is no simple escape from these much higher borrowing costs -- absent assistance from more solvent Member States. And -- for the moment -- healthier Member States, such as Germany, have resisted intervention. Austerity has been bandied about (indeed, it has been 'imposed' on Greece), but there is a point of distress beyond which quite painful austerity measures cannot generate the budget surpluses needed by a country to dig its way out of debt. The better answer may be devaluation - but this path is not presently open to a country participating in a currency union like the Euro.

Crime, Punishment and the Common Good in California

By Seth Weiner, Co-Director of the Center for Restorative Justice

Beautiful music began to fill the Sacred Heart Chapel as dusk had fallen and guests from across California took seats in the pews. Lively conversations between many reunited long-time friends quieted as Rod Hickman, former secretary of the California Department of Corrections and Rehabilitation, approached the microphone and welcomed the crowd.

It was a picturesque beginning to the Responsibility, Rehabilitation and Restoration symposium on "Crime, Punishment and the Common Good in California," co-hosted by Loyola Law School's Center for Restorative Justice and the California Catholic Conference on August 3 and August 4. More than 600 attendees from all parts of California, including dozens of restorative justice advocates, gathered to learn about the on-going historic reforms in the state's criminal justice system. After sharing a meal in the early evening on a grassy lawn overlooking West Los Angeles and the ocean from the bluffs on LMU's Westchester Campus, attendees were welcomed to an evening of healing music, poetry and testimony of people affected by crime and the criminal justice system.

As the lyrics of the hymn repeated, "hold us in thy mercy," survivor of violent crime and restorative justice advocate Jaimee Karroll spoke into the microphone. "I am a survivor of child abduction and violent abuse when I was 9 years old. I have found personal healing from working with both crime survivors as well as offenders incarcerated for violent offenses, including abduction." She returned to her seat and the music continued. A man replaced her at the microphone. "I am responsible for the murder of another man. I have served many years in prison and am now working to help heal the kinds of harm I have caused. I pray to God every day for forgiveness." These testimonies were followed by that of a sister of an incarcerated brother, the mother of a murdered son, and the sister of a murdered brother. As each person spoke, they took a seat side by side the others. The hymn played on as the tragedy and triumph spread through the chapel.

Darlene Chavarria and Frank Escamilla from Street Poets put many of the feelings into words with sharp and insightful poems. Azim Khamisa and Ples Felix, the father of a murdered son and grandfather of the shooter, gave a keynote presentation based on their own story of loss, forgiveness and work for the creation of safe schools and communities. The evening ended with a screening of the challenging and moving documentary film of a restorative victim-offender dialogue "Meeting with a Killer." And all of this was just the beginning!

Saturday, August 4 was a day that filled Gersten Pavillion both with more than 600 attendees and more inspiring stories and presentations from the likes of the restorative-justice pioneering Judge Gail Brewster Bereola and current CDCR Secretary Matthew Cate. Much of the event was recorded and will be made available soon. For more information and a listing of the full program please click here.

European Limits on Banker Bonuses

By Professor Jeffery Atik

The EU's Council has prepared its draft legislative package implementing the Basel III banking reforms -- known as CRD IV. Attention now shifts to the European Parliament for its response, expected this autumn. A complex process of reconciliation will follow. On one point the Parliament has drawn a line in the sand: the eventual CRD IV must contain significant limits on contingent compensation paid to bankers. The Parliament's starting point is a one-to-one ratio cap: bankers' bonuses cannot exceed annual salaries.

Basel III did not impose any limits on bankers' compensation -- although several European members of the Group of 20 had sought bonus restraints during the negotiation. Nor does Basel III restrict the ability of Europe -- or any other Basel party -- from imposing additional requirements on its banks. Europe's imposition of bonus limits in CRD IV may be described as "Basel III Plus" -- an additional term beyond the basic Basel III mandates.

There is a broad perception that the bonus culture of New York and London contributed to the 2007 financial crisis. Bankers seduced by the prospect of large contingent payments caused their firms to undertake inappropriate levels of financial risk. New limits on bonuses, in this telling, are needed to eliminate the distortion in risk appetite generated by prevalent compensation practices. But bonuses have their defenders -- and not just the bankers who receive them. There remain policymakers (albeit more likely those overseeing markets in New York and London) who continue to believe that bonuses are necessary to attract the creative talent that will drive economic growth.