49 Emory L. J. 1211 (2000)
Collective Inaction and Investment: The Political Economy of Delay in Bankruptcy Reform; Walt, Steven

handle is hein.journals/emlj49 and id is 1221 raw text is: COLLECTIVE INACTION AND INVESTMENT:
THE POLITICAL ECONOMY OF DELAY
IN BANKRUPTCY REFORM
Steven Walt*
Positive legal theory typically understands the production of legislation as
the provision of a public good. Although the details can be complex, the
treatment is basically simple. Legislative proposals are produced when interest
groups act and are well organized, so that collective action problems already
are overcome, or when organizing interest groups is (individually) cost-
justified, so that collective action problems do not exist. When collective ac-
tion problems prevent interest groups from organizing, legislative proposals
are not forthcoming. Thus, the typical approach to legislative activity explains
its presence or absence by the presence or absence of collective action prob-
lems. The approach, however, is seriously incomplete because it ignores the
phenomenon of collective inaction. Sometimes organized interests groups do
not act when acting would be in their apparent interest. Sometimes their fail-
ure to act cannot be explained by lapses in individual rationality, latent collec-
tive action problems or indifference, or simple ignorance. The data sometimes
just do not support these explanations. When well-organized interest groups
do not engage in legislative activity to further their apparent goals, inaction can
be a deliberate decision. The presence or absence of collective action prob-
lems do not explain inaction. From the approach to legislation typical in the
legal literature, collective inaction among well-organized groups with stakes in
legislation is an anomaly.
Collective inaction was prominent in the passage of the 1998 Religious
Liberty and Charitable Donation Protection Act (the Act).? The Act amends
the Bankruptcy Code to ensure that bankruptcy does not interfere with a good
deal of charitable giving. Prebankruptcy contributions to qualifying charities
under prescribed conditions are insulated from attack as constructively fraudu-
* Professor of Law and Nicholas E. Chimicles Research Professor of Law and Business Regulation,
University of Virginia School of Law. I am grateful to Barry Adler, George Cohen, Adam Hirsch, Kevin Kor-
dana, Saul Levmore, Elizabeth Magill, Paul Mahoney, Geoffrey Manne, William Stuntz, George Triantis,
Amy Wax, Christopher Wonnell, and participants in workshops at the University of San Diego and University
of Virginia for comments or discussion on earlier drafts of this Article. Xinh Luu provided valuable research
assistance. The usual disclaimer applies.
I 11U.S.C. § 101 (Supp.I P1998).

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