About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

5 Ind. J.L. & Soc. Equal. 1 (2016)

handle is hein.journals/injlaseq5 and id is 1 raw text is: 







                                                Indiana Journal of
                                       Law and Social Equality
                                                             Volume  5, Issue 1




                                 Inefficient   Inequality

                                       Shi-Ling  Hsu*

ABSTRACT

       For the past several decades, much American lawmaking has been animated by a concern for
economic efficiency. At the same time, broad concerns over wealth and income inequality have roiled
American politics, and still loom over lawmakers. It can be reasonably argued that a tension exists
between efficiency and equality, but that argument has had too much purchase over the past few
decades of lawmaking. What has been overlooked is that inequality itself can be allocatively inefficient
when  it gives rise to collectively inefficient behavior. Worse still, some lawmaking only masquerades
as being efficiency-promoting; upon closer inspection, some of this supposedly efficiency-driven
legislation is only naked rent-seeking, enriching a small minority at the expense of social welfare. In
pursuit of efficiency, injudicious lawmaking has created inefficient laws and institutions.
        This Article lays out several ways in which inequality can be allocatively inefficient. This
Article also lays out a simple normative principle, focusing on broad economic effects, by which
efficiency rationales for lawmaking might be more rigorously considered. Importantly, while it is
lawmaking  and not economic policymaking that is the focus of this article, it is essential that
lawmaking  be adequately informed by serious economic analysis, and not the intellectually casual,
ideologically-driven economics that has opened the door to rent-seeking over the past several decades.
The resulting lawmaking creates inequality but does not even produce the promised efficiencies. Better
lawmaking  must be informed by better economics. After all, if inequality is objectionable because it is
inefficient, then measures to reduce inequality should themselves be efficient.

INTRODUCTION

       The   problem   of economic  inequality  in  the United   States  has  already  roiled
presidential  politics, and still retains the potential to reshape,  if not realign, both the
Republican and Democratic parties. The temptation is to think of inequality as an
economic   problem   with economic   solutions. There  is just enough  truth in such  a view
to  mask   a  more  fundamental source: legal rules and institutions. After all, an



*      D'Alemberte Professor and Associate Dean of Environmental Programs, Florida State University College
       of Law. The author thanks and acknowledges the help and comments of Richard McAdams, Lee Fennell,
       June Carbone, Steve R. Johnson, workshop participants at Emory University School of Law, Loyola
       University Chicago School of Law, and at the Florida State University College of Law, and participants
       at the 2015 Midwestern Law and Economics Association meeting. The author would also like to thank
       Mary McCormick, Kat Klepfer, and the always outstanding library staff at the Florida State University
       College of Law for their assistance. Of course, the remaining shortcomings are the sole responsibility of
       the author.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Contact us for annual subscription options:

Already a HeinOnline Subscriber?

profiles profiles most