All posts by Eric Posner

It’s out!


You can buy it here. And some humbling comments:

“How do we recognize a demagogue when we see one? In this insightful book, Eric Posner shows us that although democracies are inherently vulnerable to demagogues, America has seen remarkably few of them. Until now. The Demagogue’s Playbook makes a compelling case that Donald Trump differs from nearly all other flawed, dishonest, or populist politicians that have passed through American politics. He is a true demagogue―a living manifestation of one our Founders’ greatest fears. This is an important read for anyone concerned about the fate of American democracy.”
―Steven Levitsky, Harvard University, and New York Times bestselling co-author of How Democracies Die

“Professor Posner has made an outstanding, superbly written analysis of how Donald Trump has drawn on the ‘demagogue’s playbook’ to win a presidency that is severely testing our constitutional democracy. He provides crucial historical perspective on the demagogue as a distinctive and dangerous brand of leader in the American political experience―and on the erosion of the protections that the Founders hoped to have built against a full-fledged demagogue’s capture of the White House. It is hard to imagine understanding the Trump presidency and its significance without reading this book.”
―Bob Bauer, Former Chief Counsel to President Barack Obama

“A brilliant and highly original discussion of one of the most important topics of the current era. Essential reading if you want to understand the world today.”
Cass Sunstein, the Robert Walmsley Professor of Law, Harvard Law School, and co-author of the international bestseller, Nudge: Improving Decisions About Health, Wealth, and Happiness

“In a calm tone and with careful research and keen reasoning, Eric Posner illuminates the interplay of elitism, demagoguery, and populism in American politics, past and present. With a refreshing, sensible clarity, he cuts through the hyperbole and hysteria that often distorts assessments of our republic, particularly at this time.”
―Alan Taylor, Pulitzer Prize winning historian of William Cooper’s Town: Power and Persuasion on the Frontier of the Early Republic and The Internal Enemy: Slavery and War in Virginia 1772–1832

“Moving through a series of political and historical events and personalities, including Andrew Jackson, Huey Long, Joseph McCarthy and Donald Trump, Posner illuminates the characteristics that make someone a “demagogue,” including vicious personal attacks on political opponents, divisive accusations against vulnerable groups, the intentional spreading of lies, and efforts to undermine such fundamental institutions as the press and the judiciary. This work is necessary reading for anyone who wants to understand the challenges we, as a nation, face in the era of Trump.
Geoffrey R. Stone, Edward H. Levi Distinguished Professor of Law, The University of Chicago, and author of Perilous Times,winner of the Los Angeles Times Book Prize

“A magnificent book that traces the concepts of populism and demagoguery throughout American history. The book is hopeful in that the country has survived other demagogues and frightening in reminding us of how such a man can come to power.”
Erwin Chemerinsky, Dean and Jesse H. Choper Distinguished Professor of Law, University of California, Berkeley School of Law, and bestselling author of We the People: A Progressive Reading of the Constitution for the 21st Century

“Eric Posner is an incisive guide and a wise advisor as he leads us through the history and conditions that gave rise to two disruptive American demagogues, Andrew Jackson and the more dangerous Donald Trump. He takes us on this journey so that we may understand, with clear eyes, what we have done, and to recognize the scale of the attack we face against our own democratic institutions.”
―Tom Nichols, author of The Death of Expertise

Meritocracy / Noncompetes

I have posted a review of various books relating to meritocracy at Project Syndicate.

And here is a new paper that asks why antitrust law is so easy on covenants not to compete:

Abstract. Employee covenants not to compete bar workers who leave their jobs from working for a competing employer for a period of time. The common law regards noncompetes as restraints of trade and imposes a “reasonableness” standard on them; they can also be challenged under the antitrust laws. But new research suggests firms frequently abuse noncompetes, causing significant harm to workers and to the economy. The existing legal approach is inadequate because the common law offers minimal sanctions and antitrust law imposes excessive burdens of proof on plaintiffs. While antitrust law is the appropriate vehicle for challenging noncompetes because of its focus on market effects, it needs to be strengthened.

Libra: not a good idea

I present some objections in The Atlantic. The structure of Libra in Facebook’s white paper suggests something like a money market mutual fund with a floating net asset value. When you buy a Libra, you’re buying a share of this mutual fund, which you can transfer to others over the internet, using Facebook’s social network among other platforms. If enough people buy in, Libra could work as a currency—where the currency value is simply the relevant fraction of the assets in the mutual fund (the “Reserve”). The assets include national currencies and government bonds. The holder of a Libra takes currency risk but probably not much, especially if it is easy to exchange a Libra back into one’s national currency. The structure of Libra is open-ended enough that the “Libra Association”—a club of big corporations with a handful of nonprofits thrown in—could easily convert Libra into a bank by changing the portfolio mix and adding some risk. I imagine that Facebook’s/Libra’s lawyers are working hard to persuade regulators that Libra is not a money market mutual fund / bank so as to avoid the relevant regulations, and are gambling that the Libra Association’s structure as an international organization (located in Switzerland) with enormous assets (distributed around the world) will force (national) regulators to make concessions.

What could go wrong? Read here to find out.

The human rights wars heat up!

For the past decade or so, a bunch of academics has debated whether international human rights law has improved human rights outcomes. In my book The Twilight of Human Rights Law, I argued “no,” but many other academics have disagreed with me, including Beth Simmons, and most recently, Kathryn Sikkink, in her book Evidence for Hope.

But while we, and many others, have argued about statistical significance, causation, and definitions, we missed, or at least gave insufficient attention to, the bigger story. That story is the redefinition of human rights to give them “conservative” content. Under the traditional definition, human rights was understood in either “liberal” (think of the U.S. Bill of Rights) or “social democratic” (think of Sweden, or anyway what we like to imagine Sweden to be) terms. Around the periphery, to be sure, other conceptions existed. Many Islamic countries argued that human rights law protected people against “defamation of religion,” which in practice meant restrictions on free speech where it offended religious sensibilities, while China’s “right to development” was supposed to excuse certain human rights violations until poverty was taken care of. But these views were never taken seriously by the dominant human rights community, consisting largely of liberal NGOs like Human Rights Watch, international human rights courts, and governments in the powerful liberal democratic countries, and never gained traction.

This may soon change. On May 30, a short notice appeared in the Federal Register announcing the formation of the “Department of State Commission on Unalienable Rights.” The Notice says that the “The Commission will provide fresh thinking about human rights discourse where such discourse has departed from our nation’s founding principles of natural law and natural rights.” The Charter (courtesy of Just Security) adds that “The Commission’s charge is not to discover new principles, but to recover that which is enduring for the maintenance of free and open societies.”

These statements give us little to go on, but commentators have begun to speculate, rightly in my view, that “natural law” and the anachronistic use of “unalienable” rather than “inalienable,” are meant to invoke the Christian, and especially Catholic, understandings. (The Declaration of Independence refers to “unalienable rights” with which people “are endowed by their Creator.”) And, given what we know about the Trump administration, this almost certainly means that the U.S. government will argue that abortion and possibly other forms of family planning violate “human rights;” and, I suspect, will, following the Organization of the Islamic Conference, mutatis mutandis, put greater emphasis on religious rights and freedoms as a matter of international human rights law.

The political scientist Clifford Bob wrote an eye-opening book back in 2012 entitled The Global Right Wing and the Clash of World Politics, in which he documented the ways that conservative activists from the United States traveled to foreign countries where they helped like-minded locals enact laws protecting gun rights, banning abortion, and criminalizing homosexual activity. In the Monkey Cage, he rightly sees the Trump commission as a continuation of these efforts, now more formal and legitimate, under government auspices—and harder to ignore. As he observed, “The commission will find allies not only among conservative Americans but also internationally. For every left-wing NGO promoting today’s dominant conceptions of human rights, there is a right-wing NGO promoting something different, often in the name of human or natural rights.”

The human rights community should be very afraid. What have they to fear from an obscure government commission, whose weird name is no doubt already being mocked in faculty lounges, and with a budget of $385,074? Not the commission itself, but what it stands for—a growing movement, both political and intellectual, that will, far from repudiating international law, redefine it so that it will advance right-wing causes.

We have seen this story before. In the 1970s, U.S. constitutional law theory was the product of liberal academics who sought to rationalize the rulings of the liberal Warren court. The community of liberal lawyers and law professors was insular, complacent, and like-minded, and it was entirely unprepared when the right launched a legal revolution that both drew on the work of mostly ignored and maligned dissidents; funded and encouraged a new generation of conservative lawyers who would populate the Federalist Society’s chapters and eventually the federal courts; and armed them with a usable conservative judicial ideology that could be used to roll back the Warren court rulings and entrench conservative commitments like gun rights in their stead.

The left took refuge in international human rights, and continued to fight a rearguard action by arguing that international human rights, as they saw them, trumped the increasingly conservative jurisprudence of the Supreme Court. Here, too, an insular, like-minded, and complacent group of lawyers, activists, and academics generated a left-of-center human rights ideology that is politically and intellectually vulnerable. It is easy to predict that we will see their arguments turned against them. Arguments that international human rights law—excuse me, “natural law”—should be used by the Court to reverse—what else?, Roe v. Wade—and ultimately overturn state laws that permit abortion, and should be used to strengthen property rights, religious freedoms, and gun rights will enter the mainstream.

Meanwhile, the liberal lawyers and political scientists who continue to insist that international human rights law takes precedence over national law might want to begin reconsidering their views.

On common ownership; reply to Barry Ritholtz

The Bloomberg columnist Barry Ritholtz wrote an error-strewn response to some comments I made on the common ownership debate at a recent conference that was sponsored by Morningstar. I wrote the following letter to Bloomberg, which you can read if you own a Bloomberg terminal or hit the comments button after Ritholtz’s column. For everyone else, here is the letter:

Ritholtz does a disservice to readers by misrepresenting the important debate over common corporate share ownership. The debate began when a group of economists showed that airline-ticket prices have increased with the degree of common ownership of airlines — which means the extent to which institutional investors like BlackRock, Vanguard and State Street own (or have an effective ownership interest in) competing airlines. Economic theory tells us that when competing companies are owned or partly owned by common dominant shareholders, competition between the companies should decline, which is what the airlines study (along with another study on banking) suggests is happening.

Ritholtz makes several misleading assertions:

No. 1. He says that this theory is contradicted by the fact that investors have saved money by buying shares of the index funds offered by the Big Three. However, the critics like me do not deny that investors benefit by buying passive index funds. The critics argue that common ownership hurts consumers (or more broadly, people who lack significant stock holdings, which is to say most Americans). The problem is airline-ticket prices, not airline-stock prices, which of course should benefit from anticompetitive behavior.

No. 2. Ritholtz next says that the studies of airlines and banking that I cite do not take into account consolidation in the underlying industries. In fact, they do. Increasing common ownership aggravates the anticompetitive effects that arise from independently occurring consolidation at the industry level.

No. 3. Ritholtz says that I and the other critics ignore industries where prices have gone down. The problem with this argument is that you can’t simply look at prices. Prices reflect both costs and market structure; so even if concentration increases, prices may decline as technology advances. Although he is right that most industries have not been studied, no one has said otherwise.

No. 4. Ritholtz says that the criticisms of common ownership assume that the institutional investors “engage[d] in a criminal conspiracy to restrain trade and fix prices. Yet no one even tries to make this assertion.” For a good reason: he’s wrong that the critique assumes a criminal conspiracy. The theory is not that institutional investors agree with each other to fix prices. The theory is that the each institutional investor independently declines to pressure the firms it owns to compete with one another.

No. 5. Ritholtz says that in my view, “Vanguard, Blackrock, and State Street are going to throw out their investment philosophy, ignore their fiduciary obligations to their investors and risk vast reputational harm.” No, I assume only that the three institutional investors seek to maximize returns for their investors.

No. 6. Ritholtz suggests that the studies can’t be right because common ownership has existed for decades, all the way back to the 1960s. But there is no doubt that common ownership has increased dramatically over the last several decades. Common ownership will influence competition only when the common owners are the dominant shareholders of the competing firms, which was not the case in the past.

No. 7. Ritholtz suggests that my criticisms are focused on index funds, and that I’m on the side of active investors. That’s like saying that someone who opposes consolidation of the airline industry is opposed to air transportation and thinks everyone should walk. My worry is about the size of the institutional investors, which are now the largest owners of competing firms in numerous industries, not the products they offer.