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    Through its "comfort women" framework, the World War II Japanese military extended its licensing regime for domestic prostitution to the brothels next to its overseas bases. That regime imposed strenuous health standards, which the military needed to control the venereal disease that had debilitated its troops in earlier wars. These "comfort stations" recruited their prostitutes (we limit this article to women recruited through Korea and Japan) through variations on the standard indenture contracts that the licensed brothels had used in Korea and Japan. Some women took the jobs because they were tricked by fraudulent recruiters. Some took them under pressure from abusive parents. But the rest seem to have taken the jobs for the money. The notion that the comfort stations were anything else dates from the 1980s. In 1983, a Japanese writer published a memoir in which he claimed to have led a posse of soldiers to Korea and conscripted women at bayonet-point. Soon, several women sued the Japanese government for compensation. The government apologized (the Kono statement), and the U.N. issued two scathing reports. In fact, the Japanese author had made up the story. By the end of the century, historians and journalists (in both Japan and South Korea) had determined that he had fabricated the entire memoir. In the meantime, however, an apparently corrupt organization (its leader is currently on trial for embezzlement) with close ties to North Korea (the leader's husband served prison time for passing documents to a North Korean agent) took control of the comfort-women movement. Steadily, it inflamed the ethno-nationalism within South Korea and stalled rapprochement with Japan. All this took place while North Korea steadily developed its nuclear weapons arsenal. Given the close ties between North Korea and the organization running the comfort women movement, that may be the point. Under pressure from the South Korean left, however, the government continues to launch criminal prosecutions against scholars who point out the genesis of the movement in the fabricated memoir. Readers in the Anglophone world need to realize that scholars who contest the fabricated comfort women story in South Korea face potential prison time for doing so.

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    In “Contracting for Sex in the Pacific War,” International Review of Law & Economics (IRLE) (2020), I explored the economic logic behind the contracts made by Japanese and Korean prostitutes with the brothels at which they worked. Among the terms of the contracts that I tried to explain were the way in which they coupled a large initial payment with a maximum period of service. I sought to interpret these and other contractual terms as addressing classic economic dilemmas.My article provoked massive criticism. However, virtually none of the critics attacked my economic analysis of the contracts. Indeed, most of my critics did not even mention my analysis of the contractual terms – even though that was the focus of my article and was the basis for its publication in the IRLE. Instead, some critics complained that I did not examine actual prostitution contracts. Readers of my actual article will know that I never claimed to have a data set of actual contracts. To the best of my knowledge, very few actual contracts survived the war. What I did rely upon—as I make clear in my article—is information about the prostitution contracts from government documents, wartime memoirs, newspaper advertisements, a summary of a comfort station accountant’s diary, and so forth.Other critics compiled a long list of asserted mistakes concerning the accuracy, relevance, and interpretation of citations in my article. I respond to these claims below. Most of them are not mistakes at all. A small number of them are mistakes, but they do not affect my analysis of the contract terms. Most critics emphasized the immorality of the comfort women system. In particular, some critics claim that I ignored the fact that some women were deceived into becoming comfort women and were cheated and otherwise mistreated by owners of the comfort station brothels. Readers of my actual article will recall that I mention these points in my article. Most of the critics insist that large numbers of Korean women were forcibly conscripted (at gunpoint or hauled away against their will) by the Japanese army in Korea. My IRLE article does not address this issue, but I discuss it in this response. The claim is false: Korean women were not programmatically and forcibly conscripted by Japanese soldiers in Korea into comfort station work. There is no contemporaneous documentary evidence of forcible conscription. Neither is there any evidence for over 35 years after the war ended in 1945. Only in the late 1980s did some Korean women begin to claim that they had been forcibly conscripted. Crucially, in 1983 a Japanese writer named Seiji Yoshida wrote a best-selling book claiming that he and a posse of soldiers had dragooned Korean women at bayonet point and raped them, before sending them off to serve as sexual slaves. A famous 1996 UN report on the conscription of Korean women relied on this book, and it is in the wake of the book that a small number of Korean women began claiming that they had been conscripted even though some of them had earlier given different accounts. Before he died, Yoshida admitted that he had fabricated the entire book. Yoshida’s fabrication attracted substantial attention in Asia and abroad, including in the New York Times. The comfort women dispute began with Yoshida’s fraud. Yet this astonishing and crucial fabrication is not mentioned by any of my critics even though many of them are Japan or Korea experts and are surely aware of it.

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    In this essay for the Oxford Handbook of Japanese Politics, I survey the state of (and the research into) the Japanese judiciary. Japan operates a largely honest and meritocratic judiciary. The court's administrative office (and indirectly, the ruling party) can reward and punish judge for the quality of the work they do -- and has. For the most part, the administrative office uses that capacity to reward good work. It can also use the capacity to punish opposition politics -- but self-selection into the judiciary seems to keep the (perceived) need for that political intervention to a minimum.

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    In response to questions that have been raised since the publication of my article.

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    Security is often a non-excludable public good. On the one hand, it benefits the people who buy it; on the other, it also benefits those who live near the people who buy it. It benefits those neighbors even if they refuse to share in the cost of the security themselves. Security also entails economies of scale. In part because of the positive externalities involved, people economize when they purchase security together. Rather than each pay to protect him- or herself, they save resources if they purchase their security together.

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    The article presents an English translation of the Japan vs. Shimizu decision (信玄 公 旗 掛 松 事件 Shingen-kō hata kake matsu jiken), which is a central court decision in the history of Japanese civil law. With its decision in a tort law dispute over a historically significant tree, the Japanese Imperial Court of Justice has set a legal precedent for taking into account the principle of good faith. Lawsuits based on an "improper exercise of law" (権 利 の 濫用 kenri no ran'yō) have since played a major role in tort, contract and property law in Japan. The authors give an overview of the background of the case and discuss the legal and dogmatic significance of the decision, for which they reconstruct the historical facts and the process flow. In this way, they hope to expose an important area of ​​Japanese law.

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    The protracted political dispute between South Korea and Japan over the wartime brothels called "comfort stations" obscures the contractual dynamics involved. These dynamics reflected the straightforward logic of the "credible commitments" so basic to elementary game theory. The brothel owners and potential prostitutes faced a problem: the brothel needed credibly to commit to a contractual structure (i) generous enough to offset the dangers and reputational damage to the prostitute that the job entailed, while (ii) giving the prostitute an incentive to exert effort while working at a harsh job in an unobservable environment. Realizing that the brothel owners had an incentive to exaggerate their future earnings, the women demanded a large portion of their pay upfront. Realizing that they were headed to the war zone, they demanded a relatively short maximum term. And realizing that the women had an incentive to shirk, the brothel owners demanded a contractual structure that gave women incentives to work hard. To satisfy these superficially contradictory demands, the women and brothels concluded indenture contracts that coupled (i) a large advance with one- or two-year maximum terms, with (ii) an ability for the women to leave early if they generated sufficient revenue.

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    Through webs of cross-cutting ties, groups can build "social capital" -- the ability to use the resulting access to information and collective punishment to enforce on each other their norms of appropriate behavior. Yet not all minorities maintain such networks. And groups without them sometimes find themselves manipulated by opportunistic entrepreneurs who capture private benefits for themselves while generating massive hostility and (statistical) discrimination against the group as a whole. As one adage puts it, sometimes the worst enemy of a minority group is its own leadership. Consider the Korean residents of Japan. Koreans had begun to migrate to Japan in the 1910s. They were poor, single, male, young, uneducated, and did not intend to stay long. As one might expect given those characteristics, they maintained only very low levels of social capital, and generated substantial (statistical) discrimination against themselves. After the Second World War, most Koreans returned to their homeland. Among those who stayed, however, a self-appointed core of fringe-left opportunists took control and manipulated the group toward their private political ends. Lacking the dense networks that would let them constrain the opportunists, the resident Koreans could not stop them. Those with the most talent, sophistication, and education simply left the group and migrated into Japanese society. The opportunistic leaders exploited the vulnerable Koreans who remained, captured private benefits for themselves, and generated enormous hostility and (statistical) discrimination against the rest.

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    Over the last century, Japanese consumers have steadily lost their taste for sake. Several large producers dominate the mass market through economies of scale, but the regional brewers have gradually gone out of business. In this environment, a small group of enterprising regional brewers began to create a market for premium sake with the environmental variations so important to French terroir. To produce this terroir sake, brewers must convince local farmers to grow high-risk and high-cost varieties of rice optimized for premium sake. The challenge involves unusually complex incentive and informational requirements. Yet the parties almost never draft elaborate contracts with verifiable terms, and rarely vertically integrate. Instead, they build dense and refined networks of social capital among themselves and combine short-term renewable (and hence terminable) contracts, extremely high (efficiency-wage level) prices, and close monitoring by the brewer. In the process, they give the farmers strong incentives to let the brewers intervene as needed in the farming. The brewers and farmers neither draft elaborate contracts nor vertically integrate for a simple reason: they do not need to do so. The combination of dense networks of social capital, terminable short-term contracts, and high prices gives them all the flexibility they need.

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    As academics, we are used to dealing with exaggerations. We are not used to finding that the story is pure fiction. But that is the nature of the comfort-women-sex-slave story.

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    Although Japan has the third largest deposit of geothermal energy in the world, its total installed generation capacity remains paltry. In part, development has been stymied by contractual problems involving promissory credibility. By the common law of property, hot springs hotels in many areas can potentially shut down geothermal projects. Geothermal developers would make the projects worth the hotels’ while if they could, but cannot credibly assure them that they (the developers) will compensate them for any damages ex post. Conversely, by the basic logic of collective action, hot springs hotels cannot credibly promise to negotiate in good faith. Because each hot springs owner may potentially have a right to enjoin the entire geothermal project, the developer faces sequential negotiations, each of them a bilateral monopoly – and no one owner can credibly promise that all subsequent owners will negotiate in good faith. These problems are not necessarily insolvable. And the few geothermal plants that exist are disproportionately those where the hotels and developers created ways to solve these twin contractual problems. Some geothermal developers overcame their credibility problem by piping hot water to the hotels directly. Some hotels overcame their collective action problem by negotiating through their trade association or town government.

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    Informal social sanctions such as ostracism are most communities’ primary means of controlling deviance, with formal legal sanctions a costlier backup mechanism, but outside university laboratories, studies of ostracism barely exist. We construct a formal model and examine legal cases brought by targets of Japanese village ostracism. Villagers truly offending against social welfare do not bring these suits. Rather, much ostracism is opportunistic -- to extort property, hide communitywide malfeasance, or harass rivals. Typically, the objective is not to employ government’s coercive power, but to have the court publicly certify that the target of ostracism is not really culpable.

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    In the 1960s, Japanese women began asking temples to perform commemorative ceremonies for the fetuses or children they had aborted. They still do. Physicians have been able to perform abortions legally since 1952, and many women have had them. The ceremonies do not fit within the classic rituals offered by the temples, but many Japanese women find them helpful. They ask for the services. The temples respond. The temples charge for these memorial services. They rely on such fee-for-service arrangements for an increasingly important segment of their finances. Traditionally, priests had stood ready to offer their parishioners counseling and ritual as needed during the existentially troubling passages in their lives. In exchange, their local communities had effectively kept the temple on retainer. This no longer works. The temples stand in low levels of tension with the surrounding society (as Stark put it). As such, they cannot trust their parishioners to give voluntarily. Instead, they had counted on the constraining power of the tightly intertwined social network within the local community. Over the course of the 20th century, Japanese migrated out of these tightly structured villages to the often anomic cities. Without a coercive village structure to enforce giving, the low-tension temples found themselves without their effective retainer. With the first-best contract unavailable, many temples have turned to fee-for-service arrangements — of which the abortion-related ritual is merely the most notorious. Ironically, the new environment presents an entirely different challenge: temples now find themselves competing with internet-based priest-dispatch services.

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    Group ostracize members. Sometimes they do it to enforce welfare-maximizing norms, but other times ostracism reduces welfare. Japanese villages have long used ostracism as a tool for conformity, and the targets have sometimes sued in response. The cases that have reached the courts disproportionately involve welfare-reducing behavior by the community; for example, ostracism against targets who report corruption. The targets usually win the civil cases against ostracizers and prosecutors usually win the criminal cases. Yet the targets seem not to have sued for financial or injunctive relief, and the prosecutors seem not to have pushed for prison terms. Instead, they have used the courts for an informational end: to certify and publicize innocence. This end is of minor importance in normal litigation, but crucial fo ostracism, as we explain using a formal model. We use case examples and the model to explore the factors that cause disputes to lead to ostracism and ostracisms to lead to litigation.

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    Using fourteen government censuses and a wide variety of quantitative historical sources, I trace the origins of the Japanese putative outcastes. Sympathetic scholars have long described the group - called the burakumin - as the descendants of a 17th century leather-workers' guild. Members of the group suffer discrimination because their ancestors handled dead animals, they write, and ran afoul of a distinctively Japanese religious obsession with ritual purity. In fact, the burakumin are not descended from leather-workers. They are descended from poor farmers. Eighteenth-century Japanese would not have discriminated against them out of any concern for ritual purity. They would have discriminated against them because they were poor. The burakumin identity as we know it dates instead from the early 20th century. In 1922, self-described Bolsheviks from the buraku upper class lauched a "liberation" movement. To fit their group within Marxist historiography, they created for it a fictive identity as a leather-workers' guild. Within a few years, however, criminal entrepreneurs from the urban slums had hijacked the new movement. They embarked on full-scale identity politics, and generated the public hostility that has plagued the group ever since. The criminal leadership used discrimination claims to shake down local (and eventually the national) governments for ever-increasing transfer payments. Before the 1920s, prosperous member of the buraku had stayed and helped to build its social and economic infrastructure. After the 1920s, those burakumin who hoped to capitalize on the shakedown strategies continued to stay. Given the public hostility that the criminal leadership generated, however, those who preferred mainstream careers increasingly left and merged into the general public.

  • William A. Klein, J. Mark Ramseyer & Stephen M. Bainbridge, Business Associations: Agency, Partnerships, LLCs, and Corporations, 2020 Statutes and Rules (2020).

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    During the Second World War, fraudulent recruiters sometimes promised young Korean women factory jobs but sent them instead to war-zone brothels called "comfort stations." Western historians take it on faith that the Japanese military forced Korean women into brothels as well. Unfortunately, in doing this they do not just ignore the role that politics (Korean, Japanese, and Western academic) have played in the dispute. They also ignore the contracts that the rest of the -- not defrauded -- young women actually concluded. In the article that follows, I examine the employee-level contracts in the market for sexual services within the Japanese empire. The contracts reflect the straightforward logic of "credible commitments" so basic to elementary game theory. Realizing that the brothel owners had an incentive to exaggerate their future earnings, the women demanded a large portion of their pay upfront. Realizing that they were headed to the war zone, they demanded a relatively short maximum term. And realizing that the women had an incentive to shirk, the brothels demanded provisions that gave women incentives to work hard. Ultimately, the women and brothels concluded identure contracts that coupled a large advance with one or two year maximum terms, and an ability for the women to return early if they generated sufficient revenue. Crucial to the current dispute, the Japanese military did not force -- or even recruit -- Korean women into prostitution. Instead, the brothels surrounding the bases began and remained as privately owned and operated enterprises. They employed contracts that reflected these game-theoretic principles of promissory credility. The women were poor, they were young, and they were born into the bad circumstances. But basic principles of market economics apply to poor young people too -- and we would do well to recognize how resourcefully the women used those principles to respond to their plight.

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    Japanese communities with nuclear reactors have them because they applied for them, and they applied for them for the money. Among Japanese municipalities, they were some of the most dysfunctional before the reactors had even arrived. These were the villages that had long fought for targeted subsidies, but ignored infrastructural investments. Subsidies operate as a regressive tax on out-migration, of course, and the lack of private-sector infrastructure reduces the returns to high-value human capital. As a result, these were the villages from which the most talented young people had probably begun to disappear—even before the reactors arrived. After the communities built the reactors, talented young people continued to leave. Unemployment rose. Divorce rates climbed. And in time, the communities had little other than reactor-revenue on which to rely.

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    When members of a minority group can monitor and constrain each other, they can leverage their internal social capital to financial gain. When they live within dense networks of personal contacts, they will more often have the information necessary to learn whether potential trade partners have kept their word and to punish those who have not. When members of a minority group lack that social capital, they not only lose these advantageous transactions but become vulnerable to their own self-appointed leaders as well. Lacking a network of close ties, they can neither monitor nor constrain others in the group. This vacuum creates an opening for opportunists to purport to act on their behalf (perhaps to obtain ethnic subsidies or other group preferences), but actually to divert rents to themselves--and incite hostility toward the group in the process. Arrovian statistical discrimination and selective out-migration follow. The opportunists raise the level of dysfunction within the group. Faced with an outside majority that treats minority members by the observed group mean, those minority members with the highest outside options will now leave and abandon the group to the opportunists. Any ethnic subsidies will offset the discrimination in part, of course. The higher the level of subsidies, the fewer the number of minority members who will find it advantageous to leave; the higher the level of subsidies, the slower the pace at which the dysfunctional minority will merge into the mainstream I illustrate these dynamics with examples from the burakumin outcastes in Japan, the Korean residents in Japan, and the Okinawans.

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  • J. Mark Ramseyer, Comfort Women and the Professors (Harv. L. Sch. John M. Olin Ctr. Discussion Paper No. 995, Mar. 13, 2019).

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    We in the West have embraced an odd "narrative." The Japanese army of the 1930s and 1940s, we write, forcibly drafted 200,000 mostly Korean teenage girls into "rape camps" called "comfort stations." Should anyone question the story, we summarily consign the person to "denier" status. This makes for a strange phenomenon. Only a few of the comfort women claim to have been forcibly recruited, and several of them had told a different story before the reparations campaign against Japan began. A strongly leftist affiliate runs their nursing home, controls whom they can see, and vilifies any woman who might say anything else. In fact, no one has ever located any documentary evidence that the Japanese military forcibly recruited any Korean woman into a comfort station. And when Korean academics question the orthodox account, their own government sometimes prosecutes them for criminal defamation -- indeed, sent one heterodox professor last fall to six months in prison.

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    Solicited for the Oxford Handbook of Fiduciary Law, this essay offers a general introduction to Japanese fiduciary principles. Using corporate law as an example, it outlines the scope of the duties of loyalty and care, and of the business judgment rule. It compares the application of these principles in Japan to their application in the United States. It briefly examines their use beyond the corporate context, and outlines several recent extensions.

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  • William A. Klein, J. Mark Ramseyer & Stephen M. Bainbridge, Agency, Partnerships, and Limited Liability Entities: Unincorporated Business Associations (Found. Press 4th ed. 2018).

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    This book is a collection of edited cases, original text, questions, and problems designed for use in a law school level course on agency, partnerships, and limited liability entities. A key feature of this casebook is the extensive coverage of limited liability entities, especially unincorporated limited liability companies (LLCs). The authors include cases on such LLC topics as formation, interpretation of the operating agreement, piercing the LLC "veil," fiduciary obligation, expulsion of an LLC member, and dissolution. Also included is a section on the question of whether membership interests in LLCs and limited partnerships are a security. This edition has been meticulously updated with important cases and rules.

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    In 1969, Japan launched a massive subsidy program for the "burakumin" outcastes. The subsidies attracted the mob, and the higher incomes now available through organized crime compensated those burakumin who abandoned the legal sector for criminal careers. In the process, the subsidies gave new support to the tendency many Japanese already had to equate the burakumin with the mob. The government ended the subsidies in 2002. We explore the effect of the termination by merging 30 years of municipality data with a long-suppressed 1936 census of burakumin neighborhoods. First, we find that outmigration from municipalities with more burakumin increased after the end of the program. Apparently, the higher illegal income generated by the subsidies had restrained young burakumin from joining mainstream society. Second, we find that once the mob-tied corruption and extortion associated with the subsidies neared its end, real estate prices rose in municipalities with burakumin neighborhoods. With the subsidies gone and the mob in retreat, other Japanese found the formerly burakumin communities increasingly attractive places to live.

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    Japanese communities with nuclear reactors have the reactors because they applied for them, and they applied for them for the money. Among Japanese municipalities, they were some of the most dysfunctional before the reactors had even arrived. Communities depend on young families for the social capital that holds them intact, and these were the communities from which those families had already begun to leave. After the reactors arrived, young families continued to disappear. Unemployment rose. Divorce rates climbed. And in time, the communities had little -- other than reactor-revenue -- to which they could turn.

  • J. Mark Ramseyer, Business Organizations (Wolters Kluwer 2nd ed., 2017).

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    "In a thoughtful yet uncomplicated style, Business Organizations reveals the structure of corporate, partnership, agency, and securities law. J. Mark Ramseyer places the law in historical context and analyzes the law’s economic effect. Overviews in each chapter and hypothetical examples illustrate the synthesis of legal, financial, and economic relationships in a way that will inform and interest readers whether their previous exposure to economics has been minimal or extensive. Comprehensive coverage embraces all of the principal cases in the leading casebooks. Clear and incisive analysis explores what motivated the parties and why the judges decided as they did." -- Wolters Kluwer

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    In late 2013, the Japanese Supreme Court voided inheritance rules giving non-marital children half the shares of their marital half-siblings. To punish children for the sins of their parents, it explained, violated the equal protection clause of the Constitution. Like the stigma that most traditional societies attached to illegitimacy, the inheritance rules had reflected a simple selection bias: the societies that survive are those where more children live to reproductive age; in harsh environments (the norm until a few centuries ago) whether children survived turned on the level of investment adults made in them; men tend not to invest in children whose paternity they do not know; hence, non-marital children had been substantially less likely to survive; but the stigma attached to illegitimacy and the accompanying legal disabilities had helped minimize the number of such children by channeling sex into stable dyadic relationships. The pre-2013 inheritance rule had promoted that relational stability by helping women hold men to their promises. In order to induce women to marry them, men routinely promise to invest in the children they bear together. The earlier rule had assured women that if their husbands breached those promises in life, they could at least trust the law to favor their children in his death. After 2013, the courts could no longer offer even that assurance.

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    Nuclear reactors entail massive nontransferrable site-specific investments. The resulting appropriable quasi-rents offer the mob a lucrative target. In exchange for large fees, it can either promise to “protect” the utility (and silence the reactor's local opponents) or “extort” from it (and desist from inciting those opponents). Using prefecture-level Japanese panel data covering the years 1980 to 2010, I find that extortion rates rise when a utility announces plans to build a reactor. The evidence is consistent with a straightforward account: once news about a utility's plans to build a new reactor leaks, the mob moves in to appropriate the large quasi-rents from the utility, and stays to do what it does everywhere else—extort regular payments from local businesses. Reprint in the Japanese Journal of Law forthcoming (2017).

  • J. Mark Ramseyer, Liability for Defective Products: Comparative Hypotheses and Evidence from Japan, in Products Liability: Problems and Process 550 (James Henderson, Aaron Twerski & Douglas Kysar eds., 8th ed. 2016).

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    Products Liability: Problems and Process offers a problem-based approach that balances doctrine with in-depth exercises that prompt students to apply the law in realistic fact scenarios. Rules and comments from the Restatement (Third) of Torts: Products Liability—for which two of the authors, James Henderson and Aaron Twerski, have served as co-reporters—are fully integrated throughout the text. Brief dialogs among the three authors present a range of perspectives on controversial issues within the field to help stimulate reflection and discussion. The book concludes with a chapter on products liability in a global context. New to the 8th Edition: • substantial reorganization of material resulting in a slimmer, more user-friendly volume; • fully updated notes and cases in every chapter, including the latest scholarly commentary; • several new problem exercises and author dialogues throughout the book; • complete revision of preemption coverage and analysis; and • addition of a new co-author, Doug Kysar.

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    By easing the difficulty of the Japanese bar-exam equivalent, recent changes increased the quality of young lawyers. The result is counterintuitive, but a relaxation in a licensing standard can have this effect if it lowers the costs to taking a test enough to increase the number and quality of the people willing to go to the trouble of sitting for it. We explore the theoretical circumstances under which this phenomenon can occur and discuss the evidence that this is indeed what happened in Japan.

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    Verifiable proxies for social capital potentially provide an empirically tractable way to identify environments where social norms both constrain behavior and substitute for judicial enforcement. Using regression and factor analysis with Japanese prefecture-level data, I explore several aspects of this possibility. I first note that people in prefectures with high levels of social capital more readily comply with a wide range of low-level legal mandates. Conditional on levels of economic welfare, I further find that: (i) firms in prefectures with low levels of social capital are more likely to default on their contracts, (ii) residents in low social-capital prefectures are more likely to litigate, (iii) creditors of distressed debtors in low social-capital prefectures are more likely to petition a court for enforcement orders, and (iv) distressed debtors in low social-capital prefectures are more likely to file in court for bankruptcy protection.

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    Development officials and scholars routinely argue that land reform can raise productivity. It may not always do so, they write, but it can—and during 1947–1950 in Japan it did. Land reform may sometimes raise productivity, but it did not raise it in Japan. The claim that it did is a fable, a tale people tell and re-tell only because they wish it were true. A lease is a credit transaction—a way for local elites (tied to local information networks in ways that banks can never be) to extend funds to farmers. Elites could lend money directly, but would need to create a security interest to protect their loans. Doing so requires legal procedures, however, and most local elites in prewar Japan lacked the university education necessary to manipulate those procedures. By contrast, a lease lets local elites protect their funds simply by retaining the right to evict tenants who fail to pay. As such, it represents a way for investors and farmers jointly to economize on credit market costs. The Japanese land reform program effectively banned this transaction-cost economizing credit-market strategy, expropriated the wealth of the investors who used it—and cut the rate of growth in agricultural productivity.

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    It’s long been known that Japanese file fewer lawsuits per capita than Americans do. Yet explanations for the difference have tended to be partial and unconvincing, ranging from circular arguments about Japanese culture to suggestions that the slow-moving Japanese court system acts as a deterrent. With Second-Best Justice, J. Mark Ramseyer offers a more compelling, better-grounded explanation: the low rate of lawsuits in Japan results not from distrust of a dysfunctional system but from trust in a system that works—that sorts and resolves disputes in such an overwhelmingly predictable pattern that opposing parties rarely find it worthwhile to push their dispute to trial. Using evidence from tort claims across many domains, Ramseyer reveals a court system designed not to find perfect justice, but to “make do”—to adopt strategies that are mostly right and that thereby resolve disputes quickly and economically. An eye-opening study of comparative law, Second-Best Justice will force a wholesale rethinking of the differences among alternative legal systems and their broader consequences for social welfare.

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    As of June 1, 2015, the Tokyo Stock Exchange mandated a "corporate governance code" on firms that would list their stock on its exchange. In effective, the code required most listed firms to appoint outside directors to their boards. The code itself was the output of a study committee organized under the auspices of the Financial Service Agency and the Exchange. And it had as its formal impetus the 2014 amendments to the Corporate Code that increased pressure on firms to appoint outside directors. The mandates trace their origins to debates within other countries over corporate governance, and to the on-going political disputes over reviving Japanese economic growth. In this article, we explore four questions relating to the mandate: (a) what do the outside director mandates actually require, (b) who actually decides the substance of the mandate, (c) what process resulted in the mandate, and (4) what relation does the mandate bear to economic theory and empirical research? By standard economic theory, market pressure will push shareholders to select those directors (whether insiders or outsiders) who most effectively increase stockholder wealth. To mandate the appointment of anyone else (again, whether insiders or outsiders) will necessarily cause stockholder welfare to fall. The proponents of the new mandate argued aggressively that that it would stimulate the Japanese economy. We suspect they will soon adopt other measures that require outside directors even more rigidly. Nothing in economic theory or research, however, provides any support for their claims. Also available at: 28 Osaka gakuin daigaku keizai ronshu 15 (2015) (written in Japanese).

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    For scholars studying the political attitudes of the general public, someone’s position on the ideological spectrum is a good place to start. Typically, scholars identify that position through factor analysis on survey questions, making the assumption that the most important artificially constructed factor indicates the person’s position on the liberal-conservative spectrum. The leading attitudinal surveys, however— the GSS, the CCES, and the ANES— include a variable giving a respondent’s self-identified ideology, a variable given no special prominence by factor analysis. We suggest a new ideology measure: the individual’s fitted value from a regression of self-identified ideology on other variables. We describe various ways to choose those other variables. This approach gives proper priority to the usefulness of self-reported ideology. It lets us test whether voters identify their own ideology through identity-group variables; avoids the bias introduced in choosing which issue variables to include in factor analysis; and shows which positions the average American— as opposed to the analyst— thinks define “liberal” and “conservative”.

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    "The ninth edition preserves the authors' tradition of providing a comprehensive overview of agency, partnership, and corporation law. It also continues to emphasize six basic editorial principles: Be lean but not mean, cases edited ruthlessly to produce a readable and concise result. Facts matter, so they are included in all their potential ambiguity. Bring a planner's perspective to the table through extensive use of transactionally-oriented problems. It's a casebook not a treatise. No long, stultifying textual passages. Provide the cases and let the individual teacher use them as he or she sees fit. Try to find cases that are fun to teach. Great facts or a clever analysis are always given first priority in case selection. Provide a teachers' manual that goes into great depth, with analysis of every case and, whenever applicable, offering the disparate views of each author." --Publisher Supplements (1993, 1998, 1999, 2001, 2005, 2008, 2010, and 2014); Teachers' Manual with Supplements (1991, 1993, 1998, 1999, and 2001); and annual Statutory Supplement.

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    Two persistent questions of enterprise law are raised and addressed: First, how does law matter to business practice? Second, how can we make law that stimulates economic efficiency? These questions are difficult to answer because of two important complementarities: the complementarity between areas of law within a country’s legal regime and the complementarity between law and other social environments such as markets and social norms. Over the course of the two-day conference, academics and practitioners from the U.S. and Japan in the areas of corporate law, securities regulation, labor law (including both employment protection law and labor union law), bankruptcy law, and tax law investigate the ways that enterprise law affects practice complementarily with markets and social norms. A key analytical framework is introduced, in which the business enterprise is viewed as an incentive mechanism among the four indispensable capital providers of the firm: management, employees, shareholders, and creditors. Only through close attention to the incentive bargain between these four players can optimal legislative design and economic efficiency be achieved.

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    Antitrust scholars have come to accept the basic ideas about exclusive dealing that Bork articulated in The Antitrust Paradox. Indeed, they have even extended his list of reasons why exclusive dealing can promote economic efficiency. Yet they have also taken up his challenge to explain when exclusive dealing might possibly cause harm and have modeled a variety of special cases where it does. Some (albeit not all) of these are sufficiently plausible to be useful to prosecutors and judges.

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    Using regression and factor analysis with prefecture-level data, I ask whether Japanese in communities with high levels of “social capital” more readily settle their disputes out of court. Although studies of litigation rates often measure suits per capita, the more appropriate measure may involve suits per “dispute.” We lack information about the number of disputes in many fields, but we do have it for Japanese divorces and traffic accidents—and I focus on those two sets of disputes. Disputes over divorce and traffic accidents differ fundamentally, and social capital does not lower litigation rates among either. I find that: (1) couples in communities with low social capital are more apt to divorce; (2) couples in low-social-capital communities are not more likely to litigate their disputes; (3) couples in communities with more lawyers are not more likely to litigate their divorces; and (4) parties in communities with low social capital are not more likely to litigate their disputes over traffic accidents; but (5) parties in communities with more lawyers are indeed more likely to litigate their disputes over those accidents.

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    This Essay is a response to Professor Hyman’s piece, Why Did Law Professors Misunderestimate the Lawsuits Against PPACA. In this Essay, Ramseyer argues that the statements made by law professors about the constitutionality of the PPACA often reflected partisan loyalty more than thoughtful legal analysis.

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    Critics have long complained that lawyers dissipate value. Some do, of course. Some legal work dissipates more value than others, and the lawyers who focus on the most notorious rent-seeking sectors extract a heavy toll in the U.S. Whether lawyers choose to focus on value-dissipating or value-enhancing work depends on the institutional structure in place, and the American legal system apparently generates high returns to value-dissipating work. The Japanese legal system traditionally holds down such returns, and Japanese attorneys have invested much less in those sectors. In 2006, the Japanese Supreme Court unilaterally invented an entirely new field of rent-seeking: it construed usury law to let borrowers sue for refunds of "excessive" interest they had explicitly and knowingly -- and with statutory authorization -- agreed to pay. Although borrowers swamped the courts with refund claims, the field did not attract either experienced or talented attorneys. Instead, it attracted two groups: new lawyers who had entered the bar under the relaxed licensing standards, and the least talented lawyers. At least in this sector of the rent-seeking field, the returns to experience and talent in Japan apparently remain lower than in value-enhancing sectors of the bar.

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    Many observers suggest that American citizens sue more readily than citizens elsewhere, and that American judges shape society more powerfully than judges elsewhere. We examine the problems involved in exploring these questions quantitatively. The data themselves indicate that American law’s notoriety does not result from how we handle routine disputes. Instead, it results from the peculiar and dysfunctional way American courts handle particular legal doctrines like class actions.

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    The U.S.-controlled occupation imposed on Japan in the late 1940s an American-style securities statute. The U.S. statute did not ban insider trading at the time, and neither did the new Japanese law. Not until the 1960s did U.S. prosecutors and judges start to criminalize insider trading. Their Japanese counterparts did not follow their lead, and as of the mid-1980s had left insider trading largely unpoliced. In 1988, the Japanese Diet banned and criminalized insider trading. Rather than use a vague rule like 10b-5, it carefully specified which investors, which trades, and which contexts would trigger the ban. In 2004, it added an administrative surcharge regime. Commentators in Japan ostensibly urged the Diet to adopt the bill because they hoped to restore investor confidence in the stock market. If the ban restored investor confidence, it did not show. Shortly after the ban took effect, the Japanese stock market collapsed.

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    Americans file 80,000 product liability suits a year; Japanese file perhaps 100-300; and most countries more closely resemble Japan than the United States. Based on reports and articles from forty-five countries, Mathias Reimann has advanced several thoughtful and subtle hypotheses about this contrast. In this article, I apply Reimann's hypotheses to Japan and explore what they might tell us about law in the two countries. As Reimann suggested, the reason for the Japanese-American contrast does not lie in legal doctrine: on the substantive law of products liability, the United States and Japan are quite close. Instead, the reasons for the contrast seem to turn on aspects of American procedure that encourage meritless demands. Litigation rates are not lower in Japan because the law prevents victims from recovering their damages; Japanese law does not deter valid claims. Instead, the rates are higher in the United States because American law helps claimants collect amounts to which they are not legally entitled.