Faculty Bibliography

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.

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.

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.

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.

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.

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.

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.

Japanese judges are least likely to hang a defendant for murder if they graduated from a high-status university, passed the bar-exam-equivalent quickly, or enjoy a fast-track career within the courts. “Panel composition effects” and other measures of collegiality seem unrelated to sentencing patterns. To explore the effect of judicial panel composition beyond the more-often-studied world of politically prominent cases, I examine its impact on criminal sentencing. More specifically, I examine the possible determinants of the propensity of Japanese judges to sentence guilty defendants to death. Toward this end, I collect all opinions published since 1980 in murder cases—about 200 cases. Because each case involves a three-judge panel but some judges write multiple opinions, these cases involve about 440 judges. Within this group, the most elite judges are least likely to impose the death penalty. Measures of possible collegiality—how long judges have served on a court together, graduation from a common university, closeness in age—have no observable impact. The presence of potential “whistle-blower” judges also appears not to matter.

Elegantly written, thoughtful and often amusing, Business Organizations analyzes the law of business organizations: corporate law, partnership and LLC law, agency, and selected aspects of securities regulation. In clean, uncomplicated prose, the text offers a clear and thoughtful overview. Business Organizations explains the structure of the law itself, placing it within an historical context, and outlines its economic effect. Integrating basic principles of business and finance in an unintimidating, uncomplicated manner, the text engages readers who have either an elemental or a sophisticated grasp of economics. Various pedagogical features support learning and facilitate use, such as the overview in each chapter, giving an over-arching, synthetic account of the law with the details on which many instructors focus. The book propels the analysis with an extensive use of hypothetical examples. The comprehensive coverage embraces all of the principal cases in the main casebooks, and goes beyond to explain what each case decided and why it matters. The authors explores what motivated the parties' actions, and why the judges held as they did. Second edition forthcoming (expected in 2017).

Consumers in wealthy countries like the U.S. and Japan usually know what they want, and how to obtain it. In such markets, the sellers who thrive should tend to be those who offer consumers the level of safety they want -- no matter what the law might be. For the most part, U.S. data confirm this essentially Coasian logic: a shift in the product liability rule from negligence to strict liability seems not to raise product safety. Unfortunately for the empiricist, however, the U.S. combines state-based liability standards with a national product market. This necessarily complicates the empirical task. Although Japan presents its own empirical difficulties, it does couple national law with a national market. In 1995, the Diet adopted strict products liability. Before, courts had adjudicated product disputes in negligence or contract; after 1995, they applied strict liability. As in the U.S., the level of product safety did not rise. Curiously, Japan did not experience any of the perverse effects sometimes attributed to strict products liability in the U.S. either. This fact suggests that the perverse results may derive not from the liability rule itself, but from the interaction between the rule and several procedural devices peculiar to the U.S.

To study the determinants of judicial productivity and speed (measured by published opinions), I examine all 348 trial-court civil medical malpractice opinions published in Japan between 1995 and 2004. For comparative purposes, I add 120 randomly selected civil judgments from the same period. The data cover 706 judges (about a third of the Japanese bench). I find: (A) Productivity correlates with apparent intellectual ability and effort. The judges who attended the most selective universities, who passed the bar exam most quickly, and who were chosen by the courts for an elite career track publish the most opinions. (B) Adjudicatory speed correlates with apparent ability and effort too, but institutional experience counts as well. As the courts acquired increasing experience with malpractice cases, the pace of adjudication quickened.

"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." --Publisher Related Teacher's Manual (3d ed. 2012).

This casebook on Japanese Law has been specially designed for ease of use and theoretical versatility. Heavily-edited cases, statutes, and articles canvass a wide range of intriguing problems and theoretical perspectives. Professors will find that it facilitates a variety of analysis and approaches to a given question--whether sociological, anthropological, or based on law and economics. The book allows for in-depth coverage of a diverse range of substantive areas of law, from torts, criminal law, and contracts to employment and corporate law.

On March 11, 2011, a magnitude 9.0 earthquake and thirty-eightmeter high tsunami destroyed Tokyo Electric’s Fukushima nuclear power complex. The disaster was not a high-damage, low-probability event. It was a high-damage, high-probability event. Massive earthquakes and tsunamis assault the coast every century. Tokyo Electric built its reactors as it did because it would not pay the full cost of a meltdown anyway. Given the limited liability at the heart of corporate law, it could externalize the cost of running reactors. In most industries, firms rarely risk tort damages so enormous they cannot pay them. In nuclear power, “unpayable” potential liability is routine. Privately owned companies bear the costs of an accident only up to the fire-sale value of their net assets. Beyond that, they pay nothing — and the damages from a nuclear disaster easily soar past that point. Government ownership could eliminate this moral hazard — but it would replace it with problems of its own. Unfortunately, the electoral dynamics in wealthy modern democracies combine to replicate nearly perfectly the moral hazard inherent in private ownership. Private firms will build reactors on fault lines — but so will governments. Anticipated to be reprinted as a chapter in a book edited by J. Weitzdoerfer, to be published by Cambridge University Press in 2018.

Most studies of executive compensation have data on pay but not total income. Because exchange-listed Japanese firms (unlike exchange-listed U.S. firms) need not disclose executive compensation figures in their securities filings, most studies on Japan lack even good data on pay. Through 2004, however, the Japanese tax office disclosed the tax liabilities of the 73,000 Japanese with the highest incomes. We obtained this data, and match the high-tax list against the list of CEOs of the firms listed in Section 1 of the Tokyo Stock Exchange. We thus estimate salaries and risk exposure in a new way. We confirm survey and anecdotal evidence that Japanese executives earn less than American—about one-fifth the pay, adjusting for firm size and outside income. Tobit regressions show that pay in Japan depends heavily on firm size (a .22 elasticity) and on accounting profitability, but not on stock returns. Additionally, family owned firms and those with large lead shareholders pay less to employee CEOs not in the family or with large shareholdings, as do firms whose directors have less tenure on the board.

To discourage firms from buying and selling tax deductions, Section 382 of the tax code limits the ability of one firm to use the ‘‘net operating losses’’ (NOLs) of another firm that it acquires. Under the Troubled Asset Relief Program, the U.S. Treasury lent a large amount of money to General Motors. In bankruptcy, it then transformed the debt into stock. GM did not make many cars anyone wanted to buy, but it did have $45 billion in NOLs. Unfortunately for the Treasury, if it now sold the stock it acquired in bankruptcy, it would trigger Sec. 382. Foreseeing this, the market would pay much less for its stock in GM. Treasury solved this problem by issuing a series of notices in which it announced that the law did not apply to itself. Sec. 382 says that the NOL limits apply when a firm’s ownership changes. That rule would not apply to any firm bought with TARP funds, declared Treasury. Notwithstanding the straightforward and all-inclusive statutory language, GM could use its NOLs in full after Treasury sold out. The Treasury issued similar notices about Citigroup and AIG. Treasury had no legal or economic justification for any of these notices, but the press did not notice. Precisely because they involved such arcane provisions of the corporate tax code, they largely escaped public attention. The losses to the public fisc were not minor — they cost the country billions of dollars in tax revenue. That the effect could be so large and yet so hidden illustrates the risk involved in this kind of tax manipulation. The more difficult the tax rule, the more easily the government can use it to hide the cost of its policies and subsidize favored groups. We suggest that Congress give its members standing to challenge unlegislated tax law changes in court.

In the Grutter case, Justice O'Connor suggested that universities could justifiably try to enroll a "critical mass" of minority students. Enroll fewer than that "critical mass," reason some observers, and minority students will feel too marginalized to perform at their highest levels. In this article, we test whether minority students perform better with other students from their ethnic group in a class or school. To do so, we assemble data on the ethnicity and performance of each student in all classes at two law schools - for three years at one, and for 16 years at the other. Although these schools enrolled a smaller fraction of African-Americans than most law schools, they are located in states with a much smaller fraction of African-Americans than in the United States as a whole. There is also a large amount of variation in the percent African-American across classes. At these schools, we find no consistent evidence that having additional students from one's ethnic group raises a student's performance. Instead, we find some evidence that having additional ethnic peers lowers performance - albeit by a very small amount.

Scholars (e.g., Chalmers Johnson) routinely argue that university cliques dominate Japanese firms and bureaucracies. The graduates of the most selective schools, they explain, control and manipulate their employer. They cause it to hire from their alma mater. They skew internal career dynamics to favor themselves. For most firms and bureaucracies, we lack the data on employee-level output necessary to test whether cliques do skew career tournaments. Because judges publish opinions, within the courts we may have what we need. In this article, I use data on published opinions to test whether Japanese judges from the most selective schools are more likely -- holding output constant -- to reach the Supreme Court. They are not. I find only weak evidence of possible favoritism toward Kyoto University graduates, and no evidence of favoritism toward Tokyo University graduates. Japanese judges do not find themselves named to the Court because of their school backgrounds. They find themselves named there because they are unusually productive.

Although law & economics scholarship has grown rapidly in recent years, Japanese scholars (with prominent exceptions, to be sure) have embraced the approach less enthusiastically than their U.S. peers. I explore some "reasons" for this reticence -- particularly, the location of legal education in the undergraduate curriculum, and the long-term Marxist domination of economics faculties. Ultimately, these "explanations" remain unsatisfactory. The undergraduate location of law does not explain law & economics' reception across a broader sample of countries, or why universities keep law in these undergraduate departments in the first place. And Marxist dominance is not the cause of an intellectual outcome. Instead, it is itself an intellectual outcome. At root, the reason for the difficulty in explaining patterns of intellectual diffusion lies in the paucity of hard-edged incentives in higher education. Although universities compete, they do not compete with anything approaching the intensity of for-profit firms. As a result, the mechanisms behind the equilibrium outcomes we observe in economic markets simply do not apply in education. Lacking those mechanisms, universities might still converge on superior intellectual approaches. Or they might not.

Using micro-level tax data on attorney incomes in 2004 (when the law was changed to make it confidential), we analyze the industrial organization of the Japanese bar. These data suggest two sources of high income: an idiosyncratic return to talent in Tokyo and a compensating differential for the lack of amenities in the provinces. The most able would-be lawyers (those with the highest opportunity costs) pass the bar-exam equivalent on one of their first tries or abandon the effort and pursue careers outside of law. If they pass, they opt for careers in Tokyo that involve complex litigation and business transactions. This work places a premium on their talent, and from it they earn appropriately high incomes. The less talented face lower opportunity costs and opt to spend many years studying for the exam. If they do eventually pass, they apparently choose between a relatively low-income career in Tokyo and a provincial career paying a compensating differential.

Interdisciplinary, wide-ranging, and flexible, contemporary Japanese legal scholarship is nothing like its antecedents thirty years ago. In significant part, it owes this modern sophistication to tax. More specifically, it owes its inter-disciplinary character to the work of Hiroshi Kaneko. When Kaneko came to Japanese tax law in the late 1950s, he came to a field like most other Japanese legal fields—intellectually isolated, and overwhelmingly doctrinal. Through a novel interpretive theory, Kaneko created a way for tax scholars to debate the economic substance of tax and income. In the process, he (a) created a field (tax law) where little had existed before, (b) brought public finance and the comprehensive tax base to the forefront, (c) kept Japanese public law practice anchored firmly in the rule of law, and yet (d) opened the door to social science in law more generally.

From the proceedings of the Symposium Honoring the Contributions and Career of Thomas L. Blakemore : May 28-29, 2009.

Japanese patients file relatively few medical malpractice claims. To date, scholars have tried to explain this phenomenon by identifying "faults" in the Japanese judicial system. They look in the wrong place. Largely, the faults they identify do not exist. To explore the reasons behind Japanese malpractice claiming patterns, I instead begin by identifying all malpractice suits that generated a published district court opinion between 1995 and 2004. I then combine the resulting micro-level dataset with aggregate data published by the courts, and publicly available information on the Japanese health care industry. I locate the explanation for the dearth in claims in the patterns of Japanese medical technology, and the reason for that technology in the national health insurance program. In order to contain the cost of its universal national health insurance plan, the Japanese government has radically suppressed the price it pays for the technologically most sophisticated procedures. Predictably as a result, Japanese doctors and hospitals have focused instead on more rudimentary - and more generously compensated - care. Yet, for reasons common to many societies, Japanese patients do not sue over rudimentary care. They sue the physicians who supply the most sophisticated care. Japanese patients bring relatively few malpractice suits because the government has (for reasons of cost) suppressed the volume of the services (namely, highly sophisticated services) that would otherwise generate the most malpractice claims.

Medieval Japanese governments only haphazardly enforced claims to scarce resources. Necessarily, this presented landholders with a void. To obtain the enforcement they needed, many turned to institutions affiliated with the fractious Buddhist faith instead. Temples and monasteries enjoyed an exemption from tax on their lands and controlled an array of financial and human resources with which they could adjudicate and enforce claims to scarce resources. To obtain access to that exemption and those resources, landholders "commended" their rights in land to them, and paid them a share of the harvest. In exchange, the temples and monasteries exempted them from tax, adjudicated disputes internal to the estate and protected their estates against external threats. Effectively, the temples and monasteries competed in a market for basic governmental services. By helping to secure basic claims to property, the temples and monasteries helped to promote investment and growth; by competing against the government itself they helped to forestall the crippling effect of a predatory monopolistic state.

Wolff (2007) argues that female judges in Japan experience statistically significant pay discrimination. To document his assertion, he compares the mean values for men and women among judges hired in the 1960s. I use multivariate regressions to test his claim with new data on all judges hired between 1978 and 1981. I find (a) that women brought qualifications comparable to the men, (b) that women received initial postings as attractive as the men, (c) that women accepted inter-city transfers in their careers at the same rates as the men, and (d) that women were not more likely to quit their jobs than the men. Although I find (i) that women were underrepresented among those judges who specialized in administrative rather than judicial work, I also find (ii) that women did not climb the pay scale significantly more slowly than the men. Wolff's pay discrimination results are apparently an artifact of an earlier era.

Japanese national health insurance provides universal coverage. This system necessarily entails a subsidy that dramatically raises the demand for medical services. In the face of the increased demand, the government suppresses costs by suppressing prices. Through biographical and income data on more than 4,000 Tokyo physicians, I explore the effect of this price suppression on the allocation of talent and the development of expertise. Crucially, this national health insurance does not cover services—like elective cosmetic surgery—deemed medically superfluous. Facing price caps in the covered sector but competitive prices in these “superfluous” sectors, the most talented doctors disproportionately shift into the “superfluous” sectors and there invest heavily in their expertise: cosmetic surgeons are more likely than other doctors (more likely even than noncosmetic plastic surgeons) to have attended a more selective medical school, to have served on a medical school faculty, to be board certified, and to earn high incomes.

For more than four decades, Japan has offered universal health insurance. Despite the demand subsidy entailed, it has kept costs low by regulatorily capping the amounts it pays doctors, particularly for the most modern and sophisticated procedures. Facing subsidized demand but stringently capped prices on complex procedures, Japanese physicians have had little incentive to invest in specialized expertise. Instead, they have invested in small private clinics and hospitals. The resulting proliferation of primitive clinics and hospitals has cut both the number of complex modern medical procedures performed, and the number of hospitals with any substantial experience in those procedures. With a quarter of the heart disease in the United States, Japan performs less than 3 percent as many coronary bypass operations and less than 6 percent as many angioplasties. Of the 855 cities and regions in Japan, 77 percent lack any hospital with substantial experience in the sophisticated modern treatment (defined below) of cerebrovascular disease, and 89 percent lack much experience in angioplasties. In this article, I estimate one of the costs of this regulatorily-driven lack of expertise. Toward that end, I combine mortality data from 855 cities with information on local hospital expertise and local demographic composition. In the typical city, I find that the addition of one hospital with substantial experience in modern stroke treatment would cut annual stroke mortality by 7 to 16 deaths. The addition of one hospital with substantial experience in angioplasties would cut the annual deaths from heart attacks in the city by over 19.

Taking eleven pivotal cases that have shaped the evolution of corporate law, internationally renowned scholars explore the people behind the disputes, and the forces that led the judges to decide the cases the way they did. From Meinhard v. Salmon to Paramount v. QVC, they unravel the logic (and, often, apparent illogic) of the opinions. Simultaneously amusing and clarifying, the resulting chapters make sense of cases that have puzzled students and scholars for decades. Translated and published in Chinese (2012).

Empiricists routinely explain politically sensitive decisions of the U.S. federal courts through the party of the executive or legislature appointing the judge. That they can do so reflects the fundamental independence of the courts. After all, appointment politics will predict judicial outcomes only when judges are independent of sitting politicians. Because Japanese Supreme Court justices enjoy an independence similar to that of U.S. federal judges, I use judicial outcomes to ask whether Japanese premiers from different parties have appointed justices with different political preferences. Although the Liberal Democratic Party (LDP) governed Japan for most of the postwar period, it temporarily lost power in the mid-1990s. Elsewhere, Professor Eric Rasmusen and I asked whether the administration of the lower courts changed during this non-LDP hiatus. Here, I explore whether the supreme court changed. More specifically, I ask whether the non-LDP premiers appointed supreme court justices with different policy preferences. I find that they did not.

It is natural to suppose that a prosecutor’s conviction rate– the ratio of convictions to cases prosecuted– is a sign of his competence. Prosecutors, however, choose which cases to prosecute. If they prosecute only the strongest cases, they will have high conviction rates. Any system which pays attention to conviction rates, as opposed to the number of convictions, is liable to abuse. As a prosecutor’s budget increases, he allocates it between prosecuting more cases and putting more effort into existing cases. Either can be socially desirable, depending on particular circumstances. We model the trade-offs theoretically in two models, one of a benevolent social planner and one of a prosecutor who values not just the number of convictions but the conviction rate and unrelated personal goals. We apply the model to U.S. data drawn from county-level crime statistics and a survey of all state prosecutors by district. Conviction rates do have a small negative correlation with prosecutorial budgets, but conditioning on other variables in regression analysis, higher budgets are associated both with more prosecutions and higher conviction rates.

“Legal origins” scholars explain economic performance by a country’s membership in a given “legal family.” To demonstrate the proposition, they regress various indices of performance on, inter alia, that membership. These regressions are properly specified only if (a) countries cannot switch families, and (b) family membership seriously constrains legal change. If countries can switch, then family membership is endogenous to economic performance—since a country will decide whether to stay in a family with an eye to its expected economic effect. If countries can readily borrow across legal family lines, then membership does not bind—and necessarily can have no effect on performance. Unfortunately, neither of these propositions is true. Countries can indeed switch and borrow—easily. That one does not observe much cross-family switching or borrowing in practice merely reflects the fact— nicely demonstrated by Spamann—that countries find it easier to borrow from other countries that use the same language, and that legal families tend to correlate with linguistic families. Given that statutory options within any one legal family usually offer countries all the options they need, countries have little reason to move outside those linguistic groups. I illustrate the possibility of cross-family switching and borrowing with the example of pre-war Japan.

Most studies of executive compensation focus on publicly traded companies. The high levels of compensation there are often attributed to agency slack due to ownership by diffused shareholders. If so, pay at private companies more closely held should be much lower. Governments in the United States and elsewhere do not require the pay of executives in private companies to be publicly disclosed, but until 2004 the tax office of Japan published the name and tax liability of any individual paying over about $100,000 in tax. We match this tax data with rosters of some 1,400 presidents of public and 4,100 presidents of private corporations. We find that public and private company presidents have similar incomes. Both groups earn incomes that rise with the size and profitability of the firm, but the presidents' incomes are more sensitive to profitability at public firms than at private ones. In Japan, at least, public firms pay their presidents no more than private firms do, and tie that compensation more closely to observable performance benchmarks.

They left Japan in shambles. By the time they surrendered in 1945, Japan’s military leaders had slashed industrial production to 1930 levels. Not so with the American occupiers. By the time they left in 1952, they had rebuilt the economy and grown it by fifty percent. By 1960 the economy had tripled, and by 1970 tripled once more. For Japan’s spectacular economic recovery, the American-run Allied Occupation had apparently set the stage. The Americans had occupied, and the economy had boomed. The Americans had ruled, and Japan had thrived. At least during the Occupation’s early years, the Americans had apparently planned and run a “Good Occupation.” Or so it is often said. In fact, the Americans did nothing of the sort. When they arrived in 1945, they brought few economic plans. Rather than invent a new plan, they simply helped incumbent bureaucrats keep the legal controls they had manipulated—disastrously—throughout the War. Coming from the New Deal, many Americans brought an instinctive aversion to competitive market policies. After rehabilitating the Marxist leaders and intellectuals, the Americans let them use the legal apparatus to ideological ends. With a Socialist Premier, Japanese voters let them try. By 1948, the voters had had enough. Under the legal controls, miners did not mine. Firms did not produce. Farmers sold, if they sold at all, only on the black market. With inflation out of control and production stuck at desultory levels, conservatives struck back. They installed the quintessentially capitalist Shigeru Yoshida as Prime Minister; Yoshida promptly shut down the planning apparatus, and Japanese voters ratified the change. Inflation stopped, the economy rebounded, and Washington politicians forced their control-inclined agents in Tokyo to acquiesce. After June 1950 (after it had already started to recover), the economy enjoyed a procurement bonus from the Korean War.

The Ringling case presents itself as an irrational spat over board seats among spoiled investors. It is not. The investors were not fighting over board seats; they were fighting instead over corporate offices. Neither were they irrational. Although Edith Ringling pushed her incompetent son and Aubrey Haley her inappropriate husband, they did so to their private advantage. Although the circus cycled from one management team to another, the investors always promoted the new teams for private gain. The root of the Ringling dispute lay not in irrationality but in the inability of the law to enforce duty-of-loyalty standards. The duty does not just mandate fairness. If enforced, it promotes corporate performance (and the aggregate welfare of all investors) by removing the incentive to appoint less able kin, and the tendency of management teams to cycle. The Ringling circus did not degenerate into the chaos in which it found itself because the investors were spoiled or irrational. It degenerated because the law could not enforce the duty of loyalty. Translated and published in Chinese (2012).

For over four decades, Japan has offered universal health insurance. Despite the demand subsidy entailed, it has kept costs low by regulatorily capping the amounts it pays doctors, particularly for the most modern and sophisticated procedures. Facing subsidized demand but stringently capped prices on the most complex procedures, Japanese physicians have had little incentive to invest in specialized expertise. Instead, they have invested in small private clinics and hospitals. The resulting proliferation of primitive clinics and hospitals has cut both the number of complex modern medical procedures performed, and the number of hospitals with any substantial experience in those procedures. With a quarter of the heart disease in the US, Japan performs less than 3 percent as many coronary bypass operations and less than 6 percent as many angioplasties. Of the 855 cities in Japan, 71 percent lack any hospital with substantial experience in the sophisticated modern treatment of cerebrovascular disease, and 83 percent lack any in heart disease. In this article, I estimate the mortality cost of this regulatorily-driven lack of expertise. Toward that end, I combine mortality data from 855 cities with information on local hospital expertise and local demographic composition. In the typical city, I find that the addition of one hospital with substantial experience in stroke patients or in modern stroke treatment would cut annual stroke mortality by 10 to 15 deaths. The addition of one hospital with substantial experience in cardiac bypass operations or angioplasties would cut annual heart attack mortality in the city by 27 to 56 deaths.

Firms in modern developed economies borrow from both banks and trade partners. Using Japanese manufacturing data from the 1960s, we estimate the price of trade credit, and explore some of the ways firms choose between the credit and bank loans. We find that firms of all sizes borrow heavily from their trade partners, and at implicit rates that track the explicit rates banks would charge. They borrow from banks when they anticipate needing money for relatively long periods; they turn to trade partners when they face short-term unexpected exigencies. This apparent contrast in the term structures follows, we suggest, from the fundamentally different way bankers and trade partners cut default risk. Because bankers seldom know their borrowers' industries first hand, they rely on formal legal protection (like security interests). Because trade partners know the industry well, they reduce risk by monitoring their borrowers closely instead. Because the costs to creating legal mechanisms are heavily front-loaded, bankers focus on long-term debt; because the costs of monitoring debtors are ongoing, trade creditors do not. Apparently, banks monitor less than we have thought.

Is Japanese baseball a different game? In this short research note we offer a new approach to the question Whiting posed so famously and polemically three decades ago – we ask whether owners in the two countries bid for players offering different skills. If baseball in Japan “isn’t baseball,” then perhaps owners compete for a different type of player? In the note that follows, we combine data on player performance and salaries to ask whether they do. Obviously, this is a limited inquiry. We do not address many of the myriad other ways in which baseball might indeed differ in the two countries. Nonetheless, we do offer the project as a way to test indirectly an important component of Whiting’s more general proposition – whether fans in the two countries demand different athletic contests. We follow the discussion with three peripheral but distinct inquiries: (a) which kinds of players earn the highest endorsement incomes?; (b) do teams pay Japanese and American players and black American and white American players equally?; and (c) what effect do the mandatory nine-year contracts in Japan have on player pay?

Provides a forum for the presentation and discussion of legal, policy-based, and socio-economic issues that affect East Asia and Polynesia, the individual nations of those regions, and Australia.

The Japanese national health insurance provides universal coverage. Necessarily, this entails a subsidy that dramatically raises the demand for medical services. In the face of the increased demand, the government suppresses costs by suppressing prices. By combining extensive biographical (including income) data on all 449 Tokyo cosmetic surgeons and a random sample of 499 other Tokyo physicians, I explore the effect of this price suppression on the allocation of talent and the development of expertise. Crucially, the national health insurance does not cover services - like elective cosmetic surgery - deemed medically superfluous. Facing price caps in the covered sector but competitive prices in these superfluous sectors, the most talented doctors should tend to shift into the superfluous sectors and there to invest heavily in their expertise. I find evidence consistent with this: cosmetic surgeons earn higher incomes than other doctors; are more likely to have attended a national (generally more selective) medical school; are more likely to have served on the faculty of a medical school; and are more likely to be board-certified. I speculate on the broader implications this phenomenon poses for the allocation of talent in medicine.

Do workers earn their market wage under multi-year incompletely specificied contracts? Or do employers use their monopsony power in later years to hold wages down? We use pay and performance data from Japanese baseball to compare the salaries players receive before and after turning free agents. Although teams do pay lower salaries (performance levels held constant) during the early years of a player's contract term, they do so largely to recoup the training and sign-on bonus they provide. Once they recover that training and bonus, they pay salaries close to free agent levels - even before a player becomes a free agent. Additionally, we find that the younger stars earn high endorsement incomes; that Japanese owners compete for players who offer the same performance characteristics as the players for whom U.S. owners compete; that Japanese teams pay a premium for American players; and that Japanese teams do not pay black players less than white players.

Because of the risk of political interference, in countries with managed courts, jurists who share ruling-party preferences disproportionately self-select into judicial instead of private careers. During political turmoil, such jurists will find judicial careers less attractive. Orthodox potential jurists will disproportionately shun the courts, and orthodox incumbent judges will disproportionately resign. Unorthodox potential jurists, on the other hand, might find the judiciary more attractive. Combining data on a random sample of 1605 Japanese lawyers and on all 2502 judges hired between 1971 and 2001, we locate evidence consistent with these hypotheses: after the political crisis of 1993, the recruitment of young lawyers from elite universities lagged, while the number of early resignations increased.