The Economics of Unanimity

It is often thought that judicial unanimity is a valuable commodity. Chief Justices bang heads, twist arms, and break legs in order to get their courts to produce more of it, but they don’t always succeed, and unanimity remains at least somewhat scarce on the U.S. and Canadian Supreme Courts (although more on the former than on the latter, which has been unanimous in judgment in between two thirds and three quarters of its decisions rendered since 2010). The unusually high output of the unanimity production line at the US Supreme Court this year has produced much commentary. But how much do we really know about the economics of unanimity? What is it worth? More precisely, what is its purchasing power? How much does it cost? And is the cost worth what you get in return?

In the New York Times, Adam Liptak reviews some academic attempts to answer these questions (in the American context), including a recent paper by Cass Sunstein. The takeaway from this literature seems to be that unanimity is worth less than is commonly assumed. Mr. Liptak notes that people, including judges, often think that “[t]he public may be less likely to accept and follow decisions that would have gone the other way with the switch of a single vote.” Yet experiments ― and perhaps even historical experience ― do not bear out this intuition. And while another claim about the value of unanimity, that unanimous judgments are less likely to be reversed, is apparently supported by the facts, the number of overturned decisions is so small to begin with that this value is more illusory than real. Finally, although unanimous judgments might in theory make for a clearer legal landscape, they often fail to deliver on this promise too. Mr. Liptak points out that

Supreme Court opinions are the product of negotiation and compromise, which is why they can read as if written by a committee. A nine-member committee does not seem likely to produce crisper prose than a five-member one.

At the Volokh Conspiracy, Jonathan Adler chimes in, writing that

[t]he cost of broad agreement may be an opinion that speaks in generalities and pushes aside the potential points of disagreement.  Concurrences and dissents often draw clearer lines and are more analytically coherent than majority opinions. The sorts of opinions that result from efforts to achieve greater unanimity are different from those that merely seek the median vote.

At the same time, coalescing around a narrow holding allows the Court to avoid premature resolution of a potentially divisive question, perhaps leaving it to be resolved when it can be resolved in a unanimous way or even putting it off indefinitely.  This is itself a virtue of judicial minimalism, according to some.

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These are useful observations, so far as they go, but I think some additional clarifications are necessary for us better to assess the value (or lack thereof) of unanimity.

For one thing, we need to be clearer about what it is that we are talking about. Unanimity in judgment does not necessarily mean unanimity in reasoning, and indeed in some of the recent decisions of the U.S. Supreme Court (for example in NLRB v. Noel Canning, a case considering the constitutionality of President Obama’s “recess appointments”) unanimous judgment masks sharp disagreements about the law between a majority and a concurrence. In such cases, it seems unreasonable to expect the putative effects of unanimity, whether positive or negative, to manifest themselves.

For another, even unanimity in opinion can be of different sorts. While some unanimous decisions will indeed be the products of laboured compromise, and thus be likely to exhibit the flaws described by Mr. Liptak and prof. Adler, others are in fact the products of genuine agreement about the legal principles involved and their application. Probably most decisions of intermediate appellate courts (which have unanimity rates much higher than Supreme Courts, both in the U.S. and in Canada) are of this sort, because they are rendered in “easy” cases where the law is relatively clear. Some decisions of Supreme Courts, at least, are of this sort too. I don’t know American law well enough to give examples, but they are plenty this side of the border ― among the more notable recent cases, Reference re Securities Act, 2011 SCC 66, [2011] 3 SCR 837, comes to mind. Of course, it might not be easy for external observers to distinguish unanimity of agreement from the unanimity of compromise (and a single decision might involve both), but it seems likely that the former sort is more valuable, at least for clarifying the law (though not if one values unanimity for requiring narrow rulings!) ― but also less susceptible of deliberate manufacture by a court.

As for the value of unanimity as a means of exchange for acquiring legitimacy, I wonder whether an inquiry into the value “ordinary” people attach to it is the relevant one. The issue here does not concern unanimity alone. Rather, given well-documented and pervasive political ignorance, I wonder how much people outside the legal and political communities notice and care about judicial decisions at all, and to the extent that they do, how much their views of these decisions are influenced by what politicians (and perhaps experts) tell them. It is possible, and indeed likely, that the perceived legitimacy of the vast majority of, and perhaps of all, judicial decisions depends on the opinions of a certain class of journalists, lawyers, and politicians. If that is so, then an empirical assessment of the value of unanimity should look at the views of such people, and not of random citizens.

Finally, we might need a fuller picture of the transaction costs involved in achieving unanimity. Presumably, producing a decision that is unanimous in reasoning ― at least when unanimity of of compromise rather than of agreement is involved ― takes time and effort, which might, in theory, otherwise be expended on producing better decisions in other cases. It also, by definition, requires individual judges to sacrifice the opportunity to implement or even express their views about the law, and prevents disagreement from being aired in the open. It seems at least plausible that this will, for lack of a better term, undermine the morale of the court or at least of the more independent (or headstrong) judges. I don’t know, I’m afraid, whether this is a real problem (perhaps readers who have clerked at the Supreme Court can tell!). Judges surely know that they sometimes need to “take one for the team”, though nobody, I imagine, like to have to do that very often. In any case, the possibility is worth considering.

All that to say that, as with other commodities, unanimity doesn’t have any “true” value. How much it costs and what it can buy depends on a number of contextual factors. A quest, or demands, for unanimity that ignore these factors will likely be misguided, and perhaps pernicious.

R.I.P. Ronald Coase

Not exactly news anymore, but I wanted to note the death of Ronald Coase. Smarter and more knowledgeable people have written and will write about the significance of his work. I will only speak to my own feelings.

The Nature of the Firm” ― a paper Coase mostly wrote as an undergraduate and published at the ripe old age of 26 ― is the single most brilliant thing I’ve ever read. I was blown away when I read it, and I still am when I think about it. The reason for this is, I believe, the following. Most scientific work ― regardless of the discipline ― explains complicated, almost esoteric things. But every now and then, a researcher comes across a perfectly familiar phenomenon; realizes ― as perhaps nobody had before ― that though familiar, it stands in need of an explanation; and goes on to give that explanation. It is these discoveries that are, in my entirely subjective view, the most amazing. Sir Isaac Newton’s explanation for why apples, and other things, fall to the ground is of this sort. So is Hans Bethe’s explanation for how stars, including the Sun, produce light. Ronald Coase’s explanation for the existence of firms belongs to the same category. And of course, unlike gravity or stellar nucleosynthesis, Coase’s explanation for the existence of firms requires no formulae, no mathematics, nothing beyond logic and common sense. Simplicity is the mark of genius.

As Frank Easterbrook once pointed out, “we live in a world where knowledge is scarce and costly, ignorance rampant.” Coase expanded our capital of knowledge immensely, and his death is a sad loss for all of us.

In Vino Veritas

Un article publié aujourd’hui sur le site de La Presse parle d’un recours collectif intenté contre la SAQ parce que, selon l’avocat du demandeur, « les marges bénéficiaires de la SAQ sont actuellement disproportionnées, déraisonnables et exorbitantes alors qu’elle se trouve en position de monopole ». Bien que la SAQ soit en mesure d’acheter son vin à des prix très avantageux, grâce à son pouvoir d’achat, elle le revend aux consommateurs québécois à des prix très élevés. Le demandeur prétend que “la marge bénéficiaire de la SAQ ne devrait pas dépasser 30 %, au lieu de 75 %, comme c’est le cas actuellement.” Selon ce que rapporte l’article, il s’appuie notamment sur l’article 8 de la Loi sur la protection du consommateur, L.R.Q. c. P-40.1, qui dispose que

[l]e consommateur peut demander la nullité du contrat ou la réduction des obligations qui en découlent lorsque la disproportion entre les prestations respectives des parties est tellement considérable qu’elle équivaut à de l’exploitation du consommateur, ou que l’obligation du consommateur est excessive, abusive ou exorbitante.

Je ne connais pas assez le droit de la consommation ou celui des contrats en général pour pouvoir juger des chances de succès de ce recours. Mais ce que je peux dire, c’est qu’il est une excellente illustration de deux thèmes que j’ai déjà abordés sur ce blogue―les limites de la compétence institutionnelle des tribunaux et les problèmes que cause la production de biens ou de services par le gouvernement.

Il me paraît plutôt évident que les tribunaux ne sont tout simplement pas en mesure de dicter les marges de profit des entreprises, qu’elles soient privées ou publiques. Malheureusement, La Presse n’a pas mis en ligne une copie de la demande (une bonne habitude de Radio-Canada que les autres médias devraient imiter!), alors nous ne savons pas comment le demandeur ou son avocat en sont arrivés au chiffre de 30%, qu’ils jugent acceptable. Mais de façon générale, je vois mal comment un tribunal s’y prendrait pour déterminer ce qui serait une marge de profits « appropriée ». La distribution de surplus entre producteurs et consommateurs, ou encore employeurs et travailleurs, fait partie de ces “problèmes polycentriques” qui, comme l’explique Lon Fuller dans son article magistral sur “The Forms and Limits of Adjudication,” (1978) 92 Harv. L. Rev. 353, résistent à la résolution par adjudication. Leur solution dépend de trop de facteurs, a des répercussions trop fluides et imprévisibles pour que le débat contradictoire entre deux justiciables puisse guider un tribunal chargé de la trouver.

Comme le note l’article de La Presse, il y a quelques années, la Cour supérieure a déjà rejeté une demande d’autorisation de recours collectif contre la SAQ. À l’époque, on reprochait à la SAQ de ne pas avoir fait profiter les consommateurs des économies qu’elle réalisait grâce aux taux de change avantageux. Dans Chifoi c. Société des alcools du Québec, 2008 QCCS 3871, la Cour a jugé que la demande n’identifiait aucune règle de conduite particulière s’imposant à la SAQ dont la violation aurait constitué une faute que la SAQ serait tenue de réparer.

Ce recours, fondé essentiellement sur l’article 1457 du Code civil, était différent de celui qu’on cherche maintenant à faire autoriser, tant par son fondement factuel que par la règle de droit invoquée, mais sa ratio devrait, je crois, servir de leçon au cas présent: dans le contexte commercial, il n’y a pas de règles que les tribunaux pourraient faire appliquer. Crier au scandale ou à l’injustice ne suffit tout simplement pas à orienter une décision judiciaire.

Ce qui ne veut pas dire qu’il n’y a pas d’injustice ou de matière à scandale. À titre purement anecdotique bien sûr, une même bouteille de vin coûte généralement 30, sinon 40% moins dans le magasin newyorkais où j’achète mon alcool qu’à la SAQ ― quand on peut trouver la bouteille en question à la SAQ, ce qui est très loin d’être toujours le cas. Seulement, ce n’est pas le genre de problème que les tribunaux peuvent régler.

Le problème, c’est bien sûr le fait que la SAQ est un organisme public et un monopole. L’absence de concurrence lui permet d’imposer le prix qu’elle juge approprié. Et « approprié », pour un organisme public, ne veut surtout pas dire « déterminé en fonction des coûts et de la demande ». Ce qui détermine les prix imposés par la SAQ, c’est d’abord l’objectif politique qui lui est imposé, celui de maximiser la ristourne qu’elle verse au gouvernement. Mais c’est aussi, on peut s’en douter, le désir d’acheter, avec l’argent des consommateurs, la paix avec ses syndicats, aux membres desquels elle peut, grâce à son monopole, verser des salaires plus élevés que ceux des autres employés dans le commerce de détail. Et c’est aussi une certaine vision de la façon dont le vin doit être vendu.

Comme je l’écrivais dans un récent billet sur les problèmes de la production de biens et de services par le secteur public, des mécanismes politiques peuvent en théorie simuler ou remplacer la concurrence sur un libre marché. Les problèmes du secteur public peuvent être exposés par des partis d’opposition ou des journalistes, et les élections peuvent mener au remplacement de gestionnaires incompétents ou dont les priorités ne correspondent pas à celles des électeurs. Mais, comme je l’écrivais aussi, les élections ne sont pas une panacée. Elles ne sont menées que sur quelques enjeux, et il n’est pas surprenant que le prix du vin ne soit pas parmi ceux qui décident les élections québécoises. Ainsi, le contrôle politique sur la façon dont la SAQ profite de son monopole est purement hypothétique (ce qui la distingue, par exemple, d’Hydro-Québec, dont les prix sont un enjeu assez présent dans le débat politique).

Lorsqu’un bien ou un service n’est pas un « bien public » (au sens de la théorie économique) que le marché ne produirait pas en quantités suffisantes, et qu’en plus le contrôle politique sur sa production gouvernementale est particulièrement irréaliste, la chose logique à faire serait d’en laisser la production au libre marché. Mais un autre problème de la production publique, dont je n’ai pas discuté dans mon billet sur le sujet, est que lorsque cette production est profitable, le gouvernement risque de devenir dépendant des revenus qu’elle procure. Une vérité qui, comme tant d’autres, est dans le vin.

The Idea of the Marketplace

Apologies for the lack of blogging for the past week. We had this minor disturbance of a hurricane, and then I went to a conference in Chicago to present my paper on federalism and judicial review.

My topic today is the highlight of that conference, a keynote address by Robert Post, Dean of the Yale Law School. Dean Post spoke about academic freedom, and how (American) courts struggle to understand it and integrate in the the First Amendment jurisprudence. Dean Post as expressed much the same ideas in a brief essay, “Discipline and Freedom in the Academy”, (2012) 65 Ark. L. Rev. 203 (which will, presumably, be available on the Review’s website in some not too distant future), and in a book he published this year (which I haven’t yet looked at). There is a lot of food for thought there, but I would like to focus on one specific claim.

One source of difficulty that courts have with figuring out the true meaning of academic freedom, says Dean Post, comes from the interference of the notion of the “marketplace of ideas.” It is a staple of the American free speech jurisprudence; and of course it sounds intuitively relevant to a discussion of universities, since they are in the ideas business. Unfortunately, this intuition is misguided, according to Dean Post. In the “Discipline and Freedom” paper, he writes that “[t]he marketplace of ideas is designed … to eliminate content discrimination. It is supposed to enshrine an equality in the field of ideas.” But there is, and can be, no such equality in academia, or in any setting that is devoted to the pursuit of knowledge, especially of expertise, the institutionalized sort of knowledge universities are charged with producing. Academic disciplines recognize claims as true or false; arguments as valid or not. A university (as well as, say, a scientific journal) must be able to say that some ideas are brilliant and others rotten, and it does so all the time―when hiring a would-be professor, when granting him or her tenure, etc. Importing the notion of the marketplace of ideas into the academic setting contributes to the belief that academics are free to say whatever they please, but that’s nonsense. Once we understand that the purpose of universities is not to foster an equality of ideas but to generate expertise, we also understand, concludes Dean Post, that academic freedom is really the freedom of the academic profession to judge its members and their output by the standards of truth and validity it sets itself.

This is just a bare-bones sketch of one of the lines in Dean Post’s rich argument. I hope it is fair to him, even if it surely does not do it justice. Dean Post’s idea that universities, and the production of knowledge more generally, require discipline and judgment about what is true and valid, and what is not, seems obviously right to me. And I think Dean Post is right too that there is a danger in relying on the metaphor of the marketplace of ideas to develop a jurisprudence of academic freedom. But the danger is not exactly the one he sees. It is not that the marketplace of ideas is an inapt metaphor for describing the production of knowledge, but that it is a complex one, and easily misunderstood. Dean Post, I am afraid, it guilty of misunderstanding it in two ways.

First, a marketplace isn’t a place of equality. If the market is free, then everyone is equal in the sense of being legally able (which is of course not to say capable, or inclined) to enter it as a buyer or a seller. But not every seller will be successful, because every seller competes against other sellers of the same or similar products. Some products fare well; others do not. If the market is free, it is the preferences of the buyers, rather than the decisions of the government, that determine who succeeds and who fails. The marketplace of ideas is no different. It is not a place of equality. Some ideas are accepted, others rejected. When we rely on the metaphor of the marketplace of ideas in discussing freedom of speech, we imply that this particular marketplace must remain a free one, in the sense that the preferences of the “buyers”―the readers, the listeners, etc.―determine which “products”―ideas―succeed, and which fail. The government cannot pick winners here, or erect barriers to entry, or even engage in much of the regulation that we consider acceptable in other markets.

Second, the market doesn’t consist just of individual sellers and buyers. In most markets, (most) sellers (and often buyers, but the demand side is less important here) are firms. And firms, as Ronald Coase pointed out in his brilliant paper on “The Nature of the Firm“, do not function internally according to the market principles of free competition at all. They are like islands of central planning, little command economies, even as their relationships with each other are structured according to market principles. The reason for this, Coase explains, is that on (relatively) small scales, command economies are actually more efficient than markets, because they avoid transaction costs. What about the marketplace of ideas then? Does it too have its “firms”―organizations which, internally, are not structured on free market principles? Arguably, Dean Post’s insight about universities not obeying marketplace of ideas principles is the equivalent of Coase’s insight about firms―universities are (one sort of) firms in the marketplace of ideas. (Others probably include the institutional press, and perhaps other producers of ideas). Internally, as Dean Post points out, universities or scientific journals are not marketplaces of ideas. But externally, they are producers on the great marketplace of ideas of our society. When, for example, I submit a paper to an academic journal, the journal evaluates it according non-marketplace criteria of truth and validity. But once it decides to publish it, it arrives on a market place of ideas, where it might have to compete against other papers in the same area, which have also passed the tests of truth and validity, and where its success or failure will be measured not by any institutional assessment, but by the interest of the readers and their willingness or not to accept my claims.

Now I’m not yet sure what, if anything, the takeaway from this is. I think that Dean Post’s key insight about the importance of institutional practices of assessment of truth and validity of scientific claims and arguments holds true whether we describe this assessment as taking place outside the marketplace of ideas altogether or within special structures, not organized on marketplace of ideas principles, which are nonetheless themselves part of the marketplace of ideas. My thinking here is still a prototype―I want to show it off, but am not yet ready to put it on the market.