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There Will Be Rich Always: Finding a New Way to Think About Income Inequality

On Monday, Aaron Edlin and I published a cri de coeur op-ed in the New York Times calling for a Brandeis tax, an automatic tax that would put the brakes on income inequality. In the next few days, Aaron and I will be publishing a series of posts explaining more about our rationale and providing more details on how a Brandeis tax might be implemented.

There Will Be Rich Always
By Ian Ayres & Aaron Edlin

In one of the more memorable lyrics from the musical Jesus Christ Superstar (based on Matthew 26:11), Jesus tells his disciples “There will be poor always.”

The same is true of the rich. There will always be a top 1 percent of income earners. But what it takes to be rich can change drastically over the course of even a single generation. In 1980, you would have had to earn at least $158,000 to be a one-percenter; but by 2006 the qualifying amount had more than doubled to $332,000. (You can produce an estimate of your own household income percentile – albeit using a different definition of income that produces a much higher 1 percent cutoff – at this wsj.com site.) The rise is not due to inflation as both these numbers are expressed in inflation-adjusted, constant 2006 dollars. Read More »



NBA Players’ Union Decertification As Owner Opportunity: What if Mark Cuban Had Gone Maverick?

David Stern ran roughshod over owners during the recent NBA lockout negotiations. He was willing to levy stiff fines for any public comments that might undermine an image of management unity.

But the league’s power to control dissident owners possibly changed on Nov. 14, when the union representing NBA players formally dissolved. The league treated dissolution as a bad faith bargaining ploy by the players to gain bargaining power. You see, sports leagues can engage in collusive conduct that would otherwise violate the Sherman Antitrust Act – so long as the collusion takes place as part of a collective bargaining agreement. By disbanding the union, the players were threatening to expose the league to massive antitrust liability.

The league treated the players’ dissolution as though it had no impact on its control of team behavior. But imagine for a moment that one of the team owners took the players decertification seriously. Read More »



Tattoo Taboo

I was in Tokyo a few weeks ago speaking at IBM’s Business Analytics Forum. At 6:30 in the morning a few hours before my talk, I had a wonderfully rejuvenating swim at the Royal Park Hotel. But I was surprised to see a pool-side sign stating “Persons With Body Tattoos Not Allowed.”
I have swum at dozens of pools in the United States and have never encountered such a restriction. Is there any valid public health reason for tattoo discrimination? Is the pool policy driven by irrational health concerns (a la the early days of HIV hysteria)? Read More »



National Treasure 2.7 Deciphered

In one of my previous posts, I asked for help interpreting a rather bizarre dream imagining a new plotline for a National Treasure movie. These movies often involve deciphering secret codes, and so did my post. My [day]dream was actually an aid to help me remember 40 digits of the irrational, transcendental constant of Leonhard Euler, e.

Here is the dream again with numeric annotations in brackets: Read More »



Paying People to Quit: What Law Schools Can Learn From Zappos

My favorite incentives book tells the story of how after a week of training, Zappos offers new employees a one-time, one-day offer of a cash bonus if they will quit (As noted in the Freakonomics Radio hour, “The Upside of Quitting”). I describe this as an anti-incentive because even though the Zappos offer on its face gives employees an additional reason to quit, in practice it keeps employees on the job longer.

The vast majority of trainees turn down the offer during training – resisting the temptation to take the money and run. Then almost no one quits in the initial months after training because they’d feel like fools to quit for nothing when they could have quit for money. The cognitive dissonance would be too great. This is the power of resisted temptation.

But in a recent Slate piece, Akhil Amar and I deploy the Zappos idea for a different purpose – to reduce the concern that law schools are admitting students who are unlikely to pass the bar. Read More »



National Treasure Puzzler

During a break in my contracts class the other week I told the students about a strange dream I had. Here’s what I said:

I don’t know whether it’s because we just read a case about the War of 1812, but I dreamed a kind of screenplay that begins with a tight close up with two identical faces of Andrew Jackson. As the camera pulls back, we see that the Jacksons are struggling to break free from being inside a cramped triangle. To make matters worse, we see that their bodies are jerking about because they are holding between them an electrified neon equation blinking “2+3=5”. The equation is encased in some kind of phosphorescent circle.

They aren’t willing to drop the circle, because on closer inspection one can make out a miniature Andrew Jackson who is trapped inside the circle. To make matters worse, out of nowhere an airplane swoops in and hooks the top of the triangle so that the Jacksons and the rest of the triangle’s contents are suddenly dangling in midair behind the aircraft. Read More »



Dad-or-Daughter Contest: We Have a Winner

I’m happy to announce that Elizabeth Simpson won the Dad-or-Daughter Songwriting Contest by correctly identifying Friend Zone as the song that I coauthored with my daughter, as well as correctly identifying a line in that song that I composed (“But you just laughed it off and said we’d always be bros”), and a line in the song that Anna composed (“I bought a shirt today with your favorite band.”).

Elizabeth turns out to be a former student from my 2006 small group in contracts. In her email, she describes the method behind her entry: Read More »



How to Be Sure Your Waiter Brings You Decaf (And Thwart Tiger Attacks Too!)

You’ve just finished a dinner at a nice restaurant and you order decaf coffee instead of regular so that you won’t have trouble falling asleep. A few minutes later, your server brings you a steaming cup of Joe. You want to drink, but you’re worried it might have caffeine. At this point, I normally ask something like “Are you sure this is decaffeinated?”

But my friend (and newly tenured colleague) Yair Listokin tells me that Oprah suggests that we ask instead: “Is this regular coffee?” Or, “Are you sure this is regular coffee?”

It’s not fool proof, but asking “is it regular” will let you find out whether the waiter is willing to say “yes” to any question, possibly to avoid the extra work of having to go get a replacement? Framing the question doesn’t work if the restaurant follows the “after 8 p.m. or so, all the coffee is decaf” convention. Read More »