Edward J. Balleisen

Government and Markets: Toward a New Theory of Regulation

Introduction Part I. Beyond Market Failure: 1. Government failure vs. market failure: principles of regulation Joseph E. Stiglitz 2. Effective regulation through credible cost-benefit analysis: the opportunity costs of superfund Michael Greenstone 3. From state interference to the return to the market: the rhetoric of economic regulation from the old Gilded Age to the new Mary O. Furner 4. Lessons from Europe: some reflections on the European Union and the regulation of business Neil Fligstein 5. Confidence games: how does regulation constitute markets? Daniel Carpenter Part II. Beyond the Economic Theory of Politics: 6. The end of special interests theory and the beginning of a more positive view of democratic politics Donald Wittman 7. Public choice: a critical reassessment Jessica Leight 8. The paranoid style in the study of American politics David A. Moss and Mary Oey 9. Law, policy, and cooperation Yochai Benkler Part III. Beyond Command and Control: 10. What opportunity is knocking? Regulating corporate governance in the United States Mary A. OSullivan 11. Taxation as a regulatory tool: lessons from environmental taxes in Europe Monica Prasad 12. Redesigning regulation: a case study from the consumer credit market Elizabeth Warren 13. Origins and regulatory consequences of the subprime crisis Barry Eichengreen 14. Prospects for economic self-regulation in the United States: an historians view from the early twenty-first century Edward J. Balleisen 15. Deregulation theories in a litigious society: American antitrust and tort Tony Freyer 16. Markets in the shadow of the state: an appraisal of deregulation and implications for future research Marc Allen Eisner Conclusion.

Vulture Capitalism in Antebellum America: The 1841 Federal Bankruptcy Act and the Exploitation of Financial Distress

There is, on an average, annually wrecked upon the Florida coast, about fifty vessels…. The great destruction of property consequent upon this state of things, and the hope of gain, have induced a settlement at Key West, where, to adjudicate upon the wrecked property, a court of admiralty has been established. A large number of vessels, from 20 to 30, are annually engaged as wreckers, lying about this coast to “help the unfortunate,” and to help themselves. These vessels are in many instances owned in whole or in part by the merchants of Key West; the same merchant frequently acts in quadruple capacity of owner of die wrecker, agent for the wreckers, consignee of the captain, and agent for the underwriters . Whose business he transacts with most assiduity, his own, or that of others, may be readily inferred.

Private Cops on the Fraud Beat: The Limits of American Business Self-Regulation, 1895-1932

From the late 1890s through the 1920s, a new set of nonprofit, business-funded organizations spearheaded an American campaign against commercial duplicity. These new organizations shaped the legal terrain of fraud, built massive public-education campaigns, and created a private law-enforcement capacity to rival that of the federal government. Largely born out of a desire among business elites to fend off proposals for extensive regulatory oversight of commercial speech, the antifraud crusade grew into a social movement that was influenced by prevailing ideas about social hygiene and emerging techniques of private governance. This initiative highlighted some enduring strengths of business self-regulation, such as agility in responding to regulatory problems; it also revealed a weakness, which was the tendency to overlook deceptive marketing when practiced by firms that were members of the business establishment.

Understanding Public Risk Perception and Responses to Changes in Perceived Risk

This chapter will introduce scholars and policy-makers interested in the public’s perception of risk and its effect on individual and collective responses to some psychological literature on these topics. Depending on the reader, the sections below will contain either too much or too little information. The latter (too little information) can be remedied by consulting the provided references to specific facts, theories, or arguments for more information. The former (too much information) can be solved by reading just the remainder of this introduction and the conclusions and by sampling from the intervening sections as needed. The section “Function of Risk Perception” argues that the general public only distinguishes between a small number of risk levels (present/ absent or negligibly low/need to monitor/unacceptably high) and that triggering events shift their perceptions from one level to another. This results in either an underor overreaction to existing risks in most situations, as illustrated in Figure 4.1. Real-world examples of such rapid shifts in reaction are provided in Boxes 4.1 to 4.3. “Individual Risk Perception” provides more background on several psychological processes that give rise to the discrepancy between actual and perceived levels of risk. Risk often is a feeling rather than a statistic based on objective outcomes, and this feeling is influenced by reactions (dread, feeling out of control) that may not closely connect to objective loss or risk statistics. Importantly, it is this feeling of being at risk that motivates action. However, this flag goes down when some action has been taken, giving rise to a single-action bias that discourages sustained attention to complex risks.

The Story of Risk: How Narratives Shape Risk Communication, Perception, and Policy

The organizing question of this volume is when and how events in the world lead to a recalibration of risk and a change of policy. A naïve model might assume a simple Bayesian process: the polity has regulations based on a prior assessment of risk, new information about the true risks becomes available, people update their assessments appropriately, and regulators adopt policies that minimize risks (at the lowest cost). Under some circumstances, to be fair, such a model might not be too far off the mark: in the cases of lead additives in gasoline, or drinking and driving, or smoking, viewed over a sufficiently long time period, regulatory change might be viewed as rational choice. But in myriad other cases, the path from risk to policy strays far from the policy analytic ideal.

Government and Markets: Contributors

Introduction Part I. Beyond Market Failure: 1. Government failure vs. market failure: principles of regulation Joseph E. Stiglitz 2. Effective regulation through credible cost-benefit analysis: the opportunity costs of superfund Michael Greenstone 3. From state interference to the return to the market: the rhetoric of economic regulation from the old Gilded Age to the new Mary O. Furner 4. Lessons from Europe: some reflections on the European Union and the regulation of business Neil Fligstein 5. Confidence games: how does regulation constitute markets? Daniel Carpenter Part II. Beyond the Economic Theory of Politics: 6. The end of special interests theory and the beginning of a more positive view of democratic politics Donald Wittman 7. Public choice: a critical reassessment Jessica Leight 8. The paranoid style in the study of American politics David A. Moss and Mary Oey 9. Law, policy, and cooperation Yochai Benkler Part III. Beyond Command and Control: 10. What opportunity is knocking? Regulating corporate governance in the United States Mary A. OSullivan 11. Taxation as a regulatory tool: lessons from environmental taxes in Europe Monica Prasad 12. Redesigning regulation: a case study from the consumer credit market Elizabeth Warren 13. Origins and regulatory consequences of the subprime crisis Barry Eichengreen 14. Prospects for economic self-regulation in the United States: an historians view from the early twenty-first century Edward J. Balleisen 15. Deregulation theories in a litigious society: American antitrust and tort Tony Freyer 16. Markets in the shadow of the state: an appraisal of deregulation and implications for future research Marc Allen Eisner Conclusion.

Government and Markets: BEYOND COMMAND AND CONTROL

Introduction Part I. Beyond Market Failure: 1. Government failure vs. market failure: principles of regulation Joseph E. Stiglitz 2. Effective regulation through credible cost-benefit analysis: the opportunity costs of superfund Michael Greenstone 3. From state interference to the return to the market: the rhetoric of economic regulation from the old Gilded Age to the new Mary O. Furner 4. Lessons from Europe: some reflections on the European Union and the regulation of business Neil Fligstein 5. Confidence games: how does regulation constitute markets? Daniel Carpenter Part II. Beyond the Economic Theory of Politics: 6. The end of special interests theory and the beginning of a more positive view of democratic politics Donald Wittman 7. Public choice: a critical reassessment Jessica Leight 8. The paranoid style in the study of American politics David A. Moss and Mary Oey 9. Law, policy, and cooperation Yochai Benkler Part III. Beyond Command and Control: 10. What opportunity is knocking? Regulating corporate governance in the United States Mary A. OSullivan 11. Taxation as a regulatory tool: lessons from environmental taxes in Europe Monica Prasad 12. Redesigning regulation: a case study from the consumer credit market Elizabeth Warren 13. Origins and regulatory consequences of the subprime crisis Barry Eichengreen 14. Prospects for economic self-regulation in the United States: an historians view from the early twenty-first century Edward J. Balleisen 15. Deregulation theories in a litigious society: American antitrust and tort Tony Freyer 16. Markets in the shadow of the state: an appraisal of deregulation and implications for future research Marc Allen Eisner Conclusion.

The Celebrated Showman Unmasked

In July 1835, a sometime clerk, lottery agent, and grocer from Connecticut ventured into the entertainment business. He did so by exhibiting a blind, withered, and partially paralyzed African-American women, first in New York City, and then, over the subsequent eight months, throughout New York State and New England. The exhibitor was Phinneas T. Barnum, soon to become the countrys foremost purveyor of commodified culture. The elderly woman he put on display was Joice Heth, a Kentucky slave whom Barnum advertised as The Greatest Natural and National Curiosity in the World: ostensibly a deeply religious 161-year-old wonder who had served as George Washingtons nurse in his early years of life. At almost every stop on the tours itinerary, throngs of visitors paid to hear, examine, question, prod, and converse with Heth. This touring exhibit, the relationships among its key participants (chiefly Barnum and Heth, but also Barnums confederate Levi Lyman), and its place in nineteenth-century American culture receive Benjamin Reisss detailed attention in The Showman and the Slave. Embracing the interpretive methodology of cultural studies pioneered by the British scholar Stuart Hall, Reisss book primarily follows a chronological organization. Relying heavily on Barnums autobiographical writings, Lymans fictional promotional pamphlet about Heths life, newspaper accounts, and a handful of memoirs by audience members, Part I tracks the Heth exhibitions pivotal episodes, including a public autopsy after her death in February 1836, which had the professed goal of determining her actual age. Part II then analyzes later representations and recollections of Heth, beginning with the duelling newspaper exposes about Heth, Barnum, and the autopsy that filled the pages of New York City newspapers through a good part of 1836, and moving on to Barnums periodic autobiographical reflections, penned over the next several decades. In both of these sections, Reiss focuses predominantly on the perspective of Barnum and the urban white northerners who visited or read about the exhibit. A brief final chapter speculates on the pre-exhibit life