ELEMENTS B1 & B2 POWER POINT SLIDES Class #15 Tuesday, September 20, 2016 Wednesday, September 21, 2016

MUSIC: BRAHMS Cello Sonatas (1862, 1886) Mstislav Rostropovich, Cello; Rudolph Serkin, Piano Recording: 1983 TOMORROW (THURSDAY) Both Sections Together for Class #16 (7:55-9:20) Festival Seating Posted On Course Page : Practice Midterm Info Logistics/Instructions How to Get Most From Exam Technique Tips

DEMSETZ FIRST THESIS: Basic Analysis Identify decision at issue Identify old rule Identify neg. externalities under old rule Identify change in circumstances Does change increase neg. externalities [or perception of harm]? If cost of externalities > cost of change  change in rule We’ll Come Back to Repeatedly in Later DQs. Be certain you understand steps (or ask Qs outside of class).

DEMSETZ FIRST THESIS: DQ1.36(a) RADIUM (Pollution Controls) Decision/activity at issue: Manufacturing that pollutes air/water; cars Old rule: Very Limited Tort Liability for Factories (needed odors or visible smoke); No regulation of gasoline content or auto emissions Externalities?:

DEMSETZ FIRST THESIS: DQ1.36(a) RADIUM (Pollution Controls) Decision/activity at issue: Manufacturing that pollutes air/water; cars Old rule: Very Limited Tort Liability for Factories (needed odors or visible smoke); No regulation of gas content or auto emissions Externalities?: Costs to Environment & Human Health (Huge by 1970) Change in circumstances: Post-War economic boom + suburbs  more cars/driving; more factories. New technology  better measurement of pollution & effects. What happens?

DEMSETZ FIRST THESIS: DQ1.36(a) RADIUM (Pollution Controls) Decision/activity at issue: Manufacturing that pollutes air/water; cars Old rule: Very Limited Tort Liability for Factories (needed odors or visible smoke); No regulation of gas content or auto emissions Externalities?: Costs to Environment & Human Health (Huge by 1970) Change in circumstances: more cars/driving; more factories. New technology  better measurement of pollution & effects. Big increase in neg. externalities (both harm & perception) If cost of externalities > cost of change  change in rule (Clean Air Act; Regulation of Gasoline & Auto Emissions)

DEMSETZ FIRST THESIS New property rights tend to develop “when the gains of internalization become larger than the cost of internalization.” Useful description of how legal change can occur. Going forward, can use to argue that legal change should occur b/c social changes have greatly increased negative externalities.

Questions? DEMSETZ FIRST THESIS New property rights tend to develop “when the gains of internalization become larger than the cost of internalization.” Useful description of how legal change can occur Can use to argue that legal change should occur Questions?

DEMSETZ SECOND THESIS DQ1.37-1.40 ME & KRYPTON (1.39)

DEMSETZ SECOND THESIS Over Time, Process Described in 1st Thesis Leads to More and Stronger Private Property Rights

DEMSETZ SECOND THESIS As Opposed to What? Over Time, Process Described in 1st Thesis Leads to More and Stronger Private Property Rights As Opposed to What?

DEMSETZ SECOND THESIS DQ1.37 Alternatives to Private Property State of Nature: (Can Use Power/Force to Exclude Others) Common Law re Rights among Family Members Fairly Uncommon Today w/in U.S.

DEMSETZ SECOND THESIS DQ1.37 Alternatives to Private Property State of Nature: (Can Use Physical Force to Exclude) Communal Ownership No one can exclude others completely In practice, often variants of First in Time Common Examples Access to Public Streets, Public Parks, Beaches, etc. Use of Oxygen in Air; Use of Water from Public Sources

DEMSETZ SECOND THESIS DQ1.37 Alternatives to Private Property State of Nature: (Can Use Force to Exclude) Communal Ownership (Can’t Exclude/1st-in-Time) Can Have Non-Communal State Ownership Like Private Property BUT Gov’t Management E.g., Military Bases

DEMSETZ SECOND THESIS: DQ1.37 Gradations of Private Property  Communal : Examples (Pretty Strong Private Rights) (1) Songs under copyright: Can’t perform for $$ or copy text w/o permission/$$ Can’t limit singing in shower, etc. (2) Right to Exclude Others from Privately Owned Land Can exclude most people for most purposes Limits on right to exclude for public necessity (emergencies; stop crime, etc.)

DEMSETZ SECOND THESIS: DQ1.37 Gradations of Private Property  Communal : Examples (Pretty Weak Private Rights) (1) Perfumes, Clothing Designs: Anyone can copy formula/design & sell Can’t lie about source (private property in trademark). (2) Air Generally anyone can use oxygen, nitrogen, etc. Some limits on use if creates identifiable pollution

Demsetz: Private Property More Efficient Than Communal Property DEMSETZ SECOND THESIS Over Time, Process Described in 1st Thesis Leads to More and Stronger Private Property Rights Why? Demsetz: Private Property More Efficient Than Communal Property

DEMSETZ SECOND THESIS: DQ1.38 Private Property More Efficient Than Communal Property (Results in Fewer Externalities) Members of community will have trouble negotiating among themselves to achieve optimal level of resource use.

DEMSETZ SECOND THESIS: DQ1.38 Private Property More Efficient Than Communal Property (Results in Fewer Externalities) Members of community will have trouble negotiating to achieve optimal level of resource use. Claim: Private Os more likely to manage resource in way to maximize long term benefits. In communal or state, no individual reaps benefits of good management, so have to do difficult group negotiation to get everyone to agree to steps needed to achieve optimum. (High transaction costs)

DEMSETZ SECOND THESIS: DQ1.38 Private Property More Efficient Than Communal Property (Results in Fewer Externalities) 2. The members of the community will have trouble negotiating with other communities or outsiders: to prevent interference with community’s rights to achieve useful bargains

DEMSETZ SECOND THESIS: DQ1.38 Private Property More Efficient Than Communal Property (Results in Fewer Externalities) The members of the community will have trouble negotiating with other communities or outsiders: Standard problems of group bargaining Plus difficulty of figuring out who to bargain with (Who do I talk to if I want to buy up all the oxygen or to prevent some people from overusing oxygen?)

DEMSETZ SECOND THESIS DQ1.39 KRYPTON Demsetz: Private Property More Efficient Than Communal Property In your experience, what ways do communities have of preventing anti-community behavior aside from bargaining or paying off the anti-social community members?

DEMSETZ SECOND THESIS: DQ1.39 Demsetz: Private Property More Efficient Than Communal Property: Reasons to Question Claim May understate effectiveness of social sanctions/ ostracism/self-help as ways for communities to regulate behavior w/o negotiation. E.g., Law school sections Fast food containers Celebrities, NFL & Twitterverse

DEMSETZ SECOND THESIS Private Property More Efficient Than Communal Property (Reasons to Q Claim) May understate effectiveness of social sanctions Not always clear that private property yields better management. Individuals … may be irrationally wasteful may sacrifice long term value for short term gains may rationally place low value on consequences in distant future (time value of money)

DEMSETZ SECOND THESIS Private Property More Efficient Than Communal Property (Reasons to Q Claim) May understate effectiveness of social sanctions Not always clear that private property yields better management Individuals may not value future benefits highly Sometimes concerned community (e.g., re children or future generations) can do better job planning for future

DEMSETZ SECOND THESIS Private Property More Efficient Than Communal Property (Reasons to Q Claim) DQ1.40: If bargaining among community is so difficult, how do private property systems get created? Shows some group negotiation possible Although Demsetz would say overcoming high transaction costs very hard so only occurs if perceived costs of retaining status quo very high

Assuming Private Property Results in Fewer Externalities … DEMSETZ SECOND THESIS Over Time, Process Described in 1st Thesis Leads to More and More Private Property Assuming Private Property Results in Fewer Externalities …

DEMSETZ SECOND THESIS Over Time, Process Described in 1st Thesis Leads to More and More Private Property If Externalities High Change in Rule

DEMSETZ SECOND THESIS If Externalities High Change in Rule Over Time, Process Described in 1st Thesis Leads to More and More Private Property If Externalities High Change in Rule Rule Changes Unpredictable

DEMSETZ SECOND THESIS If Externalities High Change in Rule Over Time, Process Described in 1st Thesis Leads to More and More Private Property If Externalities High Change in Rule Rule Changes Unpredictable If to Private Property, Low Externalities = Stable

DEMSETZ SECOND THESIS Over Time, Process Described in 1st Thesis Leads to More and More Private Property If Externalities High Change in Rule Rule Changes Unpredictable If to Private Property, Low Externalities = Stable If not, Higher Externalities  More Change

QUESTIONS? DEMSETZ SECOND THESIS Over Time, Process Described in 1st Thesis Leads to More and More Private Property If Externalities High Change in Rule Rule Changes Unpredictable If to Private Property, Low Externalities = Stable If not, Higher Externalities  More Change Downloading Music as Example QUESTIONS?

DEMSETZ: WHAT TO TAKE AWAY Externalities = Important Idea Very Commonly Referenced Concept Want Decision-Makers to Consider Real Costs

DEMSETZ: WHAT TO TAKE AWAY Externalities Important 1st Thesis: Useful Description of How Changes in Society Can Create Changes in Property Rights Can also use to argue change is needed b/c of high externalities

DEMSETZ: WHAT TO TAKE AWAY Externalities Important Useful Description of a Way Changes in Society Create Changes in Property Rights Arguments re Advantages of Private Property (or of Stronger Private Property Rights)

DEMSETZ: WHAT TO TAKE AWAY ALSO (though we didn’t spend time on): 1st para.: Description of What Property Is Expectations re Rights to Act Protection from Others’ Interference Construct of Particular Society/Culture

DEMSETZ: WHAT TO TAKE AWAY What Counts as Property = Construct of Particular Society/Culture

LOGISTICS: Assignment #1 Generally Submission due Sat 9/24 @ 2 pm Non-Coordinators send work to Coordinators by Friday 9/23 @ 2 am (effectively late Thursday night) unless group agrees otherwise. Coordinators Get Pseudonyms Before End of School Day Friday Double-Check Formatting Instructions Before Finalizing Questions In Class Today By E-Mail through Wednesday night

Return to MANNING URANIUM: Brief Continued RADIUM: DQ Return to MANNING URANIUM: Brief Continued RADIUM: DQ.146 (From Facts to Relevant Factors)

Manning v. Mitcherson: URANIUM: BRIEF ISSUE (Procedural Component?)

Manning v. Mitcherson: URANIUM: BRIEF ISSUE (Procedural Component): Did the magistrate err in awarding possession of the canary to the original owner … OR Did the Superior Court err by affirming the judgment of the magistrate awarding possession of the canary to the original owner … (Substantive Component?)

Manning v. Mitcherson: URANIUM: BRIEF ISSUE Did the magistrate err in awarding possession of the canary to the original owner … because an OO loses [or retains] property rights to an escaping canary where [facts].

Manning v. Mitcherson: BRIEF ISSUE  NARROW HOLDING Did the magistrate err in awarding possession of the canary to the original owner because an OO loses [or retains] property rights to an escaping canary where [facts].  The magistrate didn’t err in awarding possession of the canary to the original owner because an OO retains property rights to an escaping animal where [facts]. We’ll Insert List of Facts from p. 40 (2d Paragraph) + Distinctive Crest

Manning v. Mitcherson: FACTS & HOLDING The original owner retains property rights in an escaped [canary] … [that responded to its name] [that had escaped and returned once before] [that had distinctive crest] [that had been owned for two years] [that had been missing for only five days] [that OO located day after it was found]

NARROWING/BROADENING HOLDINGS Narrowest Version of Holding Essentially Includes All Facts of Present Case Broader Versions Address More Future Cases Because Less Specific

NARROWING/BROADENING HOLDINGS Narrowest Version of Holding Essentially Includes All Facts of Present Case Broader Versions Address More Future Cases Broaden Holding by (either or both of): Making Descriptions of Some Facts More General Eliminating Some Facts

NARROWING/BROADENING HOLDINGS Narrowest Version Essentially Includes All Facts of Case Broad Versions Address More Future Cases Different Versions of Broad Holdings Play With to See What Case Might Stand For Going Forward Remember Acceptable Formulations Must be Consistent with Result & Language of Case

Manning v. Mitcherson: BROADENING HOLDING: Example The original owner retains property rights in an escaped [canary]  [animal ferae naturae] [that responded to its name] [that had escaped and returned once before] [that had distinctive crest] [that had been owned for two years] [that had been missing for only five days] [that OO located day after it was found]

Manning v. Mitcherson: DQ1.46 Relevant Factors (ME then RADIUM) We’ll discuss the possible significance of each fact, including… How Might You Broaden a Particular Fact to a More General Factor? (to imagine what might be part of broader versions of holding) Why Might that Factor Matter in Determining Rights between OO and Finder? (to clarify purpose/relevance) How Well Does the Particular Fact Further the Purposes of Considering the General Factor ? (to assess the relative importance of the fact and prepare to compare it to facts of future cases/problems)

Manning v. Mitcherson: DQ1.46 Relevant Factors (ME) The original owner retains property rights in an escaped animal ferae naturae … that responded to its name that had escaped and returned once before Possible Significance? Possible more general factor(s)?

Manning v. Mitcherson: DQ1.46 Relevant Factors (ME) The original owner retains property rights in an escaped animal ferae naturae … that responded to its name that had escaped and returned once before Possible Significance? Possible more general factor? Taming or Emotional Bonding Why Might these Factors Matter in Determining Rights between OO and Finder?

Manning v. Mitcherson: DQ1.46 Relevant Factors (ME) Possible Significance of … responded to name + Prior escape/return  tamed or bonded Shows labor by OO (or prior owner) AND/OR May want to protect emotional connection How well do the specific facts achieve these purposes?

Manning v. Mitcherson: FACTS & HOLDING The original owner retains property rights in an escaped [canary]  [animal ferae naturae] [that had escaped and returned once before] + [that responded to its name]  [that was tamed/had emotional bond to OO] [that had distinctive crest] [that had been owned for two years] [that had been missing for only five days] [that OO located day after it was found]

Manning v. Mitcherson: DQ1.46 Relevant Factors (RADIUM) The original owner retains property rights in an escaped animal ferae naturae … that had distinctive crest … Possible Significance? Possible more general factor? Why might matter to rights of OO/F?

Manning v. Mitcherson: DQ1.46 Relevant Factors (RADIUM) Possible Significance of … that had distinctive crest  marked May help identify animal May provide notice to F of prior claim [May also further show taming or emotional bond if grooming by OO.] How well does crest here do these things?

Manning v. Mitcherson: FACTS & HOLDING The original owner retains property rights in an escaped [canary]  [animal ferae naturae] [that had escaped and returned once before] + [that responded to its name]  [that was tamed/had emotional bond to OO] [that had distinctive crest] [that was marked] [that had been owned for two years] [that had been missing for only five days] [that OO located day after it was found]

Manning v. Mitcherson: DQ1.46 Relevant Factors (RADIUM) The original owner retains property rights in an escaped animal ferae naturae … Note Three Different Measures of Time [that had been owned for two years] [that had been missing for only five days] [that OO located day after it was found]

Manning v. Mitcherson: DQ1.46 Relevant Factors (ME) Possible Significance of … that had been owned for two years  Taming/Bonding again Maybe stronger than name or escape/return: More labor by OO (2 years maintenance) Emotional connection probably strong (at least on OO’s side!!)

Manning v. Mitcherson: FACTS & HOLDING The original owner retains property rights in an escaped [canary]  [animal ferae naturae] [that had escaped and returned once before] + [that responded to its name] + [that had been owned for two years] + [maybe groomed by OO]  [that was tamed & emotionally bonded to OO] [that had distinctive crest]  [that was marked] [that had been missing for only five days] [that OO located day after it was found]

Manning v. Mitcherson: DQ1.46 Relevant Factors (RADIUM) The original owner retains property rights in an escaped animal ferae naturae … that had been missing for only five days that OO located day after it was found Possible Significance? Possible more general factor? Why might matter to rights of OO/F?

Manning v. Mitcherson: DQ1.46 Relevant Factors (RADIUM) Possible Significance of … missing only five days/OO located day after found  Gone very short time Shows pursuit/interest by OO Little time for F to invest or bond How well does time here show these things?

Manning v. Mitcherson: FACTS & HOLDING The original owner retains property rights in an escaped [canary]  [animal ferae naturae] [that had distinctive crest]  [that was marked] [prior escape/return] + [responded to name] + [owned for two years]  [that was tamed & emotionally bonded to OO] [that had been missing for only five days] + [that OO located day after it was found]  [that had been gone for a short time]

Manning v. Mitcherson: VERSIONS OF HOLDING Version #1: The original owner retains property rights in an escaped bird that had escaped and returned before, is distinctively marked, had been found only a short time after it escaped, and was located by the owner a short time after being found.

Manning v. Mitcherson: VERSIONS OF HOLDING Version #2: The original owner retains property rights in an escaped animal ferae naturae that is tamed and distinctively marked.

Manning v. Mitcherson: VERSIONS OF HOLDING Version #3: The original owner retains property rights in an escaped animal ferae naturae where the OO is emotionally bonded to the animal and locates the animal after it only is gone for a short time.

Manning v. Mitcherson: MANY VERSIONS OF HOLDING As with Pierson, exact scope of Manning holding necessarily unclear until Ga. S.Ct. clarifies. Use other language from case to help determine best alternatives (DQ1.45 & 1.47). Use squirrel hypothetical to see how different versions might accomplish different results (DQ1.48) QUESTIONS ON FACTORS & HOLDING?

MINING the MEANING of MANNING Relevant Language (DQ1. 45 & DQ1 MINING the MEANING of MANNING Relevant Language (DQ1.45 & DQ1.47 & Rationales) featuring ME, RADIUM & URANIUM

Mining Manning ‘s Meaning: DQ1.45 RADIUM The law of Georgia is, that to have property in animals, birds and fishes which are wild by nature, one must have them within his actual possession, custody or control, and this he may do by taming, domesticating, or confining them. (Top p.40) POSSIBLE SIGNIFICANCE TO COURT’S REASONING?

Mining Manning ‘s Meaning: DQ1.45 The law of Georgia is, that to have property in animals, birds and fishes which are wild by nature, one must have them within his actual possession, custody or control, and this he may do by taming, domesticating, or confining them. Could simply go to 1st possession and mean that Mitcherson owned bird prior to escape. Could mean, “Once tamed, yours forever”, BUT structure of opinion suggests otherwise.

Mining Manning ‘s Meaning: Taming Enough? (p.40 2d para): …the bird in controversy was shown to have been tamed. It was also testified that …

Mining Manning ‘s Meaning: Taming Enough? …the bird … was … tamed. It was also testified that it had been in the possession of the plaintiff in the warrant about two years; that it knew its name, and when called by its owner, would answer the call; that it had left its cage on one occasion, and after having been gone a day or two returned; that on the 27th day of December, before the preceding new year's day, it was missing from its cage, and on the latter day it was received and taken possession of by the defendant …

Mining Manning ‘s Meaning: Taming Enough? …the bird … was … tamed. It was also testified that in the possession of the plaintiff about two years; knew & would answer to its name; prior escape & return; Caught and given to defendant 5 days after escape ¶ Under this evidence, there does not seem to be any question of sufficient possession and dominion over this bird, to create a property right in the plaintiff.

Mining Manning ‘s Meaning: DQ1.45: RADIUM The law of Georgia is, that to have property in animals, birds and fishes which are wild by nature, one must have them within his actual possession, custody or control, and this he may do by taming, domesticating, or confining them. Could mean, “Once tamed, yours forever”, BUT if holding is that simple, court probably would just say so and NOT list all the other evidence.

Mining Manning ‘s Meaning: DQ1.45 To have property in animals ferae naturae, “one must have them within his actual possession, custody or control, and this he may do by taming, domesticating, or confining them.” Present tense suggests this is not a rule for when you acquire property rights, but a rule about how you maintain property lights in a living wild animal.

Mining Manning ‘s Meaning: DQ1.45 To have property in animals ferae naturae, “one must have them within his actual possession, custody or control, and this he may do by taming, domesticating, or confining them.” Present tense suggests this is not a rule for when you acquire property rights, but a rule about how you maintain property lights in a living wild animal. D almost certainly argued that P lost her property rights because she no longer had the bird within her “actual possession, custody or control.”

Mining Manning ‘s Meaning: DQ1.45 To have property in animals ferae naturae, “one must have them within his actual possession, custody or control, and this he may do by taming, domesticating, or confining them.” D must have argued that P lost her property rights because she no longer had the bird within her “actual possession, custody or control.” The Court rejected that argument: “Under this evidence, there does not seem to be any question of sufficient possession and dominion over this bird, to create a property right in the plaintiff.

Mining Manning ‘s Meaning: DQ1.45 & Possible Doctrinal Rationale To have property in animals ferae naturae, “one must have them within his actual possession, custody or control, and this he may do by taming, domesticating, or confining them.” Defendant seems to have argued that P lost her property rights because she no longer had the bird within her “actual possession, custody or control.” However, the court held that the totality of the evidence here showed that she retained “sufficient possession and dominion over [the] bird” to still have property rights.

Mining Manning ‘s Meaning: DQ1.45: RADIUM The law of Georgia is, that to have property in animals, birds and fishes which are wild by nature, one must have them within his actual possession, custody or control, and this he may do by taming, domesticating, or confining them. Interesting idea from Fall 2012 that OO retains ownership if sufficient evidence remains of taming, domesticating or confining. Could Finder here tell that bird had been tamed and/or confined?

Mining Manning ‘s Meaning: DQ1.47: RADIUM To say that if one has a canary bird, mocking bird, parrot, or any other bird so kept and it should accidentally escape from its cage to the street, or to a neighboring house, that the first person who caught it would be its owner, is wholly at variance with our views of right and justice. (p.40 last para.) For Sweet, probably not an accident! Court probably means owner did not deliberately allow bird to fly free.

Mining Manning ‘s Meaning: DQ1.47: RADIUM To say that if one has a canary bird, mocking bird, parrot, or any other bird so kept and it should accidentally escape from its cage to the street, or to a neighboring house, that the first person who caught it would be its owner, is wholly at variance with our views of right and justice. Likely true here; if so, why relevant?

Mining Manning ‘s Meaning: DQ1.47: RADIUM To say that if one has a canary bird, mocking bird, parrot, or any other bird so kept and it should accidentally escape from its cage to the street, or to a neighboring house, that the first person who caught it would be its owner, is wholly at variance with our views of right and justice. Possible Relevance of Street/Neighbor House: Only a short distance from point of escape? Not returned to natural habitat/liberty? (although court doesn’t use this language) Finders might be aware of prior claim OO might be able to recapture easily

Manning v. Mitcherson: Might add Distance to HOLDING: The original owner retains property rights in an escaped [animal ferae naturae] [that had distinctive crest][that responded to its name] [that had escaped and returned once before] [that had been owned for two years][that had been missing for only five days][that OO located day after it was found] [that only traveled a short distance after escape]

Mining Manning ‘s Meaning: DQ1.47: RADIUM (p.40 last para.) To say that if one has a canary bird, mocking bird, parrot, or any other bird so kept and it should accidentally escape from its cage to the street, or to a neighboring house, that the first person who caught it would be its owner, is wholly at variance with our views of right and justice. WHY? This is unsupported rhetoric. You need to do better. More explanation = More Persuasive = More Points