Friday, January 20, 2006

Intellectual Activism: Incentives . . .

Antirust law creates huge financial incentives-for the people who file antitrust suits. Consider the case of Lloyd Constantine's recent award of $220 million dollars as lead plaintiffs counsel in the Visa International Service Association/MasterCard Inc. antitrust suit. Constantine sought $609 million plus expenses, but had to settle for the smaller figure after Judge John Gleeson of the Eastern District of New York ruled that his request was "absurd." Don't feel too bad though-Constantine and his henchmen have found the will to carry on.

The firm has left its old offices and sublet grander quarters from New York's Davis Polk & Wardwell. Two weeks after he got the money, Constantine gathered the firm together in those offices and handed out checks. An employee in the mailroom got $50,000. So did a paralegal who had worked for the firm for a single year. ("She practically gave up a year of her life. She must have billed 3,000 hours," says Constantine.)

As for himself, Constantine won't say how much he got. And while he's careful to play down the importance of money -- "Before I got this fee, I had everything I needed. I don't need a hell of a lot more now," he says -- there have been changes. Constantine bought his wife a 1921 Steinway grand piano, for example. Also, she recently left her job as general counsel of News America Marketing, a subsidiary of The News Corp. Limited, and is looking for something new. Perhaps teaching, or something in the nonprofit world, taking a pay cut made possible by Visa. []
What young law school student is going to read that article and conclude that they want to be a moral defender of capitalism? Precious few I suspect-and proof that of all the looting in the world, it's the legalized variety that offers the best incentives.

So what to do? I doubt too many people who actually make money (that is, who actually create the thing of value that they later sell on the market, over looting it) will look at a case like the Visa/MasterCard antitrust case and conclude that it was a feat of justice. Yet by their inaction, they tacitly support its outcome. Why? Because these people do not grasp the moral basis of capitalism. I've been trying to think of a new name for this kind of thinking-the "anti-inductive mentality" comes to mind. It shouldn't be rocket science for someone to figure out that when a person creates something, they own it. Case closed, period. This is clearly not the situation today.

So yet again, I am reminded that the tipping point in this battle is moral and epistemological. Look forward to some new campaigns out of CAC to help underscore this truth. After all, we have some incentives of our own we can put on the table . . .

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