Henderson and Judge Posner on Law, Economics, and Penn State
The NCAA sanctions against Penn State, including a $60 million fine, are very much about law and economics. The law involves its transgressions, the economics involves the penalties. The aim is to utimately alter an institutional culture.
It thus seemed relevant to contact folks at the University of Chicago Law School, home of law and economics, the most potent intellectual theory in American law in the past several generations. Its impact on everything from antitrust law to government regulation has been enormous.
"You could compare it [the whole situation] to banking," said Richard Posner, a faculty member better known as arguably the most influential federal judge outside the Supreme Court. He sits on the 7th Circuit Court of Appeals in Chicago and his latest must-read ruling made it big in Tuesday's Wall Street Journal.
"If the prospective gains from unethical behavior are large enough, you need really heavy sanctions to deter the behavior. Football was everything to Penn State, as is to many other universities as well, so really stiff punishment of the sort meted out by the NCAA seems a sensible response and is likely to be effective."
If you don't know the law and economics school of thought, that's essentially it in a nutshell.
Is Posner correct?
Some interesting variations came from a young law school colleague, M. Todd Henderson.
"Will it alter the institutional culture? I don't know but I sure hope so. Not that I care that much about Penn State and football but we rely on that instrument in so many places," he said, alluding to the big financial penalties.