Behavioral Law & Economics

When the concept of law and economics came into existence, behavioral economics was a central point of contact. The Coase theorem is the foundation of law and economics. According to the theorem, the outcome is not affected by allocation of legal rights to one party or another if transaction costs are sufficiently low because . . . → Read More: Behavioral Law & Economics

Do we need minimum wage legislations?

Minimum wage laws are against the law of supply and demand. Wages are based on the supply of and demand for labor. If the supply is low, wages will be higher and if the supply is high, the wages will be lower. If the demand is high, the wages will be high and if . . . → Read More: Do we need minimum wage legislations?

Negative Impact of Estate Tax

In economics, inheritance means transfer of unconsumed assets from one generation to the next. The goal of estate tax is to reduce the volume of such transfer. Adam Smith in his work, The Wealth of Nations, commented that all taxes upon the transference of property of every kind, so far as they diminish the . . . → Read More: Negative Impact of Estate Tax

Short Selling Under SEC Scrutiny

Short sellers have been vulnerable to attack on the claim that they’re spreading rumors or are out to destroy a company. Companies have mounted public-relations campaigns against them. In a short sale, investors borrow shares and immediately sell them, hoping to profit by replacing them later at a lower price – a sell-high, buy-low . . . → Read More: Short Selling Under SEC Scrutiny

Why lack of funding failed NCLB

In January 2000, President Bush signed the No Child Left Behind (NCLB) Act with great fanfare. The Act had noble intentions and was sold on the guarantee that there would be no student left behind and the strong arm of the government would ensure that the poor would have the same as the rich.

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America’s Most Effective Weapon Against the Rich

Inheritance is a civil right and not a natural right. Way back in 1898, the Supreme Court ruled that the right to take property by devise or descent is the creature of the law and not a natural right. The government had the absolute right to decide as to the terms upon which a . . . → Read More: America’s Most Effective Weapon Against the Rich

Why the efforts to rescue the economy may fail

In an attempt to resolve the present credit crisis, the United States government has taken many steps. Since September, it placed Fannie Mae and Freddie Mac, the mortgage giants under conservatorship, taken a majority stake in the American International Group and passed a $700 billion rescue package for the financial sector. The Treasury . . . → Read More: Why the efforts to rescue the economy may fail

Coming in 2010: New IRS Rules to Fight Tax Evasion

Many wealthy Americans have been using offshore services provided by foreign banks to evade tax. Things may now get a little difficult.

Until now foreign banks could funnel hundreds of billions of dollars overseas on behalf of American clients without disclosing their names to the Internal Revenue Service (IRS) under a program known . . . → Read More: Coming in 2010: New IRS Rules to Fight Tax Evasion

Wall Street Bailout: The World’s Largest Sovereign Wealth Fund?

More than 20 countries have set up sovereign wealth funds while a dozen more have expressed interest in establishing them. Many of these sovereign wealth funds are picking up stakes in U.S. companies, which is raising concerns about the need for regulating them. Up until the $700 billion bailout, which effectively is a . . . → Read More: Wall Street Bailout: The World’s Largest Sovereign Wealth Fund?

Senate Investigation: Major Financial Institutions Helped Hedge Funds Avoid Taxes

A year long probe by Senate Permanent Subcommittee on Investigations which relied on internal bank documents and emails has found that some of the nation’s biggest investment banks and brokerage firms including Morgan Stanley, Citigroup, Lehman Brothers, and Merrill Lynch & Co marketed allegedly abusive transactions that helped foreign hedge fund investments avoid . . . → Read More: Senate Investigation: Major Financial Institutions Helped Hedge Funds Avoid Taxes