Ideas have consequences.

That’s the title of a recent paper by economists Elliott Ash, Daniel Chen, and Suresh Naidu, and depending on your political beliefs, the consequences they’re talking about are either heartening or deeply disturbing.

Ash, Chen, and Naidu studied the Manne Economics Institute for Federal Judges, a program offering economics instruction to federal judges so that they could incorporate economic reasoning into their papers. Launched in 1976 by the legal academic Henry Manne with support from corporations and conservative funders like the Olin Foundation, the institute was one of the most effective disseminators of Law and Economics, a movement in legal academia that sought to incorporate analysis of economic efficiency and incentives into the study of the law.

On its own, that sounds benign enough. And distinguished liberal lawyers and judges, like Ruth Bader Ginsburg, even went to these seminars (Elizabeth Warren met her husband at a Manne event for law professors). But Ash, Chen, and Naidu find that the training in the programs had a conservative/libertarian bent, and that this shows up in the behavior of judges who attended. Attendees were less likely to rule in favor of environmental or union regulations and gave longer prison sentences to federal defendants. The study provides evidence that the seminars, and the broader Law and Economics movement promoted by conservative philanthropies like the Olin Foundation, pushed American courts to the right.

That makes the democratic dilemma posed by groups like Olin (and present-day political donors like the Koch brothers or Tom Steyer) even starker. We know that programs funded by politically oriented charities can meaningfully change American public policy without much of any input from voters. That doesn’t seem compatible with basic norms of democracy — a theme we’re exploring in this season’s Future Perfect podcast.

I talked to Naidu about his research into the Manne seminars for the podcast this week.

We couldn’t fit most of his interview into the audio version, but it was a fascinating conversation about an important overlooked program. A transcript, lightly edited for length and clarity, follows.

Dylan Matthews

So, the Manne seminars. What were those?

Suresh Naidu

They were these two- to three-week camps that were held in very nice places and resorts.

They basically flew in judges and gave them a two- to three-week course in Law and Economics. ... It was taught by various eminent economists.

It was reasonably balanced as far as the ideological composition of the instructors went, but I think when you look at inside the program, the people that had the most influence were definitely of the more laissez-faire persuasion inside economics.

We have some great pictures of Milton Friedman lecturing at these events. The judges afterward raved about how great it was, how it really helped them see the economics behind a lot of their judicial decision-making.

Dylan Matthews

Can you paint a scene of what these conferences are like?

Suresh Naidu

Sunday, you arrive. There’s a reception. There’s a dinner.

And then Monday morning, from 8:30 to 12, you have a class taught by Armen Alchian —and the subjects are competition, demand, and exchange.

Then the rest of the day is free. You’re probably just hanging out. Taking in the sun. And then you’d have a nice dinner where there was delicious wine.

It was all very nice.

And then you’d have a few other days of classes. Charles Goetz on competition and monopoly, for example. You’d get a class on property rights. You would get one class from Orley Ashenfelter, who is a famous labor economist, that didn’t have any readings assigned. But it was supposed to be like an introduction to econometrics.

But this is all during the day, and then the evenings were filled with entertaining events.

Dylan Matthews

So once you’re in these classes, what are the kind of ideas you’re hearing?

Suresh Naidu

It would probably depend on the instructor. But [for example,] antitrust.

There was this older view of the antitrust that ... if there’s one big firm in a sector, that’s probably a monopoly.

But a law and economics angle would say, “Well, no. You can’t infer just because there’s one large firm that there’s market power. That firm might be really worried about the threat of potential entrants!”

And so that means you can’t say that just because there’s one firm in a sector, there’s necessarily the exercise of monopoly power, because it could be that that monopolist is being disciplined by the threat of entry.

And so the idea is that previous cases that argued that big firms were obviously monopolies were misguided because they didn’t account for the threat of potential entry.

Dylan Matthews

You had some really eye-popping examples in the paper about pollution.

Suresh Naidu

Yeah, and it kind of reveals ... sometimes when you take economics too literally, it leads you into kind of very sociopathic ways of thinking about things.

We have quotes from Armen Alchian, who said, “Give me a capsule that will magically clean all the air in Los Angeles. ... Beg me to crush it. ... I won’t crush the capsule. Because if I do, poor blacks will have to pay $20 a month more for land rental. ... The black in Watts, already used to living with bad air, loses his discount for doing that.”

And that’s just this idea that if you clean up the pollution, more people will want to live there and that will drive up the housing prices, making the people that are already used to pollution worse off.

I think that’s the kind of reasoning you’ll find in a lot of what the Manne teachers were teaching, as well as, “Here’s why a lot of regulation by the EPA [Environmental Protection Agency] might not be the most efficient way of reducing environmental damages … and maybe people don’t value environmental damage that much anyway.”

Dylan Matthews

There’s a section in the paper where you talk about how [Goetz] had an argument that it can be rational to punish black defendants more than white defendants for the same crime. Where does that come from?

Suresh Naidu

Alongside the ideas about antitrust and regulation, there also comes this idea of thinking about crime as something that can be a rational decision.

For a while, people thought that criminals were like social deviants or psychologically disturbed, and what economics brings to that is, “Nope, criminals are rational like everybody else, and they’re making decisions based on considering costs and benefits.”

What that means is that part of the object of sentencing and punishment should be altering the calculus of crime. And one of the values of being harsh in sentencing, for example, is that you deter future criminals.

Definitely the skew of the instruction runs toward the conservative side of the economics profession at the time.

Out of, say, two weeks of lectures, there’s one lecture by [liberal economist Paul] Samuelson but there’s, like, five by Alchian and five by Goetz, and then there’s one lecture by [liberal] Ashenfelter.

And when you read the testimonials of some participants, it was often the case that Paul Samuelson would dispense stock trading advice and Orly Ashenfelter would talk about wine, but the real meat of the program was broadly coming from like the more conservative faculty on the program.

Dylan Matthews

Do you have a sense of why people like Samuelson or Ashenfelter participated in it, then? Why would they participate in this given what they believed about political issues?

Suresh Naidu

So an important thing about this is that there’s nothing about Law and Economics that’s bad economics.

There’s an important element of actual truth in it. And that’s part of why it’s successful. And you can imagine from the point of view of economics as a profession, we just love the idea that our tools can get applied in ever-increasing contexts.

Dylan Matthews

Was it just Republican appointees and people inclined to these ideas anyway who were going to these?

Suresh Naidu

It’s certainly not the case that it’s only Republican appointees that are going. In fact, some of the biggest praise of the program comes from Democratic appointees.

The beloved Ruth Bader Ginsburg is in fact a big fan of this program, and talks about it quite favorably afterward. About the intensity of the instruction being as hot the Florida sun.

Some of our results find that the effects of this program are larger for the Democratic appointees than the Republican ones.

Dylan Matthews

Let’s go to the results section of your paper. People go to these seminars. How do they act differently?

Suresh Naidu

What we find is that after you attend the Manne seminars — first, you start using a lot more economics language in your written opinions.

One of the judges, after attending the Manne programs, actually used a supply and demand diagram in a court opinion. That’s the first time ever that kind of an economics diagram gets used in a court opinion.

But then, in terms of actual outcomes, what we see is that they also start voting more conservatively on economic cases.

What we look at is whether or not you find against the EPA or NLRB [National Labor Relations Board, the federal union regulator] in a case where one of those is the plaintiff.

And we find that you’re less likely to find in favor of the federal regulatory agency after you attend the Manne program.

Dylan Matthews

And you also found some results for criminal cases.

Suresh Naidu

We went to look more at the district courts, because the district courts are where sentencing for criminal cases happens. We looked at the effects of attending Manne seminars on the average length of sentence given.

And what’s important about all of this is that we’re really taking advantage of the fact that the judicial docket is randomized, so that nothing about the kind of case you’re getting as a judge is associated with whether or not you went to the Manne program.

So that means by just looking at the effect of going to Manne on the average sentence length of the case, we kind of know that that’s not due to some weird characteristics about those cases that those judges are facing.

And we find that after you go to the Manne program, you give longer criminal sentences.

Dylan Matthews

You also estimate what having Milton Friedman as a teacher does to these judges. What is the Milton effect?

Suresh Naidu

So Milton Friedman is an honest-to-god real libertarian and believed — along with laissez-faire in the economy — that people should make their own decisions and not have the government intrude on them. So that comes along with him being a firm believer in drug legalization.

We ran that regression, thinking about Friedman always being in favor of the legalization of recreational drugs and wondering if that showed up in the effects that being taught by Friedman had on sentencing.

And it’s exactly what you’d expect.

Being taught by Milton Friedman makes you less likely to give long sentences on certain kinds of criminal activity, particularly around like drug crimes.

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