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- Lecture number:
- Lecture Note
- Cornell University
- Econ 4040 - Economics and the Law
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Lecture 9 Outline of Last Lecture No Class Outline of Current Lecture I. Review for the Exam Current Lecture ECON & LAW REVIEW SESSION I Matthews v. Massell, 356 F. Supp. 291 (N.D. Ga. 1973) Facts: mayor of Atlanta plans to use federal Revenue Sharing Act funds to pay firemen’s salaries, and use resulting savings in the general fund for politically motivated tax refund Claim of Plaintiffs: proposed use of federal funds violates requirement that funds be used only for “priority purposes”; misuse will render city liable for repayment of funds and penalty Defense: restrictions on use of funds are illusory and unenforceable, as recognized by Congress Matthews v. Massell, 356 F. Supp. 291 (N.D. Ga. 1973) Holding: proposed use of funds a violation; enjoined Reasoning: no restrictions on the use of freed-up funds on the fact of the Act, but shifting funds from one account to another constitutes a misuse of funds as it would violate the spirit of the restrictions Economic theory: budget curve of the city and ‘new year spending’ problem; result is illogical from a single-budget perspective, allocation of budget contingent on the new funding is indistinguishable from next year’s budget presupposing the funding; intent is only relevant here because the budget was pre- announced Tilton v. Richardson, 403 U.S. Econ 4040 1st Edition 672 (1971) Facts: Higher Education Facilities Act of 1963 allocates funding for new buildings to universities Claim of Plaintiffs: taxpayers grant funds to religiously affiliated colleges as a violation of the First Amendment Holding: no violation; problem of “entanglement” between the federal government and religious institutions is mitigated because (1) collegiate institutions prioritize education and college students are cynical; (2) non-ideological character of the aid provided; (3) no continuing financial relationship; Douglas Dissent: one budget; money saved for the construction of secular buildings can be spent for religious purposes; restricting use of budget would require surveillance which will create further entanglement Tilton v. Richardson, 403 U.S. 672 (1971) Economic Theory: designing funding conditions toincentivize a particular use? Matching grant: effectively reduces the price of building by ½; assume two budget items, religious buildings and non-religious buildings Equilibrium: depends on elasticity of demand;Without knowing elasticity of demand, we cannot know the effect of a matching grant Edwards v. Sims, 24 S.W.2d 619 (K.Y. 1929) Facts: entrance to a cave located on Edwards’s land, where he operated an exhibition of the cave. Lee (neighbor) sues to compel a survey to determine if any part of the cave falls under his property. Chancellor Sims ordered the survey. Edwards sues for a writ of prohibition to prevent the survey. Rule of Law: Cuius est solum, eius est usque ad coelom et ad inferos (Whoever owns the soil, owns all the way to heaven and down to hell) [old rule] Holding: writ of prohibition denied; right to exclude others from your property sometimes yields to public policy or the property rights of others; Edwards v. Sims, 24 S.W.2d 619 (K.Y. 1929) Dissent: cave has no use to ...
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