My new article, Codification and Legislative Transaction Costs (free download from ssrn.com), addresses the effects of having codified statutes on legislative borrowing and statutory harmonization between jurisdictions. The discussion below draws from one section of the manuscript, focused on legislative borrowing and enactment costs.
Justice Brandeis first introduced the metaphor “laboratories of democracy” into our legal discourse, in New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting). The phrase now appears regularly in Supreme Court opinions as a meme for federalism. The laboratory image suggests that states experiment with diverse, innovative policies and laws, and those producing the best results (whatever that means) can become the standard that other states follow.
Yet the codification of American legislative law, which occurred throughout the country in the late nineteenth and early twentieth centuries, tends to work against state legislative innovation. Between the Civil War and World War II, every state and the federal government shifted toward codified versions of their statutes – with topical arrangement, hierarchical format and numbering, indexing, and cross-references.
This change in the form of legislation significantly lowers transaction costs for legislators (that is, costs of enactment), as demonstrated in my manuscript. Where enactment costs are lower, borrowing from other jurisdictions becomes more likely. Once a state’s statutes are in codified form – sorted topically, with numbered and subordinated sections, indexed, and so forth – it becomes much easier to plug in a code or section, borrowed either from a sister jurisdiction or a model act, to fill a gap or to replace an existing hodgepodge section with a systematic treatment of a legal subject. Inter-jurisdictional comparisons become easier, replacement or gap-filling more precise, and the advantages of harmonization more apparent to lawmakers. Just as codification lowers information costs for legislators regarding their own statutory corpus, it also lowers information costs about available alternatives – the laws of other states or those drafted by the NCCUSL – making borrowing cheaper than many academic commentators seem to have realized.
The ease of adoption and borrowing helped the ascent of the National Conference of Commissioners for Uniform State Laws and the American Law Institute. The codification movement expanded the market for their model codes, uniform acts, and restatements. At the same time, the NNCUS/ALI fueled the trend by providing legislatures with high quality, ready-made code sections on many subjects. These model codes and uniform acts come already in codified form, with numbering, subsections, and definition sections, so their adoption necessarily contributed to the codified shape of modern state statutes. The accompanying commentary further enhanced the appeal, functioning as both persuasive precedents for the law’s interpretation, and as quasi-legislative history. The fact that courts often follow these official commentaries gave new legislators considering adoption more predictive power about the model laws’ subsequent interpretation and application.
When sister jurisdictions have adopted the same statute, one jurisdiction’s cases become super-persuasive or near-binding precedent for the adopting state’s courts. (See 2B Sutherland Statutory Construction § 52:2). Model acts and uniform codes take this advantage to the next level, because the judicial interpretations of any state that has adopted the same code become highly persuasive precedent for future courts in the adopting jurisdiction. This allows even more predictability for legislators.
Here is the abstract of the article:
Between the Civil War and World War II, every state and the federal government shifted toward codified versions of their statutes – with topical arrangement, hierarchical format and numbering, indexing, and cross-references. Academia has so far ignored the systemic effects of this dramatic change. For example, the consensus view in the academic literature about rules and standards has been that precise rules present higher enactment costs for legislatures than would general standards, while vague standards present higher information costs for courts and citizens than do rules. Systematic codification, however, inverts this relationship, lowering transaction costs for legislatures and increasing legal information costs for courts and citizens as statutes proliferate. This Article takes a fresh look at this problem. On the legislative side, codification lowers enactment costs, making it easier for special interest groups to obtain their desired legislation; it facilitates Coasean bargaining between legislators; and it facilitates legislative borrowing, which diminishes the “laboratories of democracy” phenomenon. For the courts, codification changed how judges interpret statutes, prompting them to focus more on the meaning of individual words than on the overall policy goals of enactment, and to rely more on external sources, such as legislative history. For both legislators and courts, codification functions as a Hartian rule of recognition, signaling legality for enacted rules. For the citizenry, the reduced legislative costs mean increased legislative output, yielding rapid proliferation of statutes and unmanageable legal information costs. More disturbingly, codification also facilitates overcriminalization. While it is not realistic to reverse the trend, it is important to recognize codification’s effects on lawmaking, federalism, and statutory interpretation.