Articles
Private Equity for All: The Paradoxical Push to Democratize Private Markets
William W. Clayton & Elisabeth de Fontenay | PDF
The recent push to open private equity and other private assets to retail investors represents one of the most profound changes to U.S. capital markets in decades. This “retailization” effort is often framed as an overdue democratization of superior investment opportunities. Indeed, private equity has long been viewed as special, both for its market-beating returns and its success in making companies more profitable. Yet it has historically been off-limits to retail investors.
This Article argues that the push to democratize private equity is subject to a glaring paradox: Expanding access to private equity undermines the very benefits that access aims to deliver and the very features that purportedly make private equity special. The democratization narrative has it backward. Retailization erodes private equity’s famed advantages in investor performance and corporate efficiency while subjecting retail investors to new risks and altering the private markets beyond recognition.
The debate has become urgent. Private asset managers are hard at work selling products that thread the needle of the securities laws to target retail investors while the executive branch is pushing for private assets to be included in Americans’ 401(k) plans. Steering retirement savers away from low-cost index funds toward products that mask high fees and illiquidity and that yield vastly disparate outcomes represents a step backward in the design of our retirement system, an unearned windfall for private asset managers, and a loss for long-term economic performance.
Patronage Pardons
Lee Kovarsky | PDF
Abuse of presidential pardon power is taking a new and frightening turn. The Donald Trump administration is using clemency, including pardons, to signal impunity to regime allies contemplating misconduct. Such clemency has a predictable effect: it induces loyalist crime by reducing the expected penalty. “Patronage pardoning” refers to the clemency practices that power this loyalty-for-protection exchange. Those practices pose a grave threat to the rules-based constitutional order, and they are the subject of this Article.
Some historical observations predicate the diagnostic and prescriptive arguments that come later. Most importantly, the Framers concentrated federal pardon power in the president because they believed that impeachment and infamy would deter wholesale abuse. The Supreme Court has long acquiesced to the Framers’ vision, fortifying the presidential power against legislative regulation and judicial review. The preferred concentration always entailed some corruption, but the corrupt pardons of earlier eras were sources of shame—not carefully staged communication to the broader political community.
Patronage pardoning is different, as its central function is to broadcast the return on loyalty. The clearest example is clemency for the January 6 insurrectionists, but the Trump administration has used pardons before and since to publicly communicate its willingness to use power to protect allies. That communication induces loyalist crime from civilians and federal officers alike, which threatens the rule of law. There are aggravating conditions, too: (1) political polarization extinguishes the checking effect of impeachment and infamy; (2) corrupt pardons now seem constitutionally exempt from prosecution; and (3) there is a vicious cycle in which offending begets more leverage and leverage begets more offending.
There is no magical response because concentrated pardon power is too encased in the American constitutional tradition. There are nevertheless three broad strategies to minimize damage to the rules-based order. First, the states should be positioned and encouraged to prosecute conduct that also forms federal offenses. Second, to corral intransigent federal officials, courts should lean into civil contempt power. Third, and particularly with respect to misconduct in the District of Columbia, there ought to be a credible threat of civil penalties.
Note
Ensuring “The Right to Live in the World”: The Right to Repair Powered Wheelchairs
Maximillian J. Grahl | PDF
Twenty-seven years ago, in Olmstead v. L.C., the Supreme Court held that improperly institutionalizing people with disabilities is a form of unlawful discrimination. In doing so, the Court acknowledged that people with disabilities have a right to live free from confinement. Yet today, repair restrictions and outdated Medicare standards combine to threaten powered-wheelchair users’ ability to live out in the world. Some states have responded by passing right-to-repair laws, which require powered-wheelchair manufacturers and suppliers to provide the resources necessary for more accessible and more timely repairs. This Note analyzes these state laws in the context of previous right-to repair solutions—national memoranda of understanding regarding farm equipment and motor vehicles, and state laws addressing the repair of consumer electronics. This Note proceeds by examining the most effective way to guarantee the right to repair powered wheelchairs going forward. More robust state repair laws, combined with more realistic Medicare standards, will ensure powered-wheelchair users have a right to live in the world.