In 1963, the United States Supreme Court ruled in Gideon v. Wainwright, 372 U.S. 335, that the Constitution required the appointment of an attorney to represent any indigent person charged with a felony level offense. As the Court explained, “In our adversary system of criminal justice, any person hauled into court, who is too poor to hire a lawyer, cannot be assured a fair trial unless counsel is provided for him. This seems to us to be an obvious truth. Governments, both state and federal, quite properly spend vast sums of money to establish machinery to try defendants accused of crimes. . . . That government hires lawyers to prosecute and defendants who have the money hire lawyers to defend are the strongest indications of the widespread belief that lawyers in criminal courts are necessities, not luxuries” (372 U.S. at 344).
The Gideon case, while a landmark, merely extended the reasoning of Powell v. Alabama, 287 U.S. 45 (1932), which had earlier ruled that the Constitution required legal counsel be appointed or otherwise provided for indigents accused in capital cases. Later cases such as In re Gault, 387 U.S. 1 (1967), Argersinger v. Hamlin, 407 U.S. 24 (1972), and Ake v. Oklahoma 470 U.S. 68 (1985) continued to extend the right to counsel and provide additional protections for indigents accused in criminal matters. Today, there is little question that indigents accused of criminal offenses that carry a possible punishment of confinement are entitled to an attorney and the other material requisites for mounting a defense to those charges. What is questionable, however, is whether the current system of delivering legal services in Texas to indigent defendants fosters - - or even permits-- effective representation. Fundamentally, the right to have legal counsel is hollow unless it is effective legal counsel.
Households save more in fast growing economies. The respective experiences of the East Asian countries, such as Japan in the 1970s and Korea and Taiwan in the 1980s, attest to this empirical regularity. In the last decade, rising saving in the BRIC countries provides further evidence. However, these observations are difficult to reconcile with the representative agent model, since forward looking consumers with standard preference should save less in a high growth environment as they anticipate a higher level of earnings in the future relative to their present incomes (e.g., Tobin, 1967; Carroll and Summers, 1991). Although income growth can lead to increased saving in the life cycle model (e.g., Modigliani, 1970) or in models with habit formation (e.g., Carroll, Overland and Weil, 2000), the quantitative effect has shown to be small (e.g., Paxson, 1996). This is the household saving puzzle that remains unresolved .
Behind the rise in average saving, there is a second stylized fact regarding life cycle saving profiles. When Taiwan experienced rapid income growth in the period 1976-1990, the saving rates of young households were systematically higher than that of the old households (Deaton and Paxson, 1994). This empirical regularity is also observed in China. From 1992 to 2007, the average saving rate of young households with their heads under age 40 increased by about 11 percentage points (see Figure 3B). The high saving of the young in these two fast growing economies contrasts sharply with the typical hump shaped or relatively flat age saving pro files in developed economies. If growth raises the earnings of all workers, why don't young households consume more with higher future income?
The social welfare created by insurance is unquestionable. Insurers can pool and diversify large idiosyncratic risks that have potentially catastrophic consequences for individuals and businesses. In competitive markets, insurance is priced on an actuarial basis, leaving tremendous utility gains to the previously exposed individuals and businesses.
