ProfessorBainbridge.com

Citizens United and Shareholder Activism

In Citizens United v. Federal Election Commission,  No. 08–205,  Jan. 21, 2010, the Supreme Court's recent decision on campaign finance, the majority noted that:

Shareholder objections raised through the procedures of corporate democracy, see Bellotti, supra, at 794, and n. 34, can be more effective today because modern technology makes disclosures rapid and informative. A campaign finance system that pairs corporate independent expenditures with effective disclosure has not existed before today. . . .  With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.  Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are “‘in the pocket’ of so-called moneyed interests.” 540 U. S., at 259 (opinion of SCALIA, J.); see MCFL, supra, at 261.

Jay Brown observes that:

It is, in the end, a misguided proposition.  It assumes that with some kind of public disclosure of the payments, shareholders can put a stop to them.

Jay goes on to note that there are a number of obstacles to shareholder activism directed at campaign contributions. And he's quite right. But so what?

The Cost of Being an Early iPad Adopter

Megan McArdle reports that:

Remember the kerfuffle over the original iPhone? Apple charged luxe prices for the first few months, and then after it had wrung every possible dollar out of the early adopters, dropped the cost to capture more price-sensitive users. Many of those who had bought early reacted with the righteous fury of a wronged spouse.

This time around, they can't say they weren't warned: Apple has apparently already said that if sales of the iPad aren't brisk enough, it will drop the price. I expect it will have to, if the company is to have any hope of hitting the 1-5 million sales analysts are projecting in the first year. $500 is pretty steep for a netbook without a keyboard.

The question before us thus is simple: How much of a premium are you willing to pay to be an early adopter? Personally, I could live with 20%.

Obama's Rigged Invitation

Barack Obama's invitation for the GOP to sit down with him for a televised health care summit is an interesting political gambit, but I doubt whether it'll fly. As Megan McArdle observes:

Republicans are saying what you'd expect them to: we won't engage in sham negotiations. If you want us to come to the table, shelve this monstrous and unpopular plan and let's start over.

Democrats should recognize the tactic: they invented it. And used it successfully against Social Security reform in 2005. Sure, they wanted to do Social Security reform, they said. All Republicans had to do to bring them to the table was get rid of the central point of the reform: the private accounts. Astonishingly enough, they did not suffer at the polls, even though the president tried to stir up public discontent with their "obstructionism". The problem is, the public doesn't get mad at you for obstructing things the public doesn't like.

The GOP Congressional delegation would be idiots to agree to serve as human stage props for a White House-controlled event that inevitably will be rigged against them. Especially because Obama is still more charismatic, smarter, and a better debater than just about anybody on the GOP side. Wrong but sharp.

Update: I think Andrew Sullivan's got a valid point that "not showing up makes [the GOP] look totally obstructionist and makes Obama look more responsible and presidential." Maybe the political optics require the GOP to show up.

On the merits, however, it still seems clear to me that the summit is intended by the White House as a political trap. It won't be a meaningful negotiation, since the President is coming in with strong preconditions, as the White House's latest statement on the summit makes clear that:

The President is adamant that we seize this historic moment to pass meaningful health insurance reform legislation. ... What he will not do, however, is walk away from reform and the millions of American families and small business counting on it.

<Tongue in cheek> I'm tempted to insert a crack here about how the President is willing to negotiate with Ira and North Korea without preconditions, but that would be the sort of cheap debater's ploy with which the summit will be rife, so I'll pass. </Tongue in cheeck>

Unless the President is willing to terms and conditions that make the summit a level playing field in which both sides ideas will get fair representation and a fair opportunity for inclusion in the bill, the GOP should skip it.

BTW, McArdle also catches the NYT in a bit of an inconsistency when it comes to "obstruction." Amusing.

Clarkson for President?

The Sun reports that a Metro/Harris poll of UK voters found that "Top Gear presenter Jeremy Clarkson would make a better Prime Minister than Gordon Brown." He'd make a better President than Barack Obama or Sarah Palin, for that matter.

<JOKE>Of course, there's that annoying Constitutional requirement that the president be a "natural born citizen," but since we waived that for Obama, I say it's only fair to waive it for Clarkson. </JOKE>  

The Green Police Ad

I would love to know what Top Gear's Jeremy Clarkson thinks of Audi's Green Police ad.

After all, it was Clarkson who quipped that: "They’re not called Trots and Bolsheviks any more. They’re called environmentalists and health and safety officers. A single health and safety man can inflict more damage on business and industry than an army of Red Robboes."

Update: David Roberts observes that:

The thrill at the end, when they guy gets to accelerate away from the crowd, turns on satisfying the green police -- not rejecting or circumventing them, but satisfying their strict standards. The authority of the green police is taken for granted, never questioned.

Point well taken. Which means Clarkson likely will also have something to say about the fact that it's a German car maker who ran the ad. After all, it was Clarkson who came up with this ad for the Volkswagen Scirocco TDI:

The state of stakeholderism

Just finished reading a very interesting paper by Andrew R. Keay, Moving Towards Stakeholderism? Constituency Statutes, Enlightened Shareholder Value and All That: Much Ado About Little?

Abstract: While Anglo-American jurisdictions have seen shareholder primacy dominate as the theory which provides what the objective of the large public company is to be, there are indications in the past 20 years that the stakeholder theory, the other leading theory that addresses the objective of the company, has become increasingly popular in many Anglo-American jurisdictions, and there is some suggestion that this approach is developing support in academic and practitioner circles. A number of factors have been identified to support this view and are adverted to in the paper. This paper focuses on legal developments in Anglo-American jurisdictions (and particularly the US and UK) to assess whether there is a movement in these jurisdictions to more of a stakeholder approach as far as its corporate governance is concerned. To this end the paper examines so-called constituency statutes in the US and their impact, and the concept of enlightened shareholder value as it has been developed in the UK (under the Companies Act 2006), as well as referring briefly to developments in Canada and Australia. The paper concludes that the pieces of legislation examined in the paper only appear to provide greater stakeholder focus and they really add, from a strict legal viewpoint, little in a drive towards stakeholderism. This is due to a number of reasons but a major one is the lack of power in stakeholders to challenge directorial actions in the courts or in any other way.

Tom Smith on Paul Krugman

Don't be shy, Tom, tell us what you really think:

I regard him as a national treasure of sorts.  Nobody I can think of does a better job of exposing the sneering yet half-baked, the condescending yet ill-informed, the pedantic yet misguided, the professorial yet creepily unnerving, and the self-aggrandizing and deeply unappealing face of contemporary American progressivism than does the good Doktor Professor.

10 Things I Think I Think Super Bowl Eve Edition

1. The Colts are going to win tomorrow. (Update: As usual, my prognostication skills sucked.)
2. I base this prediction on having run the game in Madden 2010 ten times with the Colts winning 8.
3. I doubt whether Lucian Bebchuk owns Madden 2010, which probably explains a lot about our relative standing as corporate law professors.
4. Pierre Garcon will be the Super Bowl MVP.
5. I base this on nothing but a gut feeling.
6. Speaking of my gut: A dinner of steak, potatoes, and arugula salad with a good red wine, followed by a cigar and some Tawny Port is a wonderful way to end the day.
7. Chicago's transformation from the City of Broad Shoulders to the Nanny State makes me sad.
8. Andrew Sullivan's beard is going grey. So is my goatee. One of us is using Just for Men hair dye. One of us isn't.
9. My frustrated desire to be a successful standup comedian sometimes bites me in the ass, with yesterday's faculty meeting being a good example.
10. I've owned some great cars. The pre-emissions control Olds 88 with a 455 Rocket V8. The Cosworth Vega. The BMW M3 convertible. The Porsche 911. But I've never loved a car as much as my new Mercedes E550. The combination of technological bells and whistles, comfort, and power is just right. More later.

Comment Moderation

Megan McArdle is leery of moderating her comment section:

I exercise a pretty light hand on the comments section. That's a tough choice. I could probably have a more civil comments section if I were more willing to delete nasty comments and ban trolls.

On the other hand, I don't trust myself in the position of censor. That's why I'm pretty obsessed with a hard core version of the first amendment: I don't trust anyone as a censor. One will always find most outrageous those people who disagree with one's own pet notions. If I started deleting comments, the net effect would be to pull the comments section towards agreeing with my particular brand of libertarianish, market-loving philosophy. This is not, to my mind, the point of the comments section. So I delete comments only when they are obscene or intolerably nasty; I ban people only when they have a history of repeatedly derailing threads, defaming my family, or similarly doing things that would get them kicked out of any decent private home.

She goes on to make an extended plea for self-policed civility.

Her post prompts Ilya Somin, who calls it "excellent," to observe that:

I disagree slightly with Megan’s analogy between comment moderation and government censorship. The latter is far more dangerous than the former. Nonetheless, aggressive moderation is problematic for the reasons she describes. I also agree with Megan’s point about comments that attack motives, and would add that even if your opponents really do have bad intentions, that doesn’t prove their arguments are wrong, so it doesn’t really help make your case.

I could perhaps overcome the tendency to favor commenters who support my own views by adopting consistent bright line rules (e.g. — ban anyone who call anyone else an “idiot” or “unpatriotic”). But such rules have serious shortcomings of their own: they are insensitive to nuance and context, and can be cleverly circumvented once they become known (e.g. — using various euphemisms to substitute for “idiot”). A related problem is that I don’t want to devote my limited blogging time to careful analysis of comments to determine which ones deserve to be deleted, issued warnings, and so on. I think both my goals and those of the readers will be better served if I devote as much of my blogging time as possible to actually writing posts.

With all due deference, I can only say: poppycock.

My policy on comment moderation is based on the moment in the 1980 Presidential campaign when Ronald Reagan declared "I paid for this microphone."

This is not a public forum. I pay for it. So there are no rules. There is simply an arbitrary despotism in which freedom of speech depends mainly on how cranky I'm feeling at the moment. Granted, long time readers get more slack than newbies, but nobody has a "right" to be heard in this space any more than you would in my house. If you think that's censorship, you're wrong. It's just private property.

On being old

Our blog buddy James Joyner is complaining that at age "44, I’m under no illusions that I’m still a young man." Try being 51.

Behrens & Hitchcock Merlot (Napa Valley) 2002

Still an incredibly deep, inky purple, at age 8. Strong legs. Big nose, intense flavors. It's a far cry from your usual wimpy Merlot plonk that goes belly up at age 4.

 The flavor associations are all black: blackberry; black currant; black olive; black coffee.

Grade: A--

Louis Roederer Brut Rose (Champagne) NV

A lovely salmon color with very fine bubbles. Toast, rose water, honeysuckle, and Meyer lemon. Airy and elegant. Grade: B++