Saturday February 17, 2007

WHAT THEY BELIEVE AND HOW THEY BEHAVE. By following a long (maybe it just seemed long) stream of posts by Professor Bainbridge -- originating in a discussion of Aflac's decision to let shareholders vote on executive compensation -- I learn that Bainbridge believes that

[a]nalysis must begin with the basic principle that shareholders do not own the corporation. Instead, they are merely one of many corporate constituencies bound together by a complex web of explicit and implicit contracts. As such, the normative claims associated with ownership and private property are inapt in the corporate context. (This is known as the nexus of contracts model of the corporation.)

...shareholder voting is not an integral part of the corporate decision-making apparatus.

It struck me as I read this that, while Bainbridge's conclusion may be perfectly supportable in contract law, it suggests that the people who put down their nickels, figuratively speaking, shouldn't have much say in what is done with the fruits of their investment. This would seem counterintuitive for a conservative author -- aren't they always complaining that Big Gummint is squandering our investments (that is, our tax money), and calling for greater accountability to the People?

But things became clearer as I read further:

The board's primacy has a compelling economic justification. The separation of ownership and control mandated by corporate law is a highly efficient solution to the decision-making problems faced by large corporations. Because collective decision-making is impracticable in such firms, they are characterized by authority-based decision-making structures in which a central agency (the board) is empowered to make decisions binding on the firm as a whole.

And then it hit me: for conservatives, to paraphrase Vince Lombardi, money isn't everything, it's the only thing. They strongly identify with corporations, and therefore endorse whatever hauls in the most money for them and their leaders -- populism be damned. Government isn't nearly so important to them -- not a lot of profit to be seen there -- except as the object of a hostile takeover, after which it can be plundered and sold off for parts, toward which end a little pretense at populism is acceptable (See Revolution, Republican).

They're pretty obvious when they're propagandizing, but their true nature is never more clear than when they talk about the thing(s) they love.

UPDATE. In comments Kia is inspired to expound on a language native to the Ivory Tower called Weaselese: "[Bainbridge is] talking about corporate law, but he's using the legal terminology with surprising vagueness considering that he's talking radically about these very technical matters. That is, his legal phrasings are more like jargon; they don't actually bring any evidence or persuasive argument with them, just reassuring noise." And I thought I didn't speak a second language! You can enjoy more of Kia's brilliance at Gall and Gumption -- if you lose the address, you can always find it on my blogroll.