ProfessorBainbridge.com

Schramsberg Blanc de Noirs Late Disgorged (California) 1990

A tasty blanc de noirs sparkling wine predominately fr m pinot noir. Served it with the good wife's delicious veal fricassee, for which it made a fabulous match. It retained enough pinot noir stuffing to stand up to the meat, while the bubbles scrubbed the cream sauce off the palate.

A lovely golden color, with a hint of salmon, but not a rose (let alone a red). Exactly what you want from a blanc de noirs -- a white wine from red grapes. Tiny bubbles. On both the nose and the palate, the wine's age has caused the fruit to subside while the long lees aging typical of a late disgorged sparkling wine has accentuated the yeast autolysis flavors. Creamy texture, with soft bubbles, but good acidity and a touch of sweetness. Buttered toast, baked apples, roasted almonds, hazelnuts, creme brulee, orange blossoms, and a hint of indeterminate citrus. It is the texture that is the dominant sensory impression, however. Scrubbing bubbles in cream is the only way to describe it, but hardly does it justice. The entry is all about creaminess, while the finish provides the scrubbing effect. Very impressive. Grade: A

Kaizen as human resources tool

Business Week offers up an interesting article on Toyota's Kaizen (continuous improvement) process. (Link via Business Pundit.)

[Toyota] executives created the doctrine of kaizen, or continuous improvement. "They find a hole, and they plug it," says auto-industry consultant Maryann Keller. "They methodically study problems, and they solve them."

While kaizening works well as an engineering process, it's less clear that it makes an effective human resources tool, at least in the US. I wrote about kaizening, TQM, and other types of employee involvement in in my article Privately Ordered Participatory Management: An Organizational Failures Analysis, in which I quoted a worker at NUMMI (the Toyota-GM joint venture), who said:“Kaizening is supposed to be creative, but I mean how many times can you sit there and Kaizen a job after you’ve done it for four and one-half years? ... [J]ust keep me in a job and I’ll do it the way you want me to do it.” This worker seemingly would prefer a more structured environment.

Studies of formalization—the creation of written rules, procedures, and instructions—suggest that it reduces role conflicts and ambiguity, which increases work satisfaction and reduces feelings of alienation and stress. Kaizening and other forms of employee involvement can trigger role stress because many employees lack the quasi-management skills—agenda building, conflict management, and problem solving—required for successful employee involvement. Alienation can result from the greater workload and negative changes in peer group relationships experienced by some participants in employee involvement. Not all employees respond well to formalization, of course. Many prefer a less structured and less hierarchical workplace.

A good manager manages to his/her people, not to the latest management fad. Understanding your workers' tastes is the essential first step in making decisions about how workplaces are structured. All too many managers, however, manage to the latest fad rather than managing to the preferences of their people.

Qupe Los Olivos Cuvee (Santa Ynez Valley) 2000

A Rhone Ranger blend of 55% syrah, 27% mourvedre, 18% grenache. A deep blue-ish/purple that is almost black. Strong nose of candied fruits, smoke, white pepper, and violets. On the palate, a tasty mix of plums, cherries, vanilla, with a gamy undertone. Not a wine for the cellar, it is drinking quite nicely right now. Grade: B

Implications of the expectations effect for behavioral economics

The WSJ (sub. req'd) reports today on research into the so-called expectations effect:

British philosopher Bertrand Russell was only half joking when he described the powerful effect that the nationality of a scientist can have on lab rats. "Animals studied by Americans rush about frantically, with an incredible display of hustle and pep, and at last achieve the desired result by chance," he wrote in 1927. "Animals observed by Germans sit still and think, and at last evolve the solution out of their inner consciousness."

Seventy-six years on, scientists have documented the power of expectations, not only of lab researchers but also of teachers, athletic coaches, judges and work supervisors.

"Expectation becomes a self-fulfilling prophecy," says Robert Rosenthal, professor of psychology at the University of California, Riverside. "When teachers have been led to expect better intellectual performance from their students, they tend to get it. When coaches are led to expect better athletic performance from their athletes, they tend to get it. When behavioral researchers are led to expect a certain response from their research subjects, they tend to get it." [Ed.: Emphasis supplied.]

Expectation effects, also known as the Pygmalion effect, have been documented time and again (479 studies have found that teachers' expectations affect how students do, for instance).

The highlighted sentence is what caught my eye. Much recent legal scholarship has relied on the burgeoning school of behavioral economics. In turn, much behavioral economics research is based on psychology experiments using university students.

A longstanding critique of behavioral economics claims that many of these experimental situations are highly artificial, which raises doubts as to whether the results can generalized from the lab setting to real markets. The behavior of undergraduates swapping coffee mugs, for example, probably doesn’t tell us very much about the behavior of institutional investors buying IPO stocks in the primary capital market.

In contrast, the expectation effect suggests an even more powerful -- and fundamental -- critique of behavioral economics. If the experimental model is not well-designed to eliminate covert communication by the researcher, it seems, the researcher's expectations may be what is driving the result rather than any real cognitive bias on the part of the subjects. Consider the Journal's description of one experiment involving lab rats:

In one set of studies, 12 experimenters were each given five rats. Six experimenters were told that their rats were of a genetic strain that learned like long-tailed geniuses; the other six were told that their rats were dolts. The experimenters then spent five days training their rats to run a maze. From the first day, the rats identified as bright ran the maze better -- and kept getting better.

You can guess the punch line: all the rats belonged to the same strain. They differed only in the experimenters' expectations for them. In this case, the covert communication probably came from the way experimenters with "smart" rats acted: They felt more relaxed and enthusiastic as they worked with the rats, talked to them less (fewer outbursts of "you stupid rat!") and handled them more.

The effect is a very significant one:

The size of the expectation effect varies, but is always statistically significant, and sometimes big. For teachers, high expectations can raise student performance 30%. For rats, they can improve maze learning 65%.

What are we to make of all this? I don't think we should throw the baby out with the bath water. Behavioral economics is an important development every law and economics scholar should be prepared to grapple with. On the other hand, it is another reminder that behavioral economics cannot be used glibly. In the legal literature, one increasingly sees advocates of government intervention using behavioral economics to tell a variety of market failure stories. They jump glibly from positing the status quo bias, citing the coffee mug experiments, for example, to the conclusion that the government needs to shake up the status quo, without demonstrating that the bias is truly valid in the specific setting at hand. The expectation effect teaches that such a demonstration may prove even harder than I suspected. Interestingly, the Journal reports that a recognition of the power of the expectations effect is the reason studies of new therapies are done on a "double-blind" basis, so that not even the investigators know which patients received the active compound and which a dummy pill. Perhaps we should only trust those behavioral economic studies that mimic the double blind methodology.

Crooked Timber on Janice Rogers Brown

Kieran Healy at Crooked Timber is yet another left-liberal blogger taking Justice Janice Rogers Brown to task for the speech she gave in April 2000 to the University of Chicago law school Federalist Society chapter. Once again, my take is that Justice Brown offers up a lot of red meat for her audience of conservative/libertarian law students, but that nothing she says is so far out of the mainstream of American legal and political thought as to be disqualifying. Kieran's post quotes selections from Brown's speech followed by commentary. In my post below, I've excerpted the meat of his post and interspersed my own commentary. Justice Brown's comments are, appropriately, in brown. Kieran's are in red. Mine are in the usual attractive black.

[T]he speech is a heady and unstable mix of libertarian obiter dicta, Randian bromides, culture-war cliches and, um, Procol Harum lyrics. No, really.

As I've already conceded, Justice Brown served up a lot of red meat in this speech. But she was speaking to a chapter of the conservative/libertarian Federalist Society. Is it surprising that she cut loose a bit for that audience? In any event, it is hardly unusual for judges to serve up red meat -- written or spoken-- to an audience. The late US Supreme Justice William O. Douglas once wrote: "We must realize that today’s Establishment is the new George III. Whether it will continue to adhere to his tactics, we do not know. If it does, the redress, honored in tradition, is also revolution." Yikes! Or Judge Harry Pregerson's confirmation hearing testimony that he would follow his conscience rather than the law when the two conflicted? Or, for that matter, Pregerson's justly controversial prediction that the 9th Circuit would reverse his ruling in the California recall case? ... Oh, you get the point. Was it prudent for Justice Brown to use such colorful language? Perhaps not. Yet, as Justice Douglas also once said: "Since when have we Americans been expected to bow submissively to authority and speak with awe and reverence to those who represent us?" In any event, would Brown's critics prefer that ambitious young conservative lawyers plan their careers around the prospect of being a stealth canidate and, therefore, keep their mouths shut until they get on the bench (at which point, with life tenure, they can really cut loose)?

The whole thing is held together by the unbreakable bonds of conservative martyrdom. Speaking a few months before conservatives might reasonably have been said to control of all three branches of government, Brown says,

There are so few true conservatives left in America that we probably should be included on the endangered species list … But they need not banish us to the gulag.

It all depends on how you define conservative, I suppose. The folks at places like The Mises Blog probably think they're all alone in the world, and they're pretty much right (thank goodness). In the law school context, as I've argued before, we are badly outnumbered. On balance, however, as Brian Anderson's now famous column explained, "three huge changes in communications have injected conservative ideas right into the heart of [the media] debate." If your definition of conservative is broad enough to encompass the family values types, the fiscal conservatives, the South Park Republicans, and the Republic Party Reptiles, there are a whole bunch of us with pretty bid soapboxes.

Lucky for you, the liberals spared you … this time. And why?

We are not much of a threat, lacking even a coherent language in which to state our premise.

Sadly, Brown’s speech does on to confirm this claim. We are living, she claims, in a period of “cultural disintegration” where “words are ceasing to have any meaning” and “The question is: how do you feel.”

Justice Brown's point, I tihnk, is that we live in an era of Xtreme Politics in which civic discourse is badly frayed. Indeed, civic discourse basically has been replaced by the depraved morons of reality tv.

What is to blame for this? The unfettered rise of market capitalism, with all the superficiality and commodified meaninglessness it brings, maybe? No, silly, it’s the fault of “the sheer tenacity of the collectivist impulse — whether you call it socialism or communism or altruism,” in conjunction with human nature:

In fact, it now appears that human nature is so constituted that, as in the days of empire all roads led to Rome; in the heyday of liberal democracy, all roads lead to slavery. And we no longer find slavery abhorrent. We embrace it. We demand more. Big government is not just the opiate of the masses. It is the opiate.

Granted, the United States still stands sixth in the world on the Economic Freedom Index. On measures such as fiscal burden and government intervention, however, the US is not as close to the top (albeit still relatively free). Moreover, we live in an era in which even the conservative party has become the party of big government conservatism. Contrary to the claims of GOP tax-cutters, the beast is not starving. To the contrary, studies show that Leviathan is growing faster than ever. In context, moreover, this passage of Justice Brown's speech really is just a rather colorful way of making the same claims advanced by public choice economics. Public choice’s basic tenet is that well-defined, politically influential interest groups use their influence with lawmakers to obtain legal rules that benefit themselves at the expense of larger, more diffuse groups. In other words, legislative decisions are not driven by distributive justice, but by interest group pressures (such as those of big corporations, famrers, unions, and the AARP). After all, doesn't the left compalin about corporate welfare all the time? Corporate welfare is a symptom of big government.

Although human nature makes us rush toward the dead hand of government and enslave ourselves to socialism, we learn a few paragraphs later that it also is the main reason capitalism must triumph:

The founders viewed private property as “the guardian of every other right.” But, “by 1890 we find Alfred Marshall, the teacher of John Maynard Keynes making the astounding claim that the need for private property reaches no deeper than the qualities of human nature.” A hundred years later came Milton Friedman’s laconic reply: ” ‘I would say that goes pretty deep.’” As John McGinnis persuasively argues: “There is simply a mismatch between collectivism on any large and enduring scale and our evolved nature.

Up to this point, I think Kieran has been pretty fair about not taking Justice Brown out of context. Here, however, I think he does so. (Or, at least, misses her point.) Read in context, Justice Brown is not claiming that capitalism will inevitably triumph over collectivism. Instead, she is making the different claim that collectivism is inconsistent with human nature. She does not, however, deny that collectivism can be forced down upon society. Indeed, I think her point is precisely that because collectivism is inconsistent with human nature it can only be established by force. Anyone who has read Aleksandr Solzhenitsyn's The Gulag Archipelago or Anne Applebaum's Gulag: A History would find it hard to dispute that point.

I like the idea that the absolute worst one can say about that crypto-socialist Alfred Marshall was that he was the teacher of that noted revolutionary communist, John Maynard Keynes.

Whatever.

On we steam:

Ayn Rand similarly attributes the collectivist impulse to what she calls the “tribal view of man.”

Oh god. Ayn Rand. Fourteen year olds of the world unite! The car keys shall be yours by sheer force of will! Objectivism requires it!

Actually, I agree with him here. I can't stand Ayn Rand and Objectivism gives me a headache. But if an Ayn Rand acolyte can be Chairman of the Federal Reserve, I don't see why a fan can't be a federal judge.

Democracy and capitalism seem to have triumphed.

Indeed they have, and surely nowhere more so than in the United States. This raises problems for the theses put forward above. What to do? Who to blame?

But, appearances can be deceiving. … Marxism has been “shamed and ridiculed everywhere except American universities” but only after totalitarian systems “reached the limits of their wickedness.”

When in doubt, blame the professors. This does not address the fact that capitalism and democracy seem to have triumphed and we are living with the consequences, but Brown is getting to that. It turns out that capitalism did not triumph after all:

As noted above, I don't read Brown's speech as claiming that capitalism triumphed. As also noted above, one can make a plausible argument that we in an era of large government nanny statism. Or is Walter Olson just wasting his time?

Of course … you might think none of that can happen here. I have news for you. It already has. The revolution is over. What started in the 1920’s; became manifest in 1937; was consolidated in the 1960’s; is now either building to a crescendo or getting ready to end with a whimper.

Far from being the most advanced form of market capitalist democracy, the United States is in fact a haven of something else. Could it be … Socialism?

At this moment, it seems likely leviathan will continue to lumber along, picking up ballast and momentum, crushing everything in its path … The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible.

It seems the actually-existing socialism of the U.S., in contrast to actually existing socialism everywhere else, has managed to produce not a world that’s drab at best and totalitarian at worst, but rather an end-times party of positively dionysian proportions. How did they manage it? If this is socialism the Russians are going to want it back. And what, in particular, is to blame for this? The answer is, of course, The New Deal. You might have thought it was a set of government policies that, along with the Second World War, helped save captialism from itself. In fact, it was the hellspawn of Robespierre and Lenin.[Ed.: In the interests of speeding things up, I've trimmed the section on the Elightenment.]

The point I think Justice Brown was trying to make here is that the nanny state is a poor substitute, at best, for the virtue inculcating power of faith and voluntary community. We may fear the faceless bureaucrat, but he does not inspire us to virtue. Conduct that rises above the lowest common moral denominator thus cannot be created by state action. But while the state cannot make its citizens virtuous, it can destroy the intermediary institutions that do inculcate virtue: “Communities can be destroyed from without; but they cannot be created from without; they must be built from within.” Richard A. Epstein, Simple Rules for a Complex World 324 (1995). Conservatives therefore argue that the rich set of mediating institutions famously praised by Tocqueville is caught, like the Romans at Cannae, between the nanny state on one side and judicial hijacking of the state’s monopoly on the use of coercive force to advance a hyper-legalistic cult of the autonomous individual on the other. We therefore reject both prongs of modern liberalism in favor of achieving communitarian goals through private ordering. Our pessimism about human nature thus does not lead us to statism, but to promoting intermediating institutions that raise up citizens who can regulate themselves from within according to a shared language of good and evil, to paraphrase George Weigel.

All this is bad enough. However:

But there are even deeper movements afoot. … We find ourselves … in a situation that is hopeless but not yet desperate. The arcs of history, culture, philosophy, and science all seem to be converging on this temporal instant. … Hold on even while we accept the darkness. We know not what miracles may happen; what heroic possibilities exist. We may be only moments away from a new dawn.

I once read an essay by science fiction writer Spider Robinson giving advice on speeckmaking: "always play them out with a song." That's all Justice Brown is doing here.

Oh my. So there you have it. A clear outline of why free-market capitalism is inevitable in the light of human nature yet has been displaced in the United States because of the collectivist impulse ingrained in human nature and the crypto-revolution of The New Dealers which created the socialist leviathan of the American state that now crushes everything with its dead hand while allowing people to do what they like, engaging in mindless decadence with no respect tradition, custom or the standards of truth and rationality, thanks in large part to the Aid to Families with Dependent Children program and its gruesome offspring TANF, those bastard children of Enlightenment, the Terror, October 1917 and The New Deal (again), but do not fear because there is yet a chance that we can be propelled in millenarian frenzy into a world where free markets rule an economy comprised of Objectivist agents who nevertheless are imbued with the Feudal virtues of respect for the moral authority of their betters, committed to traditional pre-Enlightenment values and immune to the social and cultural transformations that tend to be associated with capitalism. Then we shall be happy.

Res ipsa loquitur.

Why institutional investors are not the saviors of corporate governance

At the CorporateCounsel.Net Blog, Broc writes:

As Pat McGurn of ISS noted in our recent "Wildest Proxy Season" webcast, mutual funds often are the "swing" vote in a close vote. In addition, the SEC's recent proposal on shareholder access will undoubtably make the votes cast by mutual funds even more important. That's one reason why the governance failures at funds are so scary. The reforms that companies have undergone over the past two years pale next to the ones necessary to fix governance in the mutual fund industry.

If I may be allowed to toot my own horn, I saw this one coming. In my article, The Politics of Corporate Governance, 18 Harvard Journal of Law & Public Policy 671 (1995), I wrote:

Dr. Seuss tells a marvelous tale about the town of Hawtch-Hawtch, whose principal industry is a bee. The Bee-Watcher’s job is to watch the bee, because “[a] bee that is watched will work harder, you see.” Unfortunately, the bee didn’t work very hard. The townspeople concluded that this was the fault of the Bee Watcher, so they decided to hire a Bee-Watcher-Watcher. But the latter also failed. So a Watch-Watcher-Watcher was hired. Things progressed as one might expect, with the upshot being that soon all of Hawtch-Hawtch was out in the field watching one another. ...

[The] problem with reforms designed to enhance institutional investor monitoring of public corporation management should now be readily apparent: it amounts to hiring a Bee-Watcher-Watcher. The vast majority of large institutional investors manage the pooled savings of small individual investors. From a governance perspective, there is little to distinguish such institutions from corporations. The holders of investment company shares, for example, have no more control over the election of company trustees than they do over the election of corporate directors. Nor do the holders of such shares have any greater access to information about their holdings, or ability to monitor those who manage their holdings, than do corporate shareholders. Indeed, until quite recently, most investment companies would not even disclose the name and background of the individual who managed the fund. Worse yet, although an individual investor can always abide by the Wall Street Rule with respect to corporate stock, he cannot do so with respect to such investments as an involuntary, contributory pension plan. In sum, if separation of ownership and control is a problem in search of a solution, encouraging large financial intermediaries to evolve and to take an active corporate governance role simply moves the problem back a step: it does not solve it.

Fun Funds

Since I've been thinking about further diverisfying my investments, I've been doing some mutual fund research. In the course of that research, I have stumbled upon two very interesting, albeit diametrically opposed funds:

1. The Ave Maria Mutual Fund Family, whose website states:

   The Ave Maria Mutual Funds are designed specifically for morally responsible investors who are looking for financially sound investments in companies that do not violate the core teachings of the Catholic Church.

   Their latest shareholder report states:

   For the quarter ended June 30, 2003, the Fund was up 19.6% vs. 15.4% for the S&P 500. For the first six months of 2003, Ave Maria Catholic Values Fund was up 12.1% vs. 11.7% for the S&P 500.

2. The Vice Fund, whose prospectus unabashedly proclaims:

   We select securities of companies using a two-part test: (1) First, we look for companies that derive a significant portion of their revenues from products often considered socially irresponsible, and (2) Then we select companies from this group based on their financial soundness and potential for growth. For the first part of the test, we select companies that have significant involvement in, or derive a substantial portion of their revenues from, industries such as tobacco, gambling, defense/weapons and liquor. By “significant” or “substantial portion,” we mean a minimum of approximately 25% of the company’s revenues. It is our philosophy that although often considered politically incorrect, these and similar industries and products will always be supported and/or consumed and that companies in these industries, if managed correctly, will continue to experience significant capital appreciation during good and bad markets. We consider these industries to be nearly “recession-proof.”

   Their fund is up almost 32% in the last year (returns here).

Being the Republican Party Reptile Catholic that I am, I'm thinking about investing in both.

Prof. Froomkin on Janice Rogers Brown

Prof. Michael Froomkin of the always interesting Discourse.Net blog has concluded that California supreme court Justice Janice Rigers Brown "is so far outside of the mainstream that [she] really shouldn’t be a federal judge." As evidence, he offers an extended selection of excerpts from a speech by Justice Brown. What we have here is not a failure to communicate so much as an eye of the beholder problem. What Prof. Froomkin apparently sees as disqualifying, I see as colorful polemics, at worst. Below I offer Prof. Froomkin's chosen excerpts with commentary, which will probably ensure my disqualification from the federal bench or, perhaps a more likely possibility (albeit still slim), the SEC: The excerpts from Justice Brown are in block quotes. My commentary follows each passage.

There are so few true conservatives left in America that we probably should be included on the endangered species list.

Okay, I'll concede this one. I'm tired of this meme too (at least outside the law school faculty hiring context).

Writing 50 years ago, F.A. Hayek warned us that a centrally planned economy is “The Road to Serfdom.” He was right, of course; but the intervening years have shown us that there are many other roads to serfdom. In fact, it now appears that human nature is so constituted that, as in the days of empire all roads led to Rome; in the heyday of liberal democracy, all roads lead to slavery. And we no longer find slavery abhorrent. We embrace it. We demand more. Big government is not just the opiate of the masses. It is the opiate. The drug of choice for multinational corporations and single moms; for regulated industries and rugged Midwestern farmers and militant senior citizens.

I hope Professor Froomkin does not mean to suggest that quoting Hayek is disqualifying! As for the rest of this passage, isn't it just a rather colorful way of stating the basic tenets of public choice theory? Public choice’s basic tenet is that well-defined, politically influential interest groups use their influence with lawmakers to obtain legal rules that benefit themselves at the expense of larger, more diffuse groups. In other words, legislative decisions are not driven by distributive justice, but by interest group pressures. Like big corporations, the farming interest, and the AARP. Justice Brown overstates the case in claiming that all roads lead to slavery, but most roads these days do seem to lead to Leviathan.

It is my thesis today that the sheer tenacity of the collectivist impulse — whether you call it socialism or communism or altruism — has changed not only the meaning of our words, but the meaning of the Constitution, and the character of our people.

So what?

Ayn Rand similarly attributes the collectivist impulse to what she calls the “tribal view of man.” She notes, “[t]he American philosophy of the Rights of Man was never fully grasped by European intellectuals. Europe’s predominant idea of emancipation consisted of changing the concept of man as a slave to the absolute state embodied by the king, to the concept of man as the slave of the absolute state as embodied by ‘the people’ — i.e., switching from slavery to a tribal chieftain into slavery to the tribe.”

Okay, I'll give him this one too. I can't stand Ayn Rand.

Democracy and capitalism seem to have triumphed. But, appearances can be deceiving. Instead of celebrating capitalism’s virtues, we offer it grudging acceptance, contemptuous tolerance but only for its capacity to feed the insatiable maw of socialism. We do not conclude that socialism suffers from a fundamental and profound flaw. We conclude instead that its ends are worthy of any sacrifice — including our freedom. Revel notes that Marxism has been “shamed and ridiculed everywhere except American universities” but only after totalitarian systems “reached the limits of their wickedness.”

I have demonstrated elsewhere that even an ardent foe of communism like John Paul II retains something of a socializing/statist propensity. We have not yet reached the "end of history." The battle with collectivism rages on, with the foe this time taking the forms of anti-globalization and ecoterrorism. BTW, Joe Carter's blog had a nice point about the alleged "triumph" of capitalism: "I watched as a WTO protestor threw a newsrack through the window of Niketown. It was already depressing that the greatest injustice he could find to lash out against was being perpetuated by a shoe company. But then I noticed something odd about his feet. He was wearing a pair of Nikes." The irony is breathtaking. As for Justice Brown's latter point, I've never met a Marxist who didn't have a university job. But, then again, I don't get out much. (On the other hand, if some of Justice Brown's opponents knew more conservatives, they might realize that her views are not that far from the middle of American political culture as a whole. After all, not everybody lives in red counties of blue states.)

“Socialism concentrated all the wealth in the hands of an oligarchy in the name of social justice, reduced peoples to misery in the name of shar[ed] resources, to ignorance in the name of science. It created the modern world’s most inegalitarian societies in the name of equality, the most vast network of concentration camps ever built [for] the defense of liberty.”

Anyone who has read Aleksandr Solzhenitsyn's The Gulag Archipelago or Anne Applebaum's Gulag: A History would find this statement awkwardly phrased but hard to contest on the substantive merits.

Revel warns: “The totalitarian mind can reappear in some new and unexpected and seemingly innocuous and indeed virtuous form. [¶]… [I]t … will [probably] put itself forward under the cover of a generous doctrine, humanitarian, inspired by a concern for giving the disadvantaged their fair share, against corruption, and pollution, and ‘exclusion.’”

Richard Epstein once observed that socialists no longer advocate direct government ownership of production. Instead, they operate on two different levels: “At a personal level, [modern socialism] speaks to the alienation of the individual, stressing the need for caring and sharing and the politics of meaning. At a regulatory level, it seeks to identify specific sectors in which there is a market failure and then to subject them to various forms of government regulation.” Richard A. Epstein, Simple Rules for a Complex World 23 (1995). Of course, anybody who watched Senator Biden waving Takings (upside down) at Clarence Thomas during his confirmation hearings knows that Epstein is disqualified.

Of course, given the vision of the American Revolution just outlined, you might think none of that can happen here. I have news for you. It already has. The revolution is over. What started in the 1920’s; became manifest in 1937; was consolidated in the 1960’s; is now either building to a crescendo or getting ready to end with a whimper.

If this is disqualifying, I take it I disqualified myself when I wrote in the Cornell Law Review that: "[I]t can be argued that the decline in social trust began when the rich set of mediating institutions famously praised by Tocqueville was caught, like the Romans at Cannae, between the nanny state on one side and judicial hijacking of the state’s monopoly on the use of coercive force to advance a hyper-legalistic cult of the autonomous individual on the other." If so, so be it. I like law teaching too much to quit anyway. UPDATE: On a substantive level, even if one accepts that the New Deal was a "constitutional moment," nobody ever said the Constitution --written or "momentary" (?) -- was immune to amendment.

Lionel Tiger, in a provocative new book called The Decline of Males, posits a brilliant and disturbing new paradigm. He notes we used to think of a family as a man, a woman, and a child. Now, a remarkable new family pattern has emerged which he labels “bureaugamy.” A new trinity: a woman, a child, and a bureaucrat.” Professor Tiger contends that most, if not all, of the gender gap that elected Bill Clinton to a second term in 1996 is explained by this phenomenon. According to Tiger, women moved in overwhelming numbers to the Democratic party as the party most likely to implement policies and programs which will support these new reproductive strategies.

What is disqualifying about observing that pro-choice and single women tend to vote Democrat? Even New Democrats acknowledge the existence of a "marriage gap." Or is it disqualifying to suggest that some family structures are preferable to others?

We find ourselves … in a situation that is hopeless but not yet desperate. The arcs of history, culture, philosophy, and science all seem to be converging on this temporal instant. Familiar arrangements are coming apart; valuable things are torn from our hands, snatched away by the decompression of our fragile ark of culture. But, it is too soon to despair. The collapse of the old system may be the crucible of a new vision. We must get a grip on what we can and hold on. Hold on with all the energy and imagination and ferocity we possess. Hold on even while we accept the darkness. We know not what miracles may happen; what heroic possibilities exist. We may be only moments away from a new dawn.

William F. Buckley said the task of a conservative is to "stand athwart history, yelling Stop, at a time when no one is inclined to do so, or to have much patience with those who do." Is it disqualifying to hope someone might listen, which seems to be what Justice Brown hopes? In sum, I am prepared to be persuaded that there is a case to be made against Justice Brown, but this didn't do it for me.^* Granted, Justice Brown is serving up some red meat here, but to say this sort of thing is disqualifying is to disqualify virtually the entire Federalist Society. ^* Well, okay, you caught me...I'm really not prepared to be persuaded, but it sounded good. Didn't it?

Omnicare v. NCS Healthcare: What did the majority expect the NCS board to do?

In Omnicare, by a 3-2 vote, the Delaware supreme court struck down the NCS-Genesis merger agreement. The majority acknowledged that “[a]ny board has authority to give [a bidder] reasonable structural and economic defenses, incentives, and fair compensation if the transaction is not completed.” In addition, the majority acknowledged that the controlling shareholders “had an absolute right to sell or exchange their shares with a third party at any price.” Yet, the majority nevertheless concluded that NCS’ board “was required to contract for an effective fiduciary out to exercise its continuing fiduciary responsibilities to the minority stockholders.” The majority also stated that “[e]ffective representation of the financial interests of the minority shareholders imposed upon the [NCS board] an affirmative responsibility to protect those minority shareholders’ interests.” What could the NCS board have done, however, if Outcalt and Shaw -- the controlling shareholders -- insisted on supporting Omnicare?

The majority explained neither what it meant by “an effective fiduciary out,” what the NCS board should have done if Genesis refused to agree to a fiduciary out, nor what it expected the NCS board to do if the controlling shareholders wanted to go forward with the Genesis deal. Would the NCS board be obliged, for example, to issue stock to other investors so as to dilute the controlling shareholders’ voting power?

Presumably not, as such a requirement would be contrary to well-established Delaware precedent. In Mendel v. Carroll, 651 A.2d 297 (Del. Ch. 1994), for example, Chancellor Allen explained that: “The board’s fiduciary obligation to the corporation and its shareholders, in this setting, requires it to be a protective guardian of the rightful interest of the public shareholders. But while that obligation may authorize the board to take extraordinary steps to protect the minority from plain overreaching, it does not authorize the board to deploy corporate power against the majority stockholders, in the absence of a threatened serious breach of fiduciary duty by the controlling stock.” Id. at 306.

Instead, the Omnicare majority most likely contemplated a fiduciary out pursuant to which the NCS board could refuse to hold a shareholder vote on the Genesis deal if a better deal came along. But why? Suppose the NCS board had insisted on such a fiduciary out. The board then declines to put the Genesis deal to a shareholder vote after Omnicare makes a higher bid. Instead, the board puts the Omnicare deal to a shareholder vote. What happens if the controlling shareholders then vote down the Omnicare deal? NCS would be left up the proverbial creek without the proverbial paddle. In sum, Omnicare is a most unsatisfying opinion that poses as many questions—if not more—than it answers.