ProfessorBainbridge.com

Schramsberg Brut Rose (California) 2002

A lovely salmon color with very fine bubbles. Strong yeast and toast aromas dominate with an underpinning of fresh red berries. Bright red apple and berry flavors with a touch of grilled french bread. Yummy. Grade: A--

Italianized Paella with a Shortcut

• 1 lb. boneless and skinless chicken breasts, cut into bite-sized pieces (I used organic, free range chicken from Gelson’s)
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• 1 tablespoon extra virgin olive oil
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• ¼ teaspoon Old Bay seasoning
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• ¼ teaspoon Paul Prudhomme poultry seasoning
  
• 6 links Italian sausage, casings removed and cut into bite-sized pieces (I used 3 sweet and 3 hot Gelson's store brand links)
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• ½ tablespoon olive oil
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• ¼ cup diced onion
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• ¼ cup diced celery
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• salt
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• 3 cloves garlic, minced fine
  
• 2 ½ cups low fat, low sodium organic chicken broth
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• 2 ½ cups dry white wine (don’t use an oaky wine, opt for something fairly neutral like a generic California or Australian white)
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• 1 14-½ ounce can diced Italian tomatoes
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• ¼ teaspoon dried oregano
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• 2 packages Alessi Risotto Milanese
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• 1 lb. deveined and peeled medium shrimp

Combine chicken pieces, olive oil, and seasonings in a non-reactive bowl and set aside to marinate for a few minutes.

Saute Italian sausage chunks in a large nonstick skillet over medium-high heat until well-browned on all sides. Transfer to a paper towel lined cookie sheet to drain. Wipe skillet with paper towels. Add chicken and saute over medium-high heat until browned on all sides. Transfer to a paper towel lined cookie sheet to drain.

Heat a large paella pan or dutch oven over medium-low heat for a few minutes. Add olive oil and heat for 1 minute. Add onions and celery. Season with salt. Sweat vegetables until soft but not brown. Add garlic. Cook 1 minute.

Add chicken broth, wine, tomatoes (with juices), and oregano to pan. Raise heat to high and bring to a boil. Reduce heat to medium low and add Alessi risotto mix packages. Stir. Cover and simmer 10 minutes.

Add chicken pieces, sausage chunks, and shrimp to pan. Raise heat to high until the mixture returns to the boil. Lower heat to medium-low, cover pan, and allow to cook 8 more minutes or until rice is al dente and shrimp is cooked through.

Serve in large pasta bowls. Top with freshly ground Parmesan cheese and chopped fresh Italian parsley.

Making Charity Illegal

The GOP's rush to crack down on illegal immigration takes ever more vindictive turns. New legislation has been introduced in the House that would make illegal immigration a felony.

"This legislation aims to prevent illegal immigration and re-establish respect for our immigration laws," said Representative F. James Sensenbrenner Jr., Republican of Wisconsin, who introduced the legislation in the House.

"Those breaking the law will be held accountable," Mr. Sensenbrenner said, "whether they are smugglers cruelly trafficking in human beings, employers hiring illegal workers or alien gang members terrorizing communities." (Link)

Apparently that includes priests and pastors ministering to immigrants, as the US Conference of Catholic Bishops has pointed out:

...  the application of criminal penalties to individuals, including U.S. citizens, who assist aliens without legal status could jeopardize church programs which provide basic needs and life-saving assistance to these individuals. Current federal law does not require humanitarian groups to ascertain legal status of an individual prior to providing assistance. However, in our view, the provisions in Section 202 of the legislation would place parish, diocesan, and social service program staff at risk of criminal prosecution simply for performing their job. It also could apply to health care personnel or U.S. citizens who provide urgent or life-saving assistance to an undocumented individual.

Did the Good Samaritan check the immigration status of the "certain man was going down from Jerusalem to Jericho"? Should he spend five years in jail for not doing so? Are we so desperate to keep out Hispanics looking for a better life that we would criminalize humanitarianism?

Update: Steve Benen, who is guest-blogging over at Kevin Drum's place, nicely captures the rather absurd politics of the House bill:

Indeed, in a manner of speaking, this is a Republican "faith-based initiative" gone awry. For all the talk about empowering churches to create "armies of compassion," House Republicans have endorsed legislation that essentially tells ministries, "We want you to help those in need, but if one of the needy turns out to be in the country illegally, be prepared to go to jail."

DGCL Section 141(a) versus Precommitment Strategies

In an earlier post on Delaware Chancellor William Chandler's recent decision in Unisuper Ltd. v. News Corporation, I observed:

... as I explain in my book Corporation Law and Economics, corporate law generally ought to be enabling rather than mandatory in nature. Because director primacy is such a fundamental norm of corporate governance, however, limitations on the directors' power of fiat should be in the corporation's articles of incorporation (at least when one is dealing with a public corporation).

As I've thought about it, however, I decided that I was wrong to suggest that such limitations should be valid only if they're included in the articles of incorporation. The relevant statute is Delaware General Corporation Law section 141(a), which provides:

The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation. If any such provision is made in the certificate of incorporation, the powers and duties conferred or imposed upon the board of directors by this chapter shall be exercised or performed to such extent and by such person or persons as shall be provided in the certificate of incorporation.

On its face, § 141(a) is directed to an entirely different problem than the one raised by board-initiated restrictions on the board’s powers. In particular, note the reference in the second sentence of § 141(a) to the “powers and duties” of the board being “exercised or performed” by such other persons as provided in the certificate of incorporation. This language clearly reflects a concern with the special problems of close corporations, whose shareholders often seek to modify the default rules of corporate governance so as to run the firm as though it were a partnership Delaware has a special set of statutory provisions for close corporations whose articles of incorporation contain an election to be governed by those provisions. Among the special rules applicable only to such so-called statutory close corporations is a provision authorizing shareholders to limit the powers of the board of directors by mere contract. Outside of that limited context, however, § 141(a) makes clear that any such shareholder-initiated limitation on the board’s authority must be included in the articles of incorporation. Taken as a whole, therefore, § 141(a)’s language regarding exceptions to the board’s authority is not concerned with self-imposed limitations on the board’s authority. Instead, § 141(a) is concerned with ensuring the validity of such close corporation governance provisions, while requiring that they be included in the articles of incorporation rather than by mere contract. On its face, nothing in the statute compels a conclusion that the board cannot create self-imposed limitations on its authority.

Fed Ex Drivers: Employees or Independent Contractors

Whether someone is an employee (a.k.a. servant) or an independent contractor is a critical question for many reasons. An employer is generally responsible for torts committed by a servant, but generally is not liable for torts committed by an independent contractor. Employees are entitled to various job protections that independent contractors lack. And so on.

Christine Hurt blogged a recent Los Angeles Superior Court decision rejecting Federal Express' argument that its drivers are independent contractors rather than employees.

Los Angeles County Superior Court Judge Howard Schwab said FedEx had violated California law by classifying all of its single-route drivers as independent contractors and forcing them to incur expenses the company should have covered, including paying for fuel, oil, tires, repairs and liability insurance. The judge ordered payments ranging from a few hundred dollars to as much as $98,000 for about 200 class members. The case was tried over nine weeks last year. ...

In court, FedEx has argued that while it sets work rules for some contractors, they aren't employees because they don't have set start times, they can hire and fire workers, they use their own vehicles, and they choose their own routes.

I discussed these delivery driver cases in my book Agency, Partnership, & LLCs, explaining that:

Frank Frausto was a delivery driver for the Arizona Republic newspaper. Frausto’s car collided with a motorcycle driven by plaintiff William Santiago, who then sued the newspaper. The newspaper defended by claiming that Frausto was an independent contractor. The trial court agreed, granting the newspaper summary judgment on the issue as a matter of law. Applying an 8 factor test tracking Restatement (Second) § 220(2), the Arizona supreme court reversed and remanded for trial.

First, as to control by the alleged master, the court noted that the newspaper exercised little actual supervision, but was able to give Frausto specific instructions with the expectation that they would be followed. Pointing out that the power to fire is regarded as “one of the most effective methods of control,” the court noted that Frausto could be terminated without cause on 28 days notice and, moreover, could be terminated for unsatisfactory service without any notice. Second, the court noted that Frausto had no independent delivery business. He worked only for the newspaper, payments went to the newspaper and not the carrier, and accounts were serviced by the newspaper. This distinguished the case at bar from other newspaper carrier cases in which the delivery firm bought the newspapers from the publisher and resold them to delivery customers at a profit. Third, the court noted that being a newspaper carrier required little specialized or skilled training, which suggests that Frausto was a servant. Fourth, while the newspaper did not provide all of the necessary supplies, it did supply the newspapers and designated the route to be covered. Fifth, the court observed that the relationship was of indefinite duration, which points towards finding that Frausto was a servant. Sixth, Frausto was paid a regular weekly salary. Seventh, newspaper delivery was a core part of the publisher’s business. Finally, Frausto stated that he regarded himself as an employee. In sum, on all of the § 220 factors there was at least some support for treating Frausto as a servant and summary judgment was inappropriate.

I haven't seen Judge Schwab's decision, but my guess is that the key factors were (1) Fed Ex probably has the ability to fire the drivers on short notice if they fail to comply with instructions and (2) the drivers probably don't have an independent business (when Fed Ex comes to my door, the driver is in a Fed Ex truck wearing a Fed Ex uniform).

The business lesson is that out-sourcing only works if you outsource to a truly  independent business. If you try to get the benefits of vertical integration, while avoiding the legal responsibilities that attach to a vertically integrated firm, California will put substance ahead of form.

Are Lay and Skilling Finished?

Tom Kirkendall does a great job of explaining the likely implications of the plea deal by former Enron chief accountant Richard Causey. In a later post, Tom details the Causey cooperation agreement and its implications. Unlike the hyperbolic press reports, Tom's careful analysis suggests that the plea deal may not be as much of a problem for Lay and Skilling as the press thinks:

... inasmuch as Causey and his counsel have participated under a joint defense agreement with the Lay and Skilling defense teams for over two years now, virtually any of Causey's testimony would be subject to challenge as being derived from that joint defense effort. Moreover, as noted in this earlier post, Causey had problems in defending himself against the charges that Lay and Skilling do not, and his credibility may be subject to impeachment at trial through portrayal of the eve-of-trial plea deal as an effort to save his skin at the expense of his co-defendants.

Restricting Director Discretion

Larry Ribstein's got a very thoughtful post on the recent Delaware Chancery Court decision in  Unisuper Ltd. v. News Corporation. He writes:

... this case as it stands boils down to a simple one of statutory interpretation about what has to be in the certificate. It makes sense to require any contract in this situation to be clear. That’s evident from the facts here, including the considerable uncertainty about the terms of the supposed contract, and even who the parties were – not shareholders themselves, but an institutional investor group supposedly acting on behalf of shareholders whose interests in the firm the opinion didn't specify. It follows that it’s reasonable to require agreed managerial powers to be set forth in the certificate.

The more interesting question is what the certificate should be able to provide. Specifically, should a certificate that limits the board’s power to enter into a poison pill be enforceable? I think the answer to this question as a matter of policy is clearly yes.

I think that's basically right. as I explain in my book Corporation Law and Economics, corporate law generally ought to be enabling rather than mandatory in nature. Because director primacy is such a fundamental norm of corporate governance, however, limitations on the directors' power of fiat should be in the corporation's articles of incorporation (at least when one is dealing with a public corporation).

Crystal Rain

Tobias Buckell sent along a review copy of his forthcoming novel Crystal Rain. Like SM Stirling's Raj Whitehall series, whose premise it somewhat resembles, Crystal Rain is an interesting mix of fantasy and military science fiction. It starts off a bit slow, but especially picks up pace once main POV characters John deBrun and Pepper finally hook up.

Long ago, so the stories say, the old-fathers came to Nanagada through a worm’s hole in the sky. Looking for a new world to call their own, they brought with them a rich mélange of cultures, religions, and dialects from a far-off planet called Earth. Mighty were the old-fathers, with the power to shape the world to their liking---but that was many generations ago, and what was once known has long been lost. Steamboats and gas-filled blimps now traverse the planet, where people once looked up to see great silver cities in the sky.

Like his world, John deBrun has forgotten more than he remembers. Twenty-seven years ago, he washed up onto the shore of Nanagada with no memory of his past. Although he has made a new life for himself among the peaceful islanders, his soul remains haunted by unanswered questions about his own identity.

These mysteries take on new urgency when the fearsome Azteca storm over the Wicked High Mountains in search of fresh blood and hearts to feed their cruel, inhuman gods. Nanagada’s only hope lies in a mythical artifact, the Ma Wi Jung, said to be hidden somewhere in the frozen north. And only John deBrun knows the device’s secrets, even if he can’t remember why or how.

Tobias is an active blogger and is making a very aggressive effort to market the book through the blogosphere and I suspect it'll pay off. Buckell writes cleanly and skillfully, has a deft touch with plot twists, and is as good a world builder as any. What starts out shaping up as a Caribbean take on medieval fantasy turns into what Andrew Wheeler aptly calls "a lost-colony SF novel, low-tech division, conflict between more powerful alien races sub-division." Along the way, Buckell neatly avoids the Dark Lord cliche by creating bad guys who have some moral nuance. If I wasn't quite convinced by the ending, it was a plausible outcome and the ride getting there was fun.

I wouldn't put Buckell in the same class as my current favorites Charles Stross and John Scalzi, but I'd slot this book at about the same level as Andre Norton's best work, which is a pretty high standard IMHO.

Bush Admits, sub silentio, to Having Pissed Away the

A while back, I wrote a post entitled What might have been, in which I argued that President Bush's decision to go to war in Iraq had "pissed away the conservative moment by pursuing a war of choice via policies that border on the criminally incompetent" and asked:

We control the White House, the Senate, the House of Representatives, and (more-or-less) the judiciary for one of the few times in my nearly 5 decades, but what have we really accomplished? Is government smaller? Have we hacked away at the nanny state? Are the unborn any more protected? Have we really set the stage for a durable conservative majority?

Finally, I criticized Bush for giving us nothing but unrelenting positive spin.

I took a lot of flack for that post from my fellow conservatives, but I'm feeling more than a tad vindicated by an article in today's Washington Post, which reports that:

President Bush shifted his rhetoric on Iraq in recent weeks after an intense debate among advisers about how to pull out of his political free fall, with senior adviser Karl Rove urging a campaign-style attack on critics while younger aides pushed for more candor about setbacks in the war, according to Republican strategists. ...

The lessons drawn by a variety of Bush advisers inside and outside the White House as they map a road to recovery in 2006 include these: Overarching initiatives such as restructuring Social Security are unworkable in a time of war. The public wants a balanced appraisal of what is happening on the battlefield as well as pledges of victory. And Iraq trumps all.

"I don't think they realized that Iraq is the totality of their legacy until fairly recently," said former congressman Vin Weber (R-Minn.), an outside adviser to the White House. "There is not much of a market for other issues." ...

As the year ends, only some litigation limits have passed, and Social Security, tax and immigration plans are dead or comatose.

We can debate whether invading Iraq was a necessary step in the War on Terror. What we can no longer debate is that the Iraq War has brought the larger conservative agenda to a crashing halt, wasting a moment for which many of us in the conservative movement have waited for decades, and if public perceptions of the GOP don't improve soon, threatening to undermine the conservative realignment for which we long hoped. As I observed in that earlier post:

The conservative agenda has advanced hardly at all since the Iraq War began. Worse yet, the growing unpopularity of the war threatens to undo all the electoral gains we conservatives have achieved in this decade. Stalwarts like me are not going to vote for Birkenstock wearers no matter how bad things get in Iraq, but what about the proverbial soccer moms? Gerrymandering probably will save the House for us at least through the 2010 redistricting, but what about the Senate and the White House?

At the end of the day, that may well be George Bush's legacy. If so, he'll go down as the Impostor Bruce Bartlett's forthcoming book accuses him of being.

My top 10

TCS has posted my top 10 wines of 2005.

Angst

I can't quite tell whether the market needs a valium or not. On the plus side, consumer confidence is way up. On the other hand, the yield curve keeps flirting with inverting, which is a traditional signal of investor lack of confidence and a frequent leading indicator of a recession. Also on the down side:

... more and more Americans seem to be stressed out, miserable and depressed, according to two new opinion polls. One long term survey shows that personal misery among Americans is at its highest levels since the early 1990s, with people saddled with woes over healthcare, unemployment, paying bills and romance. (Link)

It's all very puzzling, which makes it a good time to be in passively managed index funds. Of course, if you believe Burton Malkiel, as I do, anytime is a good time to be in passively managed index funds.

More on the State of the American Conservative Mind

Earler today I posted an excerpt from Jeffrey Hart's provocative essay The Burke Habit, in which Hart discussed the role of ntaionalism in conservative thought. In that essay, Hart also raised some very good points about the conservative attitude towards the market:

American conservatism emerged during a period when socialism in various forms had become a tacit orthodoxy. The thought of Friedrich Hayek, Ludwig von Mises and Milton Friedman informed its understanding of economic questions. At length, the free market triumphed through much of the world, and today there are very few socialists in major university economics departments, an almost total transformation since 1953. But the utopian temptation can turn such free-market thought into a utopianism of its own--that is, free markets to be effected even while excluding every other value and purpose . . .

. . . such as Beauty, broadly defined. The desire for Beauty may be natural to human beings, like other natural desires. It appeared early, in prehistoric cave murals. In literature (for example, Dante) and in other forms of representation--painting, sculpture, music, architecture--Heaven is always beautiful, Hell ugly. Plato taught that the love of Beauty led to the Good. Among the needs of civilization is what Burke called the "unbought grace of life."

The word "unbought" should be pondered. Beauty has been clamorously present in the American Conservative Mind through its almost total absence. The tradition of regard for woodland and wildlife was present from the beginnings of the nation and continued through conservative exemplars such as the Republican Theodore Roosevelt, who established the National Parks. Embarrassingly for conservatives (at least one hopes it is embarrassing), stewardship of the environment is now left mostly to liberal Democrats.

Not all ideas and initiatives by liberals are bad ones. Burke's unbought beauties are part of civilized life, and therefore ought to occupy much of the Conservative Mind. The absence of this consideration remains a mark of yahooism and is prominent in Republicanism today. As if by an intrinsic law, when the free market becomes a kind of utopianism it maximizes ordinary human imperfection--here, greed, short views and the resulting barbarism.

It is precisely such considerations that motivated my critique of Wal-mart and prompted my on- going interest in using Catholic social thought to study the role of corporations in society.

The American Mind Today

Jeffrey Hart has a very provocative piece on the state of American conservatism. Two parts jumped out at me as being worthy of discussion or, perhaps more precisely, highlighting. First, the role of the nation:

Soft utopianism speaks of the "nation-state" as if it were a passing nuisance. But the Conservative Mind knows that there must be much that is valid in the idea of the nation, because nations are rooted in history. Arising out of tribes, ancient cosmological empires, theocracies, city-states, imperial systems and feudal organization, we now have the nation. Imperfect as the nation may be, it alone--as far as we know--can protect many of the basic elements of civilized existence.

What Hart doesn't discuss here is the possibility that the United States is not a nation-state but rather a state-nation. Albert Wesibord writes:

What is a "nation," as we ought properly to use the term? Historically, a "nation" (a term derived from the Latin nascere, to be born) is developed from the "tribe," an enlarged "clan," which is, in turn, an enlarged "family" or "kindred." The "nation" has a base of common ancestry and blood relationship without which there could be no family, no kindred, no clan, and thus tribe. Various tribes of common origin may bind themselves into a brotherhood of "phratry" but when this occurs no "nation" has as yet developed, only the basis for one. ... At what point then did the United States become a "nation"? In our opinion never, for this process was blocked by slavery of the Africans and by an overwhelming non-English immigration from Europe.

Or, as Wikipedia puts it:

The term "state-nation" is sometimes used, for nations where the common identity derives from shared citizenship of a state. It implies that the state was formed first, and that the sense of national identity developed later, or in parallel.

Hence, Everett Ladd argues that "America is an idea -- a set of beliefs about people and their relationships and the kind of society which holds the best hope of satisfying the needs each of us brings as an individual."

This is a distinct challenge for American conservatism, especially the Anglophile strain represented by Russell Kirk, which looks back to English Tories like Edmund Burke for historical precedent and guidance. American conservatism thus finds itself torn between the polar extremes of nativists desperate to preserve a purported Anglo-American culture and open borders business types who seem to care nothing for cultural traditions (think National Review versus WSJ editorial board). One hopes for a middle ground, in which American remains open to anyone who embraces the "American idea," regardless of race or creed, while also striving to ensure assimilation to that idea.

What Would Tocqueville Do?

In pondering Tocqueville's insights on democracies' lack of martial spirit, Joseph Epstein concludes:

The thought of the U.S. fighting a Thirty Years War or engaging in something akin to the Peloponnesian War (which lasted 27 years) is unthinkable. These were wars fought by aristocrats, not democrats, who want chiefly to get on with their pleasurable lives.

Epstein says that like it's a bad thing. Personally, I'm increasingly convinced that the Powell Doctrine is the only sensible warmaking policy in the modern American polity. Again, let's see what Epstein says:

... why should democracies find it so difficult to start and to finish wars? Tocqueville's response is complex: The martial spirit is less in democracies than in aristocracies; moreover, "the wealthiest, best educated, most capable citizens of democratic nations are unlikely to pursue careers in the military." Citizens in a democracy have "an excessive love of tranquility," and war gets in the way of their striving for increased wealth and material comfort. Tocqueville himself wasn't opposed to war. He thought it "almost always enlarges the thought and ennobles the heart." But he felt that democracies were not in the best condition to wage it.

Does anybody still really believe that war "almost always enlarges the thought and ennobles the heart"? It is a necessary evil, at best. When we wage it, we should go in hard and fast with overwhelming force and get out just as fast.

Academic Bias

It's one thing for a college professor to express opinions on matters germane to the subject matter of the class, as when my Econ 101 professor left no doubt about his belief that markets work better than bureaucracies when it comes to setting prices. It is quite another, however, for a professor to use his bully pulpit and captive audience to express opinions on matters not germane to the subject matter of the course, as a Pennsylvania physics professor allegedly did:

"How could this happen?" Ms. Brown asked Representative Gibson C. Armstrong two summers ago, complaining about a physics professor at the York campus of Pennsylvania State University who she said routinely used class time to belittle President Bush and the war in Iraq. As an Air Force veteran, Ms. Brown said she felt the teacher's comments were inappropriate for the classroom.

The encounter has blossomed into an official legislative inquiry, putting Pennsylvania in the middle of a national debate spurred by conservatives over whether public universities are promoting largely liberal positions and discriminating against students who disagree with them.

The deniers and minimizers, of course, are quick to dismiss complaints:

"Mechanisms exist to address these glitches and to fix them," said Joan Wallach Scott, a professor at the Institute for Advanced Study in Princeton, N.J., and former chairwoman of the professors association committee on academic freedom, in testimony at the Pennsylvania Legislature's first hearing. "There is no need for interference from outside legislative or judicial agencies."

Sorry, but when was the last time you ever heard of a college professor being disciplined for veering off topic to attack conservatives? And, at least as far as state colleges are concerned, why shouldn't the tax payers representatives have a role in ensuring that the classroom is not a hostile learning environment? Speaking as an instructor at a state school, I would welcome such oversight.