ProfessorBainbridge.com

Brown screws Bainbridge and 20K other Californians

Regular readers will notice a minor design change: All Amazon-related links and ads have been deleted. I'm a longtime Amazon Associate. I never made big bucks at it; in some years, I didn't make enough to even get a 1099 form. It did pay my TypePad fees though.

Unfortunately, in a moronic attempt to raise tax revenues that has predictably backfired, Governor Jerry Brown and the Democrats in Sacramento have forced Amazon to put me out of business:

Gov. Jerry Brown has signed into law California's tax on Internet sales through affiliate advertising which will immediately cut small-business website revenue 20% to 30%, experts say.

The bill, AB 28X, takes effect immediately. The state Board of Equalization says the tax will raise $200 million a year, but critics claim it will raise nothing because online retailers will end their affiliate programs rather than collect the tax.

Amazon has already emailed its termination of its affiliate advertising program with 25,000 websites. ...

Board of Equalization Member George Runner blasted Brown for signing the law. "Even as Governor Jerry Brown lifted his pen to sign this legislation, thousands of affiliates across California were losing their jobs. The so-called 'Amazon tax' is truly a lose-lose proposition for California. Not only won’t we see the promised revenues, we’ll actually lose income tax revenue as affiliates move to other states."

I won't be moving to another state, but any chance the state had of getting income taxes from my Amazon sales just went out the window, so that's one tax loss they'll suffer, Meanwhile, while Brown and the bill's proponents say the bill will help small local retailers, this is one consumer who's going to go right along doing the vast majority of my shopping at Amazon.

From Wizbang:

This will be a huge blow to bloggers and freelance website owner/managers, who often depend on affiliate programs or click-through advertising as a primary source of the revenue that pays for website hosting and up-keep. 

And when websites start closing down, or when their owners dissolve their California companies and file for business incorporation in other states, the Mainstream media will once again be stumped by the UNEXPECTED failure of this bill to raise even a fraction of the revenue that was originally projected.

It has been said that insanity is repeating the same failures over and over again, hoping to achieve a different result.  I think we can now safely say (as if we hadn't suspected all along) that the government of California is truly insane.

Yep.

And from Walter Jacobson:

This is why Obama will not see the trillion dollars in new taxes he wants, even if such legislation were passed.  People change their business and personal practices once taxes reach a tipping point.

This why we can’t tax our way to reducing the deficit.  We can control spending, but we cannot control revenue because we cannot control people.

Yep, again.

Hadfield on the market for lawyers

USC professor Gillian Hadfield is a very smart legal thinker, even if she did choose to work at a school whose athletic teams are named after a brand of condoms. In an essay ruminating on the future of legal practice, which I highly recommend reading in full, she argues that:

I have spoken with dozens of general counsel, entrepreneurs, business leaders and experts in innovation about how well the American legal system is supporting the innovative enterprise powering the global economic transformation under way since the fall of the Berlin Wall and the birth of the Internet. They have been uniformly optimistic about the pace of innovation in their industries — but uniformly despondent about the legal tools available to them to support their efforts to ride the surging waves of the new global economy. One complained about the great “DNA gap” between lawyers and business thinkers. Another bemoaned the need to resort to a patchwork of law firms around the world to manage operations that are “global from day one” in a new economy firm. A third shared his frustration with lawyers who produce reams of paper — erudite analysis memos or long complex contracts — when what is needed, and fast, is targeted business advice or short documents that memorialize key commitments.

Such complaints are now new, of course. Mark McCormack's wonderful book The Terrible Truth About Lawyers made many of the same complaints twenty-odd years ago.

Hadfield argues that what we need to solve the problem is a new approach to the market for legal services:

It’s not that lawyers aren’t smart or committed enough to produce good quality legal services. The problem with the way in which U.S. markets for legal inputs are structured is that they are entirely closed off to the potential quality-improving and cost-reducing innovations that might be produced by people who are not already heavily invested in our existing ways of handling legal problems. Those existing approaches are the problem: too costly, too poorly informed about rapidly changing business and regulatory realities in a global economy, too risk averse, too slow and cumbersome.

So why not let people other than JD-trained, bar-examined lawyers and organizations that aren’t 100 percent lawyer-owned and -financed compete to supply advice about managing legal and regulatory risks, complete required document filings, design documents and organizational policies, negotiate contracts and manage legal disputes? Certainly, there are some things for which only the most experienced and conventionally trained lawyer will do. But there is also a huge landscape of legal work that could be better done by differently trained lawyers, lawyers trained out-of-state, lawyers working in partnerships with nonlawyers, and companies that are owned, managed and financed by business-minded folks, rather than (or in addition to) legally minded folks.

Great idea. Anybody who even halfheartedly believes in markets ought to think that a freer market for legal services, in which non-lawyers can compete, will result in more innovation, lower prices, and more widely available services. Indeed, as Hadfield details, the UK is doing okay with a much more competitive legal market than we have in the USA.

Of course, as someone who benefits massively from the current monopoly law schools have on the production of lawyers who then have a near monopoly only the provision of legal services, I favor adopting her approach the day after I retire. But YMMV. ;-))

TSA Keystone Kops strike again

I practically got strip searched by TSA agents when traveling last week, which makes this story all the more aggravating:

Authorities are looking into a shocking security breach that took place at John F. Kennedy International Airport last week. Investigators say Olajide Oluwaseun Noibi, a Nigerian, boarded Virgin America Flight 415 to Los Angeles without a valid passport or identification, using an expired boarding pass for a flight the day before that belonged to someone else. Officials say Noibi got through security and was able to board the plane. No one noticed until the flight was airborne when a flight attendant realized Noibi was sitting in a seat that was supposed to be vacant.

Of course no TSA agent noticed. They're too busy groping the junk of 95 year old cancer victims to bother reading boarding passes.

It's bad enough that we have to put up with ever more intrusive TSA security theater. The fact that it doesn't work just adds insult to injury.

Fourth of July Parades Promote GOP?

You'd think this was from The Onion, but sadly it's not:

A new Harvard University study finds that July 4th parades energize only Republicans, turn kids into Republicans, and help to boost the GOP turnout of adults on Election Day.

"Fourth of July celebrations in the United States shape the nation's political landscape by forming beliefs and increasing participation, primarily in favor of the Republican Party," said the report from Harvard.

"The political right has been more successful in appropriating American patriotism and its symbols during the 20th century. Survey evidence also confirms that Republicans consider themselves more patriotic than Democrats. According to this interpretation, there is a political congruence between the patriotism promoted on Fourth of July and the values associated with the Republican party. Fourth of July celebrations in Republican dominated counties may thus be more politically biased events that socialize children into Republicans," write Harvard Kennedy School Assistant Professor David Yanagizawa-Drott and Bocconi University Assistant Professor Andreas Madestam.

I'd love to know the authors' political affiliation and whether the survey was funded with taxpayer dollars. Plus, if the latter is the case, I'd love to know whether some Democrat Congressman got it funded via an earmark.

"Why Proxy Access (Sec Rule 14a-11) is Harmful to Corporate Governance"

Bernard Sharfman has posted Why Proxy Access (Sec Rule 14a-11) is Harmful to Corporate Governance:

A key aspect of the current proxy access rules is that they are, for all intents and purposes, mandatory. There is no opportunity to opt-in or at least opt-out. This one-size-fits-all approach to corporate governance is wealth reducing because it does not allow for private-ordering. In addition, federally mandated proxy access eliminates the benefits of our federalist system from this area of corporate governance.

But there is something even more fundamentally wrong with proxy access. That is, it is a very inefficient means to promote good corporate governance in a public company. As argued here, it is expected that proxy access will lead to increased error in the nomination of directors as decision-making is moved from the board of directors to shareholders who will make their nominations based on significantly less information and a shifting of the potential for certain opportunistic behavior, such as the extracting of private benefits from the corporation, from an independent board and nominating committee to certain shareholders who, unlike directors, are not subject to fiduciary duties. Moreover, even if proxy access can be argued to be good for corporate governance, Rule 14a-11 is not designed to be the optimal default rule.

 I'm in substantial agreement with his analysis.

"So What If Corporations Aren't People?"

Ilya Shapiro and Caitlyn W. McCarthy of the Cato Institute have posted So What If Corporations Aren't People?:

Corporate participation in public discourse has long been a controversial issue, one that was reignited by the Supreme Court's decision in Citizens United v. FEC, 130 S. Ct. 876 (2010). Much of the criticism of Citizens United stems from the claim that the Constitution does not protect corporations because they are not "real" people. While it's true that corporations aren't human beings, that truism is constitutionally irrelevant because corporations are formed by individuals as a means of exercising their constitutionally protected rights. When individuals pool their resources and speak under the legal fiction of a corporation, they do not lose their rights. It cannot be any other way; in a world where corporations are not entitled to constitutional protections, the police would be free to storm office buildings and seize computers or documents. The mayor of New York City could exercise eminent domain over Rockefeller Center by fiat and without compensation if he decides he'd like to move his office there. Moreover, the government would be able to censor all corporate speech, including that of so-called media corporations. In short, rights-bearing individuals do not forfeit those rights when they associate in groups. This essay will demonstrate why the common argument that corporations lack rights because they aren't people demonstrates a fundamental misunderstanding of both the nature of corporations and the First Amendment.

It cites yours truly at several points, which is always an indicia of high quality work. ;-))

Consolidation in the law school industry

You have a mature industry with about 175 or so producers collectively having massively excessive production capacity relative to demand. The industry nevertheless continues to produce at full capacity. What happens next?

The price the industry members receive for their product should fall. In response, industry members should cut their prices until demand and supply equilibrate. But then what happens to the excess productive capacity?

Obviously, some of the weaker players should close up shop through bankruptcy or liquidation. But many managers are reluctant to pull that trigger. So in many industries we observe a wave of mergers intended to consolidate the industry into a smaller number of players, each of whom then downsizes while staying in business. Example:

In the airline industry, over-capacity and high fuel costs have wiped out recent profits. Incumbent airlines have locked themselves into their existing, failing business model, and have not succeeded at imitating the success of low-cost carriers such as Southwest or Ryanair (witness the recent grounding of United’s Ted).

With few exceptions, they have also proven unable to enter the profitable business of operating regional feeder airlines. Prisoner to sunk costs in airplanes and hubs, union contracts, travel agents, and other inflexible elements of their business model, their only option has been to remove capacity and raise fares through consolidating their industry.

With that background in mind, consider this post from Brian Tamanaha:

The New York Times released a chart yesterday showing that law schools are churning out far more lawyers than the number of available legal positions. That is old news, of course. What's worse is that the oversupply promises to continue. In 2010, Georgetown enrolled 591 first year JD students, Harvard enrolled 531, Fordham enrolled 477, and NYU enrolled 476. Large classes are not limited to top schools: New York Law School took in 641, John Marshall (Chicago) enrolled 539, and Suffolk enrolled 531. (Let's not talk about the 808 first year students taken by Florida Coastal and 1,583 by Cooley.) Law schools now pump out about 45,000 graduates annually at a time when the Bureau of Labor Statistics projects about 28,000 new lawyer positions per year.

In an ordinary industry, such a fall in demand would trigger the wave of consolidation described above. But legal education is no ordinary industry. First, law schools get paid by their inputs rather than being paid for their outputs. A fall in demand for our outputs thus does not put direct price pressure on law schools. Instead, we only feel supply-demand pressure if the number of inputs falls. In other words, law schools suffer financially not because their graduates can't find jobs but because they have too few applicants to fill their spaces.

Over capacity could deter applicants, as Tamanaha explains:

With tuition high and job prospects low, it seems likely that the number of law school applicants will continue to fall--although it's hard to say how far or for how long. One concrete indication of a continued drop is the google trend line for LSAT searches (check it out here), which shows a steady downward trajectory since the peak in 2004. (Tellingly, the applicant uptick in 2009 and 2010 barely disrupts the overall trend.)

If the drop in applicants continues, while enrollment stays up, schools will reach deeper in the pool to fill their classes, bringing in students with lower qualifications. A significant decline like this has happened before, in the early eighties and the nineties. The consequences for each school will depend upon its standing in the overall law school hierarchy and in the local legal market. But every school will feel it (although much less at the top). Schools would be prudent to anticipate a cumulative drop in applications of perhaps a third from their high. (Even if the reduction does not go that far, the number will be misleading because prospective students now apply to more schools than in the past.)

The 2010 acceptance numbers suggest that many law schools are already in a worrisome spot. That year, twenty schools accepted between 45% and 49% of the students who applied; twenty-two schools accepted between 50% and 59% of applicants; and seven schools has an acceptance rate of 60% or higher (Cooley was the highest at 83.3%). Added together, nearly a quarter of law schools in the country accepted close to half or more of their applicants—and this was before the latest decline in the number of applicants.

If that happens, law schools will start to feel a pinch from the problem of industry over capacity. Unfortunately, the M&A solution is barred because law schools are protected by takeover defenses far stronger than those possessed by any corporation:

• Law schools are in a regulated industry with lots of barriers to competition
• University presidents think it is prestigious to have a law school, so as to be a complete research university (see, e.g., UC-Irvine's illogical decision to start a law school)
• Influential local figures support "their" law school (ditto)
• Legislatures protect law schools from closing (see, e.g., UC Hastings)
• Most basically, you can't buy stock in a law school

The point should be obvious. Unless law schools voluntarily start consolidating and downsizing, which seems about as likely as yours truly winning the Miss America pageant, we face a long-term prospect of ever increasing competition for fewer and fewer applicants. Long before the day comes that there are fewer applicants than available seats, we will be in very big trouble. Budgets will have to be slashed to pay financial aid to attract students. Admission standards will have to go down. Relations between deans, faculty, and students will be increasingly fraught.

What we have here is a classic collective action problem. Unfortunately, what we don't have is a market in which to develop solutions to that problem.

 

Is the debt ceiling unconstitutional?

HuffPo:

Growing increasingly pessimistic about the prospects for a deal that would raise the debt ceiling, Democratic senators are revisiting a solution to the crisis that rests on a simple proposition: The debt ceiling itself is unconstitutional.

"The validity of the public debt of the United States, authorized by law... shall not be questioned," reads the 14th Amendment.

And they just now figured that out? Convenient timing.

I don't see why the quoted language would render the debt ceiling unconstitutional. The 14th amendment refers to the "public debt" as "authorized by law," which would seem to contemplate a law setting a limit on the amount of debt that is authorized. Next it says that the validity of the debt shall not be questioned. A default doesn't question the validity of the debt. To the contrary, a default acknowledges that the debt is valid, but can't be paid at the moment.

In any case, the article goes on to quote my friend and UCLAW colleague Adam Winkler at length:

Adam Winkler, a law professor at the University of California, Los Angeles, said that the 14th Amendment option has recently been much discussed in the field.

"Without any clear case law about the debt ceiling in particular, no one knows exactly how the courts would rule on that issue, about whether President Obama could ignore the debt ceiling," he said. "If he wanted to continue to service the public debt, he'd probably get away with it."

Which leads to a related question: Who's to stop him?

"To have standing to challenge a governmental action, you must show that you have suffered some injury from that action, and it's hard for someone to show such an injury," Winkler said. "If Congress acted as a unified body, and claims that the president has usurped their authority, then it may have some standing."

"But," he cautioned, "it would have to be a joint resolution. And this Senate would almost certainly block it."

Delaware Supreme Court muffs Brophy claim

BNA (sub. req'd) reports that:

The Delaware Supreme Court June 20 revived claims by minority shareholders of Primedia Inc. that Kohlberg Kravis Roberts & Co. LLP, its controlling shareholder, bought up large blocks of preferred stock on the open market when the price was low and later caused Primedia to redeem the shares at full value (Kahn v. Kohlberg Kravis Roberts & Co. LLP, Del.. No. 436, 2010, 6/20/11). ...

In this lawsuit, the shareholders contended that KKR and certain Primedia officers and/or directors breached their duty of loyalty by causing Primedia to call hundreds of millions of dollars of preferred stock that it was not yet obligated to redeem, enriching KKR at Primedia's expense. The complaint was amended several times—most recently to add a Brophy claim that the KKR defendants breached their fiduciary duties to Primedia by purchasing the preferred stock at a time they possessed material nonpublic information.

Specifically, the court said, according to the complaint, KKR knew that Primedia's earnings would be better than previously forecast and that at some point, it—Primedia—planned to redeem its outstanding preferred stock. KKR allegedly traded on the information.

In June 2010, the Chancery Court granted a dismissal motion by Primedia's Special Litigation Committee. Citing Pfeiffer v. Toll, 989 A.2d 683 (Del. Ch. 2010), it concluded that because the corporation was not actually harmed, disgorgement was not an available remedy for the plaintiffs' Brophy claims.

BNA further reports that:

In a decision by Chief Justice Myron T. Steele, the court disagreed with the Delaware Chancery Court's interpretation of Brophy v. Cities Serv. Co., 70 A.2d 5 (Del. Ch. 1949), which addressed the availability of disgorgement as a remedy. ...

The court explained that in Brophy, a corporate employee acquired inside information that the plaintiff issuer was about to enter the market and purchase its own shares. The employee, who was not an officer, bought a large block of shares and resold them at a profit after the corporation's purchases caused their price to rise.

The court concluded that because the employee had a position of trust and confidence within the corporation, his relationship was analogous to that of a fiduciary. The defendant argued that the corporation failed to state a claim because it suffered no loss through the purchase of its stock, but the court disagreed. “Thus,” the high court recapped, “actual harm to the corporation is not required for a plaintiff to state a claim under Brophy.”

It explained that the Brophy court relied on principles of equity and restitution for the proposition that a fiduciary cannot use confidential corporate information for his or her own benefit. “Even if the corporation did not suffer actual harm, equity requires disgorgement of that profit.” ...

In June 2010, the Chancery Court granted a dismissal motion by Primedia's Special Litigation Committee. Citing Pfeiffer v. Toll, 989 A.2d 683 (Del. Ch. 2010), it concluded that because the corporation was not actually harmed, disgorgement was not an available remedy for the plaintiffs' Brophy claims.

Reversing, the state high court concluded that Pfeiffer—pursuant to which a plaintiff must show that the corporation suffered actual harm in order to bring a Brophy claim—“is not a correct statement of our law. To the extent Pfeiffer v. Toll conflicts with our current interpretation of [Brophy], Pfeiffer cannot be Delaware law.”

Pity. I thought Pfeiffer got it basically right, at least on this issue. As I explained at the time:

"I am on nobody's side, because nobody is on my side"

Glenn Greenwald spotted an appalling HRC quote:

Hillary Clinton, yesterday, when asked about those questioning the Libya War:

But the bottom line is, whose side are you on? Are you on Qadhafi’s side or are you on the side of the aspirations of the Libyan people and the international coalition that has been created to support them? For the Obama Administration, the answer to that question is very easy.

It's almost verbatim what the pro-war neoconservatives said about those of us who were skeptical of Bush's decision to make war on Iraq: If you're not for war, you must be on the side of the enemy.

They were wrong then, and HRC is wrong now. Supporting wars of choice where no vital national interests are at stake is not a very good litmus test of one's patriotism.

Leiter's Judges List Missing Key Players

Brian Leiter's decided to take a poll to see who were the most important American judges of the 20th Century. "Only judges who did most of their important work in the 20th-century *and* who are no longer living were eligible." The list of nominees skews left, as one might expect. (Where's William Rehnquist, for example?

More strikingly, there isn't a single Delaware judge on the list. As Chief Justice Rehnquist recognized, "The [Delaware] Court of Chancery has handed down thousands of opinions interpreting virtually every provision of Delaware's corporate law statute. No other state court can make such a claim. The economies of scale created by the high volume of corporate litigation in Delaware contribute to an efficient and expert court system and bar." Given the importance of the corporation to our society and economy, and the importance of the Delaware court systems to the workings of corporate governance, the omission is pretty appalling.

Not surprising, of course. Academics outside corporate law pay little attention to Delaware. If they notice it at all, it is to dismiss it as a mere business court. Tawdry money and all that, I guess. Not important stuff like how many constitutions can dance on the head of a pin. More seriously, like most such efforts, Leiter's list betrays a bias towards jurists famous for public law rather than those who made their name in private law.

If one were to nominate a Delaware jurist for the list, William Allen comes to mind immediately. As Ronald Gilson observed:

Twenty-five years ago Bayless Manning announced the death of corporate law "as a field of intellectual effort."  By the sheer force of his intellect, Bill Allen has given substance to what Manning then described as "our great empty corporate statutes - towering skyscrapers of rusted girders, internally welded together and containing nothing but wind."  Manning blamed corporate law's demise on the collapse of the nineteenth century notion that the corporation, like Pinocchio, was to be treated as a "real boy." Bill Allen has sought to rebuild corporate law on a more realistic and intellectually challenging foundation that recognizes the competing decision makers who contend for influence behind the corporate veil.

Unfortunately, albeit solely insofar as present purposes are concerned, Allen is still alive and therefore excluded from the list.

But how about Collins Seitz? As the history of the Delaware Chancery Court explained:

Collins J. Seitz ... was appointed Chancellor in June 1951 to succeed Chancellor Daniel F. Wolcott and who served on the Court as statutory Vice Chancellor, constitutional Vice Chancellor and Chancellor for over twenty years from 1946 to 1966. As Vice Chancellor, it was he who initially upheld the jurisdiction of the Court of Chancery in the duPont case.⁽⁹¹⁾ But his unique contribution came in the field of civil rights where as Vice-Chancellor in 1950 he enjoined the University of Delaware, then exclusively white, and its trustees, including Chancellor Harrington, from considering race in processing applications for admission to the University.⁽⁹²⁾ And, in Belton v. Gebhart, 32 Del.Ch. 343, 87 A.2d 862 (Ch.1952), aff'd, 33 Del.Ch. 144, 91 A.2d 137 (Supr.Ct.1952), Chancellor Seitz made it clear that the separate but equal doctrine of Plessy v. Ferguson, 163 U.S. 577 (1897), cried for reexamination and then went on to hold, in painstaking factual detail, that the public schools in question were not equal. But most importantly, he ordered immediate integration. "To postpone such relief is to deny relief...."⁽⁹³⁾ The defendants appealed the case to the United States Supreme Court as part of the four case litigation encompassed in Brown v. Board of Education, 347 U.S. 483 (1954). The Delaware case was the only one that was affirmed. Brown v. Board of Education, 349 U.S. 294, 301 (1955).

The Seitz years had many highlights but perhaps the most memorable occurred while he was Vice Chancellor. He decided the landmark stockholder pooling agreement case, Ringling v. Ringling Bros.-Barnum & Bailey Combined Shows, Inc., 29 Del.Ch. 318, 49 A.2d 603 (Ch.1946), while serving as a statutory Vice Chancellor. Although the Supreme Court in its modifying decision rejected the Seitz view that the voting agreement was specifically enforceable, Ringling Bros.-Barnum & Bailey Combined Shows v. Ringling, 29 Del.Ch. 610, 53 A.2d 441 (Supr.Ct.1947), the Seitz view ultimately prevailed, at least by clear implication, in the 1967 statutory revision.⁽⁹⁴⁾ Another early Seitz case was Security Trust Co. v. Sharp, 32 Del.Ch. 3, 77 A.2d 543 (Ch.1950), an opinion and decision upholding the validity of the assignment of trust income which ultimately added some fifty million dollars to the University of Delaware Endowment Fund. And no mention of Chancellor Seitz' career would be complete without noting Bata v. Hill, 37 Del.Ch. 96, 139 A.2d 159 (Ch.1958), probably the longest trial in the State's history (100 days). Not one party was an American and the governing law was primarily Czech.

The Seitz years were busy for the Court. The first reported Seitz opinion, Beuno v. Farmer Bank,⁽⁹⁵⁾ a 1946 will construction case, appears in Volume 29 of the Delaware Chancery Reports and his last reported Chancery opinion is In re Estate of McCracken,⁽⁹⁶⁾ a 1966 intestacy inheritance case, which appears in Volume 43. Seitz left a twenty year legacy which will forever be a standard for courageous equitable judging. The Seitz years in Chancery came to end on July 17, 1966, when he resigned to assume a position on the United States Court of Appeals for the Third Circuit ....

Surely the judge who wrote the only opinion affirmed by Brown v. Board of Education would make a worthy representative of this incredibly important court.

TSA policies must change

CNN reports:

The Transportation Security Administration stood by its security officers Sunday after a Florida woman complained that her cancer-stricken, 95-year-old mother was patted down and forced to remove her adult diaper while going through security....

"While every person and item must be screened before entering the secure boarding area, TSA works with passengers to resolve security alarms in a respectful and sensitive manner," the federal agency said. "We have reviewed the circumstances involving this screening and determined that our officers acted professionally and according to proper procedure."

Jean Weber told CNN's Fredricka Whitfield on Sunday that the security officers may have been procedurally correct, but she still does not believe they were justified, especially given her mother's frail condition. "If this is your procedure -- which I do understand -- I also feel that your procedure needs to be changed," she said.

How much longer are we going to tolerate living in a police state where this sort of absurd security theater takes place? I simply don't believe TSA makes us safer. What makes us safer are secure cockpit doors and passengers who will no longer stand by like sheep when terrorists strike. The rest is all costly bull sh*t.

CSR and Branding

Do corporate efforts at "responsibility" count when motivated by a desire to brand their business rather than out of the goodness of management's heart? The question was prompted by a recent paper, which argues that:

In this paper, we ... critically engag[e] with marketing campaigns of so‐called ‘ethical’ bottled water. We especially focus on a major CSR strategy of a range of different companies that promise to provide drinking water for (what they name as) ‘poor African people’ by way of Western consumers purchasing bottled water. Following Fairclough's approach, we unfold a three‐step critical discourse analysis of the marketing campaigns of 10 such ‘ethical’ brands. Our results show that bottled water companies try to influence consumers' tastes through the management of the cultural meaning of bottled water, producing a more ‘ethical’ and ‘socially responsible’ perception of their products/brands.

Corporate social responsibility is a problem, IMHO, when, as Milton Friedman observed, a manager spend "someone else's money for a general social interest. Insofar as his actions in accord with his 'social responsi­bility' reduce returns to stockholders, he is spending their money." If on the other hand, the manager is engaging in corporate activity that is "responsible," "green," "sustainable," or any other buzzword for what left-liberals regard as socially ethical behavior, the manager is pursuing the proper corporate purpose, as Friedman defined it, "to make as much money as possible while con­forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom."

So it doesn't count as CSR. Just as good advertising to bleeding hearts.

Bill Stuntz In Memoriam

Harvard Law review has posted a wonderful collection of essays in remembrance of HLS law professor William Stuntz. It was pleasant to read these recollections of a wonderful man and scholar. He was a good friend and a great person.

Vacation break

I'm off on a week's vacation and won't be blogging during that period. I'll probably still be tweeting, however, so you can follow me at http://twitter.com/#!/ProfBainbridge. Blogging will resume next week.