ProfessorBainbridge.com

Prayer to Our Lady of Vladimir, Patroness of Russia, for peace in the Russo-Ukrainian war.

An open letter to Heritage President Kevin Roberts: I used to be proud of my Heritage Foundation affiliation, but ....

Back in the early 1990s I had the privilege of being chosen to be a Salvatori Fellow at the Heritage Foundation. It didn't help my academic career, of course, but I was proud of it anyway.

But in recent years, either I've changed or Heritage has. They've taken a lot of positions that strike me as inconsistent with the sort of conservatism I learned from reading Russell Kirk and more consistent with a sort of nationalist populism:

• Going all in on an uncritical, unthinking embrace of the worst excesses of Trumpism.
• Supporting Trump's bogus election fraud claims.
• Increasingly nativist positions on immigration.
• Replacing thoughtful analysis with partisan bias.
• Climate change denial.\

And now this:

The Heritage Foundation has filed a lawsuit against President Biden’s COVID-19 vaccine mandate for private employers, claiming it is a "gross abuse" of government power and a violation of personal liberty, the conservative think tank announced Monday. ...

The lawsuit says the mandate also "exceeds the federal government’s authority under the Commerce Clause," and would "impermissibly" compel citizens "to act as the Government would have them act."

I'm as opposed to letting the government mandate that we all eat our broccoli as the next guy, but we're talking about a virus that has caused a global pandemic that has cost over 777,000 deaths in the USA alone. Plus, as Omicron demonstrates, allowing people to remain unvaccinated creates opportunities for the virus to evolve. The situation is different in kind and not just in degree.

Plus, one cannot help but wonder how far Heritage would press the point. Would it now oppose mandatory Diphtheria, Tetanus, and Pertussis shots for K-12 kids? How about Polio? How about Measles, Mumps, and Rubella? Would it have opposed mandatory smallpox vaccinations? How about quarantining TB patients?

The Black Death killed up to 200 million people. Would Heritage have opposed using a vaccine mandate to stop it?

The Heritage Foundation I was proud to be affiliated with would not have put MAGA politics ahead of the public good. But apparently this new era Heritage is fine with doing so.

Expect the SEC to Favor Woke Shareholder Proposals: The SEC's Appalling New 14a-8 Guidance

Wachtell Lipton reports:

The SEC Staff has issued revised guidance rescinding prior Staff Legal Bulletins addressing the exclusion of Rule 14a-8 shareholder proposals based on the social significance to a company, “micromanagement” or  “economic relevance.”  The changes will likely facilitate a larger number of shareholder proposals, including ESG proposals, coming to a shareholder vote. ...

The new guidance revises the SEC’s application of the “ordinary business” exclusion, which considered whether a proposal was of social policy significance or sought to micromanage a company.  While the Staff has previously focused on the significance of a social policy issue to a particular issuer, they will now focus on the proposal’s “broad societal impact.”  

This is appalling. In effect, the SEC is saying that corporate proxy statements can be conscripted by somebody owning a trivial amount of stock to solve "societal problems" that may have virtually no nexus to the company.

In addition, the SEC is encouraging shareholders to micromanage the company when it comes to woke issues:

For example, a proposal requesting a company set greenhouse gas emission targets, but providing the company with discretion on a method for its implementation, will no longer meet the threshold for exclusion based on micromanagement.  

How is deciding corporate environmental policy not micromanagement?

Wachtell concludes:

it is not clear which social issues the Staff will deem broad enough to “transcend the ordinary business,” beyond the Staff’s examples of proposals relating to human capital management with a broad social impact or to greenhouse gas emissions targets without specific methodologies.  

Piffle. It is perfectly obvious that the SEC has become a tool of the Warren/Sanders/AOC wing of the Democratic Party and is now leading the charge towards woke capitalism. I feel confident in predicting that woke shareholder proposals will breeze through the process. In the unlikely event that conservatives emulated progressives and started using the shareholder proposals to effect their policy goals, however, I'd bet the SEC allows their exclusion.

 

Greenwood: "The goal of liberalism should not be individual self-determination but the freedom to live together in peace, prosperity and justice"

I really enjoyed reading Daniel Greenwood's new article, which sits at an interesting intersection of political theory, Jewish law, and partnership law:

Liberal political theory has long relied on a metaphor of contract: autonomous adults coming together to agree, by unanimous consent, on the basic structure of a just society. But contract is a strange metaphor with which to explain society. Contract law is based on a morality of strangers acting at arms-length. In contrast, decent societies and the governments they set for themselves must be based on a commitment of mutual responsibility. What makes us fellow citizens—fellows of any variety—is accepting that we are all in this together.

Jewish legal and midrashic traditions can be a useful corrective to the atomistic metaphors underlying most liberal political theory. The Jewish tradition has never had the luxury of imagining self-sufficiency, that government itself is the primary source of unjust power, or that individuals could be free in a state of nature. We too can no longer ignore that a solitary human being is a dead human being, that we need government to make spaces in which we can be free from want, resist oppression by non-governmental power, reverse the destruction of the natural commons on which we depend, and engage in the communal activities that make life meaningful.

The partnership metaphor, I argue, can make visible the mutual concern and collective effort that must characterize decent and just governments in an age of economic challenges and ecological crises. The goal of liberalism should not be individual self-determination but the freedom to live together in peace, prosperity and justice.

Greenwood, Daniel J.H., Partnership, Democracy, and Self-Rule in Jewish Law (May 3, 2021). Touro Law Review, Vol. 36, No. 959, 2021, Available at SSRN: https://ssrn.com/abstract=3838904

Why did CEOs wake?

In April 2021, Yale Management School Dean Jeffrey Sonnenfeld convened 90 CEOs of prominent US corporations to create a common front against newly enacted voting legislation in Georgia and proposed similar legislation in Texas and elsewhere. Dean Sonnenfeld characterized the gathering as the start of a new “spiritual awakening,” akin to the historic Great Awakenings, although critics might suggest this awakening embraces progressive politics rather than the Gospel as holy writ.

As Dean Sonnenfeld pointed out, this is not the first time CEOs of large corporations have intervened in political controversies in recent years. There was the North Carolina “bathroom bill” brawl in 2016, opposition to various Trump actions on immigration and climate change, the Parkland shooting in 2018, and so on. Although some of the participating CEOs protest that their actions were nonpartisan, critics have pointed out that in every case the CEOs came down on the progressive side of the dispute.

To be sure, business and politics have been intertwined in the USA since the Founding. Two hundred years ago the mere act of forming a corporation required the legislature to pass a statute creating that corporation’s charter, which generated much corruption. In the subsequent decades, businesses routinely lobbied government for special favors. Today, annual business lobbying expenditures approaches $3 billion.

So what makes CEO activism different? Traditional business engagement with government was typically directed at the company’s bottom line. It sought a contract to provide the government with goods or services, to obtain tax breaks, or to derail costly regulation.

In contrast, woke CEO activism typically is unrelated to the company’s bottom line. Indeed, it often negatively impacts the bottom line. As The Economist recently reported, when Walmart banned sales of certain types of ammunition in response to a mass shooting, “footfall in Walmart stores in Republican districts fell more sharply as a result than it rose in Democratic ones.”

So why are CEOs plunging into social activism? Some claim that CEOs are responding to perceived consumer and labor demand. In particular, millennials apparently prefer to work for and purchase from companies that are perceived as socially and environmentally responsible. Accordingly, there is an increasingly widely held view in the business community that to attract Millennial and Generation Z workers and customers, companies must project an image as social justice activists. Nike’s embrace of Colin Kaepernick is but the most obvious example of this phenomenon.

Alternatively, some argue that the CEOs may be trying to head off regulation by progressive politicians. As Wall Street Journal columnist David Benoit observed, “Democratic presidential candidate Elizabeth Warren has argued that the primacy of shareholder returns has worsened economic inequality, enriching wealthy investors at the expense of workers.” With the mainstream of the Democratic Party seemingly moving in Warren’s direction on business and finance issues, CEOs may hope that a voluntary embrace of corporate social responsibility platitudes would help them fend off more intrusive regulation.

Both of those factors likely explain at least part of what’s going on, but there is another explanation that suggests a much more profound—and potentially permanent—change taking place.

What we’re seeing is the culmination of what Christopher Lasch called The Revolt of the Elites. In his 1995 classic, Lasch identified an emergent split between what he called the New Elites and the rest of society. The changes Lasch spotted became trends that accelerated in subsequent years. In particular, Lasch explained that “the new elites . . . regard the masses with mingled scorn and apprehension.”  They dismissed the masses’ values as “mindless patriotism, religious fundamentalism, racism, homophobia, and retrograde views of women.”  This tension was perhaps nowhere more pronounced than with respect to religion. When Lasch wrote over two decades ago, he opined that “[a] skeptical, iconoclastic state of mind is one of the distinguishing characteristics of the knowledge classes. . . .  The elites’ attitude to religion ranges from indifference to active hostility.”

If anything, today’s elites have become even more hostile to religious values. As Samuel Gregg observes, the Davos Man’s moral creed is “a mélange of social liberalism, environmentalism, and a new order of a borderless world. . . . [R]eligion is considered the refuge of fanatics and anyone stupid enough to be skeptical of gender ideology and techno-utopianism.”

A quarter-century later, Lasch’s new elites have risen to the top of corporate hierarchies. They brought their values into the C-suite. CEOs increasingly reflect the values of the Blue state coastal bubbles in which they are embedded, especially on environmental and social issues. No Fortune 100 CEOs contributed to Donald Trump’s 2016 presidential campaign, for example, but eleven gave to Hillary Clinton. More generally, “liberal groups accounted for eight of the top ten ideological causes of the ultra-rich, and seven of the ten congressional candidates most dependent on money from such people were Democrats.” Even one of the progressive movement’s favorite whipping boys—David Koch—publicly self-identifies as “a social liberal.”

As a result, as a Slate essay observed, “Fortune 500 companies today are socially liberal, especially on areas surrounding diversity, gay rights, and immigration; they are unabashedly in favor of free trade and globalization, express concern about climate change, and embrace renewable energy.” In doing so, they are simply reflecting the changing values of their CEOs.

All of which suggests that the elites who control America’s largest corporations are likely to remain some the primary culprits in the assault on America’s national and cultural identity.

Charles Elson in Directors and Boards Magazine on Corporate Political Involvement

My friend and law school classmate Charles Elson, who heads up the fabulous Weinberg Center on Corporate Governance at the University of Delaware edits Directors & Boards magazine. This issue is devoted to the growing controversy over corporate involvement in politics. Charles has a great editorial on the topic in the issue.

Charles begins by making a basic point that most people seem to be overlooking; namely, that the current wave of corporate political engagement differs dramatically from past engagements:

Historically, corporations avoided politics except where the company’s basic interest was Involved ....

Charles continues by explaining why corporate engagement on issues that are tangential to its core business is problematic:

The corporation and its various constituencies reflect the diversity of the body politic. Employees, customers, suppliers and shareholders hold viewpoints that may be quite divergent within their ranks. For a CEO to direct a particular position which reflects his or her own viewpoint may equally be opposed by as many constituencies that support it

For a business to be successful, there must be a near unanimity of purpose. A position on a controversial social issue taken by the CEO will offend as many as who embrace it, ultimately harming the success of the business. Companies were created to supply good products at fair prices to the public in a lawful manner. Anything outside of this sphere that detracts from this objective should be avoided no matter how noble one views the purpose.

Precisely. Go read the whole thing.

 

A Twitter thread on politics and religion

1/ I don't usually look to @TheEconomist or, in particular, it's Lexington column for insight on religion or faith. It'd a relentlessly secular institution. Yet, last week Lexington actually had as insightful essay on the way politics is filling the God-shaped hole in people.

— Steve Bainbridge (@PrawfBainbridge) April 5, 2021

2/ Lexington points out that many of the "evangelicals" who supported Trump in fact are "lapsed" who do not attend church and have replaced faith in God with nationalism and racism. #christiantwitter #catholictwitter

— Steve Bainbridge (@PrawfBainbridge) April 5, 2021

3/ The usually left-leaning Lexington also put aside it's liberal blinders to acknowledge that "The most avowedly secular Democrats—well-educated “woke” liberals—are also the likeliest to moralise." https://t.co/1eo7XhwQyI

— Steve Bainbridge (@PrawfBainbridge) April 5, 2021

4/ Lexington goes awry, however, in claiming that "Not since the 1850s, when New England’s Puritans embraced the abolitionist case and southern Baptists preached a divine justification for slavery to thwart them, have politics and religion been so destructively confused."

— Steve Bainbridge (@PrawfBainbridge) April 5, 2021

6/ Meanwhile, the same concern is eloquently addressed by @sullydish. After an extended contemplation of the state of his own soul, Sullivan notes that faith "makes politics less fraught." #CatholicTwitter https://t.co/JJZGKJdGvY

— Steve Bainbridge (@PrawfBainbridge) April 5, 2021

8/ @sullydish then turns to the rise of the nones (a topic about which he and @BishopBarron could have an interesting conversation). And this gets to the overlap with Lexington: pic.twitter.com/lcAfwOPtK7

— Steve Bainbridge (@PrawfBainbridge) April 5, 2021

10/ But Cardinal George continued to predict that his successor will pick up the shards of a ruined society and slowly help rebuild civilization, as the church has done so often in human history. Which leads me back to @sullydish: pic.twitter.com/rqdMAFLkN0

— Steve Bainbridge (@PrawfBainbridge) April 5, 2021

If Big Business is leaving the Republicans, will there be a revival of the old conservative antipathy to capitalism?

The WSJ is unhappy with corporate CEOs siding with the Democrats over the Georgia election law:

The CEO intervention into Georgia election law is different. It concerns a matter that doesn’t directly affect Coca-Cola or Delta Airlines, to cite two companies whose executives condemned the new law. The CEOs are instead injecting themselves into a heated debate over election law and the tension between ballot access and integrity.

The Journal concludes:

The CEOs are also playing into the hands of the Republican Party’s growing anti-corporate wing that is already making hay with Big Tech’s free-speech restrictions.

I am reminded of Ronald Reagan's campus quip that "I didn't leave the Democratic Party. The party left me."

In my article, Corporate Purpose in a Populist Era, 98 Neb. L. Rev. 543 (2019), I discussed the apparent rise of a right of center populist movement. And, as I explained in my article, Conservative Critiques of Capitalism, American Affairs, Fall 2018, at 113, there is a long history of conservative skepticism of big business:

Although American conservatism in recent decades has been characterized by its rhetorical embrace of free markets, ... it was not always so. To the contrary, there is a long tradition of skepticism about—and sometimes outright hostility to—capitalism among important strains of American conservative thought. And although the NeverTrumpers of both Right and Left continue to deny it, Donald Trump’s “popularity among conservative voters turned out to be more than just a reality-show phenomenon,” largely because Trump “tapped into a deep-seated frustration with the political and economic establishment.” ...

Postwar conservatism in the United States was a somewhat rocky marriage of traditionalists, libertarians, and, later, neoconservatives, united mainly by a shared opposition to communism. Given a seemingly binary and existential choice between Western capitalism and Soviet Communism, American conservatives opted for the former. Yet, despite Frank S. Meyer’s famous fusionism project, the preexisting fault lines persisted. With Communism off the table as an existential threat, the rupture of such a contingent unity along those fault lines may have been inevitable.

If Big Business has decided to throw its lot in with the woke, that rupture may become final.

How are CEOs deciding which political fights they should jump into?

The WSJ observes:

Companies have long sought to influence policies that affect their business, and rightly so. They have the First Amendment right to petition the government. And as the reach of the state has grown, the success or failure of a firm or industry can depend on defeating political predators in Washington or state capitals. We wish it were otherwise, but this is today’s reality.

The CEO intervention into Georgia election law is different. It concerns a matter that doesn’t directly affect Coca-Cola or Delta Airlines, to cite two companies whose executives condemned the new law. The CEOs are instead injecting themselves into a heated debate over election law and the tension between ballot access and integrity.

One wonders whether there is some neutral principle by which CEOs are choosing which political fights in which to intervene? Or are the CEOs simply carrying the Democratic Party's water? The WSJ claims it is the latter.

I have no opinion about the Georgia election law. It's not my field and there seems to be a huge amount of fake news out there on both sides.

But I do wonder whether CEOs have become social justice warriors or are just greenwashing. In either case, however, it's interesting that the CEOs seem unconcerned with the reactions of the 74 million-plus folks who voted for Donald Trump. Do CEOs assume only the woke pay attention to what companies do? Or are they content to lose those customers?

 

Political Tribal Sorting Comes to the C-Suite

It is commonplace that Americans are sorting by political tribes. A recent study finds that phenomenon is taking place in the C-suite as well:

Executive teams in U.S. firms are becoming increasingly politically polarized. We establish this new fact using political affiliations from voter registration records for top executives of S&P 1500 firms between 2008 and 2018. The rise in political homogeneity is explained by both an increasing share of Republican executives and increased sorting by partisan executives into firms with like-minded individuals. We further document substantial heterogeneity across party lines in executives’ beliefs, as proxied by their trading of company stock around presidential elections, as well as in firms’ investment decisions.

Fos, Vyacheslav and Kempf, Elisabeth and Tsoutsoura, Margarita, The Political Polarization of U.S. Firms (February 20, 2021). Available at SSRN: https://ssrn.com/abstract=3784969 or http://dx.doi.org/10.2139/ssrn.3784969

Conservative Discontents with Capitalism

Samuel Gregg in Public Discourse:

Over the past six years, there has been an eruption of disputes on the American right about the place of markets in modern conservative thought and policy. ... 

These discussions have underscored to me two things. The first is that these conservatives are asking legitimate questions which merit considered responses. Second, however sympathetic I am to their worries, these conservatives’ critiques of markets and their proposed remedies are insufficiently cognizant of some important realities.

Actually, the history of conservative discontents with capitalism long antedates the last six years. I addressed this rich history in my essay Conservative Critiques of Capitalism. I concluded that:

Postwar conservatism in the United States was a somewhat rocky marriage of traditionalists, libertarians, and, later, neoconservatives, united mainly by a shared opposition to communism. Given a seemingly binary and existential choice between Western capitalism and Soviet Communism, American conservatives opted for the former. Yet, despite Frank S. Meyer’s famous fusionism project, the preexisting fault lines persisted. With Communism off the table as an existential threat, the rupture of such a contingent unity along those fault lines may have been inevitable. The task ... is to revive what is best in those traditions and to turn them to the task of reforming capitalism into a practical but humane way of organizing the economy.

Since I jumped ship from The Republican Party to The American Solidarity Party, I've been increasingly exploring Distributism as an alternative. G.K. Chesterton is a good place to start.

Tweeting about cancel culture and self-censorship

1/ "Our country’s history is filled with imperfect people who nevertheless did remarkable things." https://t.co/D1A0073flv #cancelculture

— Steve Bainbridge (@PrawfBainbridge) March 2, 2021

2/ "self-censorship: I found that merely 9% of Trump-supporting academics say they would feel comfortable expressing their political beliefs to a colleague" https://t.co/YZpw7TDTKP #cancelculture #selfcensorship #academictwitter

— Steve Bainbridge (@PrawfBainbridge) March 2, 2021

3/ Sir Kazuo Ishiguro is "worried that less established authors were self-censoring by avoiding writing from certain viewpoints or including characters outside their immediate experiences." https://t.co/xomfnbNrCv #cancelculture #selfcensorship

— Steve Bainbridge (@PrawfBainbridge) March 2, 2021

Guttentag on Chris Collins' Insider Trading

My friend Michael Guttentag just posted this really interesting article:

On June 22, 2017, Representative Christopher Collins called his son from the lawn of the White House to share confidential information about a public company. In tipping off his son, Collins acted despite significant legal risk and a limited payoff.

This article attempts to make sense of Collins’ seemingly inexplicable behavior by turning to the work of criminologists to identify distinctive features of the crime of insider trading. First, James William Coleman’s research on what motivates white-collar criminals suggests that the absence of readily identifiable victims may contribute to the incidence of insider trading. Second, the work of Lawrence Cohen and Marcus Felson on the opportunity structure of crime suggests how the ease with which those in possession of material non-public information can trade facilitates insider trading.

Guttentag, Michael D., "Huh?" Insider Trading: The Chris Collins Story (October 26, 2020). 15 Tenn. J. L. & Pol. 95 (2020), Loyola Law School, Los Angeles Legal Studies Research Paper No. 2020-28, Available at SSRN: https://ssrn.com/abstract=3719551

It is time to recapture the definition of conservative from those who are unable to govern themselves and unable to live in peace with each other

My political journey in recent years has been a steady movement from Burkean conservatism (with a considerable dash of Catholic neoconservatism learned from Michael Novak) towards what in Europe would be called Christian Democracy.[1] This movement culminated in my switch of party affiliation from Republican to American Solidarity. Nonetheless, I remain a small "c" conservative in many ways and offer these preliminary thoughts on reforming American conservatism.

The term conservative has become an umbrella that includes Burkean conservatives, warmongering Neo-conservatives, libertarians, paleoconservatives, paleolibertarians, nationalist populists, nativists, and white supremacists. 

The assault on the Capitol by Trump's insurrectionists requires that conservatives recapture the meaning of the word and, in so doing, to reject and expel those who think violence and racism are conservative principles.

I learned about conservatism from the works of Russell Kirk. Some of those principles seem especially pertinent to today's concerns:

Liberals and radicals, the conservative says, are imprudent: for they dash at their objectives without giving much heed to the risk of new abuses worse than the evils they hope to sweep away. As John Randolph of Roanoke put it, Providence moves slowly, but the devil always hurries. Human society being complex, remedies cannot be simple if they are to be efficacious. The conservative declares that he acts only after sufficient reflection, having weighed the consequences. Sudden and slashing reforms are as perilous as sudden and slashing surgery.

Or, one might add, sudden and slashing riots.

Constitutional restrictions, political checks and balances, adequate enforcement of the laws, the old intricate web of restraints upon will and appetite—these the conservative approves as instruments of freedom and order. A just government maintains a healthy tension between the claims of authority and the claims of liberty.

Or, as Edmund Burke said:

The only liberty that is valuable is a liberty connected with order; that not only exists along with order and virtue, but which cannot exist at all without them. It inheres in good and steady government, as in its substance and vital principle.

Obviously, what we saw at the Capitol was neither liberty nor order, but rather the breakdown of the social norms and morals that underlie an ordered society. As Kirk wrote:

We couple the words “law and order”, and indeed they are related, yet they are not identical. Laws arise out of a social order; they are the general rules which make possible the tolerable functioning of an order. Never the less, an order is bigger than its laws, and many aspects of any social order are determined by beliefs and customs, rather than being governed by positive laws.

This word ‘order’ means a systematic and harmonious arrangement — whether in one’s own character or in the commonwealth. Also ‘order’ signifies the performance of certain duties and the enjoyment of certain rights in a community.

Social disorder follows from internal disorder:

Order is the first need of the soul. It is not possible to love what one ought to love, unless we recognize some principles of order by which to govern ourselves. Order is the first need of the commonwealth. It is not possible for us to live in peace with one another, unless we recognize some principle of order by which to do justice.

As a first item of business, a truly conservative party must reject those who are unable to govern themselves and unable to live in peace with each other.

Some of us hoped that Donald Trump might lead a movement that would address the divide between what Joel Kotkin calls the Yeomanry and the Oligarchs and their acolytes in the Clerisy. Mea culpa. Sadly, what Trumpism seems to have confirmed is that right of center American populism is inextricably bound up with toxic nationalism, nativism, and racism. 

I realize that it is rather naive of me to hope that the mix of Catholic social thought and Christian Democracy embodied by American Solidarity will come to power anytime soon. But I firmly believe that it is the best hope of the Yeomanry.

Recommended reading:

I concur with Bishop Barron the need for a national examination of conscience