Citizens United (again?)

Tue Sep 28 06:46:22 PDT 2010

I think the problem is "at least in theory."  The problem with this
approach to economics is that it is based on assumptions and logic
rather than being empirical.  My own assumption is that the Market Fairy
that makes all work out is a more story than fact.  I don't have time to
keep up with all this and if I did what would I do, sell my vanguard
index funds and my other index funds?

Michael Curtis

From: conlawprof-bounces at lists.ucla.edu
[mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Justin Levitt
Sent: Monday, September 27, 2010 9:27 PM
To: Mark.Scarberry at pepperdine.edu
Cc: Conlawprof at lists.ucla.edu
Subject: Re: RE: Citizens United (again?)

A few questions about the "managers are people, too" argument -- focused
on public, for-profit companies, though I know that that's a small
portion of the whole corporate universe.  

I don't doubt that the separation between ownership and management
allows corporate managers to take actions that stakeholders would not
see as profit-maximizing.  But -- at least in theory -- wouldn't such
action generally be punished by the public market, even if it were
legally permitted?  And (a slightly different question) wouldn't the
market incentive drive managers to forego such action, to the extent
that their incremental incentives are tied to market performance?

And one more related question: isn't the point of a corporate PAC to
address managers' personal ethical and reputational concerns?  Put
differently, if there's a meaningful difference between the speech of
the corporation (from general treasury funds) and the speech of a
corporate PAC (based on voluntary contributions from individuals
connected to the corporation), isn't the theory of the difference that
the former is just the aggregate accumulation of stakeholder welfare,
and the latter the place that individuals' personal incentives are
expressed?   

Justin Levitt
Associate Professor of Law
Loyola Law School
919 Albany St.
Los Angeles, CA  90015
213-736-7417

> ----- Original Message -----
> From: "Scarberry, Mark" <Mark.Scarberry at pepperdine.edu>
> Date: Monday, September 27, 2010 12:25 pm
> Subject: RE: Citizens United (again?)
> To: conlawprof at lists.ucla.edu

> 

> 

> > Prof. Humbach makes a critical point. 

> 

> > I also wonder whether the separation of ownership and management has
quite the effect that those opposed to Citizens United think it has.
That separation allows managers quite wide discretion in carrying out
their jobs, and it allows them to take actions that many shareholders
would see not as profit maximizing but as designed for other goals, such
as social welfare. To put it simply, managers are people, too, and they
have both ethical and reputational concerns, some of which they may
think they should take into account on their own or because their
stakeholders would also have such concerns. Further, to the extent that
managers are seeking to have a better business climate in which the
corporation's assets can be used more productively, they may be
effective advocates for the more general good, perhaps counterbalancing
those who would give up economic growth for other goals. Individuals and
others (e.g., pension plans) who own stock in a publicly-held
corporation would like the corporation to create as much wealth as
possible.  That's not to say that corporations' managers will always (or
even usually) act for the common good, but the same can be said for rich
individuals, whose commitment to their families' continued wealth may be
as pernicious in some ways as a manager's commitment to enriching
stockholders.

> 

> > Mark Scarberry

> > Pepperdine

> 

> > From: conlawprof-bounces at lists.ucla.edu
[mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Humbach, Prof.
John A.
> > Sent: Monday, September 27, 2010 11:57 AM
> > To: Marc R Poirier; 'Steven Jamar'; Raymond Kessler
> > Cc: <conlawprof at lists.ucla.edu>
> > Subject: RE: Citizens United (again?)

> 

> 

> 

> > There is no doubt that individuals are different from corporations,
for all the reasons that Marc and others have mentioned.

> 

> > What I have trouble seeing is a principled basis for distinguishing
between corporations that are "press" and other corporations that engage
in public expression. For example, should General Electric be less free
in its expression (through its press arms known as NBC, MSNBC, etc.)
than Fox's News Corp, which is more purely "press"? Isn't any entity,
when engaged in public expression via print, broadcast or other media, a
"press"? 

> 

> > Maybe we should forbid those entities that engage in public
expression as a "press" from having any collateral interests of their
own-a kind of "conflict of interests" prohibition for the media, so
Disney would have to either sell Disneyland, or quit making movies,
running the ABC network and publishing books.  But as long as we permit
a "mixing" of press and non-press functions in a single entity, I don't
see the principled basis for distinguishing Citizens United.

> 

> > takinglibertyseriously.net

> 

> > John A. Humbach, Professor of Law 
> > Pace University School of Law 
> > 78 North Broadway 
> > White Plains, New York 10603 
> > Tel. 914-422-4239  -- jhumbach at law.pace.edu 
> > personal homepage: humbach.net

> 

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