Wednesday, October 9, 2019

ICYMI: #corpgov Midweek Roundup (Oct. 9, 2019)

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October 9, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, October 2, 2019

Defining Neoliberalism

I recently listened to an episode of EconTalk: “Dani Rodrik on Neoliberalism.” What follows is an excerpt from the show, wherein Rodrik defines neoliberalism:

What I mean by neoliberalism is really mostly a frame of mind that places the independent functioning of markets and private incentives and pricing incentives at the center of things. And I think in the process downgrades certain other values, like equity and the social contract, and certain restraints on private enterprise that are often required to achieve economic ends that are more compatible with social goals.

For whatever it’s worth, I’d change this definition as follows:

What I mean by neoliberalism is really mostly a frame of mind that places the independent functioning of markets and private incentives and pricing incentives at the center of things. And I think in the process [posits that] certain other values, like equity and the social contract, and certain restraints on private enterprise that are often required to achieve economic ends that are more compatible with social goals [are optimized via free markets compared to the historical failures of central planning].

Two other comments from the show that stuck out to me:

  • what both Foxconn and the Amazon cases show is that in fact there is so much uncertainty about markets and consumer preferences and technologies that, you know, before the ink is dry that there are things that contribute to the unraveling of these contracts
  • the cornerstone idea in microeconomics of utility--I mean, it's not measurable

On this last point, I was remined of a footnote in Volume I of the two-volume mini-treatise on the history of economic thought I co-authored with Robert Ashford (A History of Economic Thought: A Concise Treatise for Business, Law, and Public Policy):

To the extent utilitarianism poses a challenge to laissez-faire policies (i.e., rather than letting the market decide who gets what, we will study costs and benefits and allocate resources on that basis), economists favoring laissez-faire policies could be seen as hijacking utilitarian concepts by simply defining the results of free exchange as utility. In other words, while utilitarianism may be viewed as starting out as a challenge to laissez-faire ideology, once utility is equated with efficiency, and efficiency is generally associated with free-market transactions, then utilitarianism arguably becomes an asset to those espousing a laissez-faire ideology as opposed to a challenge.

October 2, 2019 in Books, Law and Economics, Stefan J. Padfield | Permalink | Comments (0)

Wednesday, September 25, 2019

ICYMI: #corpgov Midweek Roundup (Sep. 25, 2019)

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September 25, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, September 18, 2019

Reflections on the First Annual ISG/Corporate Issuers Conference

This past Friday, I had the privilege of attending the First Annual ISG/Corporate Issuers Conference, hosted by the Investor Stewardship Group (ISG) and the John L. Weinberg Center for Corporate Governance at the University of Delaware. The Investor Stewardship Group is “an investor-led effort that includes … more than 60 U.S. and international institutional investors with combined assets in excess of US$31 trillion in the U.S. equity markets,” which was formed “to establish a framework of basic investment stewardship and corporate governance standards for U.S. institutional investor and boardroom conduct.”[1] The John L. Weinberg Center for Corporate Governance “is one of the longest-standing corporate governance centers in academia, and the first and only corporate governance center in the State of Delaware, the legal home for a majority of the nation’s public corporations.”[2] Charles M. Elson is the Edgar S. Woolard, Jr., Chair in Corporate Governance and the Director of the Weinberg Center.[3]

The primary work product of the ISG is the “framework for U.S. Stewardship and Governance comprising of a set of stewardship principles for institutional investors and corporate governance principles for U.S. listed companies. The corporate governance framework articulates six principles that the ISG believes are fundamental to good corporate governance at U.S. listed companies.” Meanwhile, the “stewardship framework seeks to articulate a set of fundamental stewardship responsibilities for institutional investors.” The Framework “became effective on January 1, 2018.”[4]

The agenda for the conference included a “deep-dive” into both the ISG Stewardship Principles and ISG Corporate Governance Principles, as well as “Fireside Chat” consisting of Charles Elson interviewing Marty Lipton. What follows, in no particular order, are three of my reflections on the conference. The Chatham House Rule applied, so I will not attribute any statements to any particular speakers.

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September 18, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Monday, September 16, 2019

Announcing the Third Annual Business Law Prof Blog Symposium - "Connecting the Threads"

Screenshot 2019-09-13 21.09.15

I am pleased to announce that The University of Tennessee College of Law is again hosting editors of this blog for a symposium focusing on current topics in business law.  The website for the symposium, which is sponsored by UT Law's Clayton Center for Entrepreneurial Law, is here.  Faculty and students from UT Law will comment on presentations given by my fellow BLPB bloggers.  Participating editors of the BLPB in this year's program include Colleen Baker, Ben Edwards, Josh Fershee, me, Doug Moll, Haskell Murray, and Stefan Padfield.  The lunchtime panel features me and two of my UT Law colleagues exploring the legal meaning and understanding of mergers and other business combinations from various perspectives, including business associations law, bankruptcy and UCC law, and federal income tax law.  That, alone, is surely worth the price of entry!

If you live in or near Knoxville, please come and join us.  Continuing legal education credit is available to members of the Tennessee bar.  If you cannot make it to the symposium, however, a video recording of the proceedings will later be available on UT Law's website, with an expected option for online continuing legal education credits.  (Last year's program is available here with a continuing legal education credit option.)  In addition, the written proceedings of the symposium are scheduled to be published in the spring volume of Transactions: The Tennessee Journal of Business Law.

I am looking forward to having many of my BLPB co-editors in town for this program.  It's always a special time when we are together.

September 16, 2019 in Colleen Baker, Conferences, Haskell Murray, Joan Heminway, Joshua P. Fershee, Stefan J. Padfield | Permalink | Comments (0)

Wednesday, September 11, 2019

ICYMI: #corpgov Midweek Roundup (Sep. 11, 2019)

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September 11, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, September 4, 2019

ICYMI: #corpgov Midweek Roundup (Sep. 4, 2019)

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Wednesday, August 28, 2019

ICYMI: #corpgov Midweek Roundup (Aug. 28, 2019)

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Wednesday, August 21, 2019

ICYMI: #corpgov Midweek Roundup (Aug. 21, 2019)

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Saturday, August 17, 2019

ICYMI: #corpgov Weekend Roundup (Aug. 17, 2019)

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Wednesday, August 7, 2019

ICYMI: #corpgov Midweek Roundup (Aug. 7, 2019)

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Wednesday, July 31, 2019

ICYMI: #corpgov Midweek Roundup (July 31, 2019)

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Wednesday, July 24, 2019

ICYMI: #corpgov Midweek Roundup (July 24, 2019)

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Wednesday, July 17, 2019

ICYMI: #corpgov Midweek Roundup (July 17, 2019)

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Wednesday, July 10, 2019

ICYMI: #corpgov Midweek Roundup (July 10, 2019)

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Wednesday, July 3, 2019

ICYMI: #corpgov Midweek Roundup (July 3, 2019)

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Wednesday, June 26, 2019

ICYMI: #corpgov Midweek Roundup (June 26, 2019)

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Saturday, June 22, 2019

Deadweight Loss or Utopian Benefit?

I am in Colorado attending the Law & Economics Center’s 34th Economics Institute for Law Professors. It’s a fantastic conference, and I highly encourage you to attend if you can. You can view this year’s agenda here. (If you have trouble with the links, try a different browser.  If that doesn't work, let me know.)

This past Wednesday, during the “Economics of Innovation and Dynamic Competition” class, Prof. John Yun discussed the difference between static and dynamic models of competition, and how this might impact our assessment of monopolists. One aspect of this discussion focused on the concept of “deadweight loss.” For those of you not familiar with this concept, go watch the following 3-minute video from “ACDC Econ”: https://youtu.be/YNcPxPz9fng .

The video provides the standard assessment that monopolies create “deadweight loss” and that this deadweight loss is inefficient. Consequently, the conventional wisdom is that government regulation/intervention is therefore justified. However, this analysis is based on comparing the expected behavior of a monopolist with a static model of perfect competition. One of the problems with using a static model is that it fails to take into account where we’ve been or where we’re actually likely to go. A more dynamic view might prompt questions such as, “If monopoly pricing power didn’t exist, would we ever get the innovation that creates monopoly power in the first place?” Or, “If perfect competition rarely, if ever, exists in the real world, why are we using it as a benchmark for regulation?” Put another way, does it really make sense to regulate away the incentive to innovate that is created by monopoly pricing power (and the accompanying consumer and producer surplus) merely because we theorize that if we lived in the magical world of perfect competition we’d have even more surplus?

The foregoing led me to ask whether it might not be better to use “utopian benefit” rather than “deadweight loss” to describe the difference between what we get with monopoly pricing as opposed to what we’d expect to get with perfect competition. It is natural to react to a “loss” of surplus as something that should be made up, corrected, or restored – but calls to put innovation at risk in order to pursue a “utopian benefit” might lead to more appropriate caution and humility when it comes to regulation.  Let's see if we can get "utopian benefit" to catch on as an alternative to "deadweight loss."

June 22, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, June 19, 2019

ICYMI: #corpgov Midweek Roundup (June 19, 2019)

June 19, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, June 12, 2019

ICYMI: #corpgov Midweek Roundup (June 12, 2019)

June 12, 2019 in Stefan J. Padfield | Permalink | Comments (0)