David Nieporent: The people who said that they didn’t think corporate officers had to read contracts and that it wouldn’t be a breach of fiduciary duty if they didn’t.

But he certainly did get fired by the shareholders, just like an elected representative who tossed a coin would get fired by the electorate.

Who endorsed that? Just because legislators don’t read every letter, doesn’t mean they’re not responsible for their votes. If they never read anything, but simply tossed a coin for every vote, they’d still be responsible.

The people who said that they didn’t think corporate officers had to read contracts and that it wouldn’t be a breach of fiduciary duty if they didn’t.

Frank — Well, not every partner signs every brief

Every partner vouches for the brief by virtue of his liability as a partner.

David Nieporent:
I’m just surprised how many people are endorsing Ken Lay’s defense: all these details are too complicated; just because I’m CEO doesn’t mean you can expect me to pay attention to and understand them all.

Who endorsed that? Just because legislators don’t read every letter, doesn’t mean they’re not responsible for their votes. If they never read anything, but simply tossed a coin for every vote, they’d still be responsible.

Legislators aren’t supposed to manage the government’s day-to-day operations either. Managing operations is the executive’s job. Legislators enact policies and provide oversight. But you wish to analogize them to officers instead of directors then my point still holds, since officers aren’t expected to read every word of every legal document they sign either.

I’m just surprised how many people are endorsing Ken Lay’s defense: all these details are too complicated; just because I’m CEO doesn’t mean you can expect me to pay attention to and understand them all.

But the analogy is strained, and this isn’t really a matter for analogy. We should find the most sensible, efficient system.

[Frank -- Well, not every partner signs every brief; a partner whose name is not on the brief has no obligation to read it and has not in any way attested to its accuracy, soundness, etc. But every legislator who votes for a bill -- that is, who casts a vote in their own name -- exercises their individual authority to participate in the legal enactment of the bill and, as a consequence, is indicating their conclusion that the legislation is desirable and, given the oath of office, constitutional. How can they attest to these things if they have not read it?

I agree we should seek the most sensible system, but the most "efficient"? Little of existing legislative procedure would pass that test.]

I don’t understand how we got to the point of making this comparison anyway. Members of Congress are not analogous to directors; directors are supposed to provide oversight, not manage the day-to-day operations of the business. Members of Congress are not directors of some sort of legislative corporation; they’re the actual legislators. It’s their personal responsibility, and it’s non-delegable.

Legislators aren’t supposed to manage the government’s day-to-day operations either. Managing operations is the executive’s job. Legislators enact policies and provide oversight. But you wish to analogize them to officers instead of directors then my point still holds, since officers aren’t expected to read every word of every legal document they sign either.

Obviously a legislator voting for legislation isn’t the same as a corporate director voting to authorize a transaction But voting on legislation is a lot more like voting on a corporate resolution than it is like doing assigned reading for class or signing a legal brief, which were Ilya’s analogies.

Michael Smith: Martinned also said:
Are you telling me that you consider the black man’s desire for freedom from chattel slavery— versus the white plantation owner’s desire to keep his “property” working his cotton fields for free — to be a mere difference of opinion about values that is beyond debate? That there is no moral basis for condemning slavery?

I answered this one, but for some reason my comment disappeared. I also have an earlier comment “awaiting moderation”. I suspect this is because I like to stick links (=footnotes) in my comments…

yankee: Not in the slightest.The failure to read the merger agreement was just one of the many ways in which the officers and directors failed to take any steps to become informed abut the transaction in question.Nothing in Van Gorkom says (or even suggests) that the directors had an obligation to read the merger agreement and ancillary documents in their entirety and that failure to do so, without more, would constitute a breach of duty.Adler’s claim, by contrast, is that a legislator’s failure to read a bill in its entirety before voting on it is irresponsible per se.

I don’t understand how we got to the point of making this comparison anyway. Members of Congress are not analogous to directors; directors are supposed to provide oversight, not manage the day-to-day operations of the business. Members of Congress are not directors of some sort of legislative corporation; they’re the actual legislators. It’s their personal responsibility, and it’s non-delegable.

Martinned: Hang on: who has more immigration, the US or Europe?

I would guess the US. You have evidence to the contrary?

Sandy MacHoots:
Yes they are.See Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985) (holding inter alia that officers and directors who did not read merger documents before agreeing to them breached their fiduciary duties to the corporation and are personally liable).

Not in the slightest. The failure to read the merger agreement was just one of the many ways in which the officers and directors failed to take any steps to become informed abut the transaction in question. Nothing in Van Gorkom says (or even suggests) that the directors had an obligation to read the merger agreement and ancillary documents in their entirety and that failure to do so, without more, would constitute a breach of duty. Adler’s claim, by contrast, is that a legislator’s failure to read a bill in its entirety before voting on it is irresponsible per se.

Michael Smith: Martinned also said:Are you telling me that you consider the black man’s desire for freedom from chattel slavery — versus the white plantation owner’s desire to keep his “property” working his cotton fields for free — to be a mere difference of opinion about values that is beyond debate? That there is no moral basis for condemning slavery?

By “beyond debate” I meant something that it is impossible to have a debate about, debate being defined in the sentence before. The slave and the slaveowner aren’t having a debate, they’re just talking to each other, each stating their opinion without any chance of agreement. In the end, as in Britain as early as 1772, if enough people with enough power side with the slave, it doesn’t matter anymore what the slaveowner thinks.

In that sense, these underlying values are like God: The unmoved mover. (Belief in God is another notable example of something you can’t argue about. You believe it, or you don’t. What is there to say?)

Part of the point of intelligent debate is to trace differences of opinion back to differences in first principles, values that are not themselves open for debate. If this is your opinion, that settles it, there’s nothing left to say.

Are you telling me that you consider the black man’s desire for freedom from chattel slavery — versus the white plantation owner’s desire to keep his “property” working his cotton fields for free — to be a mere difference of opinion about values that is beyond debate? That there is no moral basis for condemning slavery?

Secondly, the block that votes most heavily, per capita, are those who are on Medicare right now.

And, finally, the self indulgent Baby Boomer generation is rapidly moving towards Medicare. I will be eligible in six years and a couple of days. And the rest of my cohort is unlikely to take cutting their expected retirement benefits so significantly lightly.

But then, I wonder when you’re going to make those lazy poor people pay for their own share in the cost of national defence.

Won’t be necessary.

For a full answer to this, see Ayn Rand’s article, “Government Financing in a Free Society” in her book, “The Virtue of Selfishness”.

The short answer to this is that if government were limited to its only morally justified function — which is to protect individual rights by protecting men from those who initiate force or fraud — it would then consist of only three functions: a police force, a civil justice system and an armed forces. In other words, it would be a fraction of its current size. (Even military spending would probably be much lower as we would not be spending billions on the defense of other nations, like Germany and Japan.)

With government reduced to its proper size, it could be financed by charging fees to those who access its services. For instance, there could be a fee charged as a percentage of all business contracts for those who want their contract to ultimately be enforcable in court (likely to be a huge majority). The fee would be voluntary — no one is forced to pay, but if you don’t pay, you don’t have access to the courts to get the contract enforced. Given the volume of commercial contracts in a 14 trillion dollar economy, that would raise a lot of revenue.

There are other ideas in Rand’s article.

However, even if it were true that some amount of taxation is required to support the valid functions of government, this would not justify the creation of a vast, transfer-of-wealth welfare state that grants the unearned to some by looting the earned from others. If I have to be taxed to pay for the police and the national defense — which I need to protect my individual rights — that hardly justifies the notion that I should also be taxed to pay my neighbor’s doctor bills.

Cato The Elder: Yes, that’s what I was looking for — I think I first read about this practice in a book called How Your Government Really Works, albeit about a year ago. Thanks for refreshing me, Anon21.

I wonder if that was done here. I am quite suspicious of a subsidy-laden bill reducing the deficit appreciably, because that logic doesn’t make any economic sense to me. The preliminary findings in Massachussetts are that the subsidies have actually increased the rate of medical spending, as sicker people are adversely selected into the inefficient Health Connector plan, which I fully expect to occur in the Democrats’ federal plan also.

I think the trick, if there was one, was to start the taxes as soon as possible, but delay the subsidies and the like for four years. The result is that in a 10 year window, you have 10 years of additional taxes, offsetting 6 years of subsidies. So, if everything stays constant, extending it out to 20 years would result in 16 years of subsidies and 20 years of taxes, which is a much different thing (changing the ratio of years from 3/5 to 4/5). Which is why, I think, that it is noted that the numbers look a lot worse after the first 10 years.

Guest12345: Why do you keep flipping between individual countries in Europe and the EU? It hardly seems fair to isolate and cherry pick tiny countries when you want to compare per capita GDP, and then jam them all together when you want to compare GDP.

I’m not really sure why GDP matters at all. Cato the Elder asked about it. The “flipping” is caused by the fact that the lists I used for the per capita numbers don’t include an entry for the EU/Eurozone, while a comparison between the US and individual European countries on a total GDP basis is even more nonsensical than a comparison of total GDP already is anyway.

Incidentally, unlike the US constitution, the EU Treaties do explicitly mention health care. Not only does the EU have important supplementary competences in this area (art. 168 TFEU = art. 152 EC.), health care is also part of the general rules on free movement of services, meaning that EU citizen may – in principle – travel to any other EU country for the purposes of obtaining medical treatment. (To be precise, they may do so, but there are certain limitations to health insurers’ requirement to pay for it.) The whole story is here.

Martinned:
Hang on: who have more immigration, the US or Europe? And how does that affect the health care story?

Why do you keep flipping between individual countries in Europe and the EU? It hardly seems fair to isolate and cherry pick tiny countries when you want to compare per capita GDP, and then jam them all together when you want to compare GDP.

Scoring a Bill that Does Not Exist

So what’s the problem? The money to pay for it doesn’t exist, either. Perfect symmetry!

Nothing on earth justifies the notion that some individuals have a right to free (or reduced cost) goods and services to be paid for by initiating the use of force to loot the fruits of another man‘s labor.

Part of the point of intelligent debate is to trace differences of opinion back to differences in first principles, values that are not themselves open for debate. If this is your opinion, that settles it, there’s nothing left to say. But then, I wonder when you’re going to make those lazy poor people pay for their own share in the cost of national defence. ($ 687 bn translates to $ 2290 per person. Modify this a little to take into account that rich people benefit more from defence than poor people, and there’s still no excuse not to charge every man, woman and child at least $ 1000 per year for the privilege of not being murdered by invading Canadians.)

Cato The Elder: I did NOT say per-capita. Which matters because of our huge amount of immigration relative to those European countries. We lavish transfer payments to poorer folks because we have much more of them in poorer health, first of all, and secondly we can afford it.

I’m not sure why total numbers for GDP should matter, they rarely do, but here they are:

IMF/nominal (2008):
EU: $ 18,3 trillion
US: $ 14,4 trillion

World bank/nominal (2008):
US: $ 14,2 trillion
Eurozone: $ 13,6 trillion

IMF/PPP (2008):
EU: $ 15,2 trillion
US: $ 14,2 trillion

World bank/PPP (2008):
US: $ 14,2 trillion
Eurozone: $ 10,9 trillion

ChrisTS: martinned: Do you know why the WB does not consider (?) Qatar?

I just copied the list for the entire world from wiki, and I was too lazy to cut out the non-European ones. Incidentally, the numbers are for 2008.

Cato The Elder: I did NOT say per-capita. Which matters because of our huge amount of immigration relative to those European countries. We lavish transfer payments to poorer folks because we have much more of them in poorer health, first of all, and secondly we can afford it.

Hang on: who have more immigration, the US or Europe? And how does that affect the health care story?

Name me a country with higher (per capita) health care spending than the US.

Irrelevant.

Nothing on earth justifies the notion that some individuals have a right to free (or reduced cost) goods and services to be paid for by initiating the use of force to loot the fruits of another man‘s labor. Such a set-up is nothing less than the involuntary servitude of some for the economic benefit of others — and nothing justifies ANY amount of involuntary servitude.

Would it have been morally justified if the white plantation owners of the 19th century American south had responded to the demands of the abolitionists by saying, “We hear your complaint, so we’ve decided the slaves only have to work for us 4 days out of 7.” No. Part-time is every bit as immoral as full time slavery.

Would it have been morally justified for those plantation owners to say to the slaves, “Look, you don’t have to physically work for us anymore — provided you send us 40% of whatever you earn working elsewhere. We need that 40%, because without it we won’t be able to feed our children, pay our doctor bills, or put food on the table.” Would anyone have said their “needs” justified continuing to live off the efforts of the blacks?

Hell no it wouldn’t be morally acceptable — the proper response from the slaves would be to say, “To hell with your needs — fulfilling your needs, including those of your children, is YOUR responsibility, not MINE — my life belongs to ME, not to you, not to society and not to the government.”

No man, no matter how great his “need”, has a right to any part of another man’s life — because no man has a right to slaves.

The fact that we are currently partially socialized and therefore partially enslaved — in the form of a highly progressive income tax that drains the most productive, the most energetic and the most entrepreneurial members of society to pay for Medicare, Medicaid, S-CHIP, public education, public transportation, food stamps, public housing, farm subsidies, ethanol subsidies, i.e. the whole rotten welfare state — the fact that such a set-up currently exists does not justify expanding the enslavement by piling on another massive looting of the taxpayers.

The solution is to begin dismantling the welfare state. And, since it is true that some welfare recipients paid a lifetime of taxes to support that welfare state during their working lives, the dismantling must be done carefully to protect the rights of those that paid a lot of taxes. It won’t be easy to do — but Obamacare will only make it harder.

We must reverse course and take up a new motto: Give us liberty, and death to the welfare state.

Martinned: Not to mention that the students are trained to be the guy who reads the bill so that the Senator doesn’t have to. Even the senator has to be able to read it all, he just shouldn’t be required to.

This is pretty funny. I guess it’s to be expected though. Here is my plain language translation:

The lawmakers don’t need to understand the laws that the lawmakers make, they just need to have lawyers around to tell them what those laws mean.

Excellent.

To take an obvious example, have you ever read Madison’s records of the debates in the 1787 constitutional convention? The delegates spent months negotiating and voting upon a series of very short resolutions–a term sheet, in today’s parlance–that embodied the key compromises among the states. Only in late July 1787 did they send the resolutions to the Committee of Detail, which reduced them to a more fleshed-out form. The whole Convention then debated the final document anew, before sending it to the Committee of Style, which crafted the language that we have today, and upon which the whole Convention finally voted.

What the Baucus committee is doing is analogous to that process. The point is, at the legislative stage (as opposed to the stage where courts are interpreting legislation)–especially the interim legislative stage–it is not necessary to have final legal language before rational debate and important policy decisions can occur. To the contrary: prematurely reducing to final legal language is both wasteful (because terms may be omitted or added) and counterproductive (because it prevents compromise by ossifying terms too quickly).

Most practicing lawyers would be quite familiar with this process. On the road to any complex legal document, there are fits and starts along the way. The drafting of the Constitution was possibly the most successful such effort in human history, and even it did not give birth like Athena from the head of Zeus.

Cato The Elder: Name me a country in Europe wealthier than the United States.

Nominal GDP per capita (IMF):

1 Luxembourg 113,044
2 Norway 94,387
3 Qatar 93,204
4 Switzerland 68,433
5 Denmark 62,097
6 Ireland 60,510
7 United Arab Emirates 55,028
8 Iceland 53,058
9 Netherlands 52,500
10 Sweden 52,181
11 Finland 51,588
12 Austria 50,039
13 United States 47,440

Nominal GDP per capita (World Bank):

1 Luxembourg 111,182
2 Norway 94,359
3 Switzerland 64,011
4 Ireland 63,178
5 Denmark 62,327
6 Iceland 52,549
7 Netherlands 52,322
8 Sweden 52,057
9 Finland 51,060
10 Austria 49,902
11 Australia 47,498
12 United States 46,716

PPP GDP per capita (IMF):

1 Qatar 86,008
2 Luxembourg 82,441
3 Norway 53,738
4 Singapore 51,226
5 Brunei 50,199
6 United States 47,440

PPP GDP per capita (World Bank):

1 Luxembourg 78,559
2 Norway 58,141
3 Singapore 49,288
4 United States 46,716

So the short answer is: Luxembourg and Norway.

yankee: I don’t expect the CEO to have read and understood every provision of the contract, and I don’t think they are shirking their fiduciary duty to the shareholders if they don’t.

Yes they are. See Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985) (holding inter alia that officers and directors who did not read merger documents before agreeing to them breached their fiduciary duties to the corporation and are personally liable).

Parmenides weeps.