The Right Coast

January 30, 2005
Post conference blog post
By Tom Smith

Well, I spent Friday and Saturday morning at Steve Bainbridge's conference up in LA on the Means and Ends of the Corporation, sponsored by the Sloan Foundation (a billion and a half dollars, started by the first CEO of GM, looking for ways to advance our understanding of business). It was actually a pretty good conference, and this comes from someone who usually regrets going to any given conference. There were a number of papers that were that rare thing in a piece of legal scholarship, interesting. Einer Euhlange of Harvard started off with a very closely argued paper that, for all of its logical rigor, managed to avoid addressing what I thought were some pretty obvious objections. He wanted to explain why it was good corporate directors should have lots of discretion, as this would allow them to do good things. But what to do if shareholders didn't concur on what was good, he did not really address. I was grateful for the paper, though, as it gave me something to attack in my five minutes in front of the class. Henry Manne nodded and smiled approvingly at my complaints, so I least I knew I was appealling to the law and econ crustaceans in the crowd, of whom I suppose I count as one. Ed Rock of Penn had a very interesting paper applying the "discursive dilemma" to corporations. Without getting into it, this is a way that promises to revive somewhat the wrongly discredited idea of corporate personality. Two economists from Harvard gave more or less incomprehensible presentations, but one of them, by Oliver Hart, a very distinguished theorist of the firm, seemed very promising, even if I didn't really follow a lot of it. He had a simple model that purported to explain why parties sometimes agree to some terms (such as price) and then go on to negotiate the rest of the deal later, still holding the fixed term as fixed. Of course, we do that all the time in contracts, and it is a bit hard to understand theoretically. So that may be a paper worth struggling through at some point. Bill Bratton gave a very interesting historical paper on the evolution of corporate law reforms, using some evolutionary game theory as part of its story. I like evolutionary game theory, and the paper had the ring of truth about it. Stephen Presser made the point in his paper, which I think is a profound truth about corporate law, but I didn't know anybody else thought so, that it has a strong republican strain, having the object of democratizing ownership (and I would say control, too) of business enterprizes across this land of ours.

There were other good papers too. Steve Bainbridge had arranged dinner at a very nice restaurant in LA. I sat between Bill Bratton and Stephen Presser and drank more than I should have, as per usual at these events. It turns out Stephen Presser lives next door to my brother-in-law's sister in Winnetka. Small world theory confirmed yet again. The three of us decided to walk back to the hotel rather than take the law professor bus arranged for us, which took about 40 minutes, and burned up some of the 4000 or so calories I had consumed at dinner. I returned to my room and in honor of being in LA watched Collateral on the pay for view. I thought it did a good job of capturing the soulless feeling of LA which we San Diegans never tire of harping on, yet the next day dawned sunny, and the city looked beautiful.

I didn't fweel so good, but managed to sit through a session without slapping my laptop with my face. I then caught a cab to LAX, and spent an hour waiting to board, as I have a superstitious dread of missing a plane. I listened to a 45 year old marine boasting to a much younger leatherneck about how tough he was, compared to the new breed. He allowed as his girlfriend was 27. The younger was telling the older about how tense he was all the while he was in Iraq. (I like to eavesdrop in airports. What can I say.) They both looked quite tough to me. The ancient Saab turboprop, a real Greyhound with wings, somewhat to my surprise, got us to San Diego intact, which always feels so slow and calm after LA. Though it had been fun to roam, it was good to be back home.