I am not the right guy to play Scrooge this time of the year, but why is the resolution of the Republic sit down strike something to be applauded. I understand the plight of the employees. State law entitled them to notice and pay that they were not about to receive.
But this is hardly the fault of Bank of America. BOA has been politically pressured to make a loan that will never be repaid.
You may say "who cares?" BOA is a big bank and 1.75 million dollars is barely a crumb in its cookie jar. But, as the old saying goes, a million here and a million there, and pretty soon we are talking about real money. Neither BOA nor any other bank can survive by making, not merely a poor - but an insane "loan" in response to political pressure. In a free economy, businesses fail and various stakeholders - shareholders, employees and creditors - will be hurt by it. We can't expect banks - even those who have had an influx of federal capital - to insure against it.
The Republic employees acted boldly and certainly benefited from being from the President-elect's hometown. Maybe (although I would oppose it) the government should guarantee obligations under the plant closing laws. But shifting the costs to a firm's lender based upon who can and cannot exert the requisite political pressure seems irrational and even dangerous.
I suppose that those who are committed to a greater collectivization of losses and gains, this is a fumbling step in the right direction. My own view is that, if you want to assume community responsibility for private obligations, it ought to be done directly so the community can assess the costs and benefits.
Crossposted at Marquette University Law School Faculty Blog and Prawfsblawg.
4 comments:
Perhaps it's the future trial lawyer in me, but can't they screw an insurance company somehow?
Perhaps Bank of American saw in this some good will, or enlightened self-interest, or a White Hat worth the money?
How many banks these days are getting any good pub?
"a million here and a million there, and pretty soon we are talking about real money."--a slippery slope argument that, in this instance, seems untenable: that we need to do something (institutionally) about widespread involuntary unemployment in the long-term, however, is a more virtuous slippery slope; in the short-term we should do everything we can to ameliorate the effects of such unemployment, even if it goes against the grain for what counts for economic efficiency these days. The relative value of some putative economic facts may disguise value judgments that, from a moral perspective, are troubling if not indefensible. It bears to keep in mind the significance of the proposition that "the moral commitments [including the lack thereof] of economic agents are important causes and effects of significant economic phenomena, and that those commitments are influenced by the way that they are described and appraised by economic agents and by economists." At any rate, these alleged economic facts may hide substantive disagreements about values or disguise deep disagreements about the nature of "the good" that can only surface in conflict situations such as this one.
"In a free economy, businesses fail and various stakeholders - shareholders, employees and creditors - will be hurt by it."--But surely it is not too hard to appreciate the fact that the hurt to employees is of a different order of magnitude than the hurt to shareholders and other stakeholders (if only because the voluntary character of the choices involved varies considerably, owing to the different endowment structures).
"Irrational" perhaps from the perspective of neoclassical economics (which has a rather constricted conception of rationality) but perhaps less so from classical political economy or from a perspective that doesn't accept all the presuppositions and assumptions about market "efficiency" or "utility" and so on. Sometimes ethical questions of fairness and moral concerns more generally will trump economistic ones, particularly when the latter are only tenuously connected to a coherent and defensible moral philosophy or when a chasm has developed between positive and normative economics. Or, put differently, and with Larry Solum (in critiquing Kaplow and Shavell), we might argue that the "ideal of public legal reason supports both welfare and fairness, but denies the claim of either to exclude the other."
Finally, this particular sit-down strike seems unique in its specific socio/micro-economic causes even if one wants, as I do, to draw inspiration from the collective determination and solidarity of the workers, thus it seems unnecessary to generalize the economic anxieties about its apparent financial hazards or implications (e.g., 'Neither BOA nor any other bank can survive by making, not merely a poor - but an insane "loan" in response to political pressure.'). In other words, whatever the "global" causes, the "local" economic causes and effects seem paramount in this case and thus we need not leap from the local to the global in teasing out the probable or possible economic implications of this particular political and economic settlement. All the same, I'll jump from the local to the global and conclude, with Michael Luntley: "We must rearticulate the authority of the Good. In doing this we must articulate the more specific goals and standards for the variety of human institutions we find in modern society and stand these goals in opposition to the market criteria of capitalist success." Why? As it stands it increasingly seems to be the case that "Under capitalism life is lived not under the authority of the Good, but under the aristocracy of Capital."
Another reason why I was wrong in endorsing the "bank bailout."
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