Like my co-editor, Haskell Murray, I am participating in an on line symposium on Hobby Lobby over at the Conglomerate.  My piece focuses on the boundaries set (or left open) by the opinion and raises this new issue:

The Court framed the case as an “important question of religion and moral philosophy, namely, the circumstances under which it is immoral for a person to perform an act that is innocent in itself but hat has the effect of enabling or facilitating the commission of an import act by another.”  The corporate plaintiff didn’t have to violate its beliefs (that feels like an absurd statement), but taking an action that permitted a third party employee to possibly violate the beliefs of the corporation was a sufficient burden.  This is also ignores that the contraceptives at issue could be used for medical reasons unrelated to lifestyle choices.  Here is where I struggle the most with the reasoning of the Majority.  Employers pay employees subject to minimum wage laws. Employers have no guarantee that the employees will use the compensation in a manner consistent with the employer’s religious views.  Why is it different when the compensation comes in the form of employer-provided health benefits, which is a form of compensation?   

-Anne Tucker

Today I am highlighting a very interesting economics article exploring the relationship between corporate social performance and corporate financial performance.  

Scholars have been searching for a link between corporate social performance (CSP) and corporate financial performance (CFP) for thirty-five years. If only doing good could be connected to doing well, then companies might be persuaded to act more conscientiously, whether in cleaning up their own questionable conduct (Campbell, 2006) or in redressing societal ills (Porter & Kramer, 2006). A positive link between social and financial performance would legitimize corporate social performance on economic grounds, grounds that matter so much these days (Useem, 1996). It would license companies to pursue the good—even incurring additional costs—in order to enhance their bottom line and at the same time contribute more broadly to the well-being of society.

In DOES IT PAY TO BE GOOD?, three economists (Joshua Margolis,  HIllary Anger Elfenbein, and James P. Walsh) perform a meta analysis of 251 effects in over 200 manuscripts to examine the relationship between CSP and CFP.  They find a small positive effect. Most importantly, the articles engages in a rich conversation (and critique) of empirical studies in this area and suggests parameters for future research.  

This paper is accessible for non-economists and provides a very interesting discussion on the links between doing well and doing good.

-Anne Tucker

Reason.com has an interesting piece on the use of fallacious or unsupportable economic arguments by politicians.

My favorite economic fallacy, which the Reason article doesn’t discuss, is the use of multipliers to falsely exaggerate the effect of government spending. Universities tend to do this a lot: “Every taxpayer dollar spent at Enormous State University results in a $50 gain to the state economy.” To justify claims like this, you simply trace the dollars spent through multiple levels. If the university spends $100 to repair a window, that’s $100 of additional business for a local company. That company, in turn, uses the $100 to pay an employee. The employee uses the $100 to buy groceries at a local grocery store. The store then pays the $100 to a local farmer for her produce. The farmer then spends the $100 to buy supplies, etc. We’re already up to a $500 effect, and there’s no need to stop there. If you trace it through a sufficient number of transactions, the effect is enormous, even though it’s still only $100.

Using that same reasoning, it’s obvious that the key to economic recovery is to significantly increase my salary. Each dollar I receive has an enormous effect on the national economy. I use some of the money to buy groceries, gas, books, and a number of other consumer goods, helping to sustain a variety of retailers and service providers. They in turn, use my money to hire employees and buy products from producers, who in turn hire additional employees and buy additional goods and services. The money I don’t spend is put into accounts at banks and mutual funds, which use the money to invest in new and existing businesses, promoting economic growth and facilitating the hiring of additional employees.

Given the enormous multiplier effect paying me has on the economy, the solution to our current economic stagnation is obvious: pay me more.

Since I suspect there is something of an obligation for all corporate law bloggers to weigh in on Hobby Lobby, I offer my thoughts.  I admit to some trepidation posting them because (and I blush to confess it) I haven’t been as immersed in the case as most other corporate professors have, so I feel like a bit of an outsider to the debate.  So, take these thoughts as coming from someone whose knowledge of the case comes chiefly from, well, the Supreme Court’s opinion.

[More under the cut]

Continue Reading Yet another person weighs in on Hobby Lobby