Coyote Blog

I was happy to see the Wall Street Journal come forward with an editorial favoring open immigration (this one is in their non-subscription area).  I am even happier to see that they lead with the issue of fundamental human rights, not with the weak argument of who is to pick the lettuce.

Our
own view is that a philosophy of "free markets and free people"
includes flexible labor markets. At a fundamental level, this is a
matter of freedom and human dignity. These migrants are freely
contracting for their labor, which is a basic human right. Far from
selling their labor "cheap," they are traveling to the U.S. to sell it
more dearly and improve their lives. Like millions of Americans before
them, they and certainly their children climb the economic ladder as
their skills and education increase.

We
realize that critics are not inventing the manifold problems that can
arise from illegal immigration: Trespassing, violent crime, overcrowded
hospital emergency rooms, document counterfeiting, human smuggling,
corpses in the Arizona desert, and a sense that the government has lost
control of the border. But all of these result, ultimately, from too
many immigrants chasing too few U.S. visas.

Those
migrating here to make a better life for themselves and their families
would much prefer to come legally. Give them more legal ways to enter
the country, and we are likely to reduce illegal immigration far more
effectively than any physical barrier along the Rio Grande ever could.
This is not about rewarding bad behavior. It's about bringing
immigration policy in line with economic and human reality. And the
reality is that the U.S. has a growing demand for workers, while Mexico
has both a large supply of such workers and too few jobs at home.

The WSJ argues that polls show that most conservatives are similar-minded.  I'm am not a conservative and don't speak for them, but from the flavor of my email on my pro-immigration posts and from reading various conservative blogs, I have trouble believing it.

I have a number of posts on immigration, but you should start with this one.

Last week, Tyco's Dennis Kozlowski was found guilty of looting the shareholder's assets for his own personal gain.  Good.  Too many CEO's treat public companies as their own, rather than other peoples' companies for which they have fiduciary responsibility.  And, unlike the Dick Grasso mess I commented on earlier, this was a much clearer case of looting as opposed to just negotiating themselves a good deal.  (update:  Stephen Bainbridge has a different take here)

According to the Wall Street Journal, which requires a subscription:

The guilty verdicts are in for L. Dennis Kozlowski and Mark H. Swartz. For Tyco International Ltd., the company they looted, there may be more court dates to come.

Tyco was hit with dozens of shareholder lawsuits in
2002 and 2003 as the company disclosed waves of accounting problems
that sank its stock. It has restated results several times, going as
far back as 1998. A July 2003 restatement cut about a billion dollars
from pretax profit over several years.

The convictions
lend credence to the plaintiffs' allegations that Tyco was grossly
mismanaged. The suing shareholders already have a strong leg to stand
on: Tyco's string of past restatements amount to an admission that its
accounting was deeply faulty. Shareholders claim they were deceived by
accounting practices that presented rosy pictures of the performance of
the company and its acquisitions, then suffered losses following the
revelation of allegations against Mr. Kozlowski and the restatements.

I have never been able to justify most lawsuits by shareholders against companies in which they own shares.  Any successful verdict would effectively come out of the pockets of the company's owners who are.. the shareholders.  So in effect, shareholders are suing themselves, and, win or lose, they as a group end up with less than if the suit had never been started, since a good chunk of the payout goes to the lawyers.  The only way these suits make financial sense (except to the lawyers, like Bill Lerach) is if only a small subset of the shareholders participate, and then these are just vehicles for transferring money from half the shareholders to the other half, or in other words from one wronged party that does not engage in litigation to another wronged party who are aggressively litigious.  Is there really justice here?

OK, you could argue that many of these shareholders are not suing themselves, because they are past shareholders that dumped their stock at a loss.  But given these facts, these suits are even less fair.  If these suits are often made by past shareholders who held stock at the time certain wrongs were committed, they are paid by current and future shareholders, who may well have not even owned the company at the time of the abuses, and may in fact be participating in cleaning the company up.  So their argument is that because the company was run unethically when I owned it, I am going to sue the people who bought it from me and cleaned it up for my damages?  Though it never happens, the more fair approach would be for current shareholders to sue past shareholders for the mess they left.

The vast majority of these suits are dreamed up by attorneys for the benefit of attorneys.  They help shareholders not at all.

Postscript: There are a couple of circumstances where these suits are entirely justified.  The two that come to mind are:

• Suing a particular group of shareholders who somehow got disproportionate rights in the company or disproportionately benefited financially at the expense of other common shareholders.  A good example would be suing the Rigas family at Adelphia Communications for hosing the minority shareholders.  Note, however, I am talking not about suing the company, but suing certain owners who abused minority shareholders to their benefit.
• Suing to modify certain governance rules that are seen to be unethical or illegal.  I would hope this would be a last resort after trying a number of proxy fights and other remedies, but this can in certain circumstances be the last protection of minority shareholders abused by the majority.