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Open Access Publications from the University of California


Economic Democracy at Work: Why (and How) Workers Should be Represented on US Corporate Boards

Workers should have representation on corporate boards of directors in the United States. Employees are key stakeholders whose contribution is necessary for the success of innovative enterprises. In contrast to the “shareholder primacy” theory of corporate governance, which claims that only shareholders should have decision-making authority, the argument made here is that also granting employees a voice on the corporate board will have positive effects for employees and the company as a whole. Yet implementing such a reform in the twenty-first-century US context is not simply a matter of importing a European model. Effective policy design requires consideration of the US workforce structure and the important prohibition on employer-dominated organizations in US labor law, and developing appropriate mechanisms for worker-director election, representation, and worker organization. Worker representation on boards will not be effective in a vacuum, but is an important component of overall reform efforts to strengthen the US economy.

What Do Franchisees Do? Vertical Restraints as Workplace Fissuring and Labor Discipline Devices

Applying a simple model to a data set created from 530 franchise contracts, this article shows that the loosening of antitrust restrictions on vertical restraints—competition restrictions in agreements between firms at different levels of the production and distribution process—allows trademarked brands to control wages and working conditions across the boundaries of the firm, at legally separate franchised establishments. Some vertical restraints reduce the bargaining power of franchisees, causing them to exert extraordinarily high effort levels. Other vertical restraints limit franchisee discretion and focus their efforts on labor cost and labor discipline for their profit margins. By monitoring the franchisees who monitor workers, franchisors control wages at franchised establishments without incurring the legal responsibilities and liabilities of traditional employment. To properly regulate franchising and other similar contracting arrangements, antitrust and labor law should be brought together rather than considered in isolation.

Prudence and the Use and Abuse of the New Learning About Salience

We have learned that tax policy preferences are sensitive to how questions are presented to voters (their salience). If one believes, reasonably, that there is also evidence that voters do not vote for their preferred tax policy, then manipulating salience could help voters arrive at their preferred outcome. Such manipulation has been strongly criticized as not only impinging on voter autonomy as to their legitimate policy preferences, but also likely to be worse than ineffective because it would violate norms of procedural justice and possibly engender blowback. In this article, I will sketch the line between what is permissible and what is not. Choosing the right level of salience is a practice in prudence. Prudence is the virtue of mind associated with making better decisions when there are many reasonable options to choose from. A prudent salience engineer will use the new learning about salience to present the information a citizen needs to make a decision using her own practical judgment.

Economic Law: Anatomy and Crisis

This article revisits the improbable concept of “economic law,” which originated in early- and mid-twentieth-century debates in search of a magical triad: a legal-political framework for a capitalist economy under democratic control. In analyzing its composite elements both in retrospect and in the current pandemic context, it becomes obvious how the elements generate complicated, potentially destructive dynamics with one another. The recently resurgent interest in the relationship between law and political economy provides a valuable opportunity to reimagine economic law at a time when many frameworks of the twentieth-century nation and post-welfare state have been exposed as vulnerable and fleeting—making the need for a critical legal methodology the more urgent. The analysis seeks to provide some starting points for such a methodology by taking a closer look inside the toolboxes that lawyers tend to open in times of crisis.