The Law Binds But Does Not Protect
Frank Wilhoit | The Inherent Conservatism Of Business | Factoids
Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.
| Frank Wilhoit, in a comment on The travesty of liberalism by Henry Farrell
The comment ends with this:
The law cannot protect anyone unless it binds everyone; and it cannot bind anyone unless it protects everyone.
The Inherent Conservatism Of Business
In a recent issue of this newsletter, The Superior Of Capital, I highlighted a quote by Abraham Lincoln, who lived through a time of national strife over the nature of federalism. He said, in his First Annual Message:
Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.
Nonetheless, in the decades since, despite the struggle for the rights of working people, and even though unions rose to great importance in the years following World War II, and formed a pillar in the great advance of the New Deal and the Civil Rights movement, labor has fallen to the wayside, and capitalism has nearly total control of all segments of society.
This state is, perhaps, nowhere more clear than within the walls of business. Businesses are, after all, ‘private governments’, as Elizabeth Anderson pointed out. Binyamin Appelbaum observed,
In a representative democracy, the process [of legislation or judicial decisions] confers legitimacy on the result. A piece of legislation or a court ruling commands compliance because the decision is made by duly empowered representatives acting under the law.
Corporations behave like governments because they want to invest their decisions with that sense of procedural legitimacy. But they do it for the purpose of warding off the government.
The show is a sham, a mockery of democracy. Corporations may be people, but they’re not polities. Their executives are not our representatives. The rules they choose to follow are not laws. And legitimacy cannot be borrowed to justify decisions contrary to the public interest.
And corporations consistently take actions that serve the interests of their owners, shareholders, and managerial ranks, without consideration for — or in direct opposition — the interests of the managed.
In Wilhoit’s framing, the workers are treated as the out-group who are constrained by the one-sided decisions of management, but who are not protected by the companies making those decisions.
A recent example caused my to push these thoughts together. California has passed legislation — fought aggressively by business interests — that prohibits so-called TRAP (training repayment agreement provisions) and stay-or-pay provisions of employment:
The California legislature passed Assembly Bill 692, which restricts employers’ ability to enforce training and retention repayment provisions and other stay-or-pay provisions in employment agreements. The bill, which we expect to be signed by Governor Newsom soon, will be codified under the new Business and Professions Code Section 16608 and Labor Code Section 926. The new law provides that after January 1, 2026, it will be “unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship” an obligation to pay back money for leaving a job prior to a set date unless the agreement meets specific guidelines. Employers will need to review any programs requiring the repayment of educational costs, relocation costs, signing bonuses, and retention incentives to determine whether they meet the strictures of the new laws.
California has limited such provisions before, but 692 goes much farther and is not limited to any specific group of occupations.
TRAPs and similar stay-or-pay conditions for employment are clearly only in the interest of employers and are directly intended to coerce workers to continue working for their current employer, or pay to leave.
And this legislation underscores Appelbaum’s words:
The rules they choose to follow are not laws.
Often, in the context of liberal legislatures or courts, their ‘rules’ are in fact illegal, or should be.
And the moral question at the heart of it all is this: who gets to decide such rules? Business leaders want to legitimize what they consider in their best interest, which will bring them into conflict with governments that side with everyday people.
We are living in a period of moral decline, however, and the inherent conservatism of business is worsening, pushing more people into out-groups who are not protected by the ‘rules’ of business.
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