Academic journal article The Yale Law Journal

Quasipublic Executives

Academic journal article The Yale Law Journal

Quasipublic Executives

Article excerpt

ESSAY CONTENTS

INTRODUCTION

 I. CONTROLLING EXECUTIVES
    A. Incentives and Insulation
    B. Constitutional Law and Corporate Law

II. CONTROLLING QUASIPUBLIC EXECUTIVES
    A. The Status Quo
    B. Control Mechanisms for Quasipublic Executives
       1. Nominally Public Executives
       2. Nominally Private Executives

CONCLUSION

INTRODUCTION

This is an Essay about how to design control mechanisms for executives who have private characteristics such as insulation from electoral control, but who are charged with public functions such as corrections, education, and national defense. We call these figures "quasipublic executives." Quasipublic executives are created both when public executives assume private characteristics, becoming what we call "nominally public executives," and when private executives assume or are assigned public functions, becoming what we call "nominally private executives." The regulation of quasipublic executives is important and interesting for two reasons. First, quasipublic executives have become increasingly common in the United States and abroad. (1) and the demographic and technological changes behind this trend are unlikely to reverse themselves. Second, our effort in this Essay to design effective control mechanisms for quasipublic executives reveals a connection between constitutional law and corporate law that has growing consequences for both fields. Unfortunately, this connection has been overlooked for the most part by academics and practitioners alike. This inattention is symptomatic of a broader distortion in the law and legal education caused by the assignment of social problems to doctrinal areas on the basis of formal legal concepts rather than functional considerations. We shall discuss such distortions later in the Essay.

Part I begins by arguing that constitutional law and corporate law address a common problem of controlling executives but that they use very different control mechanisms to do so. It continues by suggesting that this difference can be described using the incentives-and-insulation framework that one of us has developed elsewhere. (2) In particular, we observe that constitutional law relies principally on political and social control mechanisms, while corporate law relies principally on market control mechanisms. Part I then argues that any justification for this difference in reliance must rest on differences between the functions with which we charge the executives governed by constitutional law and corporate law or on differences between the institutional structures in which these executives operate. But no such justification can support the systematic differences between the control mechanisms applied to nominally public executives and those applied to nominally private executives because both of these types of executives are charged with public functions and operate in institutions with substantial private characteristics. In the absence of a justification for the divergence between corporate law's and constitutional law's control mechanisms, it is natural to look to corporate law to shore up the control mechanisms governing nominally public executives and to constitutional law to shore up the control mechanisms governing nominally private executives. (3)

Part II sketches the application of this theory to the reform of control mechanisms for quasipublic executives, using school executives as a running example. In light of space constraints, however, we leave for future work rigorous application of our theory to particular institutions. We conclude by returning to the Essay's second motivation--namely, the light that our analysis sheds on the convergence of constitutional law and corporate law and, more generally, on the ways in which doctrinal divisions in the legal academy distort the law's approach to social problems.

I. CONTROLLING EXECUTIVES

A. Incentives and Insulation

The problem of controlling executives is a special case of the problem of controlling people--a problem central to the law, seen as a system of social engineering. …

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