More on the UAL pension debacle

I mentioned this briefly yesterday, but Jane Galt knows much more about the situation (and its possible ramifications) than I do:

Many, perhaps even most, libertarians object to the PBGC on principle. Personally, it's the sort of programme I can live with. Markets and companies change in unpredictible ways, and the PBGC is a way of making sure that those who, in perfectly reasonable good faith, assumed that they would have a corporate pension to support them in retirement, do not end up destitute. It has its economic costs, as do all regulatory institutions, but as with FDIC, I think the benefits in terms of economic stability outweigh them.

I'm not really sure what Battlepanda's objection is. UAL is insolvent — can't meet its debt payments or its pension obligations. Does she think that bankruptcy law should force liquidation? Hard luck for the workers, suppliers, and so forth, no? It's pretty generally recognized that Chapter 11 bankruptcy is one of the great strengths of the American economy, allowing companies in hard times to restructure rather than expire, salvaging something for workers, creditors, and the company. And allowing UAL to at least try to limp along isn't costing the taxpayers anything, as far as I know. The only people who lose out are the stockholders.

Now that I actually do own stocks in some corporations (all entirely within my self-directed retirement savings plan), I'm not quite as cavalier about dismissing the stockholders as somehow being the only ones who deserve to get it in the shorts when a corporation goes bankrupt. It seems to me that management generally gets off fairly easy in cases where once-mighty corporate titans are felled: too many of the most responsible seem to do alarmingly well in terms of non-performance-based pay-offs, despite being at the controls when the whole enterprise went kaput.

One aspect of corporate governance in a publicly held company is that the theoretical owners — the shareholders — rarely exercise much in the way of ownership rights. The professional managers exercise almost all of the traditional power of the owner of a company, leaving the titular owners to do little other than belly-ache at annual general meetings.