SCOTUS Trusts the Magic of the Market

During the oral arguments in Citizen United v. Federal Election Commission, the United States Solicitor General defended limitations on corporate participation in election campaigns on the grounds that the corporate insiders who control the decision might be acting contrary to shareholder’s interests.

[Chief Justice] Roberts sharply challenged this line of argument. "Isn't it extraordinarily paternalistic," he asked, "for the government to take the position that shareholders are too stupid to keep track of what their corporations are doing and can't sell their shares or object in the corporate context if they don't like it? ... 'We the government have to protect you naive shareholders.' "

Two thoughts:

First, where the hell has Roberts been these last two years? AIG, Bear Stearns, and Lehman Brothers all went down the tubes because corporate insiders took risks that were in their interests, but not the shareholders. The financial system almost went down the tubes because Alan Greenspan believed that the magic of the market would keep those insiders on the straight an narrow. Is there anything more naïve than Roberts’ blind faith in the efficiency market hypothesis?

Second, isn’t it the legislative branch's job to decide how paternalistic to make the laws governing the relationship between corporations and shareholders? Isn’t this exactly the kind of judicial activism that the conservative justices were supposed to save us from.?