The Church and the Wall Street Rule

Even though the federal income tax is my main professional interest, I don’t teach exclusively tax classes; every year, I also teach a Business Organizations class.[fn1]

In many business entities (especially publicly-traded corporations, on which I’ll focus here), management of the firm is separated from ownership. The shareholders are the equity owners of a corporation, but the board of directors manages it and makes the day-to-day decisions. And the goals of the board members may differ from the goals of the shareholders. 

Why separate ownership and management? Especially for publicly-traded corportions, because shareholders are presumed to be interested in an investment return, but we don’t assume they have the knowledge or time to oversee what the corporation does on a regular basis. One significant thrust of entity law, then, is to create incentives for board members’ goals to align with shareholders.

Among the tools shareholders have is what is called a shareholder proposal. If a shareholder manages to jump through the hoops necessary, she can present a proposal for other shareholders to vote on; if a majority of shareholders vote in favor of her proposal, it becomes binding on the board.

The main problem with this procedure? Shareholder proposals rarely succeed. In fact, their general lack of success has lead to what’s called the “Wall Street Rule“[fn2]: if you don’t like the way the board is governing the corporation, rather than try to effect change, sell your share and walk away.

A couple conversations I’ve been privy to recently reminded me of the Wall Street Rule: someone argues that the church should change something it does, and someone else responds with something to the effect of, If you don’t like it, why don’t you just leave?

A couple years ago, Lynette at ZD wrote a great post in which she tried to tease out the theological implications of that response; I’m going to come at it from a different perspective, trying to figure out why members who have problems with the church don’t just follow the Wall Street Rule.[fn3]

I mean, on the surface, being unhappy with the management of an investment and with the management of the church share a pretty fundamental similarity: like shareholders, most members are tremendously unlikely to effect fundamental change in the church. The church’s governance tends to be tremendously hierarchical and top-down; though Neylan McBaine apparently argues (convincingly) otherwise, grass-roots movements in the church tend to have minimal direct impact on the church’s direction and, when they do, the effected change tends to be slow and muted.

So why not just walk away and find a church that isn’t objectionable in the same way?

I can’t speak for everybody, clearly. But I can speak to why I don’t find the Wall Street Rule compelling when applied to my religious life, even when I fundamentally disagree with something that the institutional church does or says.

In short, it’s that my investing goals differ from my spiritual goals.

See, investments in publicly-traded corporations are largely impersonal, and ends-oriented. For the most part, I don’t invest in, say, Apple stock because I want to be an owner of Apple.[fn4] I invest in Apple because I want to get a particular investment return, and I believe Apple will provide that return.

But my goal is an investment return. This year, Apple’s return has been about 16% (which is pretty darn good, frankly). But Disney’s year-to-date return has been about 17%.[fn5] If all I care about is return, Disney is about the same as Apple. This year, at least. (Yes, I know: past performance is no guarantee of future results.)

Moreover, I’m a big believer in diversified portfolios: while it would be nice if everything I owned went up in value, proper diversification (that is, being invested in a lot of companies) means that if one company loses its value, I’m hedged.

My religious life is different. Look, I know that there’s very little in Mormonism that’s unique to us. Joseph Smith’s prayer in the Sacred Grove was derived from (though it ultimately differed from) shouting Methodist practices. We were one of many nineteenth-century religions that experimented with communitarianism and non-traditional sexual/marital practices. We were, in fact, only one of many restorationist religious movements.

But the thing is, even if the parts largely aren’t unique, the whole is. The various things that Mormonism appropriated from other sources, the various things that it developed in parallel with other traditions, the various things that are truly unique to us, come together in a package that speaks to me, and speaks to me at a fundamental level.

That is, even while I believe that the church is an imperfect vessel for what God wants us to know, I believe it is the vessel that can lead me—us—to learn what God wants us to know.

And I’m not willing to give that up.

So I can’t effect policy change in the church. I can affect—for the better, I hope—the people I interact with on a weekly basis. I can prepare and teach my lessons, I can offer my hands or my shoulder or my voice. My reach may be limited, my influence forgettable. But I’m not here to vote with my feet; I’m here because I’ve been called to be here.

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[fn1] “BizOrg” used to be called “Corporations,” at least when I was in law school. It’s basically a quick introduction to agency law, then it covers the law of partnerships, LLCs, and corporations.

[fn2] (Which was interesting for me to learn—in the tax world, the Wall Street Rule is, If everybody else is doing it, the IRS will let you do it too. Which, for the record, is not true, and the tax Wall Street Rule is (mostly) tongue-in-cheek.)

[fn3] The North Temple Rule, maybe? I have to admit, my knowledge of the sacred geography around the Salt Lake temple is pretty limited.

[fn4] That’s not entirely true: I assume some fanboys and fangirls invest in particular companies to show solidarity, or to feel part of the company. But most people don’t.

[fn5] Note that I’m writing this on Sunday, May 10. When the post actually goes live, those year-to-date returns may well be different.