02.26.10
Posted in Blog at 2:29 pm by Andrew Clearfield
There was a great deal of criticism in both academic and professional corporate governance circles of the Supreme Court decision in Citizens United v. Federal Election Commission, that corporations have the right to make campaign contributions and pay for political advertising, the McCain-Feingold Act notwithstanding. Lucian Bebchuk weighed in with the argument that such a right could permit managements to act in a manner contrary to their shareholders’ interests. In the WSJ Law Blog, I opined that any such abuse of the ruling would probably be unusual.
I am a great fan of Lucian’s, but I think his concerns are a bit over the top here. His argument requires a lot of bootstrapping: corporations would have to spend regularly a great deal on elections, they would have to favor politicians who are pursuing programs contrary to investor interests but supporting abuse by managers, the support would have to be a significant factor in electing said candidates, the managers would have to stay in power despite this open support of causes contrary to minority shareholders’ interests, and finally, the investor-unfriendly policies would have to find their way into law. That’s a lot of ‘ifs’.
More likely, companies would only get involved in those relatively rare cases where a particular politician was promoting positions seen as contrary to a particular industry’s interests—e.g., restrictions on drilling for oil, breaking up large financial combines, etc.—and where there was both a great deal of support from within the general body of shareholders, and a reasonable chance that the company’s support could make a difference. The last thing any management would want is to risk a politician’s or a political party’s ire without having had both a good chance that its contribution would make a difference in the outcome, and strong support from among its shareholders.
Currently, corporations already find plenty of ways to buy influence through encouraging contributions by their employees and other means. At least with explicit corporate funding there would be something openly done with corporate funds that shareholders could oppose. It is possible that activists might believe that the platforms being supported were contrary to the general social welfare, but in such circumstances there is an equal possibility that the activists would be themselves wrong; in any case, this is not an abuse of shareholder rights. Allowing the corporation to express its support of certain candidates, would also arguably create a counter-balance to the power of the press, which under McCain-Feingold represents the only kind of corporate entity that is allowed to express its support, and is today largely unchecked.
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02.19.10
Posted in Blog at 1:48 pm by Andrew Clearfield
Michael Knox Beran, a contributing editor to City Journal, wrote a piece for the National Review, entitled, “Palin Populism,” which made the point that our élite is too enamored of its academic achievements, and not enough with the moral sanity often expressed under the rubric of ‘common sense.’ I agreed, but felt that he was conceding too much territory to anti-intellectualism. The issue is also relevant to corporate governance, since many business leaders are chosen from among an élite, even if it is not quite the same one. Since Mr. Beran invited letter responses, I felt that I should respond.
Dear Mr. Beran:
I would like to thank you for having written a very good column, although I find your example of Mr. Gladstone was a bit tendentious: the Grand Old Man made his share of mistakes (the two you mentioned being perhaps not the worst), and could be an intolerable prig, but he also led the British Liberal Party successfully for a very long time, and was partly responsible for some of the better developments in nineteenth-century British politics, including the Second Reform Bill. A better example might have been one of the more recent products of France’s ferociously selective and elitist political system, such as M. de Villepin with his many literary achievements and strange ideas about foreign affairs, or M. Jospin who was undeniably brilliant, but also undeniably a colossal failure as prime minister.
The first thing wrong with the political use of Ivy League credentials as a qualification for high office is that being bright is no guarantee that one will make correct decisions, or even form wise opinions. The second mistake is that possession of an Ivy League degree is irrefutable proof that one is endowed with intellectual gifts. As the proud holder of both a B.A. and a Ph.D. from Ivy League institutions, I know very well that not all of my former colleagues, especially at the bachelor’s level, were even especially gifted.
Having left academe for the business world, I quickly learned that anyone who tried to win a point by arguing that his degree was better than someone else’s was not only likely to have no good arguments in favor of his position, he was likely to be a total phony. The same severe judgment should be made upon those who try to prove that their preferred politician is correct in his positions, or to justify his actions, based upon his possession of supposedly stronger academic credentials. Even in the specialized world of the academic disciplines, where academic credentials are obviously more relevant, this is a shoddy argument!
But your broader point is more important: the neglect of literae humaniores and one’s need for a moral compass resonates in ways that transcend this widespread abuse of credentials as a substitute for competence. What is missing in the current “élite’s” criteria for suitability for high office is something I find deprecated throughout our society: the need for wisdom. Even more than the possession of common sense (which is admittedly normally a component), what one needs in leaders is the perspective that comes from having reflected upon one’s experience of life, as well as the record of the experience of others, and having learned from it. The possession of even very great technical competence is no substitute, and at the level of political leadership may even be unnecessary. It is this deprecation of wisdom that makes our current so-called élite so deficient.
What strikes me about this false élite, what David Brooks, for example, keeps calling ‘the educated classes’ as if no one else were educated, is this lack of any propensity to reflect upon and learn from experience. Anyone who can insist that liberal politics is a sine qua non for intellectuality, or who argues that those who disagree with his social views must be motivated solely by selfishness or malice, is clearly incapable of serious reflection both upon his own experience and upon the collective experience of mankind.
I don’t think that a correct interpretation of the appeal of Sarah Palin should be that the common man (or woman) is better qualified to be president than those pointy-headed intellectuals from Harvard, but rather that abilities other than those nowadays required in order to obtain a Harvard degree are necessary in order to lead the country, and that those qualities, always rather rare, may be found among the rest of the population as well, while they are lacking in many who claim to be qualified to lead. It isn’t that élitism is bad, but that we are creating and nourishing the wrong kind of élite, and refusing to admit many worthy of inclusion in it.
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