October 10, 2011
More OWS, O'Reilly, Olbermann, West, Gekko, Berle, Means, & More...
Posted by David Groshoff

I found it interesting yesterday to see the New York Times attempt to seek and promote some marketing and brand management ideas for Occupy Wall Street.  

To underscore some of the confusion regarding the OWS movement, last week Fox News’ Bill O’Reilly said the protesters launched “another far left demonstration,” on Oct. 6th, and “the common thread seems to be income equality” by “socialistic outfits” who want the government to take money away from the affluent” and redistribute it. 

Meanwhile, on another Fox media empire outlet, the Fox Business Network, former Judge Andrew Napolitano, on his show “Freedom Watch,” hosted guest interviewee Michelle Fields from the DailyCaller.com.  Unlike Mr. O’Reilly, Ms Fields claimed that the Occupy DC protesters were “very libertarian.  Everyone that I spoke to said that they’re not going to vote for Obama, they’re actually going to be voting for Ron Paul . . . . and it’s sad that these liberal groups are sort of hijacking this movement.”  Judge Napolitano indicated that some of his show’s producers went into the OWS rallies and “found the same thing.”

So my confusion remained, as Fox reported to me that either (a) socialist outfits and libertarians were the same thing (a premise I can't exactly buy), or (b) Fox simply couldn’t report to me what constituted the consistent theme or themes about the Occupy protests.

A non-law-prawf-in-the-streets, Princeton University’s Dr. Cornel West, appeared on former Vice President Al Gore’s Current network on Keith Olbermann’s show and indicated that he attended protests at Occupy Wall Street, Boston, and LA.  Dr. West stated that based on his experiences in each of these three geographically diverse cities reflected the following consistent thread and focus:

(1) Corporate Greed,

(2) Individual Liberty,

(3) Social Justice,

(4) Democratic accountability, and

(5) The 1% who own 40% of the wealth.

For purposes of this post, I’ll assume that Dr. West is correct in his synthesis of the focus among the protests. I’ll save the first point for last.  Starting with #2: Individual liberty?  I love it, but this isn’t a civil liberties blog.  Social justice can be a great thing, depending on what one means by the phrase, and I’m not exactly sure what Dr. West means by democratic accountability, so I won’t discuss those items here, either.  Addressing wealth distribution, rather than income distribution, I think, is the more meaningful tactic and approach, as I suggested last week.

And, lastly and perhaps most relevant to the Glom, the notion of “corporate greed.”  While Usha clarified her earlier comments and indicated that she was “not siding with corporations against the government or the people,” my response to the inquiry posed to her would have been different, and it intersects with some of my current work.

"Whose side are you on?"  If asked that question, or, perhaps, an oft-asked business, law, economic, and societal-specific variant of it, regarding OWS, my response would have been “the side of the owners, capitalism, and free markets.”  Unlike Usha, I view many liability shielded entities — to which, IMHO: (i) too few meaningful fiduciary duties apply, (ii) many moral hazards attach, and (iii) society often bears too many costs of the many negative externalities and spillover effects that these entities create — with some suspicion.  While certainly fascinating, I view these entities as forces for some good, some bad, and many gray areas in between.  And I tend to think that, at least in the context of public corporations, the owners have gotten shafted, which is part of the underlying problem.

Thus, most fascinating — or troubling, I suppose — to me is not the “corporate greed” that Dr. West identified but instead is “the personal greed of corporate executives and managers.”  I'm reminded of Gordon Gekko’s character from the 1980s movie Wall Street.  While Gekko's most memorable or famous lines regarded how and why “greed is good,” the entire monologue, I believe, yearned for a tightening of an agency problem run amok in corporations to restore additional owner control mechanisms.  Yet the problems of agency capitalism that Gekko’s character discussed in the mid-1980s and that Adolf Berle and Gardiner Means articulated in great detail their famous “corporate governance suspense thriller,”  The Modern Corporation and Private Property, have been exacerbated since the mid-1980s and the first installment of the movie Wall Street

My take is that, while a number of causes exist, three main triggers merit special consideration (without my going into painful detail here).  First, the shift from defined benefit plans to defined contribution plans has shifted the types of fiduciary duties and investments, investment vehicles, and asset allocations targeted towards Americans’ (both white collar and blue collar) retirement savings.  Second, Sarbanes-Oxley helped incentivize institutional investors to further separate any nexus of economic owners from those entities exercising control rights, as many post-SOX investment managers turned the voting control mechanism over to proxy voting services out of fear of SOX liability.  Third, Citizens United has paved the way for management to deploy corporate assets, the assets of — in my view — the owners, to a variety of causes that seem to fly in the face of Milton Friedman’s idea that a corporation’s sole purpose essentially is to maximize shareholder value.  While my current work is attempting to synthesize all of these ideas into a coherent and cogent manuscript, the bottom line for me is that all of these issues help tell a narrative that dovetails with the OWS discussion, in that the economic owners, free markets, and capitalism are getting shafted in many ways, worsening corprorate management actions that rightly deserve outrage.  

My concern with OWS is when I read of or hear people simply blame corporations or capitalism or free markets, when, at least to me, it’s the corporate agents, government policies that incentivize further separation of economic and control interests, and (admittedly oversimplifying) one recent SCOTUS decision that explicitly permits for my equity investments to be used to advance causes, people, and laws adverse to my own economic and liberty interests [and without stated corporate policies in this area so that equity investors otherwise know to invest in or avoid investing in such entities].            

Regardless, you've probably read enough from me on OWS, although it is a hugely fascinating event about which to write at the Glom as the movement is occurring and gaining more MSM attention.  Nonetheless, I hope to post on a variety of other topics during my remaining time here, including some andragogy and pedagogy relative to teaching business and law and some additional thoughts on benefits and detriments that I'm discovering exist for the authors of near real-time academic blogging.

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