Tue 27 May 2008
My liberal friends are fond of pointing out that the business world is rife with self-dealing and mutual back-scratching. Senior executives do things, not just because it is objectively the best choice, but because doing so helps out their buddy, who then turns around and helps them out. The classic example inolves setting executive salaries. CEO A is on the board of CEO B. He votes for B to get a big raise. Now, if CEO B were on the board of CEO A and also voted similarly, the quid pro quo would be too obvious. We need one more level of misdirection. So, CEO B is on the board of CEO C who is on the board of CEO A. Both B and C, like A, vote for big raises. Everyone wins! Were the pay hikes the right decision “objectively?” Hard to say.
And my liberal friends are right! This happens all the time in the world of business. But they are wrong if they think that this particular sin is restricted to the for-profit world. Just as much self-dealing occurs among non-profits. Consider the distribution of honorary degrees, the academic equivalent of stock options.
Amherst gives the President of Wesleyan an honorary degree.
Williams gives the President of Amherst an honorary degree.
And, to make the circle complete, Wesleyan gives the President of Williams an honorary degree.
Everybody wins! The presidents of all three institutions have fancy honorary degrees, but no two presidents just gave degrees to each other.
Now, to be clear, this is mostly a tongue-in-cheek entry, motivated by Morty’s new honorary degree from Wesleyan. Neither the schools nor their presidents would actively collude in this way. Of course, the same is true of CEOs. CEO A does not write an e-mail to B CEO saying, “Raise CEO C’s salary and he will then return the favor to me.” Collusive cooperation happens naturally.
The point, instead, is just to note that it is an awfully insular would among elite liberal arts colleges. Of all the college presidents in all the world, Williams, Amherst and Wesleyan just happened to pick each other’s presidents for the awarding of honorary degrees. Perhaps, objectively, they were the best choices.
On a good note, there is little doubt that we have the funniest president.
After receiving an honorary degree, President of Williams College Morton Schapiro poked fun at both the event’s heightened security and the rivalry between Williams and Wesleyan.
“I bet you had no idea that the president of Williams traveled with so much Secret Service,” he said.
Indeed. When Morty was first proposed/named president, Professor Mark Taylor quipped that “Williams needs a wise man, not a wise guy.” Perhaps! But there can be little doubt that Morty, wise guy though he is, has done an amazing job over the last 8 years. Long may he reign.
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11 Responses to “Self Dealing”
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frank uible says:
Lousy example – liberals are corrupt (as are conservatives), but the aforesaid petty back scratching proves little.
FROSH mom says:
A certain wise person recently acquainted me with the term Guanxi…
I think it may be appropriate here.
But David, it certainly isn’t a practice limited to liberals. Quite possibly, they are just more willing to ‘share’ their ‘secrets to success. :-)
P.S. Nice little tribute to Morty…I think…
Jeff Z. says:
Now that your son is moving up in the world, shouldn’t it be SOPH mom?
Jeff Z. says:
I am pretty sure that Amherst and Williams as a matter of course give honorary degrees to each other’s outgoing presidents. I know Payne received one from Amherst, and I seem to recall an Amherst pres. receiving one from Williams near the end of his tenure … I bet Morty will get his from Amherst after he leaves Williams (which I’d bet will be either after this fund drive is completed or after the library complex is completed, probably the latter, as college presidents tend to leave after a big milestone is reached).
PTC says:
Morty is an econonimist. Pure and simple. I agree david.
frank uible says:
Most importantly Morty is a very effective CEO with one of his strengths being a highly desirable one – in public relations. His being an economist is merely a tangential virtue for the position. His status as a scholar of some kind is, of course, de rigeur.
Larry George says:
And lucky in his times: a buyer’s market for colleges in admissions and, until very recently, a general boom time economically.
frank uible says:
As all you weak-kneed, excuse making, standardless liberals like to constantly and insufferably remind, in the horse race of life it is advantageous to find oneself on top of Whirlaway rather than Old Dobbin – but on the other hand it is also better to ride as if one is Eddie Arcaro than Fatty Arbuckle.
Rory says:
the friendship college presidents is a good thing (non-competitiveness in education is desired). While collusion would (and has been, and may currently be if one is a conspiracy theorist) be bad, best-practice comparisons and administrative openness only foster improved colleges for all who attend.
On the other hand, the insularity and friendships amongst CEOs has a meaningful negative consequence–in this case, the absurd wage structure of corporations.
Finally, being on the board is a radically different proposition than being honored with a degree. The two signs of insularity aren’t directly comparable like you set them up David. While this is tongue-in-cheek, it’s a poor comparison–colleges have boards just like corporations and last I checked, Morty isn’t on Amherst or Wesleyan’s board (correct me if I’m wrong).
FROSH mom says:
Jeff:
I think I’ll wait until the fall to become SOPH mom…when s/he officially ‘starts’ the sophomore year. A lot can happen in the summer after all (remembering back to my own college years).
:-0
Back on subject:
There was a special on NPR just a couple of days ago discussing the different ways in which honorary degrees are viewed…ranging from those who take them seriously enough to add ‘Dr.’ to their titles (although they hadn’t the ‘real’ degree to justify it), and those who are merely amused and/or pleased by the honor.
Hmmm…’Dr.’ FROSH mom…
frank uible says:
To paraphrase what an old, pragmatic, tough minded New Dealer of my acquaintance used to frequently say, “an honorary degree and a nickel will get you a 5 cent cigar”.