tag:blogger.com,1999:blog-4039434.post7816375253477047138..comments2024-02-26T06:46:53.171-05:00Comments on Rajiv Sethi: Reputational Capital and Incentives in OrganizationsRajivhttp://www.blogger.com/profile/13667685126282705505noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-4039434.post-21100346222949957152010-05-04T10:20:46.784-04:002010-05-04T10:20:46.784-04:00Richard, thanks for your comments... certainly fai...Richard, thanks for your comments... certainly failures in corporate governance and incentive structures are an important part of the story. There are several comments on Mark Thoma's page along similar lines (see my 5/4 update to this post).Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-79139843194297425052010-05-03T22:59:14.993-04:002010-05-03T22:59:14.993-04:00Oh sorry, the above comment was supposed to go to ...Oh sorry, the above comment was supposed to go to Richard Green's blog.Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-75074470121839425732010-05-03T22:58:18.787-04:002010-05-03T22:58:18.787-04:00"His first is that the business would capture..."His first is that the business would capture the regulator"<br /><br />We have a long history of regulation still doing far more good than harm. Look at banking regulation post depression until the recent Republican dismantling. Look at anti-pollution regulation. Look at product safety regulation.<br /><br />Plus, this problem could easily be obliterated with an amendment banning business political spending, or public campaign financing so generous that there's little incentive to cater to businesses for their money.Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-68110071662965616912010-05-03T22:31:53.820-04:002010-05-03T22:31:53.820-04:00Here's James Galbraith on this, from an Octobe...Here's James Galbraith on this, from an October PBS interview:<br /><br />They let all of this run, because they were getting a superficially stronger economy out of it. The ownership society, all that was a scam, basically, designed to lure people who could never afford these mortgages into accepting them. And yes, I think they, any rational person, certainly people in the industry, knew that this was not going to last. There was a little industry code, I've learned, IBGYBG. "I'll be gone. You'll be gone." <br /><br />at: http://www.pbs.org/moyers/journal/10302009/transcript4.htmlRichard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-73871366638117842032010-05-03T02:18:43.566-04:002010-05-03T02:18:43.566-04:00A big thing is that the life of a CEO is so much s...A big thing is that the life of a CEO is so much shorter than the life of a company. How many CEOs are in their 50s, 60s, or 70s? There is so much harm that they can do for great short run gain that won't really become apparent until close to, or long after, they retire.<br /><br />With good corporate governance CEOs and other top management could be watched very closely and re-evaluated every year in a thorough, high level intelligence, high dimensional, flexible, non-simple formulaic way way, like basketball team coaches are. But, 1. corporate governance is extremely bad, with diffuse ownership and boards that have little time or resources and are often captured (see the book Pay without Performance, by Harvard's Lucian Bebchuk and Berkeley's Jesse Fried). 2. What's in vogue instead of high level, high dimensional thinking, is simple minded "objective" formulas that are extremely inaccurate in complicated situations like this (for more on this see: http://richardhserlin.blogspot.com/2009/05/scientific-does-not-mean-simple-minded.html).Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.com