The likely ripple effects of Penn State

Sadly, the bureaucratization of risk management that Harvey Silverglate fears will become more prevalent in higher education.

This happens in large companies, too.  Most companies have “risk” or “compliance” czars (not to mention the human resources, accounting, and tax bureaucrats who impose their own constraints) who have to monitor, in very intrusive ways, all business activities to understand the company’s exposure to various forms of liability that can literally destroy the company.

The problem is that these risks do not, for the most part, derive from market competition, but rather from government regulations and from the tort bar.  The worst part is, corporate executives generally side with the “compliance” bureaucracy over the business line if there is a conflict—when the bureaucrat says, “you can’t do that business deal for XYZ reason,” the business manager finds it hard to argue against this claim.  Blanket restrictions substitute for normal business considerations—like judgment, balance, and common sense.

One example of this from our background was a decision that the CEO of our large professional services firm made saying that, due to the Foreign Corrupt Practices Act, we would simply not do work in Indonesia.  Sure, Indonesia is a minefield, but isn’t it a bit draconian to simply ban the pursuit of all work in such an important market?  Surely a company comprised of such intelligent, seasoned businesspeople could use its judgment to pursue business there in a viable way?

This is a typical example of how conservative large companies have to be.  In fact, large organizations—be they corporations or universities—look awfully like government organizations.  This is no accident; and is another success by the left in transforming our society toward a government-centered one.

The next discrete step in this convergence of large companies and government is government ownership of some companies.  We could easily see “Big 4” accounting industry becoming nationalized the next time we see an Enron-type scandal:  these firms perform, the argument will go, an essentially public service—making sure that the investing public (including, by the way, many public or quasi-public investment funds)—so their functions should be provided by the wise, benevolent government.


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