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Folks:
I know that economics isn’t taught much in high schools,
and that’s a pity. I didn’t learn much economics
in college either, and that’s why in 1962 I joined the
Marine Reserves, rather than the Army or Coast Guard Reserves.
You had to wait to join the Army or the Coast Guard, but you
could get right into the Marines. I never stopped to ask WHY
there was no line forming for the
Marines! That’s pure economics: think “supply
and demand.”
Adam Smith, in the Wealth of Nations, makes the point that
free markets require the free exchange of information in order
to work – in order for customers to choose the cheapest
and best products that work for them, and in order for manufacturers
to “learn” to make the cheapest and best products
that people would buy.
Thomas Jefferson said that “Information is the currency
of democracy,” and he meant the same thing. Unless the
citizenry can find out what’s really going on, they
won’t be informed enough to vote their own interests.
Of course, citizens have to care to learn enough, and care
to vote for that matter.
In a mixed economy, of course, the government is often in
a position to decide how much information the public will
receive about the workings of commerce and industry. And often
the battles between the business interests and the public
interest aren’t reported much “outside the Beltway.”
And of course, what you don’t know won’t hurt
you…
Here are two articles from the Washington Post about “the
public’s right to know.” One is about whether
the owners of mutual funds should have the right to know
how
mutual fund management votes its proxy shares. In other words,
the right to know whether mutual fund management is voting
in support of corporate management, or taking a stand supporting
shareholders. Believe it or not, corporate management and
shareholder interests aren’t
always in perfect alignment. As when management votes on
management
salaries and options, for example.
Here’s how the Post
article starts: “Fidelity Investments,
the nation's biggest mutual fund company, cast its investors'
proxy votes last spring in favor of keeping businessman Frank
Savage a director of Lockheed Martin Corp., industry sources
say. Fidelity voted for Savage -- and with Lockheed management
-- over objections from some labor and investor groups.
“The objections centered on Savage's role as a director
of Enron Corp. when the company collapsed in 2001 while he
was also a director of Alliance Capital, which cost Florida's
state pension fund hundreds of millions of dollars by continuing
to buy Enron stock as it plummeted that year.”
The other article
concerns the publication of information collected from makers
of autos, tires, and car seats about defects and failures.
The article starts: “Annually, the auto industry receives
about 100 million warranty claims, 13 million customer complaints
and 9,000 property-damage claims. It writes up some 50,000
reports a year on field investigations into problems with
vehicles and is involved in 10,000 product-liability cases.”
Because of the Firestone/Ford Explorer fiasco, the Congress
will now require the manufacturers to submit this information
to DOT’s National Highway Transportation Safety Administration
(“NIT-zuh”). The fight is about whether NHTSA
can and will make the information available to the public.
And of course, what you don’t know won’t hurt
you…
As an historical note, some of the
legal impetus for corporate privacy stems from the fact that
corporations are deemed “persons” and are therefore
entitled to some of the rights of flesh and blood citizens.
I myself think that real persons create governments (remember
the Founding Fathers), and that governments then create corporations.
So I’d never have bought the
argument that corporations should have legal standing like
humans. But that’s another story.
Bob Knisely
WebLink Citations:
1) SEC
Nears Decision on Requiring Mutual Funds to Show Proxy
Votes
by Kathleen Day
Washington Post Staff Writer Wednesday, January 15, 2003;
Page E01
2) Quality
Data Is For U.S. Eyes Only, Auto Industry Says by
Cindy Skrzycki,
Tuesday, January 14, 2003; Page E01
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