Chapter 9

Why Sarbanes-Oxley?

Introduction

Thus far, this book, when viewed in light of the extant research, offers a compelling and arguably convincing portrait of what Sarbanes-Oxley is not. For instance, it is immediately apparent that the spate of corporate failures that occurred from 2000 to 2002 provided the necessary motivation for lawmakers in the 107th Congress to respond in some way. What remains hidden—and what a decade of research and a series of detailed and comprehensive analyses, as contained in the preceding eight chapters, has failed to unearth—are the precise factors that compelled lawmakers to enact Sarbanes-Oxley, per se, versus any one of a broad array of alternative models that, as indicated by the empirical evidence, would have offered far greater potential for success.

Over the preceding decade, policy researchers have essentially insisted that because the magician successfully pulled a rabbit out of the hat, the hat contained a rabbit.¹ Thus, the specific question—for example, why Sarbanes-Oxley?—has been considered a nonissue. However, a comprehensive and painstaking review of the available evidence—as contained in the preceding chapters, and as corroborated by a relative wealth of leading research²—strongly suggests otherwise. A “three-dimensional” portrait of the law—as achievable only through an eclectic analysis that employs multiple methodologies and perspectives—argues, as a conspicuous outcome, the need to decouple Sarbanes-Oxley, at a fundamental level of logic, from the antecedent, economic uncertainties (e.g., WorldCom) that surrounded it.

This is to suggest, as a wholly natural conclusion of a trenchant evaluation of the available evidence, that Sarbanes-Oxley was animated by something other than the 2000 to 2002 spate of corporate crises. Stated in another way, this effectively argues that the various controls that seek to guide the process by which U.S. corporate governance policy is developed in the modern era—from Sarbanes-Oxley to Dodd-Frank—have failed: a truly ironic conclusion given that this law may be defined according to its dominant obsession with corporate controls.

Consider that the debate over U.S. corporate governance regulation is already deeply polemicized, and thus characterized by pronounced divisions of an ideologic and political nature. Consequently, it bears noting that this analysis, as rooted in objective considerations, is not motivated by any particular animus toward the regulatory effort, a task that is extremely complex and difficult, resulting in policymakers invariably making poor decisions, which are later associated with deleterious outcomes. However, policy failure and policy misuse—for example, when the authority vested in the policymaker is usurped, so as to pursue specific (unstated) objectives that would not be otherwise achievable through democratic processes—represent two conceptually distinct constructs, and thus are not significantly correlated.

Generally speaking, a reasonable expectation may be for policy imperfections—which are the constant bane of policymakers, and inject varying degrees of unanticipated failure into the policy effort—to be fairly commonplace. Conversely, the legislative misuse of policy—especially to the degree of Sarbanes-Oxley—is likely rare. Consider further that the need to (conceptually) disenfranchise U.S. corporate governance policy from WorldCom, Enron, and the 2000 to 2002 corporate crisis, is a specific conclusion that, it is argued, flows naturally from a careful reading of the available evidence. As a particular conclusion supported by logical inference,³ it may be arrived at objectively and thus independently from individual biases. (However, this does not imply that all readers, faced with similar facts, will invariably reach the same conclusion, as this would require a conspicuous, if not unusual, degree of objectivity.⁴)

The following analogy—as rooted in a recently uncovered and particularly tragic case of child abuse⁵—illustrates behavior that by definition tests the limits of moral repugnance. However, its function, rather than to cast Sarbanes-Oxley in a similar (or even pejorative) light, is to highlight a basic failure of logic that has made it all but impossible to properly disentangle cause from effect. Thus, consider the parents of a child, one who has consistently exhibited exemplary behavior throughout most of her young life, but who has, for example, been cited for an act of vandalism or has brought home a failing report card for the first time.

An entirely reasonable expectation would be for the disconcerting behavioral decline to motivate, in concerned parents, a thoughtful response, as carefully selected from a range of commensurate remedial actions (e.g., authoritative rebuke, counseling). Assume, however—for the sake of the analogy—that the parents in question were motivated to respond by factors extraneous to the situation (e.g., animus, disdain for the child). Thus, the child is confined to a closet for a period of months, receiving minimal food or water.⁶

This analogy highlights, at a purely conceptual level, the fundamental disconnect between the law and the preceding corporate crisis, one characteristically similar to the artificial separation between the contrived response in the preceding analogy and the apparent “stimulus” on which it was based. In both cases, the specific circumstances afforded merely an opportune pretext, as required to give birth to a fundamentally unrelated course of action. That each set of circumstances failed to motivate the observed response may be demonstrated purely on the basis of logic, separate from a highly technical evaluation of the evidence.

The primary difference between the two contexts is that the abuse of a minor dependent requires a conspicuous—and wholly unacceptable—degree of animus: a proclivity toward particularly brutal behavior with no commensurate need for (mental) complexity. In contrast, the animating force behind Sarbanes-Oxley was clearly rooted in an unwavering commitment to an ideology, not animus toward an individual(s). As the policy enactment of Sarbanes-Oxley required a conspicuously high degree of intellectual complexity, the carefully calculated display of moral indignation toward the corporate CEO was likely, at least in part, contrived—that is, understood as an expedient and thus necessary means of furthering the cause. This is to suggest that the telos for Sarbanes-Oxley—which comprises the focus of this chapter—was supplied not by historic economic events, but by a relatively obscure vision that up until now has neither been acknowledged nor properly vetted.

This particular conclusion should prove alarming—first and foremost to legislators in Washington, DC, but also to all concerned Americans—given the enormous, direct importance of corporate governance regulation to the U.S. economy, as well as the full extent of the direct and indirect costs that have already been carefully attributed to Sarbanes-Oxley:⁷ estimates that can be expected to only increase over time, commensurate with increases in knowledge as to the law's overall effects. As a result, the focus of this final chapter is of critical relevance and importance to continued U.S. economic prosperity. The likelihood that a vigorous economy can be sustained in the face of protracted policy failures of the magnitude of Sarbanes-Oxley is very small. However, accurately understanding the precise malady that currently afflicts U.S. corporate governance policy requires first understanding, at a fundamental level consonant with logic, the powerful forces that are causing it to veer significantly off course. Only then might a potential solution prove tenable.

It is fundamentally important to note that even the most irrefutable, and thus universally compelling, demonstration that U.S. policy lacks a rational basis would very likely prove insufficient to achieve regulatory progress. As a history of the twentieth century unequivocally demonstrates, national policy that is decidedly irrational—even to the point of being intellectually bankrupt—can nevertheless continue to dominate, despite producing catastrophic consequences for decades, if not centuries.⁸ Rather than infer this discussion as futile, it merely acknowledges that the overall task—one begun in the preceding chapters—remains incomplete, and thus lacks fecundity. Consequently, at this point it is naturally incapable of igniting the fundamental types of change that are wholly required to effect progress.

Prior analyses, however prodigious the results they may have achieved, have all but failed to achieve the desired effects. Primarily, this is because their authors presumed a process of logical argumentation, where—generally speaking—it is understood that conclusions flow naturally from the observed results. This might suggest that the only necessary condition required to invoke necessary changes in the regulatory milieu is a series of logically compelling arguments. However, the debate over U.S. corporate governance policy—as previously noted—may be characterized, at its root, as without logic, and thus equally intractable whether faced with compelling external argumentation or empirical evidence. As it may be argued that political and cultural attitudes—which inevitably shape U.S. policy—are permanent,⁹ a fundamentally different approach is required.

The purpose of this analysis is to reveal, more directly than in prior chapters, the root cause of U.S. regulatory failure. However, the purpose is not to induce confrontation, per se, but rather to make translucent those guiding principles that, as defining characteristics of the modern ethos, effectively motivate corporate governance regulation in the modern era. To be clear, the focus of this analysis is not simply the vision underlying modern corporate governance regulation—as previously addressed—but its dominant telos: the animating forces that lend it particular vigor and broad appeal.

Methodology

Consider that the basic argument presented in this chapter is simple, as based upon the general notion—one receiving ready acceptance within modern society—that ideas are commonly associated with particular consequences. For instance, the dominant ideological framework, as present in either the former Soviet Union¹⁰ or Hitler's Germany,¹¹ gave birth to a broad range of egregious moral evils, which have been accurately recognized as such by history. For the purpose of this discussion, the dominant ideological framework, per se, is understood not merely as being associated with specific outcomes, but as exerting a causal impact upon behavior,¹² as achieved through a variety of mechanisms: for example, influencing how economic exigencies—including the actions of public corporations and of corporate executives—are perceived and interpreted; dictating the appropriate telos, role, and scope of corporate regulation; and related standards of normalcy, for instance, as needed to form value judgments. Consistent with this general hypothesis, research demonstrates the ability of culture to exert a causal influence on individual behavior.¹³

This study seeks to develop a conceptual level of understanding that is capable of predicting the content of policy, such that the analysis is truly causal. Consequently, its specific focus is the dominant, ideological frame of reference for the societal elite, a small coterie that naturally includes policymakers, who shape modern corporate governance policy. The potential influence of the dominant intellectual frame of reference upon behavioral outcomes, by definition, exceeds that of a mere assemblage of ideas. Rather, it may be understood as shaping the “modern sensibilities”—for example, consider those particular characteristics that cause us to view Victorian society, from the perspective of the contemporary viewer, as “Victorian”—that serve as the foundation for all thought, including any shared perceptions of normalcy, an inherently referential term.

Rather than “invent” new values over time, each individual culture prioritizes the existing set of values in a specific, unique manner. It is this ordering of values that causes inferences of meaning to be possible. When the precise ordering of values between two or more cultures differs very significantly (e.g., 1950s United States versus USSR), the inherent distinctions become apparent, and thus seem obvious. It is these defining characteristics that, on the whole, form a culture's sensibility, through which perceptions of normalcy attain meaning. Consequently, the intellectual frame of reference for contemporary U.S. elite society merely serves as a proxy: The actual objective is to define—insofar as it is entirely relevant to the study context—the modern sensibilities of the dominant U.S. policymaking culture.

As there is no way to directly evaluate the sensibilities of an individual culture, the most expedient approach—in terms of an analysis of U.S. corporate governance regulation—is to study its intellectual deposit. Possessed with a common sensibility, the societal elite are able—as a wholly natural outcome (and thus with no need for conspiratorial acts)—to exert a conspicuous and pervasive influence over broad segments of society. As immediately relevant to this study, this includes the ability to exert a conspicuous impact on the development of modern jurisprudence and corporate governance regulation, such that regulation in the era of Sarbanes-Oxley now seems perfectly natural.

Consider that under ideal circumstances, policy is rooted in rational considerations. However, when policymakers eschew the preponderance of reliable evidence that might otherwise effectively guide the development and implementation process, the net effect may be considered analogous to depriving a ship of its rudder. Left to drift aimlessly in the ocean, it becomes subject to the mercy of the tides and the currents. In a similar fashion, the policymaking process, absent its natural rudder, is unduly motivated by external forces, which direct and shape it in an entirely unforeseen manner. Rather than imply a conscious plot to intentionally derail policy in a specific, preordained direction, it suggests that—as the result of an entirely natural process—the policymaking process will be propelled in the direction of the strongest current.

Thus the 107th Congress, having all but abandoned anything that might resemble a methodical policymaking process,¹⁴ was left to meander in the midst of an extremely turbulent sea, amidst powerful adversaries. Absent the insular protection that may be derived only through a disciplined recourse to rationality, the policymaking process naturally succumbed to the dominant tides and currents, as contained in culture and effectively transmitted through politics.

The notion that modern corporate governance regulation reflects something other than rational considerations has not been entirely lost on researchers,¹⁵ and thus various efforts have been made to discern its natural origins.¹⁶ As but one of many potential illustrations, Sarbanes-Oxley's punitive focus has been rationalized to represent “a backlash against the exercise of power in a way that violated emerging social expectations about the governance of institutions that strongly affect peoples' lives and wealth.”¹⁷ Conversely, the focus of the present study is to broaden and deepen the scope of analysis so as to achieve a more accurate portrait of U.S. corporate governance regulation in the light of modern sensibilities.

Whereas the research, in general, has tended to overlook the influence of politics and culture on policy, the present study is predicated upon a conceptualization of the policymaking process in which external forces—for example, considerations other than those that may be considered natural to the policy scenario—occupy a dominant role.¹⁸ This fails to explain how such factors—for example, culture, politics—exercise a stable, homogeneous influence upon policy development across time.

However, it may be argued that the likelihood that the 107th Congress—as generally attributable to a wide range of factors previously discussed at great length—was unduly influenced by external factors is sufficiently high as to make it probable. Such factors refer not only to the tumultuous political, social, and economic environment that existed at that time, but to the specific nature of the process employed, to the broad import of the policy focus, and to its value-laden, symbolic nature.

This is to suggests that the answer to the question Why Sarbanes-Oxley? may be reasonably discerned only through a careful, retrospective evaluation of the dominant culture. In particular, the comprehensive search must be capable of unearthing reliable information upon which to base a persuasive, rational account for the unique, defining characteristics of Sarbanes-Oxley. Such an account must be able to shed light on the various factors that motivated the law's unduly punitive orientation, its highly prescriptive nature, and which fueled lawmakers' efforts to remake corporate America, and in the process, the role of the corporate executive.

Furthermore, consider that modern U.S. corporate governance regulation, from Sarbanes-Oxley to Dodd-Frank, as enacted by elected legislatures, represents the conspicuous outcome of political processes. To come to terms with its precise etiology, it is first necessary to understand that politics is a lagging—versus a leading—indicator: Ultimately, it is culture that makes politics.¹⁹ Furthermore, social processes initially take root at the level of the aesthetic, and only then do they aspire to cultural, and then finally, political ambitions.²⁰ This is to suggest that, as part of a realistic effort to answer the question Why Sarbanes-Oxley? a paring back of modern culture is required, so as to lay bare its roots.

Thus, the methodology for this study is generally rooted in a philosophical and historical analysis of modernist thought. Because modern U.S. corporate governance regulation, as multiple studies have adequately demonstrated,²¹ largely eschews rational considerations, delineating its precise motivation requires a fundamental comprehension of relevant aspects of the modern sensibility, including its political and cultural dimensions.

To be clear, the “intellectual deposit”—which serves as the focus of this chapter, and which represents a compelling, well-defined, and cohesive ideological framework, whose import transcends any loosely connected assemblage of ideas—did not originate in the 1960s, but rather during the Enlightenment, when the defining characteristics of modernity initially crystallized and took root. Nonetheless, it was during the more recent, tumultuous 1960s era that this “intellectual deposit” received conspicuous nurturance, such that it was effectively congealed, amplified, and accentuated. Such careful preparation and packaging eventually enabled it to achieve a vital influence over society's leading institutions, including its preeminent professional and social classes, where its diktats have come to be considered all but axiomatic. As a result, this discussion seeks to discover the basis for modern corporate governance regulation in the dominant ideology characteristic of this period of revolutionary appeal.

The overall discussion addresses particularly salient themes which, having exercised a dominant influence upon modern institutions, politics, and culture, are critically relevant in explaining U.S. corporate governance regulation in the modern era. Considered relative to the culture antecedent to the Enlightenment, they appear as radicalized conceptions. Clearly, alternative, analytic frameworks exist—for example, the Chicago school of economics²²—which might, at least in theory, serve as a basis for this study.

However, in general, these frameworks warrant exclusion on the basis of two conspicuous factors: (1) their influence, as limited to either specific communities or geographic regions, is inadequate to realistically motivate policy considerations of the magnitude of Sarbanes-Oxley; and (2) they are fundamentally inconsistent with—if not diametrically opposed to—the regulatory approach employed in the era of Sarbanes-Oxley. As a result, they are generally unable to account for the tone, the unique defining characteristics, or the content of modern corporate governance regulation, and thus are not useful as part of a study seeking to explain the genesis of regulation in the era of Sarbanes-Oxley.

As consistent with the approach employed throughout this book, the treatment is nonpejorative. Thus, its focus is to illuminate and to explore, rather than to engage in rash judgment, prior to possessing all the facts. As the focus of the discussion is nonpolemic, it emphasizes broad themes, which when considered in the cumulative, may be used as part of an effective argument to explain the unique, defining characteristics of modern U.S. corporate governance regulation. As a result, it seeks to provide an effective answer to the question, Why Sarbanes-Oxley?

The discussion begins with a brief and general introduction of the nascent period that permitted core aspects of Enlightenment thought to be effectively reformulated, as was fundamentally necessary for their rapid dissemination throughout the leading institutions of modern society. Afterward, an exclusive consideration is afforded to the dominant influence of individualism and egalitarianism²³ in shaping the modern sensibilities.

The Port Huron Statement

The defining moments of 1960s radicalism—which have been characterized as a conspicuous “retreat of reason”²⁴—may be traced back to Port Huron, Michigan, in the year 1962.²⁵ An early meeting of 59 delegates from 11 college campuses arrived at agreements on pronounced sentiments that were both revolutionary—thus serving as the genesis of 1960s protests—and unequivocally hostile toward America:²⁶ The perception of America as a thoroughly corrupt and illegitimate nation was taken as axiomatic.

Whereas Port Huron provides an accurate reflection of the radicalism inherent in 1960s counterculture, it remains relevant today as an interpretative guide, necessary to understand the origin of a wide range of important social and cultural developments that influenced broad aspects of American society. It is also particularly relevant in that its sentiments have received adoption from a wide range of contemporary public figures, including leading politicians and policymakers.²⁷

Whereas the stated agenda was to change “human beings, the nation, and the world,”²⁸ its more relevant contribution came in the form of a document—the Port Huron Statement²⁹—that served as a blueprint for fomenting revolutionary activity within the United States and throughout the world. The Port Huron Statement constituted, at its roots, a revolt not merely against contemporary society, in general, but against American culture, in particular, which it defined as morally bereft: sexist, racist, authoritarian, and imperialistic. It sought, as the only legitimate response to a corrupt regime, destruction.³⁰

Its basic theme, one consonant with totalitarian regimes, was to argue the fundamental need to revamp society, along with its dominant institutions, so as to achieve a more perfect human being.³¹ As protracted efforts to substantively improve upon human nature are likely to be actively resisted, both coercion and (ultimately) violence are naturally required. Port Huron also repeatedly emphasized the need, as a fundamental precondition for the achievement of a utopian society, to eliminate all individual and group distinctions, as reflected in the language employed: for example, “Human Brotherhood…”³²

A common theme of the 1960s was that the origin of virtually all of society's problems could be traced back to the system: “that collection of values that provides guidelines for societies as well as individuals.”³³ As an inevitable outcome of this unique conceptualization, the only conceivable remedy was the complete dismantling of (1960s) society, such that the people—the “other 99 percent”³⁴—could assume power.³⁵ Thus, the modern, romanticized caricature of the 1960s rebel as a noble idealist, committed to the lofty pursuit of the highest human ideals, is fundamentally ahistorical:³⁶ A more accurate comparison may be made to that of the German fascist.³⁷

Such deeply cherished sentiments remain relevant today, simply because they refused to die with the passing of the 1960s—causing it to be labeled the “undead decade.”³⁸ Instead, they were disseminated, like seeds, throughout society, where they germinated, producing a wholly unanticipated series of effects that likely exceeded original expectations: “I watched many of my old comrades apply to graduate school in the universities they had failed to burn down, so that they could get advanced degrees and spread the ideas that had been discredited in the streets under an academic cover.”³⁹

Thus, although Port Huron has receded into the past, its ideas have not, while its spirit has metastasized throughout society, realizing a far greater effect than its organizers could have ever anticipated. Fervently anti-institutional and antibourgeois culture, the conspicuous ideals of the infamous Port Huron Statement—after waning during a brief period in the 1980s under Ronald Reagan—are now increasingly commonplace, especially in elite circles that influence policy.⁴⁰ Thus, the same objectives are actively pursued today, “not with tumult, but quietly,”⁴¹ though adhering to the same overarching “moral and political assumptions.…”

Having introduced the setting, the discussion now turns toward a focus on its intellectual offspring. In particular, the following discussion seeks to illustrate the ability of an extremely radical version of individualism to foment social unrest, and thus to force structural changes and shape influential policy decisions, even without achieving representative status within the U.S. voting population.

Individualism

Individualism, when carried to its extremes, seeks to suppress individual differences, especially those that serve as the natural outcome of market-oriented processes. Because the general topic is imbued with highly controversial implications, a brief clarification may be warranted. Clearly, all individuals—to varying degrees—encounter obstacles in life that circumvent or weaken the ability of individual choice to effect desired outcomes. Furthermore, it is important to note that many such obstacles are not the natural result of choice (e.g., intelligence, family upbringing, health status), as exemplified, for instance, in the life of Helen Keller, who was born deaf, blind, and mute.⁴²

However, at the general level of analysis, and as applicable to a wide variety of circumstances, individual-level distinctions, especially those that directly influence quality of life (e.g., character), are heavily influenced by individual choice. The implications of this discussion, rather than reflect philosophical considerations, are eminently practical: So long as the ability to exercise discretion is retained, individuals possess enormous capacity to influence their present, and thus, by implication, their future. Furthermore, because individual preferences vary widely, so too is it entirely natural to expect a broad disparity in terms of outcomes.

Individualism, however, as a defining characteristic of modernity, is at conflict with any conceptualization of the individual that infers meaning to individual choices. Thus, it defines as unjust the mere presence of noted distinctions between individuals. Presuming such disparities to be “unfair,” leads to an insistence that they be removed, which requires forces. As a result, the state is frequently called upon to act as a leveler, causing its influence over the normal, daily affairs of society to grow exponentially over time.⁴³ Thus understood, a radical form of individualism naturally leads to a strong, centralized authority as the only possible means of enforcing a desired homogeny in terms of outcomes.

As entirely relevant to a treatise on U.S. corporate governance regulation, consider that throughout history down to the modern period, the wealthy merchant—more so than any other class—has served as the most obvious and frequent target of envy: “from the end of the Middle Ages to our day, the wealth of the rich merchant has been resented far more than the pomp of rulers.”⁴⁴ This is to suggest, as receives general support from the research,⁴⁵ that the acute, hypersensitivity to individual distinctions, as a defining characteristic of the modern era, is, at its root, little more than envy.⁴⁶

That “fewer individuals and groups are ashamed of their envy”⁴⁷ today only serves to accentuate an already growing trend. Thus, the mere presence of envy is increasingly interpreted as prima facie evidence attesting to serious social injustices that may be remedied only through government intervention.⁴⁸ Properly understood, such a focus—rather than promote societal accord—results in profound “dissatisfaction produced not by what [individuals] lack but by what others have.”⁴⁹

As a consequence, little explanation is required to facilitate an understanding that capitalism, as a basic system of free exchange, and radical individualism are diametrically at odds. For instance, radical individualism asserts the need—which it interprets as a matter of justice—for equality of result. Conversely, capitalism—as a defining characteristic—makes wide disparities in terms of observed outcomes all but certain. As may be attributed to vast individual differences—across multiple levels of existence (e.g., preferences, behavioral routines, intellectual capacity)—sheer uniformity, in terms of observed outcomes, would be fundamentally impossible when choices are unconstrained.

As a result, individualism seeks to constrain choice through the coercive power of a centralized authority. Consequently, radical individualism and modern capitalism—like Superman⁵⁰ and kryptonite—are unable to coexist for very long, especially when the other is able to maintain a vigorous presence. Though it may seem to represent a fairly impractical and/or obscure ideal, radical individualism has achieved overwhelming influence within elite society, especially those leading U.S. institutions whose principle function is to disseminate culture: for example, Hollywood, the news media, the academy, and large segments of the political class.⁵¹

As an illustration, consider that the Soviet system—despite the use of tremendous brutality so as to forcibly suppress individual differences⁵²—was considered more appealing to wide circles of U.S. academics than Western capitalism:⁵³ “I have seen the future, and it works.”⁵⁴ Thus, despite possessing considerable, noteworthy limitations, radical individualism wields raw power, thus causing its practical importance to be significant.

After the collapse of Soviet tyranny—which consumed an estimated 100 million lives in less than a century⁵⁵—the practical appeal of appearing out of step with modern capitalism decreased significantly. Furthermore, traditional foes of Western democracy, such as China, began to institute market-oriented economic reforms, causing the basic terms of the old campaign to be virtually unwinnable. However, radical individualism, as a compelling influence in American society, did not cease.

Rather, it simply reinvented itself, in part by adopting a new enemy: American bourgeois culture,⁵⁶ as exemplified by the corporate executive. Consistent with a conception of social injustice as constituting any noted disparity in outcome, hierarchical structures (e.g., as a fundamental constituent of corporate America) have been redefined as unjust, and therefore socially illegitimate. By definition, hierarchies are predicated on the existence of formal inequalities between individuals—without which they would cease to exist.

As a result, the modern corporation has now become a symbol of the counterculture. Consequently, radical individualism—having taken root within elite U.S. institutions⁵⁷—responded by turning its turrets away from Western capitalism—which it enjoyed abhorring up through the 1980s (a period exemplified by Ronald Reagan)⁵⁸—and toward a new enemy: corporate America and the bourgeois class.⁵⁹ Thus, it is not coincidental that an overt display of hostilities has grown increasingly fervent over the last decade.

Egalitarianism

Alexis de Tocqueville traveled the United States for nine months from 1831–1832, noting, as a defining characteristic of the American ethos, a commitment to equality that is greater even than a love for freedom.⁶⁰ Over the centuries, the passion for equality burning within the bosom of American culture has failed to diminish. Thus Kurt Vonnegut, the late author, satirically predicted that, by the year 2081, the Constitution would be amended to require perfect equality among individuals. Individual distinctions—for example, in terms of intelligence, appearance, strength, and so forth—would be legally proscribed.⁶¹

In a nation's nascent stages, such a marked preference for equality is unlikely to be associated with overt consequences, such that the social and economic development of the United States was not unduly affected. However, as society matures over time—to the point where its governing structures become large and complex—a conspicuous egalitarian focus may be expected to pose significant problems of a decidedly practical nature.⁶² Consider that the only institution powerful enough to satisfy the demand for egalitarian fixes (e.g., income inequality) is a centralized authority: the government.

Inevitably, proposed solutions—consonant with the focus of U.S. corporate governance regulation in the modern era—will either require the transfer of a substantial sum of resources from one group (e.g., investors, as owners of the firm) to another (e.g., accounting firms, consultants),⁶³ or that any wealth that is perceived as excessive be destroyed.⁶⁴ As directly analogous to Sarbanes-Oxley, consider that punitive income taxes on the wealthy—for example, which produce a net loss, by reducing the welfare of high-income earners, without achieving any corresponding increase in tax revenues or public funds—are generally favored by the public.⁶⁵

However, the actual redistributive effect⁶⁶—as an inherent aspect of modern corporate governance regulation—has involved less a transfer of wealth between individuals as it has required a massive shift of power from the individual, publicly owned corporation to the government. Such an outcome is largely consonant with Tocqueville, who accurately predicted nearly two centuries ago that an overriding focus on equality would, as a natural result, produce a system of “complicated rules, minute and uniform…”⁶⁷ through which individuals are “not shattered but softened, bent, and guided…” and thus reduced to a “flock of timid and industrious animals, of which the government is the shepherd.”

Of conspicuous relevance to this discussion is that radical egalitarianism, as a wholly inadvertent consequence, ultimately gives rise to a prominent, centralized bureaucracy⁶⁸—as is required to enforce conformity. Thus, rather than empower the individual citizen, egalitarianism, as a wholly natural outcome, saps all authority away from the individual and from society's intermediate institutions—which, in ideal circumstances, exist to hold government in check⁶⁹—transferring it to the state. Therefore, the egalitarian impulse, when left unchecked, constitutes a serious threat to individual liberty.⁷⁰ As force is required to compel ever-greater degrees of equality and/or to alleviate an ever-increasing demand for regulatory fixes to unforeseen social problems, such a society, by definition, becomes increasingly coercive.

Thus, egalitarianism—for fairly obvious reasons—can be shown to be inexorably linked to a general antipathy toward hierarchical institutions, since hierarchies, by definition, are constructed of inequalities. As a result, the public corporation—arguably the most conspicuous example of a modern hierarchy—constitutes the natural enemy of a society with pronounced egalitarian sentiments. Thus, widespread animus toward corporate America represents an outcome that is fundamentally consistent with modern sensibilities: One naturally leads to the other.

Whereas ethical failures at the corporate level have undoubtedly flamed already present hostilities, such actions, properly understood, constitute the occasion rather than the source of animus toward the modern corporation. In light of practical considerations, any efforts to entirely remove corporations from modern society are likely to prove difficult. However, a more feasible alternative would be to simply inundate the public corporation with a series of sweeping and costly regulations, which not only tame the headstrong, entrepreneurial executive, but successfully place the corporate structure firmly in the grasp of the modern bureaucrat. Thus presaging the general mood of Sarbanes-Oxley, a “condemnation of great wealth must inform any defense of the free market, and that moral condemnation must be backed up with effective political action.”⁷¹

It is also likely that the demands for egalitarian interventions into social and economic life can reasonably be expected to grow over time, rather than plateau. Such a counterintuitive result may be understood as the natural outcome of several processes innate to egalitarian interventions. (As a result, this brief discussion is independent from any considerations as to the merits of individual policy.) Consider a particular type of inequality that has long been present within society. If, as the result of some type of government intervention, the dominant inequality begins to subside, any remaining disparities—no matter how slight they may have seemed before—are now likely to appear as salient.⁷²

This is to suggest that as society, over time, gradually achieves its objectives—thus approaching continually higher levels of equality—perceptions of inequality will not only remain, but grow stronger. This is likely to be associated with two conspicuous outcomes: (1) it will naturally produce repeated demands for government interventions into the economy, and (2) the heightened sense of inequality will result in a society that is more—rather than less—discordant, such that policy success will prove elusive.

A second factor that can be expected to contribute to a rapid escalation in the demand for egalitarian fixes over time is the nature of egalitarian sensibilities. When justice is defined as the absence of individual distinction, those who are especially committed to this conception are likely to continually witness in the existing social and economic structures a never-ending array of potential applications for regulatory fixes. As a general result, when it serves as the focus for policy, the egalitarian impulse—despite its broad theoretic appeal—in actual application, will not only prove difficult to satiate, but counterproductive as well.⁷³

As an illustration of this general principle, consider the relatively controversial topic of income equality—upon which this discussion is decidedly neutral, so as to focus on the broader issue(s). Because it is now taken as axiomatic that income inequalities, per se, are unjust, a litany of policy interventions have sought to address the issue, which has only added to the problem. However, of conspicuously greater relevance to this discussion is the rational basis underlying the need to define income differentials as anathema.

At a very personal level, the amount of time and energy spent researching, writing, and editing this book—over a period of years—is unlikely to be well-compensated. During the same period, others are likely to earn significantly more money. Is this unjust? If so, on what basis? Consider, for instance, as is consistent with logic, the monetary fortunes reaped by others—no matter how much they may exceed my own—exert no influence, directly or indirectly, upon my personal ability to earn an income.⁷⁴ As a result, income differentials, in and of themselves, are relatively meaningless.

As a simplistic illustration, George Soros, one of the wealthiest and most powerful men in the world, did not achieve such worldly success by impoverishing me. Though he is likely envied for his vast fortune, the wealth he does possess—purely as a matter of logic—has no impact upon the resources available to others. For instance, assume that Mr. Soros lost his entire fortune in a failed business venture. This would have no impact upon my income: I am neither enriched nor made poorer as a result. Assume further that the very next day—through a series of very high-risk moves—he is able not only to recoup all of his losses, but to double his net worth from its previous high. Once again, this would have no impact whatsoever upon my personal income or wealth. Thus, income differentials, per se, can be demonstrated, simply as a matter of logic, to be fundamentally unrelated to individual well being.

It has been noted that there are three general types of falsehoods: “lies, damned lies, and statistics.”⁷⁵ The statistics on income inequality clearly belong in this range. Consider, for instance, that the poorest Americans are, in fact, more wealthy than the vast majority of those who live outside the United States.⁷⁶ However, “income inequality” in the United States is comparably high. How then is the statistic to be reliably interpreted? The reality is that income inequality and national wealth are positively correlated. Therefore, the most wealthy nations, which boast the highest standards of living, also tend to exhibit relatively greater income inequalities. Simply put, in such nations, most people earn a lot, while a smaller number of more fortunate others are able to earn unprecedented sums, without having any deleterious impact upon the wealth enjoyed by the majority. Thus, “income inequality,” properly understood, is more of a blessing than a curse.

Conversely, in nations plagued by misery and suffering (e.g., Haiti, Cuba), where the average citizen is barely able to survive—and many who lack proper recourse simply do not—general income inequalities are comparably low. Third-world countries rank high in terms of egalitarianism: Simply put, everyone is equally miserable. Thus, a logical argument—though one that properly resides outside the general purview of this discussion—may be made that “income inequalities,” as a policy objective, are actually desirable. However, at the very minimum, the evidence clearly implies that “income inequality” and “concern for the poor” are two distinct constructs.

Consider that a genuine concern for the poor is a meritorious response to the demands for justice. However, “income inequality,” despite being quantifiable, is relatively useless, because it cannot be reliably interpreted. Useful policy measures—for example, GDP, inflation, unemployment—may be reliably employed in diverse circumstances, and thus represent a valued source of objective information, independent of policy considerations or researcher bias. However, “income inequality” is a unidirectional construct: It has been employed strictly as a means of advancing a well-defined policy agenda, with strong anti-Western and anti-U.S. sentiments.

Even apart from any consideration as to the merits of the competing arguments, that the construct may be employed to support but one general message renders it virtually meaningless. A related concern is that reliable tools for policy analysis reveal—as opposed to manufacture—data: The choice of instrument should not unduly influence the findings. However, “income inequality,” as a construct, constitutes a weapon in an arsenal, rather than a useful statistical tool, and thus may be shown to lack objectivity.

Egalitarianism has also negatively influenced how poverty has been conceptualized in academic research, thus limiting its potential utility to help those who are truly impoverished. For instance, consider the nuanced understanding—one first introduced by Rawls⁷⁷ and currently held as axiomatic within academic circles—that justice requires that inequalities be (politically) structured so as to favor the least advantaged members of society.⁷⁸ Due to an ostensible focus on the needs of the poor, the general hypothesis has obvious theoretic appeal. Very few individuals want to be perceived as being opposed to the poor.

However, the focus is extremely beguiling. Although it is relatively easy to conflate abstract political considerations with those related to individual welfare, the two represent distinct—at times opposing—constructs. Consider that abstract political considerations have often been used to rationalize violations of individual liberty, based upon the presumption of superior knowledge on the behalf of the government bureaucrat. Thus, it is not insignificant to note that Rawls's⁷⁹ exclusive focus is at the level of abstract political consideration, in a method of economic calculus where the individual is objectified, and welfare considerations are considered extraneous.

To be clear, this does not imply that the modern study of economics is not eminently useful, it simply clarifies that the overriding preoccupation with equality, per se, is rooted in preference—as reflecting a specific ordering of values that serves as a defining characteristic of the modern ethos—not moral principles. Thus, it is misleading to conflate Rawls' approach to policy with a normative understanding of justice. A preferential concern for the poor, as a fundamental requirement of justice,⁸⁰ is properly rooted in a genuine concern for the welfare of the individual, and thus may only seek the other's good.

In contrast, the telos of the contemporary scholar, following in the footsteps of Marx,⁸¹ lies in economic aggregates. Not only does this make it all too easy to overlook the particular welfare considerations of the most vulnerable—given that they appear less salient when aggregated—but there exists a fundamental, bureaucratic tendency, based upon a blithe presumption of superior knowledge,⁸² to objectify the needs of the poor, and thus to dictate to them what constitutes their best interests. Such an approach—which naturally leads to coercion and a fundamental violation of human rights—is conspicuously unjust, yet it is not inconsistent with the modern academic focus, as rooted in egalitarianism.

A Modern Demonstration

As a particularly salient example of the dramatic rise in corporate antipathy present within U.S. society, consider the Occupy Movement.⁸³ Such populist movements, it may be argued, possess realistic potential to “create excitement and a sense of purpose; they promise the restoration of the lost but longed-for sense of community.”⁸⁴ Unfortunately, the Occupy Movement does not seem to have fulfilled its potential: Rather than unite, it seems to have promulgated a divisive strain within America. Propelled by an apparent obsession with a radicalized conception of equality, as opposed to a substantive concern derived either from a careful consideration of moral principles or economic exigencies, “99 percenters” across the nation have sought to vilify the public corporation.⁸⁵

The Occupy Movement, exhibiting fundamentally undemocratic tendencies, has also taken conspicuous aim at Americans who have distinguished themselves in some way. Based upon the presumption that observed outcomes, in their natural and unfettered state, would be completely homogenous, the least indication of success, at the individual level has been treated as prima facie evidence attesting to dramatic injustice. Consider that as part of a cynical effort to assist Americans in their frantic effort to achieve perfect equality, Kurt Vonnegut—over four decades ago—suggested the following recipe:⁸⁶ To prevent those of superior intelligence from taking (unfair) advantage, require them to wear a device that periodically disrupts their mental processes; compel the strong to wear weights; and force the beautiful to wear masks.

The apparent aim of this zealous, orchestrated campaign is to induce public rage over the presence of individual and/or class distinctions—as conspicuously present in hierarchical structures—thus compelling, as a natural outcome, a fundamental reshaping of society. Thus, it is hardly coincidental that the radicalized protest, as a wholly inadvertent side-effect, has spawned a virulent form of anti-Semitic rhetoric: “I think that the Zionist Jews who are running these big banks…need to be run out of this country.”⁸⁷

Virulent anti-Semitism—previously hidden, but now expressed publicly with a frequency that is alarming—is completely consistent with the modern ethos, as present in the Occupy Movement. Consider that although Jews comprise less than half of one percent of the world's population, they consistently make up over 20 percent of the Forbes 400 list of the world richest people.⁸⁸ Furthermore, 30 percent of Nobel Prize winners in science are Jewish, whereas many major entertainment studios (e.g., Paramount Pictures, Universal Studios) are either run or owned by Jewish individuals.⁸⁹

As may be generally attributed to such factors as a superior work ethic, a strong family focus, and a unique emphasis upon formal education, Jews are statistically overrepresented in nearly every success-related category. Naturally, this has induced nothing less than rage among those who blithely insist that individual distinctions—which they wish to eradicate through the imposition of government force—are immoral.

The emphasis upon radical individualism as a conspicuously defining characteristic of the modern ethos naturally produces class envy as well as animosity toward those who are conspicuously successful. Thus, it is hardly surprising that both the corporate CEO and the Jewish individual are increasingly set aside for rhetorical condemnation in the modern era. Corporate America, as a prominent symbol not only of capitalism but of bourgeois culture in general, has frequently been targeted as the enemy of civilized society—a particular notion that was originally crystallized into the modern conscious by the 107th Congress.

That the Occupy Movement has received its fair share of support from the academic world—both directly, in terms of noted academics who have joined protests, as well as indirectly, in terms of the anarchy literature, with which the protesters naturally identify⁹⁰—is also particularly telling. Whereas corporate America is not without its fair share of problems—to which concrete solutions would benefit the entire nation—the organized protests, despite being fairly scripted, have remained deafeningly silent on such issues. As perhaps the gravest illustration, consider that from 2000 to 2009, approximately 2.9 million relatively high-paying jobs were eliminated in the U.S., most of which were shipped overseas.⁹¹

Thus, it is hardly surprising that the traumatic blow suffered, first and foremost by the U.S. middle class, but also by the entire U.S. economy, may be largely attributed to the U.S. policymakers who provided generous profit incentives to firms willing to shed U.S. jobs.⁹² As an illustration, consider a U.S. firm that manufactures a product overseas, at a dramatic savings, and then subsequently ships the assembled product back to the United States, where it may be sold at no less a price than when it was manufactured domestically. As a direct result, the firm realizes a significant and immediate increase in profits. As a result, the rational, profit-maximizing firm naturally took full advantage of every conceivable opportunity to transfer production—and jobs—overseas.

A rational—and arguably obvious—policy response—so as to effectively stem the tide of U.S. jobs exported overseas before it took root—would have been to impose significant import taxes and/or tariffs on goods manufactured overseas by U.S. firms. However, U.S. lawmakers adopted precisely the opposite strategy, thus in effect providing handsome compensation to firms—the cost of which was underwritten by the U.S. taxpayer—who relocate high-paying U.S. jobs to foreign countries.

To be clear, this does not merely constitute failed policy, or even a lack of policy. Rather, it represents a moral tragedy that will continue to have lasting repercussions on the U.S. economy for many decades, if not centuries. Consider that the central “meaning of justice, perhaps the most common is efficiency…[because] in a world of scarce resources waste should be regarded as immoral.”⁹³ In the span of a single decade, during which U.S. policymakers were obsessing over complex schemes to punish corporate America with ineffective and costly new regulations, nearly 3 million high-paying U.S. jobs were lost—an outcome that could have easily been prevented.

That a severely damaging blow to the U.S. middle-class fails to perturb those who refer to themselves as the “99 percenters”—and thus, by implication, as the guardian of the common person—suggests a focus that while heavy on rhetoric is noticeably short on substance. More relevant, it suggests that the protesters are either generally uninformed or that they are motivated by something other than a genuine concern for the common good. The carefully scripted nature of the protests, coupled with a message embedded with politically laden overtones, suggests as a more realistic objective the achievement of structural economic changes which could not otherwise be attained through democratic processes.

Thus, Occupy represents a particularly cynical form of the very “battle for advantages through politics”⁹⁴ that possesses a fundamental capacity to “shatter a society into fragments of isolated individuals and angry groups.” As a movement, it represents an “ethos that aims simultaneously at political and social collectivism on the one hand, and moral anarchy on the other.”⁹⁵ Thus, the demonstrated link between radicalism and personal ambitions to power is hardly surprising, and helps to explain why protesters have generally been able to exercise “an influence far beyond their numbers.…”⁹⁶

That the Occupy leadership conceives its efforts as being linked to the “Arab Spring,” and thus have sought to reach out to the Muslim Brotherhood—whose fervent anti-Western and anti-U.S. sentiments are well documented—merely helps to confirm the obvious. As Yeats correctly observes in his poem “The Second Coming,” “The best lack all conviction, while the worst / Are full of passionate intensity.”⁹⁷

Why Sarbanes-Oxley?

Modern U.S. policy, as previously demonstrated at great length, is counterproductive. The mandate that all citizens be insulated from undue exposure to risk is a natural outcome of the egalitarian impulse, which requires that all outcomes—and thus fortunes—be equal.⁹⁸ Thus, in 2002 lawmakers assured investors that their problems could be attributed to corporate malfeasance, and that Sarbanes-Oxley would fix everything. “The failure to understand that our demands are the source of our dissatisfactions thus generates a public mood that is not favorable to the survival of democratic government.”⁹⁹

Thus, investors gladly accepted this argument, because it made them feel better,¹⁰⁰ and security developed all the connotations of a religion. When the promised resolution inevitably failed—such that unanticipated losses and economic turmoil intensified—investors naturally responded with a sense of fatalism. Thus, their only remaining recourse was to demand new regulatory fixes, so as to attain the former security that was promised but never delivered.

Inevitably, this will lead to a repetitive cycle: Inefficacious regulation (e.g., Dodd-Frank) creates policy failure, causing widespread investor panic, thus resulting in fervent demands for new, even more intrusive laws.¹⁰¹ Thus understood, Sarbanes-Oxley, as analogous to a modern ukase, has reduced precious moral capital, while it has severely weakened any remaining political authority and introduced bitter divisiveness into the fabric of modern culture.¹⁰²

A state-of-the-art luxury cruise liner—filled to capacity with thousands of passengers (men, women, and children)—unexpectedly sinks in the middle of the ocean, barely leaving a trace. The weather conditions, though somewhat rough, were not sufficient to account for the disaster. Investigators who arrive late on the scene lack any explanation. Upon recovering the ship's black box, it is discovered that the ship's captain, in consultation with its senior officers, had ordered the ship's mechanical systems be shut completely down, thus rendering its navigational systems, ballast, and steering inoperable.¹⁰³ From that point, the ship quickly began to list, took in large amounts of water, and sank. That Sarbanes-Oxley sank is clear. What is not clear is what motivated the crew's fatal decision—a quandary that caused problems that persisted for decades.

Consider that rationality constitutes an effective barrier against the artificial politicization of the regulatory process: a powerful force that possesses the significant capacity to render policy ineffective, or worse, counterproductive.¹⁰⁴ An objective, informed approach—based on the most recent and reliable information—cannot guarantee regulatory success. However, it can illuminate the regulatory development process, thus ensuring that the precise objectives are realistic—for example, commensurate with current levels of specialized knowledge and resource constraints—and that the adopted policy mechanisms are (reasonably) efficacious. As a result, the probability that policy success lies within the range of potential outcomes is dramatically increased.

The only alternative is to (knowingly) enact policies that, by definition, can only be associated with ruinous outcomes. Unfortunately, U.S. corporate governance policy in the modern era has been exposed to unacceptable risks,¹⁰⁵ in the form of dominant, external forces, whose influence has severely distorted the intellectual, cultural, and political milieu. As a natural experiment, Sarbanes-Oxley effectively illustrates the degree to which the gravitational pull associated with the modern ethos is now more compelling than fundamental logic. Its contents may be predicted as a reflection of the modern ethos. Thus, properly conceived, U.S. corporate governance regulation in the modern era reflects a temperament, not a philosophy.¹⁰⁶

Sarbanes-Oxley, as its crown jewel, is a diktat. Totalitarian in spirit, it is deeply antagonistic toward the public corporation, and thus mandates its restructuring. So as to justify the conspicuous and wanton intrusion vis-à-vis the public corporation, the vilification of the corporate executive as a rake was fundamentally necessary, thus introducing divisiveness. Reflecting the sentiments contained in the Port Huron Statement, Sarbanes-Oxley sought to create a new kind of executive and failed.

However, human nature is neither infinitely malleable nor is it perfectible; thus the marginal return on the drastic increase in regulation has been negative. The result has been a pronounced lack of efficacy,¹⁰⁷ tremendous waste,¹⁰⁸ and a wide range of unintended effects¹⁰⁹—all of which have exerted a significant, dragging influence on the U.S. and global economies during a period of crisis.¹¹⁰ Because the specific process employed made its success impossible, the law's costs are inexcusable.¹¹¹

To be clear, the response to the question Why Sarbanes-Oxley? does not require a blithe presumption that every—or even that the typical—lawmaker in the 107th Congress actively subscribed to the ideological views described throughout this study. To the contrary, institutions “are regularly politicized by minorities within them.”¹¹² The silent majority, whose overriding objective is to conform, comports weak resistance to the proselytizer whose agenda constitutes a vital source of energy and focus. Of further relevance, the hierarchical nature of Congress affords tremendous influence to its most senior members, who are able, with relative ease, to dictate how those of lower rank in their party vote.

As a result, the requirements of the theory are modest: Only a few members—well placed within the 107th Congress—would have needed to possess a significant regard for the ideological content generally reflected in the modern sensibilities. In fact, there is strong indication that—especially among elite circles—the percentage of those who are strongly committed to the modern ethos drastically exceeds what is needed for this theory to work.¹¹³ (This fails to imply that it is correct—a conclusion that is left to readers—but merely that it cannot be falsified on this specific basis.)

Perhaps, however, the most damaging aspect of the modern era of U.S. corporate governance regulation has yet to be acknowledged. Consider that Tocqueville, over a century ago, considered the large firm to be a “powerful and enlightened member of the community, which cannot be disposed of at pleasure or repressed with remonstrance, and which, by defending its own rights against the encroachments of the government, saves the common liberties of the country.”¹¹⁴ Beginning with Sarbanes-Oxley, the power fundamentally necessary to keep government in balance with the needs of society no longer resides within the corporate structure, which has been zapped of its vitality.

As a direct result, common society now lacks the influence sufficient to reprove any zealous overintrusion of the government into the affairs of daily life: a disconcerting effect that has only been enhanced by subsequent developments (e.g., Dodd-Frank, the Occupy Movement). Thus, as an ironic outcome of a law intended to protect investors, the general public's ability to fend off the encroachments of an authoritative regime—assuming one were to rise to power—has been severely compromised. This is to suggest, as a wholly inadvertent impact of Sarbanes-Oxley–era regulation, a potentially significant decrease in individual liberty, as precipitated by a general weakening of corporate influence.

 

 

 

Notes

¹ As an illustration, see: J. E. Fisch, “The Overstated Promise of Corporate Governance, Reviewed Work(s): Corporate Governance: Promises Kept, Promises Broken by Jonathan Macey,” The University of Chicago Law Review 77, no. 2 (2010): 923–958; J. R. Brown, Jr.“Criticizing the Critics: Sarbanes-Oxley and Quack Corporate Governance.” Marquette Law Review 90 (2006): 309.

² For a discussion, see: J. R. Macey, Corporate Governance: Promises Kept, Promises Broken (Princeton, NJ: Princeton University Press, 2008); R. Romano, “The Sarbanes-Oxley Act and the Making of Quack Corporate Governance,” Yale Law Journal, 2005, 114.

³ W. C. Kneale and M. Kneale, The Development of Logic (New York, NY: Oxford University Press, 1962); E. J. Yanarella, “Reconstructed Logic” and “Logic-in-Use” in Decision-Making Analysis: Graham Allison, Polity, 8, no. 1 (1975): 156–172.

⁴ A. G. Greenwald and D. L. Ronis, “On the Conceptual Disconfirmation of Theories,” Personality and Social Psychology Bulletin, 7, no. 1 (1981): 131–137. http://faculty.washington.edu/agg/pdf/Gwald_Ronis_PSPB_1981.OCR.pdf.

⁵ See, for instance: ABC News, “Police: Fla. Couple Kept Boy Locked in Closet,” ABC News, March 16, 2012. http://abcnews.go.com/US/wireStory/police-fla-couple-boy-cage-inside-closet-15936262.

⁶ Ibid.

⁷ N. Vakkur, R. P. McAfee, and F. Kipperman, “The Unanticipated Costs of the Sarbanes-Oxley Act of 2002,” Research on Accounting Regulation, 2010; E. Engel, R. M. Hayes, and X. Wang, “The Sarbanes-Oxley Act and Firms' Going Private Decisions,” Journal of Accounting and Economics 44 (2008): 116–145; I. X. Zhang, “Economic Consequences of the Sarbanes-Oxley Act of 2002,” Journal of Accounting and Economics 44 (2007): 74–115; V. Chhaochharia and Y. Grinstein, “Corporate Governance and Firm Value: The Impact of the 2002 Governance Rules,” Journal of Finance 62 (2007): 1789–1825.

⁸ For a discussion, see: R. H. Bork, Slouching towards Gomorrah: Modern Liberalism and American Decline (New York, NY: Regan Books/Harper Collins, 1996).

⁹ Ibid., p. 84.

¹⁰ S. Courtois, ed., The Black Book of Communism: Crimes, Terror, Repression (Cambridge, MA: Harvard University Press, 2008).

¹¹ For a background discussion, see: “The Nazi Ideology.” Holocaust Education: The Danish Center for Holocaust and Genocide Studies. www.holocaust-education.dk/baggrund/nazismensideologi.asp.

¹² Ibid.

¹³ See, for instance: R. Brislin, Understanding Culture's Influence on Behavior (San Diego, CA: Harcourt Brace Jovanovich, 1993).

¹⁴ See, for instance: R. Romano, “The Sarbanes-Oxley Act and the Making of Quack Corporate Governance,” Yale Law Journal, 2005, 114; S. M. Bainbridge, “Sarbanes-Oxley: Legislating in Haste, Repenting in Leisure,” 15 (UCLA School of Law, Law and Econ. Research Paper Series: #06-14). http://ssrn.com/abstract=899593; R. W. Hamilton, “The Crisis in Corporate Governance: 2002,” Houston Law Review 40, no. 1 (2003): 49.

¹⁵ Ibid.

¹⁶ See, for instance: P. Ali and G. N. Gregoriou, eds., Corporate Governance: An International Perspective after Sarbanes-Oxley (Hoboken, NJ: John Wiley and Sons, 2006); Macey.

¹⁷ D. C. Langevoort, “Internal Controls after Sarbanes-Oxley: Revisiting Corporate Law's ‘Duty of Care as Responsibility for Systems.’” Journal of Corporate Law, 2006, 949–973. http://scholarship.law.georgetown.edu/facpub/144/.

¹⁸ H. Wursten, “Mental Images: the influence of culture on economic Policy,” Report of the International Colloquium on Regional Governance and Sustainable Development. United Nations Publication ST/ESA/PAD/SER.E46.(2002) http://unpan1.un.org/intradoc/groups/public/documents/un/unpan002455.pdf.

¹⁹ For a discussion, see: Bork.

²⁰ L. Trilling, Sincerity and Authenticity (Cambridge, MA: Harvard University Press, 1971).

²¹ For a background discussion, see: J. R. Macey, Corporate Governance: Promises Kept, Promises Broken (Princeton, NJ: Princeton University Press, 2008); P. Ali and G. N. Gregoriou, eds., Corporate Governance: An International Perspective after Sarbanes-Oxley (Hoboken, NJ: John Wiley & Sons, 2006); J. Kekes, A Justification of Rationality (Albany, NY: SUNY Press, 1976).

²² For a background discussion, see: M. Friedman and R. Friedman, Two Lucky People: Memoirs (Chicago, IL: University of Chicago Press, 1998).

²³ For a discussion, see: Bork.

²⁴ C. Sykes, The Hollow Men: Politics and Corruption in Higher Education (Washington, D.C.: Regnery Gateway, 1990).

²⁵ For a background discussion, see: T. H. Anderson, The Movement and the Sixties (Oxford University Press).

²⁶ For a discussion, see: Bork.

²⁷ Anderson.

²⁸ For a discussion, see: Bork, p. 26.

²⁹ Students for a Democratic Society (SDS), Port Huron Statement of the Students for a Democratic Society, 1962. http://coursesa.matrix.msu.edu/~hst306/documents/huron.html.

³⁰ For a discussion, see: Bork.

³¹ D. Horowitz and P. Collier, Destructive Generation: Second Thoughts about the '60s (New York: Summit Books/Simon & Schuster, 1989).

³² Students for a Democratic Society (SDS).

³³ D. Horowitz and P. Collier, “Destructive Generation,” FrontPageMagazine.com, January 6, 2006. www.orthodoxytoday.org/articles6/HorowitzGeneration.php.

³⁴ See, for instance: “We Are the 99 Percent,” http://wearethe99percent.tumblr.com/.

³⁵ For a discussion, see: Bork.

³⁶ Horowitz and Collier (October 6, 2006).

³⁷ P. Berger and R. J. Neuhaus, Movement and Revolution (Doubleday & Company, 1970).

³⁸ Horowitz and Collier (October 6, 2006).

³⁹ Horowitz and Collier (1989).

⁴⁰ See, for instance: Bork.

⁴¹ Ibid., p. 53.

⁴² J. P. Lash, Helen and Teacher: The Story of Helen Keller and Anne Sullivan Macy (New York, NY: Delacorte Press, 1980).

⁴³ See, for instance: Bork.

⁴⁴ B. de Jouvenel, The Ethics of Redistribution (Indianapolis, IN: Liberty Press, 1990), p. 79.

⁴⁵ For a background discussion, see: R. H. Smith, Envy: Theory and Research (New York: Oxford University Press, 2008).

⁴⁶ Ibid.

⁴⁷ H. Schoeck, Envy: A Theory of Social Behavior (New York, NY: Harcourt, Brace, and World, 1969), 329.

⁴⁸ For a discussion, see: Bork.

⁴⁹ W. J. Blum and H. J. Kalven, Jr., “The Uneasy Case for Progressive. Taxation,” University of Chicago Law Review 19 (1952): 417–520; for a recent review, see: http://mises.org/journals/qjae/pdf/qjae4_1_3.pdf.

⁵⁰ See, for instance: M. McAvennie and H. Dolan, eds., “1970s”: DC Comics Year by Year: A Visual Chronicle (New York, NY: Dorling Kindersley/Penguin, 2010).

⁵¹ For a discussion, see: Bork.

⁵² S. Courtois, The Black Book of Communism: Crimes, Terror, Repression (Cambridge, MA: Harvard University Press, 2008).

⁵³ See, for instance: W. Chambers, Witness (New York: Random House, 1952); C. Lasch, The American Liberals and the Russian Revolution (New York, NY: Columbia University Press, 1962); G. E. White, Alger Hiss's Looking-Glass Wars: The Covert Life of a Soviet Spy (New York: Oxford University Press, 2005).

⁵⁴ Lincoln Steffens as quoted in C. Lasch, The American Liberals and the Russian Revolution (New York, NY: Columbia University Press, 1962).

⁵⁵ Courtois.

⁵⁶ For a discussion, see: Bork.

⁵⁷ Ibid.

⁵⁸ For a general background discussion, see: S. Smith, Subterranean Fire: A History of Working Class Radicalism in the United States (Haymarket Books, 2006).

⁵⁹ For a discussion, see: Bork.

⁶⁰ A. de Tocqueville, Democracy in America: Historical-Critical Edition of De la démocratie en Amérique, ed. Eduardo Nolla, translated from the French by James T. Schleifer, (Indianapolis: Liberty Fund, 2010). Vol. 2. Ch. 8. Available online at: http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=2286&chapter=218900&layout=html&Itemid=27.

⁶¹ K. Vonnegut, Welcome to the Monkey House (New York: Laurel, 1968). Harrison Bergeron was first published in The Magazine of Fantasy and Science Fiction, and then later republished in Welcome to the Monkey House collection in 1968. My source was the latter, not the original.

⁶² B. de Jouvenel, The Ethics of Redistribution (Indianapolis, IN: Liberty Press, 1990).

⁶³ See, for instance: T. E. Hartman, The Cost of Being Public in the Era of Sarbanes-Oxley (Jacksonville, FL: Foley & Lardner, 2006).

⁶⁴ See: Vakkur; R. P. McAfee and F. Kipperman “The Unanticipated Costs of the Sarbanes-Oxley Act of 2002,” Research on Accounting Regulation, 2010; E. Engel, R. M. Hayes, and X. Wang, “The Sarbanes-Oxley Act and Firms' Going Private Decisions,” Journal of Accounting and Economics 44 (2008): 116–145; I. X. Zhang, “Economic Consequences of the Sarbanes-Oxley Act of 2002,” Journal of Accounting and Economics 44 (2007): 74–115.

⁶⁵ For a discussion, see: Bork, p. 73.

⁶⁶ B. de Jouvenel, The Ethics of Redistribution (Indianapolis, IN: Liberty Press, 1990).

⁶⁷ A. de Tocqueville, Democracy in America: Historical-Critical Edition of De la démocratie en Amérique, ed. Eduardo Nolla, translated from the French by James T. Schleifer, (Indianapolis: Liberty Fund, 2010). Vol. 2, 337. http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=2286&chapter=218900&layout=html&Itemid=27.

⁶⁸ B. de Jouvenel, The Ethics of Redistribution (Indianapolis, IN: Liberty Press, 1990).

⁶⁹ A. de Tocqueville, Democracy in America: Historical-Critical Edition of De la démocratie en Amérique, ed. Eduardo Nolla, translated from the French by James T. Schleifer, (Indianapolis: Liberty Fund, 2010). Vol. 1. Ch. 1. Available online at: http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=2286&chapter=218900&layout=html&Itemid=27.

⁷⁰ B. de Jouvenel, The Ethics of Redistribution (Indianapolis, IN: Liberty Press, 1990).

⁷¹ C. Lasch, The Revolt of the Elites and The Betrayal of Democracy (New York, NY: W.W. Norton & Co., 1995), 22.

⁷² For a discussion, see: Bork.

⁷³ B. de Jouvenel, The Ethics of Redistribution (Indianapolis, IN: Liberty Press, 1990).

⁷⁴ For a discussion, see: Bork.

⁷⁵ Attributed to a “wise statesman,” Journal of the Royal Statistical Society, 1896 (formal attribution unknown).

⁷⁶ B. Milanovic and S. Yitzhaki, “Decomposing World Income Distribution: Does the World Have a Middle Class?,” Review of Income and Wealth (Blackwell Publishing), 48, no. 2 (2002): 155–78.

⁷⁷ J. Rawls, A Theory of Justice, rev. ed. (Cambridge, MA: Harvard University Press, 1999).

⁷⁸ Ibid.

⁷⁹ Ibid.

⁸⁰ G. S. Twomey, “Pope John Paul II and the Preferential Option for the Poor,” Journal of Catholic Legal Studies 45 (2006): 321.

⁸¹ For a background discussion, see: D. McLellan, Karl Marx: His Life and Thought (New York: Harper and Row, 1973).

⁸² For a discussion, see: Sowell.

⁸³ D. Berrett, “Intellectual Roots of Wall St. Protest Lie in Academe—Movement's Principles Arise from Scholarship on Anarchy,” The Chronicle of Higher Education, October 16, 2011. http://chronicle.com/article/Intellectual-Roots-of-Wall/129428/; A. Gabbatt, “Occupy Wall Street: Protests and Reaction,” Guardian (London), October 6, 2011. www.guardian.co.uk/world/blog/2011/oct/06/occupy-wall-street-protests-live.

⁸⁴ For a discussion, see: Bork, pp. 327–328.

⁸⁵ See Footnote #83.

⁸⁶ Vonnegut.

⁸⁷ S. Guthrie, “Anti-Semitism in the Occupy Movement,” Crosswalk.com, November 15, 2011. www.crosswalk.com/news/bad-things-anti-semitism-occupy-movement.html.

⁸⁸ L. Brackman, “Why Jews Are Disproportionally Successful,” Jewish World: YnetNews.com, Septemer 5, 2008. www.ynetnews.com/articles/0,7340,L-3592566,00.html.

⁸⁹ Ibid.

⁹⁰ See Footnote #83.

⁹¹ D. Wessel, “U.S. Firms Keen to Add Foreign Jobs,” The Wall Street Journal: Economy, November 22, 2011; T. W. Pauken, “Millions of Jobs Shipped Overseas—And How to Bring Them Back,” The Western Center for Journalism, April 25, 2011, www.westernjournalism.com/millions-of-jobs-shipped-overseas-and-how-to-bring-them-back/.

⁹² Ibid.

⁹³ R. Posner, “Economic Analysis of Law,” Aspen Law & Business, 1998, 30.

⁹⁴ For a discussion, see: Bork, p. 11.

⁹⁵ I. Kristol, “My Cold War, The National Interest.” April 1, 1993. http://findarticles.com/p/articles/mi_m2751/is_n31/ai_13991708/

⁹⁶ S. Rothman and S. R. Lichter, Roots of Radicalism: Jews, Christians, and the New Left (Oxford University Press: New York, 1982), 389.

⁹⁷ W. B. Yeats, The Second Coming; Michael Robartes and the Dancer. In The Poetry of W. B. Yeats, ed. N. Drake (London: Penguin, 1991).

⁹⁸ B. de Jouvenel, The Ethics of Redistribution (Indianapolis, IN: Liberty Press, 1990).

⁹⁹ Bork, p. 330.

¹⁰⁰ D. A. Hirshleifer, Psychological Bias as a Driver of Financial Regulation. Available at SSRN, 2007. http://ssrn.com/abstract=1018820.

¹⁰¹ For a background discussion, see: B. de Jouvenel, The Ethics of Redistribution (Indianapolis, IN: Liberty Press, 1990).

¹⁰² For a background discussion, see: Bork.

¹⁰³ For an illustration of a related maritime error, see: J. Noel, “Costa Concordia ‘A Tragic Accident, but Is it a Rare Occurrence?,’” The Chicago Tribune, Tribune Newspapers, January 17, 2012, www.chicagotribune.com/travel/takingoff/ct-taking-off-chi 20120117,0,2934256.story.

¹⁰⁴ For a discussion, see: Macey; Romano.

¹⁰⁵ For a discussion, see: S. M. Bainbridge, Complete Guide to Sarbanes-Oxley: Understanding How Sarbanes-Oxley Affects Your Business (Adams Media, 2007); S. M. Bainbridge, “Sarbanes-Oxley: Legislating in Haste, Repenting in Leisure,” UCLA School of Law, Law and Econ. Research Paper Series: #06-14, 2006, 15. http://ssrn.com/abstract=899593.

¹⁰⁶ For a discussion, see: Romano.

¹⁰⁷ For a background discussion, see: Macey; Ali and Gregoriou.

¹⁰⁸ Zhang; Chhaochharia and Grinstein.

¹⁰⁹ For a discussion, see the following sources: Vakkur, McAfee, and Kipperman; Engel, Hayes, and Wang.

¹¹⁰ For a background discussion, see: Yeoh.

¹¹¹ For a background discussion, see: Bork.

¹¹² Bork, p. 91.

¹¹³ For a discussion, see: Bork; Horowitz and Collier (1989).

¹¹⁴ A. de Tocqueville, Democracy in America: Historical-Critical Edition of De la démocratie en Amérique, ed. Eduardo Nolla, translated from the French by James T. Schleifer, (Indianapolis: Liberty Fund, 2010). Vol. 1. Ch. 1. Available online at: http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=2286&chapter=218900&layout=html&Itemid=27.