"performing a valuable public service in calling attention"

Once again, Dr. Bones, I think I shall store my pearls here rather than scatter them abroad. Look what patrons of the TPM Café were spared:

The shorters were actually performing a valuable public service in calling attention to the bad financial state of these companies.

The technical economics of that is over my poor head, yet talk about the nature of The Valuable can perhaps be taken in an inferior, a purely moralistical, kind of way. (Adam Smith of Edinburgh got the whole Ec. 10 racket started in that way, did he not? I mean, by rising above commonplace right-and-wrong into loftier and more distant spheres of neo-speculation . . . .)

At that level, assuming the level exists, to assent to Dr. Baker's proposition would involve believing that it is always better to know any available bad news in full.

To get away from Lord Mammon altogether: it would be better, for this brand of moralist, to be aware that she will be in the cemetary on this day next year rather than scrape through ten of the twelve months thinking her disease to be indigestion rather than cancer.

That sounds edifying, in a rather godawful way. It may well be over one's head as being too stern and Spartan for actually living up to, but there are not, I think, any intellectual difficulties about maintaining that IT IS ALWAYS BETTER TO KNOW FOR SURE. In particular, it is better to know when there is nothing at all that the knowledge can do to ward off some fate at least as bad as death.

Anyway, I find that sort of stance edifying, and assume that one must always pretend to want to know the bad news in full at the earliest possible date, even if one would really much rather play "wink, wink; nod, nod" games. To put oneself in the public position of wishing to be deceived is unworthy of a rational creature. It invites contempt from other rational creatures --does it not? -- to get caught acting "like an ostrich" rather than like Leonidas at Thermopylae. Even knowing that most of the others are privately quite as cowardly as oneself does not take all the sting out of it.

However things look a little different when one turns away from rational creatures in the abstract to, say, militant extremist Republicans. Or even only as far off "the Bernanke, Paulson, Geithner crew." Such gentry cannot think only of themselves the way M. Pascal [1] and you and I can. Our managerial betters are in the position of having to manage the news for their subjects, not just know it and live with it themselves.

Now although I have only a foggy idea what precious truths are inculcated into M.B.A. candidates over at the H*rv*rd Victory School, I feel pretty sure that perpetual full disclosure on the down side is not among them. Our Big Managers may or may not be able to confront fiasco and calamity as individuals with a steeady glance and a stiff upper lip, but when it comes to big-managing bad news for the benefit of their social and economic inferiors, they pretty well never do anything of the sort. The slogan "Boost, don't knock!" may be fifty years or more out of date philologically, but as far as I can see, it still describes how those good folks behave.

If, for example, Big Management is entirely sure that Acme Widget LLC will be gone with the wind six months from now, they will try to keep that information from their own hired hands as long as possible. (This is rather tough on the hired hands, actually. Though perhaps in the present state of the economy they could not find another position no matter how soon they learn that they are going to need one.)

I don't think I am letting technical economics in the back door again by saying this, because what is getting big-managed here is rather employee psychology than anything directly to do with balance sheets. Happy are they who have never had anything to do with employee psychology from the bottom side looking up!

Still, it is quite true that the B. M. gentry would only make their own lives all the more difficult if stockholders and suppliers and customers and so forth -- persons standing in a more strictly economic relationship to Big Management --were to learn about the impending Doom of Acme prematurely. Though I do not much care for our incumbent economic OnePercenters, there is no need to suppose that "Boost, don't knock!" is solely a matter of making life up in the executive penthouse less stressful for them. H*rv*rd Victory School lecturers can appeal to a number of cases in which the weaker side won (literal, military) battles partly because the rank and file had no clue how badly they were outnumbered. Gen. Leonidas was rather an extreme case than the typical case, after all.

On the other hand, circumstances have changed at least a little in the course of two dozen centuries. For a start, Gen. Leonidas did not have to worry about what crazy -- or, worse still, what entirely accurate -- notions about the Persians his troops might be picking up on the Internet. Whereas nowadays any ignoramus who starts by wanting to think that "the Bernanke, Paulson, Geithner crew" are hopelessly out of touch with reality will have no difficulty in gathering lots and lots of ‘evidence’ to that effect out in WWWonderland. Though naturally BP&G loyalists can muster quite as much favorable tripe and baloney. Though nobody is, perhaps, quite as ignorant in 2009 as the traditional "Boost, don't knock" panacea requires, it may be that a universal self-knowledge of things that are not actually so is even worse.

The main point, though, is that the instincts of Big Management have not changed at all in the sixty or seventy years since they shoved the legal owners of our secret-sector business corporations out of their path and began to rule more or less unchecked. [2] Full disclosure pretty well never strikes your HVS MBA as a good idea, and least of all when she would have to disclose negative information. Information that might even be used against her, should it fall into the wrong hands.

Happy days.



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[1] Travaillons donc à bien penser: Voilà le principe de la morale.


[2] Berle and Means, The Modern Corporation and Private Property, New York, 1932.