Shareholders of the World, Unite!
Bruce Bueno de Mesquita is a senior fellow at the Hoover Institution and the Silver Professor of Politics at New York University. He is an expert on international conflict, foreign policy formation, and nation building. His current research focuses on the links between political institutions, economic growth, and political change. He is also investigating the causes and consequences of international conflict as well as national security policy forecasting and analysis.
Using a proprietary mathematical formula that takes into account the self-interests of and alliances among actors in key business and political questions (i.e. whether Iran will build nuclear weapons), de Mesquita predicts the future for businesses and organizations such as the CIA.
His most recent books include The Dictator’s Handbook: Why Bad Behavior is Almost Always Good Politics (PublicAffairs, 2011) and The Predictioneer's Game: Using the Logic of Brazen Self-Interest to See and Shape the Future (Random House, Inc., 2009)Additionally, he has authored more than one hundred articles and fourteen books on politics, as well as one published novel, The Trial of Ebenezer Scrooge (Ohio State University Press, 2001).
Bruce Bueno de Mesquita: Let me elaborate on how these rules apply, for example, to corporations, publically traded corporations. Many of us have the sense that the Wall Street bankers are tone deaf. How could they be giving billions of dollars in bonuses when the taxpayers have bailed them out, the economy is suffering, millions of people are unemployed? Well people who say that are confused about how governance works.
Let’s look at how a corporation works. Well we the people certainly are not the ones who get to decide whether the CEO keeps his or her job or not. The shareholders, except under unusual circumstances, are not the folks who get to decide. The folks who get to decide are senior management, the people right under them and the board of directors. They are the folks who get the bonuses because they are the folks who keep the leadership in office.
So if one wants to change how corporations work, occupying Washington Square Park is probably not going to do it but organizing shareholders on, for example, the equivalent of a Facebook page for each individual corporation where shareholders can coordinate without any great expense to themselves and organize their own proxy battles, why that would make a difference in corporate governance because they do have the votes to control outcomes. It’s just that the shareholders give their votes away to the corporate proxy because they haven’t organized.
Directed / Produced by
Jonathan Fowler & Elizabeth Rodd
Bruce Bueno de Mesquita argues that occupying a park will never reform Wall Street. The right approach, instead, he says, is to change the system from within. That means shareholders should not give their votes away to corporate proxies, but coordinate together, because shareholders "do have the votes to control outcomes."