Wednesday, October 11, 2006

H.L.A. Buffett? Or Warren Wittgenstein?

Posted by Jeff Lipshaw

The Wall Street Journal reported on a memo Warren Buffett sent to the managers at Berkshire Hathaway in connection with the recent backdating scandals.  In a statement that seems to place him among the "soft positivists," the Sage of Omaha counseled "let’s start with what is legal, but always go on to what we would feel comfortable about being printed on the front page of our local paper, and never proceed forward simply on the basis of the fact that other people are doing it."  Indeed, Mr. Buffett observed that the five most dangerous words in business are "everybody else is doing it."

I've used this "Detroit Free Press" test as a means of counseling, but I wonder just how one applies the standard nowadays.   "Everybody else is doing it" is certainly a powerful means of rationalization, and I've argued elsewhere that law and lawyers, if nothing else, are ably equipped to rationalize otherwise judgmentally-challenged decisions.  Does the "front page" test provide a workable standard?  Would well-meaning people ever apply a different one?  Isn't the problem that nobody really knows, except in the easiest cases, how a decision plays on the front page?  And is the standard the front page of The Economist, or the Omaha Herald?  Or a sound bite on CNN?  Are you okay with a decision that looks bad on page one, but may become more defensible with in-depth coverage?

What  Mr. Buffett is really advocating is not, I think, a reduction to the least controversial common denominator, but to a Main Street kind of horse sense.  Perhaps it is time to revisit Frederick Schauer's Playing by the Rules: A Philosophical Examination of Rule-Based Decision-Making in Law and Life, particularly the discussion of rules as entrenched generalizations - where generalizations (i.e. rules) control in circumstances that no longer serve the justification for the generalization.  I think the "front page" standard is less likely to become an entrenched generalization than much of what passes for prescription in the corporate governance area these days (director independence being one, as to which Usha Rodrigues speculates over at Conglomerate), but it doesn't take long for reification to set in even on horse sense maxims.   

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Comments

A tangent (as ususal): not only does the businessperson faced with an ethical dilemma face the traditional press, where (we wish to believe) some standards of considered response, and adherence to facts and logical construction thereupon exist; he also faces the blogosphere where red-eyed partisanship, the valuation of rhetoric over logic and our old friend the downright lie are all commonplaces. A partisan press isn't new, but the speed at which factitious nonsense can be at least twice round the earth while the New York Times is still looking for its other Merrel sneaker, and the amplification offered by re-bloggers, is. So rather than "how bad would this look on the front of the paper?", the question might also be "and how bad could [insert name of tier 1 blog which doesn't agree with you] _make_ this look?"

S

Posted by: Simon | Oct 11, 2006 8:15:27 PM

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