Halfway down the Danube

To be sure, that system would've come in handy with one or two American companies I could name...

huh. I could have sworn that I posted earlier when this first came up. Lord knows where the comment ended up. Taking a 2 yo to an HPC center is...exciting. Esp when she steals your badge and knows how to use it to get through the access doors.

Anyways, I don't think this would have helped that much in the CIS. At least with Ukraine, that official would just be someone MORE to buy off. Nothing special. The regulations wrt to corporations and taxes in Ukraine are so frakked up I can't even understand it whatsoever. My wife does. After she took the ECON classes, her comments were something to the effect of "Oh, that's why they put x law in place. Too bad they didn't understand what the reason for it was in the West or the rest of the framework taht was supposed to go with it..."

Martin, the U.S. has over five million corporations. That would require 300 thousand qualified reps. Salaries alone would be $20 billion.

Corporate tax revenue in the U.S. has been, um, volatile, but a Jordanian system would eat up 10% of the revenue with very little to show for it. (I don't think the Enron clowns would have invited Joe Government to the gym with them.)

Then consider politicization of the system. You expect an impartial civil service, and I expect impartial financial auditing. Some people -- and by 'some people', I mean some people who say 'some people' -- some people look at an impartial system, and see something ripe for subversion.

(You know how it would work. Say King Michael is worried about those fashionable types. King Michael appoints a controller he knows is 'sound' on the fashionista threat. The controller appoints representatives in a similar way. Guess what? The rep finds a lot of problems with Isaac Mizrahi Ltd. Not so much with the Shapeless Muumuu Company. What did you expect? Everyone knows those fashionistas don't have a head for business.)

Martin, the U.S. has over five million corporations. That would require 300 thousand qualified reps. Salaries alone would be $20 billion.

Corporate tax revenue in the U.S. has been, um, volatile, but a Jordanian system would eat up 10% of the revenue with very little to show for it.

This got my attention. The US is too poor to copy the Jordanian example? That can't be right.

I'm guessing that Carlos in the five million figure is including privately held companies as well as those listed on the stock exchange. The big dollars are with a few, larger companies.

[Of course, it's the smaller mom-n-pop companies that would most benefit from a representative as they don't have extensive the extensive governance infrastructure of the majors. But in Doug's Jordan example we're only looking at public companies.]

Doug, I'm impressed that a culture of good governance can be created in Jordan by a Controller and ~15 representatives. It seems a bargain.

Corporate tax revenue in the U.S. has been, um, volatile

Too right! As I understand it in the USA post-tax company dividends are also taxed in the hands of the shareholders. Kindly corporations, wishing to spare their investors double taxation are more prone to capital gains than reporting profits from which dividends can be declared. I'd recommend a system of dividend imputation but that would be advocacy.

The US is too poor to copy the Jordanian example?

It doesn't scale well. Martin, bless his Dutch heart, is worried about "one or two" U.S. companies. Deploying three hundred thousand finance professionals to monitor corporate America seems a little like a... disproportionate response.

I look at that number, and I think two things: 1) that would be about ten science teachers per U.S. high school, and 2) that would be 81 thousand future corporate lobbyists.

Syd, the US' per capita income is about 10x Jordan's; but the number of publicly held companies per capita is 100x - 1000x greater.

More to the point, there are some sorts of fraud it wouldn't affect. Martin, as Carlos says, the Enron guys wouldn't invite the rep to the gym. Also, that was a very broad and deep fraud that managed to get past some fairly bright institutional shareholders.

Metaphor: the rep system puts a cop on the corner. That doesn't eliminate every sort of crime. But in some neighborhoods, it's a cost-effective way to keep crime down.

Of course, if you live in downtown Mogadishu, a cop on the corner is just another target. So, corporate governance in Ukraine.

Syd, I'm not yet sure that Jordan has a culture of good corporate governance -- I've only been in country for a week! But certain sorts of abuses seem rare.

Carlos, I'm not sure the system is impartial here. I wouldn't be surprised to hear that companies in some sectors were getting more attention, or less. However, it's powers are limited and procedural, so that probably helps.

Totally random note: there's a very strong Engineers' Association here. It's a professional organization, like a US Bar Association. But it's even stronger because every architectural plan has to be reviewed by it. (The justification being, Jordan is in a serious earthquake zone.)

Unsurprisingly, the EA uses this to extract rents like nobody's business. But that's to be expected. What's interesting is that the EA is very Islamic. Seriously, conservatively Islamic. As in, don't like talking to Americans, no women in the large HQ building without a headscarf, and members can be fired from the Association (=have their careers destroyed) for "immoral behavior".

Doug M.

I wonder what it is about engineers and Islamic fundamentalism. My first guess is that it's the natural result when you take a series of religious texts and put them through the mind of someone trained to think as an engineer, but I wonder if the more perceptive HDTD readers have thoughts.

Mexico is not Ukraine. (Yes, I understand that is obvious.) The system Doug described could do wonders there; ombudsmen and observers have been an extremely effective strategy over the past decade in fixing some of the worst-functioning corners of the Mexican state. Shareholder rights in Mexico are poorly defined, and the courts are quite a mess; a Controller might be able to greatly aid corporate governance there. (And elsewhere in Latin America, I might add, where corruption generally flows less deep than in Eastern Europe.)

Only 134 companies trade on the BMV. Something to consider.

Syd, the US' per capita income is about 10x Jordan's; but the number of publicly held companies per capita is 100x - 1000x greater.

This gets into some definitional issues. One of the criteria the SEC uses to classify a corporation as publicly held is having more than 500 shareholders. But the Amman Stock Exchange website gives a lower cut-off of 100 shareholders. I would guess by Jordanian standards, a rather large number of US corporations which are considered closely held here, would be considered public there. Same thing with assets. In the US, the cut-off is $10 million in assets. (The vast majority of US corporations falls below the cut-off.) I'm going to guess that the limit is lower in Jordan.

>I wonder what it is about engineers and Islamic >fundamentalism. My first guess is that it's the >natural result when you take a series of religious >texts and put them through the mind of someone >trained to think as an engineer, but I wonder if >the more perceptive HDTD readers have thoughts.

Might there be a parallel to the tendency of engineers in the Soviet Union to support the communist system, or those in America being right wing?

Doug-- fascinating report. I will follow this with interest.

Mexico is not Ukraine. (Yes, I understand that is obvious.)

All I can say about that is 'Thank God and any other deity responsible for that.' If the Ukrainian economy was ASB grafted onto Mexico...oh owowOwOWWOWOWOW. MAKEITSTOPITHURTS!

The sad part is that Ukraine has so many things that they could get so damned wealthy off of it just depresses the frak out of me to think about. There are so many just plain STUPIDITIES in there that make me want to go fetal and stay there: the apathy is the worst though. The Orange Revolution got my wife and I so stoked because it was so absolutely contrary to observational behavior for Ukrainians. We thought it might be the breakthrough...and then they Orangers behavior and the subsequent Blue tide that have led to the present...well...

Engineers- like doctors, are much more likely to have been educated in the west than other professions.

Four years as a young man in the US, with the glories of western college life all around and unavailable to you? That can sour a man.

Combine it with the perks of being male in islam, the general engineering mindset?

I'm not surprised.