Three years ago, I blogged about how the culture of the bond rating companies, such as Warren Buffett's Moody's, had been very slowly corrupted by the logic of the conflict of interest that went back to the 1970s by which they stopped being paid by buyers of securities and started being paid by issuers. This logical problem didn't become a terrible real world problem until the 2000s with the mortgage-backed securities disaster. I drew an example from golf:
Casey Martin, who was born with a terrible birth defect that crippled one of his legs, leaving him in recurrent pain, starred on Stanford's famous mid-1990s college golf team along with the full-blooded Navajo Notah Begay, who went on to win four times on the PGA tour before alcohol brought him down, and with Eldrick Woods Jr., who, last time I heard, remains employed in a golfing capacity.
Despite his disability, Martin enjoyed enough success on the minor league Nike tour to qualify for the PGA tour in 2000. His lawsuit under the Americans with Disability Act to be allowed to use a golf cart on the PGA tour went all the way to the Supreme Court, where he won in 2001.
Martin's was not a popular victory with players, with both Jack Nicklaus and Arnold Palmer protesting that it would open the door to other players getting a note from their doctor to be chauffeured about the course.
It was easy to imagine a player with a bad back like Fred Couples trying to get permission for a cart, and then the whole thing descending into carts everywhere.
And yet, eight years later, the PGA Tour hasn't slid down the slippery slope. So far, as far as I can tell, a cart has only been used once by somebody other than the severely unlucky Martin: Erik Compton rode in one tournament last fall because he had gotten his second heart transplant only a few months before.
Essentially, golf has a fairly healthy culture of sportsmanship where top players don't want to be seen as abusing loopholes. So, it hasn't been hard so far to restrict cart-riding to rare human-interest stories like Martin and Compton.
As dearieme commented at the time:
This accords with my observation that conservatives are very shrewd at seeing the direction of social change but prone to overestimating its speed. That's because they overlook how conservative people can be, which is pleasingly paradoxical.
Golf has a highly conservative culture, basically one of "What would Old Tom Morris do?"
It was fortunate that its origin culture was Scottish rather than English because it avoided most of the hypocrisy and cheating over amateurism that plagued tennis up to 1968 (when Wimbledon finally admitted professionals) and the Olympics even later. The Scots had a somewhat less classbound society than the English, so if a man wanted to make his living from golf, as Morris did at St. Andrews in the mid-19th Century, that was honorable. It was more honorable to be an amateur, like Bobby Jones in the 1920s, and they had their own Amateur tournaments, but the amateurs did not see themselves as tainted by striving against the professionals in the Open tournaments.
By the way, the partially crippled Casey Martin, unsurprisingly, couldn't play well enough to stay on the PGA tour. Six years ago, he retired and became the golf coach at the U. of Oregon. A week ago, at age 40, he qualified for next week's U.S. Open at Olympic in San Francisco.
dearieme is correct in this observation, and I will be using that excellent quote.
ReplyDeleteHaving been raised in England and worked in Scotland for two years, I can assure you it's an urban myth that Scotland is less class conscious than England. They are both as bad as each other. The gulf between Morningside in Edinburgh and the poor end of Dundee in every bit as great as the gulf between Winchester and Portsmouth. Accent, mannerisms, diet, values - everything is different. You only have to listen to someone speak for ten seconds to place them in the social hierarchy.
ReplyDeletehttp://www.youtube.com/watch?v=TIjnS9-rfC4&feature=colike
ReplyDeleteFists of Curry.
How about motorbikes for Mexican 100m sprinters.
ReplyDeletethat's an interesting story. you don't see that very often. once the slope gets slippery, sliding down it almost always happens.
ReplyDeletei'm definitely not a big fan of professional golf, as steve surely knows, but i respect the enduring commitment to professionalism, rules, and self policing in the game.
i was kind of surprised when i saw keegan bradley spitting on every hole on the last round of an event a few months ago, because you can't spit. i guess PGA officials don't talk to you about it between holes, because he spit his way from about hole 12 all the way to 18. i'm sure he was fined later. he was also deliberately whacking divets out of the course on all his practice swings, which i assume is also either a fine, or a penalty. he apologized a few days later for the spitting.
PGA officials let woods get away with all kinds of stuff though. spitting, throwing clubs, swearing. he's rarely fined or penalized from what i've seen. i hardly watch many events, but there's a clear difference in how he is treated.
I have Klippel-Trenaunay Syndrome, which I think is Casey Martin's problem.
ReplyDeleteMy case has given me trouble, but I doubt I would need special consideration. I have walked 20 miles in a day, played rugby, gone to sea on a commercial fishing boat as a fisheries officer, and so on.
Maybe his case is unusually bad?
The culture of the bond rating companies...had been very slowly corrupted by the logic of the conflict of interest that went back to the 1970s by which they stopped being paid by buyers of securities and started being paid by issuers.
ReplyDeleteNah, I am not convinced. The issuers of securities have no leverage over rating agencies. The issuers have no choice but to get a rating, and from a specific agency. It's a monopoly. Theoretically, issuers can get a rating from a no-name outfit (assuming such exist) or go unrated but then their investors would flee in droves. Rating agencies are the ones with the power in the relationship.
Rating agencies are not infallible. They can't see the future better than anyone else, trust their models too much, and are subject to herd mentality. This is the real reason for their failure.
Anonymous at 5:56 is correct. There is a huge difference in class for Scotland.
ReplyDeleteHowever, I don't know if this was as prevalent during golf's early days, as the culture around it developed.
"Having been raised in England and worked in Scotland for two years, I can assure you it's an urban myth that Scotland is less class conscious than England. They are both as bad as each other. The gulf between Morningside in Edinburgh and the poor end of Dundee in every bit as great as the gulf between Winchester and Portsmouth. Accent, mannerisms, diet, values - everything is different. You only have to listen to someone speak for ten seconds to place them in the social hierarchy."
ReplyDeleteScotland was one of the most dynamic societies of the 19th century... Maybe the mid 20th century Socialism changed that.
The question isn't whether class differences are as big in Scotland as in England, but whether they are viewed differently - what sort of consciousness people have of them. In my experience they are much less of a burden in Scotland, but I did leave thirty years ago.
ReplyDeleteAs for the detail, Steve should remember that golf was always much more of a game for everyman in Scotland than in England or (I assume) in the US.
One unexpected illumination I've had through working with so many continental Europeans over the past 30 years is the frequency with which they have commented on how much more socially relaxed and mobile British society is than (specifically) German, French or Italian. Heavens, you can reasonably expect to get a job in Britain based on ability rather than on who you know, who has pull, who's in your family. The latter might help, of course, but for many desirable jobs on the continent they are essential. Or so they've told me.
The last critique I saw of the slippery slope thesis ended in what we in the football playing nations call an 'own goal'.
ReplyDeleteThe homo-columnist in question produced a great catalog of pronouncements of impending catastrophe from conservatives circa 1964, and then proceeded to deride them: 'society as we know it has not imploded; the human race is not extinct; etc; etc'.
Until it was pointed out to him that not one of the slippery slopers of 1964 had even contemplated the idea that they would one day be wanting to MARRY one another.
GP.
"Steve should remember that golf was always much more of a game for everyman in Scotland than in England or (I assume) in the US."
ReplyDeleteIt has to do with the cost of the land for golf: linksland (grass covered sand dunes linking the mainland to the sea is abundant in Scotland but worthless for everything except grazing and golf, and those can co-exist until golf get really popular. And it makes really cheap outstanding golf course.
Links courses are all very well, but you can't do much about the Scottish weather.
ReplyDeleteGilbert P.
However, the corporate culture of Moody’s in 2006 was much different than of decades past. This change was best
ReplyDeletearticulated by Mark Froeba, who was a senior vice president at the time he left Moody’s after 10 years of employment,
who testifi ed before the Federal Crisis Inquiry Commission:
When I joined Moody’s in late 1997, an analyst’s worst fear was that he would contribute
to the assignment of a rating that was wrong, damage Moody’s reputation for
getting the answer right, and lose his job as a result. When I left Moody’s [in 2007],
an analyst’s worst fear was that he would do something that would allow him to be
singled out for jeopardizing Moody’s market share, for impairing Moody’s revenue,
or for damaging Moody’s relationships with its clients, and lose his job as a result.
This change in corporate culture, one that eventually prioritized company profi tability over corporate integrity, has
been attributed to Moody’s Corporation going public in 2000 after a split with its holding company Dun & Bradstreet.
This led to two specifi c changes that arguably infl uenced corporate culture: First, after the company went
public, senior managers were compensated in the form of stock options for the fi rst time in company history.41 This
compensation structure directly tied their compensation to company profi tability and may have enticed senior management
to prioritize the fi scal success of the company over Moody’s rating integrity. Second, the nature of taking
a corporation public forces a company to worry about profi tability on a quarterly basis.42 Senior management had
to prove Moody’s was worth investor consideration multiple times a year. As already discussed above with regard
to shareholder capitalism, this pressure to please shareholders may have forced Moody’s to prioritize short-term
quarterly reports of profi tability over ratings integrity.
http://tinyurl.com/7dlymex
Smoking gun: GOING PUBLIC FOR PROFITS, incentivising management towards self-enriching ends.
In Congressional testimony the panel of current Moody's management vigorously refuted charges that their self interest tainted the ratings process. The subsequent panel of key _former_ employees that were in central positions during the egregious misratings spree that later surfaced testified to the myriad ways they were informed in no uncertain terms what was of primary importance (revenue, market share, profitability thus reward for management.) As former employees they were not subject to retribution for exposing how and why the integrity of the ratings process took backseat to the conflicted interest of top level self enrichment.
We misapprehend the nature of Scotland. Scotland isn't really there - at least most of the time.
ReplyDeleteGolf would have been possible in Scotland during the Eemian interglacial and it is possible now, but normally (i.e. more than 90% of the time) Scotland is not there at all. There is an ice sheet normally from France up to the pole.
Being able to see land in Scotland at all is an unusual circumstance. For at least three million years there have been these brief periods when the ice retreats. The land has been sculpted into a favorable configuration for golf and everyone rushes outside to play before the normal situation returns.
The electorate should meditate on golf and Scotland before they sign the next Global Warming petition.
Albertosaurus
One of the worst malefactors in the worldwide financial meltdown was RBS, which Jack Nicklaus shilled for. Golf 'journalists' should have at least chided him for being a financial dummy.
ReplyDeleteThere is no slippery slope, only ever-higher peaks to be scaled.
ReplyDelete