In 1757 Admiral Byng was executed by firing squad on the deck of his flagship HMS Monarch for failing to reinforce the British garrison in Minorca the previous year. This act is generally believed to have greatly encouraged the Royal Navy's admirals and captains to fight agressively and thus to have contributed to the British Empire. It also led Voltaire to write in Candide that well known line:
"[I]l est bon de tuer de temps en temps un amiral pour encourager les autres"
It seems to me that the practice might be usefully revived. Not necessarily applied to admirals (though to be honest since the Royal Navy has more admirals than ships these days they probably wouldn't be missed) but applied to some of the titans of finance and their political cronies, not to mention the technocratic underlings who advise from the shadows.
Of course one of the problems here is that were anyone to propose this action in a form where it seemed likely to be taken seriously than there would be the usual hordes of detractors claiming that it was a bad idea. You know what they'd say: "It won't work as a deterrent, they'd just find a way to hide it" or "It isn't fair on the CEOs/Ministers who got left holding the parcel" or "It's just barbaric revenge not suited to the 21st century".
As it happens there is evidence to show that the prospect of facing a firing squad does cause senior executives to behave - ever since the Chinese shot half a dozen dairy company CEOs for putting melamine in the milk the QC of Chinese food products has increased enormously. When the risk/reward ratio looks like "if I'm wrong its a minor slap on the wrist but if I'm right for long enough then I'm get to trouser millions" then its obvious that the incentive is tilted towards risk taking. If on the other hand the "if I'm wrong" calculation ivolves not spending all those millions because you've been terminated or fired in a completely literal sense then you are rather more likely to be conservative.
And fairness is not what I care about. Perhaps, to pick an example not at random Sir Fred the Shred was not the person to blame for RBS's collapse but he certainly reaped the rewards of the good years so he looks like a good target - just as Admiral Byng was 250 years ago. Shooting him would make other bank CEOs a lot more risk averse and as a general rule we want bank CEOs to be risk averse. We want them and their fellow board members to understand enough mathematics to realize what kind of funny money they are investing in and if it turns out they don't understand then it seems fitting that their incomprehension be terminiated swiftly before they can do any more harm.
Mind you I don't want to see the bank CEOs stand there alone. There's a bunch of credit rating agency workers who ought to be given a bottle of whisky and a gun and told to go think things over at the top of a cliff. And there's a bunch of politicians who should be used by the CEOs as shields against the firing squads and since politicians are really common it certainly doesn't matter if we use a few too many as shields in order to be sure to get the guilty ones.
But really it's an idea that worked 250 years ago, indeed arguably it worked 2000 years ago when the Romans called it decimation, I see no reason why it wouldn't work today.
Blog Home : May 2009 : Permalink