Dangerous Thoughts

Charles Oliver's attack on the Endangered Species Act ("All Creatures Great and Small," Apr.) represents an important contribution to a new and reformed environmental policy. Repeal of this act, which he recommends, would follow from a basic change in approach: We should not base policy on providing intensive care to species at death's door. Rather, we should concentrate on enlarging the size of wildlife preserves, where large numbers of species can live unimpeded. The protection of wetlands can stand as a valuable part of such an approach.

The government, however, must respect the Takings Clause of the Fifth Amendment in pursuing this approach. It must not pass laws that diminish the value of property, or the opportunity of landowners to enjoy such value in full measure, and then leave these owners to carry the resulting financial burdens entirely on their own. Rather, governments must compensate the owners in consideration of such burdens and often must expect to buy the land outright, in the fashion of the Nature Conservancy. That would put an end to the present situation, in which environmentalism is an ally of socialism and an enemy to private property.

T. A. Heppenheimer
Fountain Valley, CA

Charles Oliver makes quite a leap from his reasoned criticism of the Endangered Species Act to the assertion that extinction is good because it is natural. I'll not argue that extinction has always been a "fact of life" on earth. Over millions of years, new species arose to take the place of those that couldn't adapt to changing conditions. The problem today is man's incredible escalation of the process through his own massive population growth and his deliberate alteration of natural systems. I don't consider this trend to be particularly "natural." Species are being killed off rapidly before new ones have a chance to develop. We don't need the EPA to tell us that the outlook for our world is very sad indeed.

Of course, Oliver would discount that remark as a value judgment that he obviously doesn't share. I don't have the answer to the environmental dilemma, but I know it lies somewhere between mindless, politically motivated environmental activism and the "who cares" mentality of Oliver. My basic libertarian philosophy is at odds with what I perceive as a world on the brink of ruin. Oliver would use the EPA's inaccuracies and political motivations as an excuse to continue ruining it.

Laura Ainsworth
Waxahachie, TX

Charles Oliver misses the point of the economics vs. the environment issue. What is or isn't a species is not the problem; our ever growing and ceaselessly rapacious numbers are.

The more an ecosystem moves toward domination by a limited number of species or by a single species (i.e., us), the greater are the chances of that system suffering a catastrophic crash. As homo sapiens is brought under control, those other creatures great and small will be able to take care of themselves.

Sargent T. Reynolds
Woodland, CA

Charles Oliver got me boiling mad. While I appreciate his concerns about the extremes that the environmentalists advocate, I resent the attitude that if it is in the best interests of mankind, at this particular moment, the environment can simply be manipulated and the existence of species and subspecies terminated. Where is it written that we can do whatever the hell we please with the environment?

Fred Bluestone
Ellenville, NY

Mr. Oliver replies: I think that Ms. Ainsworth's letter is indicative of how closely people read articles that challenge their beliefs. It was not the EPA that I criticized, but the Fish and Wildlife Service. Similarly, Mr. Reynolds seems to have overlooked that portion of the article in which I argued that there is no proof that man's activities have greatly accelerated the process of evolution and extinction of species. So let me repeat: The only "proof" we have of massive species decline is the unsubstantiated assertions of chronic (and chronically wrong) doomsayers such as Paul Ehrlich. Let's get it straight: The Endangered Species Act is not going to save the world, but it will, in Mr. Reynolds's words, bring homo sapiens "under control."

Finally, several of the letters took me to task for not distinguishing between the "natural" evolutionary process and man's influence upon species. I see nothing unnatural about man's activities. It's called natural when beavers dam a stream, flood a valley, and change the ecosystem, but not when men do the same thing. This distinction is false. From the time men discovered that they could keep warm by wearing animal skins, to the cultivation of crops and the domestication of animals, to today's skyscrapers, man has flourished by adapting his environment to himself. It's our method of survival, and it's just as natural for us as it is for cats to prey upon mice.

Corporate Wrongs

I was very surprised to see Deborah Hallberg's article on top corporate executives' supposedly "excessive" pay ("Top Cats," May). Nowhere is "excessive" defined. What would "nonexcessive" pay be?

Top executives constantly receive—and often accept—offers to work for other companies. To retain those who are best qualified, boards of directors must offer competitive pay packages. Hallberg offers no evidence that current compensation levels are the result of some process other than a free market for managerial skill.

She notes that golden parachutes and poison pills usually go unchallenged by shareholders. But what about when they are challenged? Of 16 shareholder resolutions sponsored last year by United Shareholders Association (USA) to redeem or submit poison pills to vote, only three passed. Of 11 USA resolutions to restrict golden parachutes, none passed (based on mid-May proxy results).

In fact, of a total of 101 corporate governance resolutions last year, only eight passed. This suggests that most shareholders, or at least those who vote in proxies, are relatively content with current management policies and do not believe there is a "lack of accountability in the corporate system."

Hallberg does not consider the possibility that the supposed "battle between shareholders and managers" might be media hype initiated by a minority of shareholder activists who—claiming to speak for shareholders in general—wish to use the SEC to gain greater control over corporate decision making. She offers no evidence that most shareholders wish to have such control; but activists' proposed proxy changes would give them increased capacity to push various agendas, and these agendas may not be in most shareholders' best interests (e.g., electing union leaders and command-and-control environmentalists to boards of directors).

Since governance policies vary by company, investors who do not approve of one company's policies can choose from 13,000 other publicly held companies or can refrain from investing in that company in the first place. The markets for investors' wealth and for corporate control are shareholders' best protectors. Expanding government intervention into shareholder-manager relations is not "promising" but alarming, because it can lead only to the further erosion of the corporation as a voluntary, contractual association.

D. T. Oliver
Capital Research Center
Washington, DC

Deborah Hallberg clearly misses the mark. I am surprised and disheartened to read such an article in a magazine devoted to "free minds and free markets."

Hallberg chooses to ignore the number-one weapon that the shareholders have at their disposal in the event they find executive salaries to be "too high": They can exercise their right to sell their stock. In a free market, no one is coerced into buying shares of a public company. It's that simple. If you don't like the pay scale, don't use your dollars to vote for the company's success. Hallberg seems to assume most shareholders espouse her views. If enough of these people put their money where their mouths are, perhaps business executives would be enticed to lower their own salaries.

Lance Vitanza
Los Angeles, CA

Ms. Hallberg responds: The question of whether executive pay is excessive or not should be settled by the company's shareholders. Unfortunately, shareholders have too little say over executive compensation. Instead, salaries are set by a board of directors that is handpicked by the company's CEO.

The CEO picks friendly directors and pampers them. The result is an insular club that too often protects its own at the expense of the shareholders who own the company. Measures that help return power to shareholders are to be applauded. Denouncing these changes as "government intervention into shareholder-manager relations" ignores how corporate executives and their lobbyists have themselves gotten government to write the rules in their favor.

To argue that shareholders must like the current situation because they do not more often challenge board decisions is to ignore the difficulty individual shareholders face when they oppose the board. There is a simplistic appeal to the argument that if a shareholder doesn't like the way a company is run or the salary of its top executives, he should simply sell his stock.

But think about it a little more closely. If someone owns a restaurant, would he be wise to let the managers set their own salaries? And if the restaurant owner did let managers set their salaries and they paid themselves more than he thought they were worth, would anyone advise him just to sell the restaurant?

Polite Points

Thank you for reviewing my book, Rude Awakenings ("The Poor Among Us," June). I agree with most of reviewer Cassandra Chrones Moore's observations, but there are a few points that I'd like to clear up.

1) I am not "reluctant to recommend market-oriented policies." I generally find them to be the first and most important part of any strategy. Sometimes, however, the market alone cannot achieve an acceptable balance between economic efficiency and social justice.

2) While I do not recommend the instant abolition of all forms of rent control, I do recommend that all forms be phased out. In the interest of honesty, I have to admit that there is no proof that moderate forms of rent control contribute to homelessness.

However, I believe that in restricting the opportunities of small landlords to make big profits in situations of housing undersupply, we are cutting off a major avenue for the poor to acquire equity through buying the place next door and fixing it up. Often, as William Tucker has demonstrated, the profits of the working poor are held down to keep rents low for the professional classes.

Small entrepreneurs are forever victimized by every kind of regulation we can cook up. Theirs is much of the energy needed to shape up the inner cities. If we are going to solve our urban problems, we need to get government off their backs and place it at their side.

3) Moore writes that I fail to "impose costs on municipalities practicing exclusionary zoning." I think that I do impose such costs by recommending that states set low- and moderate-income housing production goals for such cities and require them to meet these goals or pay a price.

By the way, I believe that such housing production can usually be accomplished through a city's redirecting the same zoning and other regulatory powers that it currently uses to keep out such housing.

Richard M. White Jr.
Berkeley, CA

No Association

The June 1992 issue of REASON carries a full-page advertisement for a product of the Life Extension Foundation, an organization about which I know nothing. I am concerned that the advertisement could give the false impression that I endorse their product. The ad's summary of my statements on aspirin from my monograph, "Drug Lag: Federal Government Decision Making," is correct (although it is on page 49, not page 48). I do not endorse their product.

Rita Ricardo-Campbell
Hoover Institution
Stanford, CA